Payton Securities Pty Ltd v Mason White McDougall (Hurstbridge) Pty Ltd
[2021] VSC 375
•25 June 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
S ECI 2020 02308
| PAYTON SECURITIES PTY LTD (ACN 004 597 166) | Plaintiff |
| v | |
| MASON WHITE MCDOUGALL (HURSTBRIDGE) PTY LTD (ACN 097 326 317) and others (according to the attached schedule) | Defendants |
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JUDGE: | M Osborne J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 18 June 2021 |
DATE OF JUDGMENT: | 25 June 2021 |
CASE MAY BE CITED AS: | Payton Securities Pty Ltd v Mason White McDougall (Hurstbridge) Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2021] VSC 375 |
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APPLICATION FOR JOINDER – Apportionable claim pursuant to s 24AL of the Wrongs Act – Extent of scope of solicitor’s retainer – Whether claim of concurrent wrongdoing is reasonably arguable - Kayteal Pty Ltd v John Joseph Dignan & Ors; Atkins v Interprac & Crole [2007] VSC 445; David v David [2009] NSWCA 8; Provident Capital Ltd v Papa [2013] NSWCA 36; Zakka v Elias [2013] NSWCA 119; Rexstraw v Johnson [2003] NSWCA 287 considered.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D Bongiorno, of counsel | Wisewould Mahony |
| For the First and Second Defendants | Mr R Moore, of counsel | Wotton & Kearney |
| For the Third Defendant | Ms N Wearne, solicitor | Clyde & Co |
| For the Fourth Defendant | Mr S T Pitt, of counsel | Sparke Helmore |
| For Harding Stenning & Co | Mr J Tsalinidis, of counsel | Lander & Rogers |
HIS HONOUR:
Introduction
The first and second defendants, Mason White McDougall (Hurstbridge) Pty Ltd and Ian Mason (collectively, ‘MWM’) and the fourth defendant, Bertacco Ferrier Pty Ltd (‘Bertacco Ferrier’) have made an application to join Harding Stenning & Co (‘Harding Stenning’) as a defendant to the proceeding, pursuant to s 24AL of the Wrongs Act 1958 (Vic) (‘the Wrongs Act’) and/or r 9.06 of the Supreme Court (Civil Procedure) Rules 2015 (Vic) (‘the Rules’). The joinder is sought to enable MWM and Bertacco Ferrier to amend their defences so as to allege that Harding Stenning is a concurrent wrongdoer, thus enabling MWM and Bertacco Ferrier to rely upon the proportionate liability provisions contained in the Wrongs Act.
The application was opposed by both the plaintiff, Payton Securities Pty Ltd (‘Payton’) as well as by Harding Stenning.
In support of the joinder application, MWM relied upon two affidavits of their instructing solicitor, Alycia Amanatidis, affirmed 7 May 2021 and 13 May 2021, respectively. The proposed amended defence relied upon by MWM is exhibit ALA-24 to Ms Amanatidis’ 7 May 2021 affidavit.
Bertacco Ferrier relied upon two affidavits of its instructing solicitor, Patrick McGrath, sworn 6 May 2021 and 4 June 2021, respectively. Bertacco Ferrier’s proposed amended defence is exhibit PJM-15 to Mr McGrath’s second affidavit.
The affidavits filed in opposition to the joinder application are as follows:
(a) an affidavit of Michelle Cohen affirmed 13 May 2021 – Ms Cohen is an employee solicitor at Harding Stenning;
(b) an affidavit of Paul Michael Harding affirmed 27 May 2021 – Mr Harding is a principal of the firm Harding Stenning; and
(c) an affidavit of Sally Jane Burgoyne sworn 27 May 2021 – Ms Burgoyne is Payton’s Investment Director.
The existing claims made in the proceeding
Prior to the application for joinder of Harding Stenning, Harding Stenning acted as Payton’s solicitors in this proceeding, which was commenced on 25 May 2020. As a consequence of MWM bringing the application for joinder, Payton, as respondent to the application, in turn engaged Wisewould Mahony as its solicitors in the proceeding. Harding Stenning was separately represented throughout the hearing of the application.
In its statement of claim in this proceeding, Payton alleges that it lent $3.25 million to Z & L Property Management Pty Ltd (now in liquidation) (‘Z & L’). Z & L was at all relevant times the registered proprietor of the land and improvements at 35 Herberts Lane, Diamond Creek, Victoria (‘the Property’). Z & L was seeking to develop the Property by subdivision and the construction of 28 residential lots (‘the Residential Lots’) and one large lot of 2.449 hectares (‘Lot A’); the development was known as Wattle Ridge Estate. As part of the planned development, Z & L sought to presell the lots.
Payton alleges that on or about 5 April 2018, it advanced $3.25 million to Z & L secured by a second mortgage over the Property (‘the Z&L loan’). Z & L defaulted, and as a consequence the loan has not been repaid.
In broad terms, Payton’s claim against each defendant is as follows:
(a) that MWM, as Z & L’s real estate agent, made certain representations as to the number of presold lots and thereby:
(i) engaged in misleading and deceptive conduct contrary to s 18 of the Australian Consumer Law (‘ACL’);
(ii) alternatively, committed the tort of deceit by making those representations; and
(iii) was an accessory for the purpose of s 75B of the Competition and Consumer Act 2010 (Cth) to Z & L’s own contravention of s 18 (Z & L having misrepresented the number of presold lots);
(b) that the third defendant, Ian John McCubbin, Z & L’s lawyer, made similar misrepresentations as to the number of presold lots made by Z & L, and thereby:
(i) engaged in misleading and deceptive conduct contrary to s 18 of the ACL; and
(ii) breached a common law duty of care; and
(c) that the fourth defendant, Bertacco Ferrier, a valuer alleged to have been engaged by Payton and who valued Lot A (which it valued at $5,150,000), breached:
(i) a contractual obligation to exercise due skill and care; and
(ii) its common law duty of care.
Payton alleges that as a result of the conduct identified, it advanced the Z & L loan, and that, inter alia, it has lost a substantial portion of the principal sum advanced and which will not be recoverable from the development. Each of the defendants deny liability.
The engagement of Harding Stenning
By the time the application for joinder was heard, Payton had waived privilege over the content of Harding Stenning’s file maintained in connection with the Z & L loan from the time of instruction up to and including the date of settlement of the loan. Accordingly, Harding Stenning made available a copy of its file to MWM and Bertacco Ferrier.
