Secured Lending 1 Pty Ltd v Mahmassani - [2021] NSWSC 811

Supreme Court

New South Wales

Summary available

Medium Neutral Citation: Secured Lending 1 Pty Ltd v Mahmassani [2021] NSWSC 811
Hearing dates: 15 – 19 March 2021
Date of orders: 7 July 2021
Decision date: 07 July 2021
Jurisdiction: Common Law
Before: Davies J
Decision:
1. The amended cross-claim is dismissed.
2. The cross-claimants are to pay the first and second cross-defendants’ costs.

Catchwords:
OCCUPATIONS – legal practitioners – duties and liabilities – duties to client – cross-claimants asked by son to help repay his debts by using cross-claimants’ home as security – short term loan where exit strategy was sale of security property to son - default under loan agreement and mortgage – where proceedings by lender compromised – cross-claim against solicitor - whether solicitor failed to explain loan agreement and mortgage to cross-claimants – whether solicitor was negligent and breached retainer – where in absence of a letter written following client conference solicitor recorded advice in a file note – where satisfied that solicitor explained nature of loan and consequences if loan not repaid – where failure to complete documents in approved form not evidence of negligence – where even if breach of duty, causation not established as cross-claimants would have gone ahead with arrangement –whether conduct of solicitor was unconscionable – where conduct not unconscionable simply because clients were in disadvantaged position – whether conduct of solicitor was misleading and deceptive – cross-claim dismissed

Legislation Cited:
Civil Liability Act 2002 (NSW) s 5D
Contracts Review Act 1980 (NSW)
Legal Profession Uniform Legal Practice (Solicitors) Rules 2015 (NSW) r 11
Real Property Act 1900 (NSW) s 57

Cases Cited:
ANZ Banking Group Ltd v Bragg (No 3) [2017] NSWSC 208
Artahs Pty Ltd v Gall Standfield & Smith (A Firm) [2012] QCA 272
Banco Exterior Internacional v Mann (1955) 1 All ER 936
Bristol and West Building Society v Mothew [1998] Ch 1
Fox v Percy (2003) 214 CLR 118; [2003] HCA 22
Gestmin SGPS S.A. v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm)
Girardet v Crease & Co (1987) 11 BCLR (2d) 361
Meakin v R [2018] NSWCCA 288
Morlend Finance Corporation (Vic) Pty Ltd v Westendorp [1993] 2 VR 284
Onassis and Calogeropoulos v Vergottis [1968] 2 Lloyd’s Rep 403
Permanent Building Society v Wheeler (1994) 14 ACSR 109
Provident Capital Ltd v Papa [2013] NSWCA 36
RHG Mortgage Limited v Rosario Ianni [2015] NSWCA 56
Studer v Boettcher [2000] NSWCA 263
Watson v Foxman (1995) 49 NSWLR 315

Texts Cited:
Nil

Category: Principal judgment
Parties: Khaled Mahmassani (First Defendant/First Cross-Claimant)
Ghada Mahmassani (Second Cross-Claimant)
Ammar Jamal-Eddine (First Cross-Defendant)
Concordia Legal Pty Ltd (Second Cross-Defendant)
Representation:
Counsel:
A Tibbey (Defendant/Cross-Claimants)
D Priestley SC (Cross-Defendants)
Solicitors:
Cogent Lawyers (Defendant/Cross-Claimants)
Gilchrist Connell (Cross-Defendants)

File Number(s): 2019/67907
Publication restriction: Nil

Judgment

Secured Lending 1 Pty Limited, the plaintiff, commenced proceedings seeking judgment for the possession of land at 168 South Street, Rydalmere pursuant to a loan agreement and mortgage dated 26 September 2018. The borrower was a…

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: [2021] NSWSC 811
Decision Date: 07 July 2021

CaseChat Overview and Summary

The case of Secured Lending 1 Pty Ltd v Mahmassani involved a dispute between the lender and the cross-claimants, who were the parents of the primary borrower. The parents were asked by their son to assist in repaying his debts by using their home as security. The son obtained a short-term loan from the lender with an exit strategy that involved selling the security property to him. After the son defaulted on the loan agreement and mortgage, the lender compromised its proceedings against the parents. The parents subsequently filed a cross-claim against the solicitor who had advised them on the loan agreement and mortgage, alleging that the solicitor failed to explain the terms and consequences of the loan to them. The parents argued that the solicitor was negligent and had breached their retainer. The parents also claimed that the solicitor's conduct was unconscionable, misleading, and deceptive.

The court was required to determine whether the solicitor had failed to explain the loan agreement and mortgage to the parents and whether this constituted a breach of duty. The court also had to consider whether the parents had established causation, such that if the solicitor had not been negligent, the parents would not have entered into the loan agreement. Furthermore, the court had to examine whether the solicitor's conduct was unconscionable, misleading, or deceptive.

The court found that there was no evidence to suggest that the solicitor had failed to explain the nature of the loan and the consequences if the loan was not repaid. The court was satisfied that the solicitor had explained the terms of the loan and the consequences of default to the parents. The court held that the failure to complete documents in the approved form was not evidence of negligence on the part of the solicitor. The court also found that even if the solicitor had breached their duty, the parents had not established causation, as they would have gone ahead with the arrangement regardless. The court held that the conduct of the solicitor was not unconscionable simply because the parents were in a disadvantaged position. Finally, the court found that the conduct of the solicitor was not misleading or deceptive.

The court dismissed the cross-claim brought by the parents against the solicitor. The court held that the solicitor had not breached their duty to the parents and that there was no evidence of unconscionable, misleading, or deceptive conduct on the part of the solicitor.

Orders