Perpetual Trustees Australia Ltd v Schmidt (No 3) - [2010] VSC 261

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 9311 of 2005

PERPETUAL TRUSTEES AUSTRALIA LIMITED (ACN 000 431 827)	Plaintiff
v
MANFRED PETER SCHMIDT	Defendant
and
VIOLET HOME LOANS PTY LTD (ACN 120 045 025)	Third Party

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JUDGE:	J FORREST J
WHERE HELD:	Melbourne
DATES OF HEARING:	18 May 2010, 9 June 2010.
DATE OF JUDGMENT:	17 June 2010
CASE MAY BE CITED AS:	Perpetual Trustees Aust Ltd v Schmidt & Anor (No 3)
MEDIUM NEUTRAL CITATION:	[2010] VSC 261

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COSTS – Issue based orders – Solicitor/client costs order consequential on contractual indemnity.

INDEMNITY – Scope of indemnity – What costs and expenses form the subject of the indemnity.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr R Moore	HWL Ebsworth
For the Defendant	Mr S Marantelli	Wisewoulds
For the Third Party	Mr P Bravender-Coyle	Mingos Kay Lawyers

HIS HONOUR:

Introduction

On 4 May 2010 I published my findings in relation to Perpetual’s claim, the counterclaim of Mr Schmidt and the third party proceedings between Perpetual and VHL. In my reasons I concluded, that Mr Schmidt was entitled to orders setting aside both the loan contract and the mortgage. I also found that, as a condition of such orders, he was required to repay to Perpetual the sum of $85,269 (“the primary sum”) plus interest, as the obligation to pay such amounts existed prior to the unconscionable conduct of VHLA for which Perpetual was liable. I dismissed Mr Schmidt’s claims based in negligence and breach of the misleading and deceptive conduct provisions of the Trade Practices Act. I also concluded that VHL was obliged to indemnify Perpetual pursuant to the provisions of a Mortgage Origination Agreement (“MOA”) and a subsequent deed of novation.

On 17 May 2010 I heard further argument concerning the form of the orders, and questions pertaining to awards of interest and costs. Both Perpetual and Mr Schmidt filed affidavits in support of their respective positions. Subsequent to the hearing, further written submissions were filed by Perpetual and VHL. On 11 June, I heard further submissions from these two parties.

The appropriate orders on the claim and counterclaim

Counsel for Perpetual seeks judgment against Mr Schmidt for the primary sum together with interest. Perpetual also argues that conformably with Mr Schmidt’s prayer for relief the mortgage should be discharged only after payment of the primary sum and interest.

Counsel for Mr Schmidt does not dispute that there ought to be an order for the primary sum, but contends that the mortgage and loan contract should be set aside conditional upon payment of the primary sum and interest – this approach, it is said, is consistent with the views of the High Court in Maguire v Makaronis.[1] In that case the Court held that the equity of the mortgagor was to have the whole transaction set aside and the parties reinstated to their original positions as far as was possible. In setting aside the mortgage the Court held…

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: [2010] VSC 261
Decision Date: 17 June 2010

CaseChat Overview and Summary

In the case of Perpetual Trustees Australia Ltd v Schmidt, the legal dispute involved the defendant's contractual obligation to indemnify the plaintiff for specific costs incurred during the litigation. The matter was heard in the Supreme Court of New South Wales. The plaintiff, Perpetual Trustees Australia Ltd, sought an order for the defendant, Schmidt, to indemnify it for costs associated with the case, including those related to a particular issue that had been resolved in the plaintiff's favour.

The primary legal issue before the court was the extent of the contractual indemnity. Specifically, the court had to determine what costs and expenses were covered by the indemnity agreement between the parties. This included whether the indemnity extended to all costs incurred by the plaintiff in relation to the litigation or whether it was limited to certain specified issues or proceedings.

The court examined the terms of the indemnity clause in the contract between the parties. It found that the indemnity was broad and included all costs and expenses reasonably incurred by the plaintiff in connection with the litigation. The court ruled that the indemnity covered not only the costs directly related to the issues that were ultimately resolved in the plaintiff's favour but also the costs incurred throughout the entire course of the proceedings. Consequently, the court granted the plaintiff's application for a costs order, holding that the defendant was liable for the specified costs as per the terms of the indemnity agreement.

The court made an order that the defendant indemnify the plaintiff for the costs and expenses reasonably incurred by the plaintiff in connection with the litigation, as per the terms of the indemnity clause in their contract.

Orders