The affidavits of Ms Burgoyne and Mr Harding, along with the underlying file as produced, shed light on the nature of Payton’s retainer of Harding Stenning and the steps taken (or not taken, as the case may be) by Harding Stenning.
Payton is an experienced commercial lender. It has instructed Harding Stenning and its predecessor law firm, Harding & Co Lawyers, to prepare security documents for hundreds of first and second mortgage loans since about 1994.
Ordinarily, Payton advances funds to borrowers by way of secured loans; it raises such funds from investors through information memoranda issued in its own name; which memoranda describe Payton as the authorised representative of Payton Private Wealth Pty Ltd.
The relevant application form for completion by investors requires each investor to confirm that they are a sophisticated investor. Relevant to the Z & L loan are two information memoranda both dated March 2018; the first memorandum invites investors to participate in a mezzanine investment in the form of a proposed first mortgage loan to Z & L of $8,900,000 secured by a first mortgage over the Property, along with associated securities. The second information memorandum is in substantially identical terms, save that it refers to a loan amount of $3,.25 million; offers a higher interest rate to investors; and is secured by a second registered mortgage over the Property instead of a first registered mortgage, as well as second registered mortgages over additional properties.
Each information memorandum refers in its executive summary to a valuation of the Property with an ‘as is’ value of $8.4 million; a project site related value of $8.63 million; and a gross realisation value (‘GRV’) of $17.68 million. The memoranda additionally note that the underlying valuation on which these figures are based had been undertaken by Bertacco Ferrier on 30 August 2017.
Each information memorandum stipulates that the making of the relevant loan is conditional on each of the valuation, a surveyor’s report and an engineer’s report being acceptable to Payton; as well as the relevant securities documentation being acceptable to Harding Stenning, who are described as solicitors acting on behalf of the investors. Roy Stenning, a principal of Harding Stenning, was noted in the memoranda as Harding Stenning’s representative.
On 28 March 2018, Payton forwarded a mortgage instructions sheet to Harding Stenning which detailed a loan of $3.25 million to be made to Z & L. This loan was to be secured by a second registered mortgage over the Property for a term of 12 months, with settlement (in the nature of a refinance of an existing loan) to occur on 9 April 2018. The mortgage instruction sheet was accompanied by the letter of offer dated 23 March 2018.
The letter of offer was addressed to the director of Z & L and noted approval of the application for the second mortgage loan of $3.25 million. The letter of offer then set out a number of special conditions, including:
(a) that the loan was subject to a first registered mortgage of no more than $8.9 million as managed by Payton Capital Ltd (‘Payton Capital’);[1]
(b) that the loan was subject to a new valuation of the Property being undertaken by an independent third party to the satisfaction of Payton Capital; and
(c) that the loan was subject to Payton Capital’s satisfaction as to a gross value of $12.5 million of presales having been effected. That special condition noted that ‘our presales due diligence is to include a review of every presales contract and legal confirmation of deposit’.
[1]. Payton Capital is a separate entity to Payton, but part of the same group.
The letter of offer contained a separate subheading ‘borrower to return the following items prior to settlement’, under which was requested both legal confirmation of unconditional presales for the residential lots at the Property with a 10% deposit held for each of those presales; and a valuation report of the Property to be undertaken by an independent third party. The letter of offer advised that the items appearing under that subheading were to be provided to the satisfaction of Payton Capital, before settlement could occur.
On or around 29 March 2018, Payton forwarded a letter of instruction and accompanying letter of offer to Harding Stenning for a proposed first mortgage loan of $8.9 million, to be made jointly by Payton and Vasco Trustees Ltd as to the amount of $5.65 million and $3.2 million respectively. This was to be secured by a first registered mortgage over the Property. The mortgage instruction sheet and the letter of offer were otherwise in relevantly similar terms to that relating to the proposed second mortgage loan of $3.25 million.
On or around 5 April 2018, Payton forwarded a further mortgage instruction sheet to Harding Stenning in respect of the second mortgage loan, specifying additional security over two further properties. It is apparent that the mortgage instruction sheet of 5 April 2018 superseded the earlier mortgage instruction sheet of 28 March 2018; being in relation to the same loan but provided for additional security. This new second mortgage instruction sheet was likewise accompanied by a letter of offer of 5 April 2018. This letter of offer was in relevantly similar terms to the first letter of offer of 23 March 2018; save for the reference to the additional securities.
Harding Stenning prepared the mortgage security and a loan agreement for both the first mortgage loan and the second mortgage loan. In the case of the first mortgage loan, the documentation was amended by the solicitors for the co-first mortgagee, Vaso Trustees.
On 28 March 2018, Richard Vidaic from Payton Capital emailed Ms Cohen at Harding Stenning in connection with the proposed loan to Z & L, requesting that Ms Cohen call both the existing first mortgagee[2] and the existing second mortgagee[3] the next day to book in a settlement time and obtain a payout figure for 9 April 2018.
[2]Also referred to as ‘the Senior Lender’.
[3]Also referred to as ‘the Mezzanine Lender’.
On 3 April 2018, RMS Lawyers, solicitors for the existing second mortgagee, provided a payout figure calculated up to 9 April 2018. Settlement of the loan was apparently to occur via the online workspace PEXA, participation in which requires acceptance of an invitation sent by the inviting party. By 6 April 2018, the invitation had been accepted by the solicitors for the existing first mortgagee, but not by the solicitors for the existing second mortgagee, RMS Lawyers. RMS Lawyers, although having earlier provided the payout figure, advised on the afternoon of 6 April 2018 that they had not yet accepted the invitation because they did not have instructions from their client to do so.
On 9 April 2018, Jacky Zhang (apparently the finance broker for the Z & L) emailed Mr Vidaic advising that in order for the loan to be processed he needed three matters to be attended to: proof of funds; the PEXA workspace reference; and legal documents for the settlement. His email concluded, ‘if you can’t give those to me tomorrow, the deal is over. Because I don’t have time to wait’.
Mr Vidaic forwarded that email to Ms Cohen on 10 April 2018 at 1:59pm requesting assistance with the first two items and advice as to the amount of available funds sitting in the trust account. His email concluded ‘client also wants to confirm that the first and second mortgagee are all okay to settle and have accepted the PEXA workspace’.
