Legal Research
Cases
Riz v Perpetual Trustee Australia Ltd

Riz v Perpetual Trustee Australia Ltd

Link copied

Case Copied 18 October 2007 52 min read

Contents

On this page

Reported Decision:
(2008) NSW Conv R 56-198
(2007) ANZ Conv R 615

New South Wales

Supreme Court

CITATION: Riz & 1 or v Perpetual Trustee Australia Ltd & 4 ors [2007] NSWSC 1153

HEARING DATE(S): 24 July - 17 August 2006

JUDGMENT DATE :
18 October 2007

JURISDICTION: Common Law Division

JUDGMENT OF: Brereton J

DECISION: Borrowers’ claim to avoid or vary mortgage and loan contract under Contracts Review Act and for unconscionability dismissed. Judgment that borrowers pay lender outstanding balance of loan and for possession. Judgment that solicitors pay borrowers damages for breach of professional duty.

CATCHWORDS: CONTRACTS – Unjust contracts – Mortgage and loan contract – Relevant circumstances – Where money borrowed for improvident investment – Purpose of the loan – where lender aware that loan for purposes of investment but not of particular investment proposed nor of improvidence – where false information provided to lender by borrowers’ agent – where lender considered and was satisfied that loan was serviceable – where unfair tactics used against borrower by promoters of investment scheme but not by or on behalf of lender – whether lender engaged in “asset lending” – whether unjust that lender failed to detect false information supplied to it – NEGLIGENCE – professional liability – solicitors – independent advice – where solicitor retained to advise on mortgage and loan contract – where solicitor not retained to provide advice on proposed investment – where client about to enter into improvident transaction which ought to have been apparent to solicitor – whether solicitor had or ought to have had knowledge of extraordinary risk associated with investment – where investment subsequently failed – whether solicitor liable for failure to advise on investment – whether suggestion that solicitor should obtain independent legal and financial advice sufficient

LEGISLATION CITED: (NSW) Contracts Review Act 1980, ss 7 & 9

CASES CITED: Antonovic v Volker (1986) 7 NSWLR 151
Astley v Austrust Ltd (1999) 197 CLR 1
Beneficial Finance Corporation Ltd v Karavas (1991) 23 NSWLR 256
Bester v Perpetual Trustee Co Ltd [1970] 3 NSWR 30
Brusewitz v Brown [1923] NZLR 1106
Chandran v Narayan [2006] NSWSC 104
Citicorp Australia Ltd v O’Brien (1996) 40 NSWLR 398
Credit Lyonnais Bank Nederland NV v Burch [1997] 1 All ER 144
Curnuck v Nitschke [2001] NSWCA 176
David v David [2007] NSWSC 855
Elkofairi v Permanent Trustee Co Ltd [2002] NSWCA 413
Hawkins v Clayton (1988) 164 CLR 539
Heydon v NRMA Ltd (2000) 51 NSWLR 1
Hogan v Howard Finance Ltd (1987) ASC §55-594
Ibrahim v Pham [2007] NSWCA 215
Neuschul v Mellish & Harkavy (1967) 111 SJ 399
Nguyen v Taylor (1992) 27 NSWLR 48
Perpetual Trustee Co of New South Wales Ltd v Bridgewater [1936] 3 All ER 501
Perpetual Trustee Company Ltd v Khoshaba [2006] NSWCA 41
Powell v Powell [1900] 1 Ch 243
Royal Bank of Scotland v Etridge (No 2) [2001] 4 All ER 449
St Clair v Petricevic (1988) ASC 55-688
St George Bank Ltd v Trimarchi…

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.

Keep reading for free

Create a free CaseChat account to read Riz v Perpetual Trustee Australia Ltd and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2007] NSWSC 1153
Decision Date: 18 October 2007

CaseChat Overview and Summary

The case involved Riz as the plaintiff and Perpetual Trustee Australia Ltd as the defendant. The dispute centred around a mortgage and loan contract, with Riz seeking to have the contract deemed unjust and seeking damages for professional negligence. The matter was heard in the Supreme Court of New South Wales. Riz argued that the loan was unjust as it was used for an improvident investment, and the lender was aware of the purpose but not the specific details or the risk. Additionally, Riz claimed that the lender's solicitor was negligent for not advising on the investment's risk despite being retained for advice on the mortgage and loan contract.

The primary legal issues the court had to decide were whether the mortgage and loan contract was unjust due to the improvident nature of the investment, and whether the lender's solicitor was liable for professional negligence. Specifically, the court had to consider whether the lender was aware of the particulars of the investment and whether it was unjust for them to fail to detect the false information provided by the borrowers' agent. Additionally, the court needed to determine whether the solicitor had or ought to have had knowledge of the extraordinary risk associated with the investment and if they were liable for failing to advise on it.

The court found that the lender was aware of the general purpose of the loan but not the specific details or the risk involved. The court held that it was not unjust for the lender to fail to detect the false information supplied to them, as they had considered and were satisfied that the loan was serviceable. The court also found that the solicitor was not liable for professional negligence as they were not retained to provide advice on the proposed investment, and the risk was not apparent or known to them. The court held that the suggestion that the solicitor should obtain independent legal and financial advice was sufficient.

The court dismissed the claims against both the lender and the solicitor. No orders were made in favour of the plaintiff.

Orders