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Settlement Group Pty Ltd v Purcell Partners

Settlement Group Pty Ltd v Purcell Partners

Case [2013] VSCA 370 17 December 2013

Mortgages & Security Interests

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SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2012 0209

SETTLEMENT GROUP PTY LTD (ACN 117 803 684)
	Appellant
v
PURCELL PARTNERS (A FIRM) (ABN 71 502 905 832)
	Respondent

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JUDGES:	MAXWELL P, REDLICH JA and DIXON AJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	25 July 2013
DATE OF JUDGMENT:	17 December 2013
MEDIUM NEUTRAL CITATION:	[2013] VSCA 370
JUDGMENT APPEALED FROM:	Permanent Mortgages Pty Ltd (ACN 097 176 362) v Purcell Partners (A Firm)and Settlement Group Pty Ltd (ACN 117 803 684) [2012] VCC 1857 (Judge Lacava)

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MORTGAGES – Real property – Refinancing – Multiple mortgages to be refinanced –Concurrent transactions – Outgoing mortgagee provided discharge of mortgage and signified satisfaction with settlement – Settlement concluded – Outgoing mortgagee discovered settlement cheque insufficient to repay loan – Discharge of mortgage returned to outgoing mortgagee – Incoming lender suffered loss – Whether incoming lender entitled to retain discharge of mortgage – Whether lender’s solicitors negligent in miscalculating payout figure – Whether settlement agent breached contract by returning discharge of mortgage – Whether outgoing mortgagee estopped as against incoming lender from demanding return of discharge – No estoppel – Solicitors’ negligence sole cause of lender’s loss – Appeal allowed.

ESTOPPEL – Contract – Mortgages – Real property – Refinancing – Multiple mortgages to be refinanced – Concurrent transactions – Outgoing mortgagee provided discharge of mortgage and signified satisfaction with settlement – Settlement concluded – Outgoing mortgagee discovered settlement cheque insufficient to repay loan – Discharge of mortgage returned to outgoing mortgagee – Incoming lender suffered loss – Whether incoming lender entitled to retain discharge of mortgage – Whether outgoing mortgagee estopped as against incoming lender from demanding return of discharge – No estoppel.

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APPEARANCES:

Counsel

Solicitors

For the Appellant

Mr G G McArthur SC with

Mr J R Ludlow

Madgwicks

For the Respondent

Mr A R Kirby

DLA Piper

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MAXWELL P:

This appeal concerns the settlement of certain mortgage finance transactions. Borrowings secured by separate mortgages over different properties were to be refinanced, on the same securities. As will appear, one of the refinancing transactions was not completed at the settlement, as a result of which the incoming lender suffered loss. The question for determination at trial, and on the appeal, was how legal responsibility for that loss was to be allocated.

It is necessary, first, to identify the key participants. The incoming lender, Permanent Mortgages Pty Ltd, had agreed with the borrowers, Mr and Mrs King, that it would refinance their existing debt. The loan would be secured by first mortgages over each of four properties. This proceeding concerns only one of the four properties, an apartment in Adelaide Terrace, East Perth (the ‘Adelaide Terrace property’). The outgoing mortgagee of the Adelaide Terrace property was John Investments Pty Ltd.

The incoming lender retained the respondent firm of solicitors, Purcell Partners, in relation to the refinancing transactions. The solicitors in turn engaged the appellant, Settlement Group Pty Ltd, to act as its settlement agent in…

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.

Continue reading Settlement Group Pty Ltd v Purcell Partners

Details

AGLC: Settlement Group Pty Ltd v Purcell Partners [2013] VSCA 370
Case: [2013] VSCA 370
Decision Date: 17 December 2013

CaseChat Overview and Summary

Settlement Group Pty Ltd and Purcell Partners were involved in a dispute concerning the refinancing of multiple mortgages, with the case heard in the Supreme Court of New South Wales. The outgoing mortgagee, Purcell Partners, provided a discharge of mortgage and signified satisfaction with the settlement. However, after the settlement was concluded, it was discovered that the cheque used for the settlement was insufficient to repay the loan. The discharge of mortgage was returned to the outgoing mortgagee, causing a loss to the incoming lender, Settlement Group Pty Ltd. The incoming lender argued that it was entitled to retain the discharge of mortgage and sought damages against the outgoing mortgagee and the settlement agent for the loss incurred.

The legal issues before the court were whether the incoming lender was entitled to retain the discharge of mortgage, whether the outgoing mortgagee was estopped from demanding the return of the discharge, and whether the lender’s solicitors were negligent in miscalculating the payout figure. Additionally, the court needed to determine if the settlement agent breached their contractual obligations by returning the discharge of mortgage. The outgoing mortgagee argued that they were not estopped from demanding the return of the discharge, and that the loss suffered by the incoming lender was a result of the solicitors' negligence, not their actions.

The court held that there was no estoppel preventing the outgoing mortgagee from demanding the return of the discharge. The court found that the loss suffered by the incoming lender was solely due to the negligence of the lender’s solicitors in miscalculating the payout figure. As a result, the appeal by the incoming lender was allowed, and the settlement agent was found to be liable for breach of contract for returning the discharge of mortgage. The outgoing mortgagee was not estopped from demanding the return of the discharge, and the lenders' solicitors were held responsible for the loss incurred by the incoming lender.

The final orders of the court were that the appeal by Settlement Group Pty Ltd was allowed, and the settlement agent was held liable for breach of contract. The outgoing mortgagee, Purcell Partners, was not estopped from demanding the return of the discharge of mortgage. The lenders' solicitors were held responsible for the loss incurred by the incoming lender due to their negligence.

Orders