Ms Cohen replied within 20 minutes, providing the relevant PEXA workspace reference and advising that the solicitors for both the existing first and second mortgagees had accepted the workspace invitations, prepared their mortgage discharges and uploaded the payout figures, but were yet to accept the revised settlement time.
Prior to settlement taking place, Jamie Westlake, the head of lending at Payton, emailed Ms Cohen advising that all conditions precedent had been satisfied. Settlement was completed via PEXA on 12 April 2018 at 2:00pm.
Bertacco Ferrier places some emphasis on the loan agreement. It is generally in unremarkable form, but Bertacco Ferrier contend that item 10(b) of the schedule (incorporated into the loan agreement by clause 19) is important. The item provides that:
At no time, in the opinion of the Lender or the Lender’s Solicitors or Valuers, shall the amount of the Moneys Hereby Secured plus the total amount secured under all prior ranking mortgages and charges over the Mortgaged Property (if any), exceed SEVENTY FOUR percent (74)% of the value of the Mortgaged Property.
(emphasis added)
‘Moneys Hereby Secured’ is defined in the agreement as including the Principal Sum of $3.25 million.
Mr Harding deposed that Payton neither provided Harding Stenning with a copy of any valuation or presales certificate, nor did it instruct Harding Stenning to obtain any planning certificates. He further deposed that apart from preparing the relevant security documents, Harding Stenning was not instructed to advise in connection with:
(a) the finance application;
(b) the valuation;
(c) the presales contracts;
(d) the preparation of the letters of offer; and
(e) the information memorandum.
In respect of the valuation, Mr Harding deposed that Harding Stenning had never been requested by Payton to obtain a valuation on its behalf in the 27 years in which Harding Stenning (and its predecessor firm) had acted for Payton. He further deposed that Harding Stenning was not provided with a copy of any of the presales contracts apparently entered into by Z & L.
Whilst Mr Harding acknowledges that Harding Stenning did receive the letters of offer, he deposed that they were received after they had been signed by Payton and Z & L. Mr Harding deposed that Payton had extensive experience as a commercial lender and that accordingly it receives and makes decisions regarding loan applications, raises money from investors, instructs valuers and considers the values of securities relating to loans without the involvement of Harding Stenning.
Mr Harding says that Harding Stenning did not receive a copy of the Bertacco Ferrier valuation or copies of any of the presales contracts until after the loan went in default.
Mr Harding otherwise deposed that he did not know of the information memorandum until it was provided by the plaintiff in the course of discovery.
Mr Harding’s affidavit was corroborated in all relevant respects by Ms Burgoyne, Payton’s Investor Relations Director and a member of Payton’s Investment Committee. In particular, Ms Burgoyne deposed that as far as she was aware Harding Stenning had never been asked to assist with risk assessment or provide advice regarding Payton’s proposed loans. Rather, Harding Stenning’s only role was to prepare loan documentation and security documentation in respect of loans advanced by Payton. She further deposed that as far as she was aware, Payton has never involved Harding Stenning in the process of approving loans nor has it required Harding Stenning to advise on any valuations obtained by Payton in respect of loans, including the valuation the subject of these proceedings. Ms Burgoyne deposes that these matters are for Payton’s staff to assess themselves.
In relation to the information memoranda, Ms Burgoyne has deposed that the Borrower Services Team from Payton was responsible for drafting these documents and the Investment Committee would sign off on the final version to be circulated to investors. She accepts that Payton’s Investment Committee signed off on the final version circulated to investors. She confirmed, however, that Harding Stenning was not retained by Payton in connection with the preparation of, or to provide advice in connection with, any of:
(a) the information memoranda;
(b) the documents comprising the presales due diligence referred to in each information memoranda; and
(c) the letters of offer.
The Bertacco Ferrier proposed amendments
The proposed amendments advanced by Bertacco Ferrier commence with the allegation that prior to March 2018 Harding Stenning was retained by Payton, inter alia, to provide legal services in connection with Payton extending loan facilities to Z & L for the purposes of the development of the Property.[4] Bertacco Ferrier then allege that Harding Stenning knew or ought to have known that:
[4]Paragraph [53].
(a) Payton was raising funds for the loan transactions from investors;
(b) Payton had issued information memoranda to investors in relation to the loan transaction that stipulated Harding Stenning (in particular Mr Stenning) as Payton’s solicitors;
(c) the information memorandum relied on an August 2017 valuation from Bertacco Ferrier that was not addressed to Payton was not to be used for its purposes;
(d) completion of the loan transaction was subject to and conditional upon a new valuation being obtained; and
(e) investors stood to lose their money if the valuation or the security property was misused by Payton.
Bertacco Ferrier next allege that, pursuant to their retainer, Harding Stenning had a duty to Payton to, inter alia:
(a) enquire with Payton as to the existence of any valuations of the Property and request copies of any valuations in respect of the Property;
(b) take all reasonable care in discovering matters that a reasonably competent solicitor would regard as such as might cause the lender to doubt the correctness of the valuation or some other ingredient of the lending decision;
(c) pass on information obtained during the course of investigating title (including but not limited to information relating to planning permits and related issues) which might cause Payton to doubt the correctness of any valuations which might suggest that the value of the security was insufficient;
(d) advising Payton about all aspects of the loan offers and the loan agreements including but not limited to considering and advising on any aspect of the available valuation reports that may affect the correctness of the valuation or some other ingredient of the Payton’s lending decision;
(e) advise the plaintiff in respect of anything contained in the valuation reports which would or might adversely impact upon the security required by the plaintiff in entering into the loan agreements including but not limited to any qualifications, recommendations, assumptions, risk assessments, SWOT analysis, limitations and warnings or special comments contained in the valuations; and
(f) obtain confirmation of unconditional presales for the Residential Lots.
