Perpetual Trustee Company Ltd v CTC Group Pty Ltd

Perpetual Trustee Company Ltd (Perpetual) appealed to the New South Wales Court of Appeal against a decision of the primary judge concerning a mortgage origination deed. The dispute arose from CTC Group Pty Ltd's (CTC) role as an originator of loan applications for Perpetual. CTC had submitted a loan application to Perpetual which included a forged signature and was made without the authority of the apparent applicant. Perpetual alleged that CTC breached its obligations under the deed by failing to take reasonable care to identify the proposed borrower and confirm their authority to submit the application.

The Court of Appeal was required to determine whether CTC had breached its contractual obligations under the mortgage origination deed. Specifically, the court considered whether CTC had used an original passport photograph to identify the applicant and whether it was likely that a third party could successfully impersonate the applicant despite a comparison with such a photograph. The court also considered whether a *Jones v Dunkel* inference should be drawn regarding a former employee, determining if that employee was within the employer's camp or otherwise someone the employer would have been expected to call as a witness.

The Court of Appeal allowed the appeal, finding that CTC had breached its obligations under the deed. The court reasoned that CTC's identification procedures were insufficient to meet the standard of reasonable care required by the contract. The court set aside the orders made at first instance and directed that the parties either agree on the amount of judgment to be entered in favour of Perpetual or lodge written submissions regarding the quantum of that judgment. The court further ordered CTC to pay Perpetual's costs of the claim at first instance and on appeal.