Bertacco Ferrier then allege, inter alia, that in breach of their retainer Harding Stenning:
(a) failed to make any or any reasonable enquiries as to the existence of a valuation report in respect of the property;
(b) failed to read or read properly, or have regard to the March 2018 valuation report or the August 2017 valuation report;
(c) failed to advise Payton sufficiently or at all about the qualifications, recommendations, assumptions, risk assessments, SWOT analysis, limitations and warnings or special comments contained in the valuation report;
(d) failed to advise Payton that the valuation was to be used for first mortgage purposes, not second mortgage purposes, and that therefore the valuation could not be used or relied upon by Payton in deciding whether to enter into the loan agreement which loan agreement was drafted by Harding Stenning;
(e) failed to advise Payton that the valuation report stipulated a maximum 55% loan-to-value ratio as a critical assumption underlying the valuation report, and that therefore the valuation could not be used or relied upon by Payton in deciding whether to enter into the loan agreement;
(f) failed to advise Payton that the valuation report was provided for the purposes of providing mortgage financing at a conservative and prudent loan to valuation ratio as stated in the valuation report;
(g) failed to verify information contained in relation to the presales including:
(iv) failing to obtain up to date schedules of unconditional presales for all 28 lots; and
(v) failing to obtain copies of executed contracts; and
(h) failed to enquire about or ascertain whether there were any matters that might have caused Payton to doubt the correctness of the value or the security, including but not limited to a drainage easement in favour of the Nillumbik Shire Council regarding Lot A and a bushfire management overlay.
The proposed amended pleading relied upon by MWM was in relevantly similar terms.
Stripped to the essentials, the gist of the claim by MWM and Bertacco Ferrier is that due performance by Harding Stenning of its retainer with Payton required Harding Stenning to:
(a) ask for and consider the Bertacco Ferrier valuation; and
(b) obtain appropriate verification of the relevant pre-sales information obtaining up to date schedules of unconditional presales for all of the residential lots allegedly sold as well as obtaining copies of executed contracts for those presales.
In the case of the valuation, MWM and Bertacco Ferrier contend that had Harding Stenning asked for and considered it, Payton would have been made aware that the valuation should not have been relied upon, including because:
(a) it stated that the valuation was to be used for first mortgage purposes, not second mortgage purposes;
(b) it specified a maximum loan to value ratio of 55% in the critical assumptions section of the valuation; and
(c) it was addressed to Payton Capital, not Payton. They contend that had such advice been communicated the second mortgage loan would not have been made.
In the case of the presales information, MWM and Bertacco Ferrier contend that had Harding Stenning obtained appropriate verification of the presales, Payton would have been made aware that the presales information that had been provided by or on behalf of Z & L was false, and consequently Payton would not have made the Z & L loan.
Principles in relation to joinder and the making of claims of concurrent wrongdoing
The parties to the application accepted that the fate of the joinder application rested on whether MWM and Bertacco Ferrier could establish an arguable case that Harding Stenning was a concurrent wrongdoer within the meanings of s 24AH of the Wrongs Act. It is not in dispute that Payton’s claim against MVM and Bertacco Ferrier is an apportionable claim.
Concurrent wrongdoer is defined in s 24AH of the Wrongs Act as follows:
24AH Who is a concurrent wrongdoer
(1)A concurrent wrongdoer, in relation to a claim, is a person who is one of 2 or more persons whose acts or omissions caused, independently of each other or jointly, the loss or damage that is the subject of the claim.
All relevant parties accepted that the joinder of Harding Stenning and the associated amendments should follow if the Court is satisfied that the claim is arguable, in the sense that the proposed amendments plead a defence (in the form of the articulation of a claim which gives rise to a concurrent liability on behalf of Harding Stenning) that has a real prospect of success.[5]
[5]Fabfloor (Vic) Pty Ltd v BNY Trust Co [2016] VSC 99 [41] (Dixon J); Atkins v Interprac & Crole [2007] VSC 445 [10] (Hargrave J) (‘Atkins’).
Joinder requires a ‘tenable’ proportionate liability defence with a ‘real (not a fanciful) prospect of success’ alleging ‘material facts that establish the responsibility of that other concurrent wrongdoer for the loss and damage claimed by the plaintiff in the proceeding’.[6]
[6]Utility Services Corporation v SPI Electricity (2012) 35 VR 628 [24] (Dixon AJA).
Both Payton and Harding Stenning submitted that the proposed pleading did not disclose an arguable case against Harding Stenning.
Kayteal Pty Ltd v John Joseph Dignan & Ors (‘Kayteal’)[7]
[7][2011] NSWSC 197 [36]-[41] (Brereton J).
Whilst acknowledging that each case turns on its own facts, MWM and Bertacco Ferrier placed considerable reliance on Kayteal. In Bertacco Ferrier’s outline of submission[8] it asserted that Kayteal is authority for the proposition that a lender’s solicitor usually has a duty to draw any matters to the attention of the lender such as might cause the lender to doubt the correctness or reliability of the valuation or some other ingredient of the lending decision. Both the plaintiff and Harding Stenning denied that Kayteal is authority for such a wide proposition.
[8]Bertacco Ferrier had the primary carriage of the application; MWM made short further oral submissions but did not file any written outline. In broad terms MWM adopted the submissions made by Bertacco Ferrier.
Having regard to the reliance placed on Kayteal, it is necessary to refer to that case in some detail.
In Kayteal the borrower’s finance broker approached the lender seeking a loan of $780,000. The broker forwarded a valuation which had been prepared by it for another potential lender, and which ascribed a value of $1.2 million to the subject property. The lender informed the broker that it was happy to proceed with the loan, subject to the lender’s solicitors being happy with the requirements for settlement and subject to the solicitors preparing a letter of offer.
Later, the broker forwarded to the lender’s solicitors a number of documents which included, relevantly, a land survey which depicted a creek line running across the land and which noted, inter alia, the erection of a shed on the subject land and that no access to the property could be obtained from an adjacent street. Also included was a council certificate stating that the land was located within the ‘Standard Flood’ area identified in the relevant Council’s flood plain management policy.
After receiving the documents provided by the finance broker, the lender’s solicitors sent a letter to the borrower advising that the lender was prepared to consider making a loan to the borrower, on the terms set out in that letter. One of the terms was that a current valuation of the property had to be provided, and that the valuation had to be satisfactory to the lender in all respects as well as addressed to it expressly for first mortgage purposes.
The next day, the lender’s solicitors forwarded draft security documentation to the borrower’s solicitors, requesting that it be returned to the lender’s solicitors once executed, together with the current valuation of the property addressed to the lender for first mortgage purposes.
Subsequently, the finance broker’s solicitors forwarded to the lender’s solicitors a copy of a valuation dated 24 April 2006, now addressed to the lender. Under a section of the valuation headed ‘Land Area’, the valuation stated that the land size was 450 square metres for each lot; in fact, the actual area of each lot was approximately 220 square metres. In a section of the valuation headed ‘Development’, the valuation stated ‘nil’, notwithstanding that the survey had referred to the shed erected on the property. Under a section headed ‘Comments’, the valuation stated that the subject properties were in ‘an excellent location’, backing onto a reserve and a walkway and overlooking a sport reserve. The ‘Comments’ section also stated that all of the lots were level and were ‘ideal building blocks’. In fact, the survey showed that the lots were bisected by a steep creek line.
Under the section headed ‘Securitisation Requirements’, the valuation stated that the ‘Comments’ section was based on site observations and where necessary verbal enquiries, without the benefit of searches. Subject to that qualification, the valuation stated that the land was not subject to flooding or land slip. In fact, as mentioned above, the flood certificates which had been obtained by the lender’s solicitors revealed that the properties were subject to flooding, being located within the ‘Standard Flood’ area.
Upon receiving the valuation, the lender’s solicitor reviewed the valuation and noted the apparent discrepancies between it and the survey and council certificates; in particular, that the valuation referred to the subject properties as being on level land facing south and at the end of a nearby street, whereas the survey in fact showed a creek with steep banks running through the property and reported poor access to parts of the property. The lender’s solicitor called the valuer and raised those matters with him. The lender’s solicitor said that he wanted to make sure that the valuer had in fact valued the correct property and that his valuation stood. The valuer subsequently confirmed that he had valued the correct property and that the valuation stood.
In fact, the valuer had valued the wrong property.
In the circumstances, the Court considered that whilst the solicitors were not under a duty to determine the correctness of the valuation, which was the valuer’s responsibility, having stipulated for a satisfactory valuation it could reasonably be expected that the solicitors would read the valuation check that the property described in it corresponded with the property over which the mortgage security was to be taken; and accordingly to draw to their client’s attention any information of which they became aware, or ought to have been aware, that might have suggested to the client that the valuation was not reliable. [9]
[9]Ibid [48].
The Court considered that a reasonably prudent and competent solicitor in the position of the lender’s solicitor would have noted both that,
(a) whereas the valuation stated that there was no development on the land, the survey referred to a shed erected on the property; and
(b) that whereas the valuation stated that the properties were not subject to flooding or landslip, the council certificates revealed that they were located within the Standard Flood area.
The Court considered that the exposure to flooding in particular was significant, noting that the valuation had been expressed to be subject to review if the searches revealed conditions contrary to the assumption that the land was not subject to flooding. The searches obtained by the lender’s solicitors (not by the lender itself) in the form of the Council certificate indeed revealed contrary conditions and effectively invalidated the valuation. This was a matter which the Court considered was within the primary scope of responsibility of the solicitor and should have been disclosed by the solicitor to the lender.
It is in the context of those facts that, after reviewing a number of authorities, the Court stated that a review of the authorities established the following propositions:[10]
•Absent specific instructions, the scope of a lender’s solicitor’s responsibility includes the legal efficacy of the security, but not its value, nor the creditworthiness of the borrower;
•However, a solicitor is bound to report to the client matters discovered – or that ought to have been discovered – in the course of investigating title and preparing for completion, that a reasonably competent solicitor would regard as such as might cause the lender to doubt the correctness of the valuation, or some other ingredient of the lending decision.
[10]Ibid [38].
However, the Court noted that a solicitor’s duty is ordinarily confined to matters within the scope of the lender’s interest with the solicitors who is engaged to protect, which appears from the retainer,[11] and further that in a case of a lending transaction the interest which the solicitor is ordinarily engaged to serve is obtaining a valid and enforceable security. Thus a solicitor acting for a lender must use reasonable care to ensure that the client obtains a legally efficacious security, including ensuring that there is no prior encumbrance of which the solicitor was unaware. Ordinarily, this does not extend to advising on the value (as opposed to the enforceability and priority) of the proposed security.
[11]Ibid [36], citing Nationwide Building Society v Balmer Radmore [1999] PNLR 606; [1999] All ER (D) 95 (Blackburne J).
The Court further noted that generally a solicitor has an implied obligation to pass on information obtained during the course of investigating title which might cause the lender to doubt the correctness of the valuation or the borrower’s bona fides; though not (unless specifically instructed or assumed) merely its creditworthiness.[12] Thus, if in the course of investigating title, the solicitor discovers facts that suggest that the value of the security is insufficient, or that otherwise cast doubt on the accuracy or reliability of the valuation, then regardless of the terms of the retainer the solicitor ought to draw this to the attention of the client; at least if a reasonably competent solicitor would regard the information as such as might cause the lender to doubt the correctness of the valuation, or some other ingredient of the lending decision.[13]
[12]Ibid.
[13]Ibid, citing Mortgage Express Ltd v Bowerman & Partners [1996] 2 All ER 836 (Sir Thomas Bingham MR, Millett LJ and Schiemann LJ); Bank of East Asia v Shepherd & Wedderburn [1995] SLT 1074 (McCluskey, Clyde and Brand LLJ); Mortgage Funding Corporation v Tisdell Nelson Nari & Co [1998] PNLR 81 (Brian Knight QC sitting as Deputy Official Referee).
Kayteal provides no real assistance to MWM and Bertacco Ferrier and is clearly distinguishable. In Kayteal, the solicitor was engaged by the prospective lender prior to the loan being approved, and the retainer plainly extended to the task of ensuring that the conditions nominated by the lender for the making of the loan had been satisfied. Those conditions relevantly included the provision of a current valuation of the property addressed to the lender. In the context of the agreed division of responsibility between the lender and its solicitor, reflected in the solicitor’s retainer in that case, the valuation was provided by the prospective borrower to the lender’s solicitor and read by the solicitor. In the result, it was the solicitors, not the lender, who read and considered that the valuation. That is not the case here.
Finally, the inconsistencies between the valuation and the land survey received by the lender’s solicitor were apparent to the solicitors precisely because they had been revealed from the results of the solicitor’s searches in investigating title and preparing for completion. In contrast to the solicitor, the client was not aware of the valuation nor, more relevantly, the searches which disclosed the flood conditions and therefore effectively invalidated the valuation on the terms of the valuation itself.
In contrast, in the present case :
(a) First, Harding Stenning were first engaged after the loan had been approved.
(b) Secondly, Harding Stenning were not asked to review the valuation. Review of the valuation was to be Payton’s task, such that Harding Stenning did not receive a copy of the valuation.
(c) Thirdly, the question of satisfaction (or otherwise) of the conditions of the loan (including the provision of a satisfactory valuation and provision of the relevant presales information), was not a matter that the solicitors were asked to consider or advise upon. In contrast to Kayteal, this was a matter for Payton, which duly advised Harding Stenning prior to settlement that the conditions precedent had been satisfied,[14] enabling the settlement to take place.
[14]See [29] above.
Other cases relied upon
Bertacco Ferrier also relied upon David v David (‘David’),[15] Provident Capital Ltd v Papa (‘Provident Capital’),[16] Zakka v Elias (‘Zakka’)[17] and Rexstraw v Johnson (‘Rexstraw’).[18] Each of those cases is distinguishable and do not assist Bertacco Ferrier or MWM.
David
[15]David v David [2009] NSWCA 8 (Allsop P, Hodgson JA and Handley AJA) (‘David’).
[16]Provident Capital Ltd v Papa [2013] NSWCA 36 (Allsop P, Macfarlan JA and Sackville AJA) (‘Provident’).
[17]Zakka v Elias [2013] NSWCA 119 (Ward and Emmett JJA and Tobias AJA) (‘Zakka’).
[18]Rexstraw v Johnson [2003] NSWCA 287 (Sheller and Tobias JJA and Foster AJA)(‘Rexstraw’).
In David, the New South Wales Court of Appeal dismissed an appeal against the decision of a trial judge dismissing a claim against a solicitor by its former clients. The solicitor had been retained to advise the clients on the refinancing of their existing borrowings in order to raise funds for an investment. The clients borrowed moneys against an existing asset and invested the funds borrowed in various companies. The dismissal of the claim at trial, and the upholding of the dismissal on appeal, were in essence based on the fact that the solicitor’s retainer was limited to advising on refinancing of their existing borrowings and did not extend to providing financial advice in relation to the investment. In that context, the Court noted that the notion that a solicitor may owe a client a ‘penumbral duty’ that extends beyond the scope of the retainer is doubtful, but further continued:[19]
If, however, the solicitor during the execution of his or her retainer learns of facts which put him or her on notice that the client’s interests are endangered or at risk unless further steps beyond the limits of the retainer are carried out, depending on the circumstances, the solicitor may be obliged to speak in order to bring to the attention of the client the aspect of concern and to advise of the need for further advice either from the solicitor or from a third party.
[19]David (n 16) [76] (Allsop P).
So stated, such a general statement of the potential scope of the solicitor’s duties is unexceptional.
Provident Capital
In Provident Capital, a client of a solicitor mortgaged premises in which she lived to secure a loan to herself, obtained primarily to assist her son with a gymnasium business he had recently acquired. The lender required that the client obtain independent legal advice regarding the loan and security arrangement. The case involved consideration of the appropriate discharge of a solicitor’s retainer in circumstances where a solicitor is retained to advise a borrower in mortgaging her home for the benefit of a company in which the borrower had no interest. It bears no relationship to the present case.
Zakka
In Zakka, the New South Wales Court of Appeal considered an appeal by a client of a solicitor against the dismissal of claims brought by him against his former solicitor. The client had sought advice on a proposed transaction wherein the client intended to borrow against the security of his home, and then lend the funds advanced to another party, on security later concluded to be inadequate. The client was unemployed and was on a disability pension. The case largely turned on whether the scope of the solicitor’s responsibility extended to informing the client of the inadequate security once the solicitor had become aware of such in reviewing the proposed loan agreement. The Court held that the solicitor’s duty did extend to informing the client of the fact that the security might be inadequate, but found that the solicitor’s negligence was not causative of any loss. The case largely turned on the fact that the solicitor knew of the inadequate security and the consequential financial risk in the client lending the moneys. The client in that case did not have the same appreciation of those matters, including because of his own personal circumstances. It is far removed from the present circumstances and is of no assistance.
In Rexstraw, the New South Wales Court of Appeal considered an appeal against orders of the trial judge in favour of a group of investors who had invested their savings in a contributory mortgage scheme. The investors subsequently lost those funds due to the contended incompetence of the promoter of the scheme and of two solicitors who had been retained, ostensibly to protect the investors’ interests. The promoter had devised a scheme such that, by involving a solicitor in the transaction, he avoided the need to issue a formal prospectus.
The solicitor, Rexstraw, was provided with a draft of an investor pack and was consulted as to its contents. The investor pack included a brochure which summarised the investments to be derived from investing in first mortgages. The brochure also included statements to the effect that investing in first mortgages had a high level of security and safety, including because the mortgage manager would only allow lending to a maximum amount of 66% of the property value and because that the property value had been determined by an appropriately qualified independent, registered property valuer. The information pack specifically stated that ‘the Documenting Solicitors’ had been instructed to prepare all security documents and carry out all necessary searches and enquiries into the borrower’s security to effect a first registered mortgage.
Subsequently, the promoter became aware of the possibility of arranging a loan, secured against a property purchased for $695,000. The loan offer for the proposed borrower was for $450,000, or 66% of the valuation or the purchase price of the property, whichever was the lesser, to be secured by a first mortgage and a guarantee. The letter of offer to the borrower referred to an existing valuation of the property and required that the valuer revisit the property to update its valuation and to readdress the valuation to the intending mortgagee.
The existing valuation specified a market value for the property of $750,000. The valuation was subsequently readdressed under cover of a letter which stated that the market value of the property remained unchanged. Contradictorily, the letter advised that the market value was $695,000, although nothing turned on this because 66% of the lower value was still more than the proposed loan of $450,000.
The promoter then advertised participation in the proposed loan, stating that the security documentation was to be prepared by Rexstraw, who would prepare all relevant documentation which would contain such covenants, terms and conditions as the lender may reasonably require. Because the property was in Queensland, Rexstraw appointed a Queensland solicitor, Johnsons, as its agent.
In the period leading up to settlement, Johnsons received a copy of the proposed transfer. The transfer noted that the transferors were Mr and Mrs Bartucz and specified the consideration as follows:
Consideration
The sum of $250,000 paid to Zoltan Bartucz and Gisella Bartucz by Queensland Mortgagee Sales Pty Limited ACN 066 221 592 the receipt of which sum is hereby acknowledged and in further consideration of the sum of $695,000 paid to the said Queensland Mortgagee Sales Pty Limited ACN 066 221 592 by Vorona Pty Ltd ACN 069 406 864 the receipt of which sum is hereby acknowledged and with the consent and direction of the said Queensland Mortgagee Sales Pty Limited ACN 066 221 592.
In effect, a back-to0back sale occurred whereby Queensland Mortgagee Sales Pty Limited (‘QMS’) acquired the property from Mr and Mrs Bartucz for $250,000, and then sold it to Vorona for $695,000. Vorona was borrowing $450,000 from the promoter via the contributory mortgage.
On the face of the transfer there was a significant disparity between the purchase price for the property being paid by QMS to Mr and Mrs Bartucz and that to be paid by Vorona to QMS. This discrepancy was noted by Johnson, who raised the matter with Rexstraw.
Johnson noted that Rexstraw had obtained a valuation of the property, whereas Johnson had not, but informed Rexstraw that he should advise the investors of the disparity between the two purchase prices and obtain instructions as to whether the transaction could nevertheless proceed in light of that disparity. Rexstraw did not do this. The settlement subsequently occurred notwithstanding that Johnson had obtained no express instructions from Rexstraw to the effect that he had raised the relevant matters with the investors and been instructed to proceed. Both Rexstraw and Johnson were held liable; Rexstraw because he had not passed on the matter to the investors, and Johnson because he had effected the settlement on the investors’ behalf without obtaining specific confirmation from Rexstraw that Rexstraw had passed the information on to the investors and obtained specific instructions. The case turned on the solicitors awareness of a matter which the client lender was not and which might imperil the security of the investment. It turns on its own facts, which are far removed from the present.
An arguable claim against Harding Stenning ?
It is tolerably clear that Harding Stenning’s express retainer did not extend to requiring it to ask for and consider the valuation, or the satisfactory nature or otherwise of the presales information provided to Payton by or on behalf of the borrower. Satisfaction of the conditions precedent was a matter for Payton not Harding Stenning.
Bertacco Ferrier argued that the scope of the retainer was uncertain because there was no written retainer, and that as such it was incumbent on Harding Stenning to expressly limit the scope of its retainer. True it is that there is no formal written costs agreement. That does not matter. The scope of the retainer is clear enough from the mortgage instructions sheet, particularly in light of the lengthy previous history of dealings between Payton and Harding Stenning. Its limited nature has been confirmed by both Mr Harding and Ms Burgoyne. I reject the submission that the obligations alleged arose because they were not expressly excluded in writing. That inverts the proper analysis which proceeds firstly from a consideration of the express terms of the retainer.
The scope of the solicitors’ duties in tort will ordinarily be set by the terms of the retainer.[20] The limited scope of the express retainer here ordinarily means that the proper discharge of Harding Stenning’s retainer here, and the related due performance of its tortious duty, did not require it to do the things that MWM and Bertacco Ferrier allege.
[20]Hawkins v Clayton (1988) 164 CLR 539, 544-545.
Bertacco Ferrier however identified a number of matters of which Harding Stenning were said to be aware which obliged the firm to ‘get on the front foot’ and to ask, before settlement proceeded, whether the matters which had been listed as conditions precedent to the making of the loan, such as the valuation and the presales confirmations, had been received by the Lender and were satisfactory.
In particular, they relied upon Harding Stenning’s knowledge of the following:
(a) the content of the information memoranda issued to investors which, inter alia, specified that the solicitors were Harding Stenning and, inter alia, stated that the loan was subject to a valuation suitable to Payton;
(b) that the letter of offer specified conditions precedent in the form of a valuation and a minimum level of presales;
(c) that Payton was struggling to meet the settlement timeframe; and
(d) that the loan agreement which Harding Stenning prepared was said to require it to express an opinion that the total amount of the secured moneys did not exceed 74% of the value of the mortgaged property.
Although Mr Harding said that he was unaware of the information memoranda until after the commencement of the proceeding, there is some evidence which suggests that his partner, Mr Stenning, was aware of its content. As a consequence, I am prepared to proceed on the basis that Harding Stenning was aware of the content of the information memoranda.
It was submitted that Harding Stenning ought to have known that if Payton did not effect appropriate supervision of the satisfaction of the loan conditions, this could expose Payton to claims by the investors. It was also submitted that Harding Stenning knew that the investors were relying on Harding Stenning. Even if that were so, this does not extend to Harding Stenning being required to unilaterally expand the scope of its retainer and reallocate the division of responsibilities nominated by its client and thereby take on for itself either the task of ensuring satisfaction of the conditions precedent, or the lesser task of taking steps to ensure that Payton had acted reasonably in forming its own view as to that matter. The fact that Harding Stenning knew that the funds that ultimately were to be advanced by Payton to Z & L had been solicited by Payton from investors via an information memorandum, and that the loan as described in the information memorandum was specified as being subject to a valuation acceptable to Payton, was not in my view a matter which can reasonably be said to have required Harding Stenning to take any further step beyond the scope of the retainer agreed with Payton.
The fact that Payton may have been exposed to claims by investors is a risk; but one that if it eventuated would give rise to a different species of loss and damage than that which is claimed Payton in this proceeding. Any putative claim against Harding Stenning by investors involves not only a different species of loss and damage but a different claimant. Neither is relevant to the current enquiry, which relates to whether there is an arguable claim that Harding Stenning is liable to the Payton for the same loss and damage that is the subject of Payton’s claims against the defendants.
Nor is a different analysis required for the fact that that the letter of offer from Payton to the Borrower (sent to Harding Stenning after execution) specified certain conditions precedent to the making of the loan. The relevant submission of Bertacco Ferrier is to the effect that because the loan letters of offer specified such conditions, it was incumbent upon Harding Stenning to have ensured that the conditions were relevantly satisfied. That was contrary to what had been agreed; as noted above, the satisfaction of the conditions precedent had been expressly confirmed by Payton to Harding Stenning before settlement proceeded.[21]
[21]See [25] above.
The reference to Payton struggling to meet the settlement timeframe is a reference to the email from Mr Jackie Zang of 9 April 2018.[22] That email was forwarded to Harding Stenning the next day with a request for, inter alia, confirmation that the existing first and second mortgagee were ready to settle and had accepted the PEXA workplace invitation. Whatever the timing difficulties were, they appear to have largely related to the fact that the existing second mortgagee had not provided express instructions to its solicitors to accept the invitation to participate in the PEXA meeting. Even allowing for the fact that this impediment was later removed and settlement proceeded, there is no logical link between that circumstance and the suggestion that by reason of Harding Stenning’s knowledge of that matter (equally known by its client, Payton) that Harding Stenning should have unilaterally sought to expand the scope of its retainer.
[22]See [21] above.
Nor, in my opinion, is there anything in the point that because the loan agreement prepared by Harding Stenning entitled either the lender, the lender’s solicitor or the lender’s valuer to give a certificate to the effect that the moneys secured exceeded a specified limit of the value of the property, that this obliged Harding Stenning to request and consider the sworn valuation prior to the execution of the loan agreement. Plainly, this provision is one which entitles a lender to call up a loan after it had been made in the event that the loan to value ratio falls below an agreed limit. The operative provision has no effect until such time as the funds had been advanced.
A critical feature in cases where proper performance of the solicitor’s obligations requires the firm to bring a matter to the attention of the client notwithstanding a narrower express retainer is the solicitor becoming aware of a matter which it knew or ought to have known would have been material to the client’s interests and of which the client was unaware or insufficiently aware. There are no such matters in the present case; in fact the critical matters – namely the content of the valuation and the pre-sales information - were known to Payton, an experienced lender, but not to Harding Stenning.
Both MWM and Bertacco Ferrier argued that I should not accept the relevantly unchallenged evidence of Mr Harding and Ms Burgoyne and deny the applicants the opportunity of testing that evidence at trial. They relied upon Atkins v Interprac & Crole (‘Atkins’)[23] in which the defendants sought to advance a claim of concurrent wrongdoing on behalf of two companies, Ann Street Mezzanine Pty Ltd (‘ASM’) and York Street Mezzanine Pty Ltd (‘YSM’), based on an allegation that the plaintiff had been misled by misleading statements in information memoranda published by those two companies. The claim was advanced notwithstanding that the plaintiff had filed an affidavit in which she deposed to undertaking the investment without first reading the information memoranda.
[23]Atkins v Interprac & Crole [2007] VSC 445 (Hargrave J).
The trial judge allowed the claim to proceed to trial, noting that the affidavit could be challenged in cross-examination, or discovery may reveal documents contradicting the affidavit.[24]
[24]Ibid [21].
Each application of course has to be considered in light of its own facts. In Atkins, the plaintiff had lost money as a result of an investment by her in promissory notes issued by ASM and YSM. ASM and YSM were part of the Westpoint group of companies, and were in liquidation. The plaintiff alleged that she had effected the investment on the recommendation of the defendants as her financial advisers.
The trial judge allowed the joinder of ASM and YSM as concurrent wrongdoers on the basis of a breach by ASM and YSM of their contractual obligation to pay the plaintiff in accordance with the terms of the promissory notes. Joinder of ASM and YSM on this basis was not opposed. Nor did the plaintiff oppose claims being made that ASM and YSM were concurrent wrongdoers in a misleading and deceptive conduct claim; relevantly, the defendants alleged that ASM and YSM published a false, misleading and deceptive information memorandum in respect of the promissory notes issued to the plaintiff, which memorandum the defendants relied upon and as a consequence of which advised the plaintiff to invest in the promissory notes.[25]
[25]Presumably the defendants in Atkins were seeking to establish a claim of indirect reliance; see Brand v Digi-Tech (Australia) Ltd [2002] NSWSC 416 (Einstein J).
Only the third claim proposed to be advanced against ASM and YSM, to the effect that the plaintiff herself was misled by the information memoranda, was in issue.
The Court’s decision to allow the third claim to proceed was no doubt influenced by the fact that ASM and YSM were to be joined as concurrent wrongdoers in any event, and because the role and content of the information memoranda was to be considered in any event.[26] It was in that context that the Court allowed the claim to proceed and for the plaintiff’s oath to be tested in cross-examination.
[26]Atkins (n 24) [21] (Hargrave J).
These are circumstances far removed from the present case:
(a) first, and unlike in Atkins, Harding Stenning is not otherwise being joined as a concurrent wrongdoer;
(b) secondly, and unlike in Atkins, discovery has in effect occurred as Harding Stenning have provided MWM and Bertacco Ferrier with copies of the file;[27]
(c) thirdly, the proposed joined parties, ASM and YSM, were in liquidation and the plaintiff had no prospect of obtaining any financial satisfaction by proceeding against those entities and accordingly it was arguably in the plaintiff’s pecuniary interest in Atkins to defray any claims against an insolvent concurrent wrongdoer.
[27]There was a suggestion that the file so provided was incomplete because there was nothing provided post settlement. Post settlement documents would not ordinarily be relevant. It was also submitted that the emails which showed Mr Stenning’s knowledge of the content of the information memoranda had not been produced as part of the file. As noted above, it has been assumed in favour of Bertacco Ferrier that Harding Stenning knew of the information memoranda. Whatever omissions are in the file, there is no proper basis to consider that those omissions will reveal anything materially different to the file produced and effectively corroborated by the affidavits of Ms Burgoyne and Mr Harding.
No such considerations apply in this case. Payton has been independently advised with respect to the viability of any claim against Harding Stenning and has given evidence by its investment director to the effect that she did not retain Harding Stenning to advise or assist in relation to the valuation assessment or the consideration of the presales information, or rely on them to do so. Supported as they are by the solicitors’ file and the evidence of Mr Harding and Ms Burgoyne, I do not consider that it is appropriate to allow the claims for joinder and the associated amendment to proceed purely so as to give MWM and Bertacco Ferrier the opportunity to see if something else emerges and otherwise challenge the evidence of Hr Harding and Ms Burgoyne.
Accordingly, in my opinion the claim that Harding Stenning is a concurrent wrongdoer is not reasonably arguable and had no real prospect of success.
The applications for joinder of Harding Stenning and the consequential leave to amend defences so as to plead the allegation of concurrent wrongdoing of Harding Stenning are dismissed. My tentative view is that MWM and Bertacco Ferrier ought pay the costs of Payton and Harding Stenning of their respective summons. If either wishes to contend otherwise, the party objecting should file a short submission to that effect within seven days.
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SCHEDULE OF PARTIES
| PAYTON SECURITIES PTY LTD (ACN 004 597 166) | Plaintiff |
| MASON WHITE MCDOUGALL (HURSTBRIDGE) PTY LTD (ACN 097 326 317) | First Defendant |
| IAN PAUL CHRISTIAN MASON | Second Defendant |
| IAN JOHN MCCUBBIN | Third Defendant |
| BERTACCO FERRIER PTY LTD (ACN 088 268 795) | Fourth Defendant |
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