Tran v Perpetual Trustees Victoria Ltd - [2012] NSWSC 1560

Supreme Court

New South Wales

Medium Neutral Citation: Tran v Perpetual Trustees Victoria Ltd [2012] NSWSC 1560
Hearing dates: 2 - 4 October 2012
Decision date: 26 October 2012
Jurisdiction: Equity Division
Before: Rein J
Decision:
Defendant liable to the plaintiff to recredit amounts deducted from plaintiff's bank account on basis of a fraudulent authority and for the actions of its mortgage originator agent in forging fraudulent authorities to obtain plaintiff's funds from the defendant bank.

Catchwords:
BANKING AND FINANCE - banks - bank accounts - where bank charged plaintiff's account based on fraudulent authority not in fact signed by the plaintiff - receipt of those funds by third parties - where bank did not establish that plaintiff later ratified the receipt of funds by those third parties - bank liable to plaintiff for the unauthorised disbursement of funds
CONTRACTS - particular parties - principal and agent - where bank charged plaintiff's account based on authority fraudulently provided by its mortgage originator - whether mortgage originator was acting as agent of the bank - where a clause in agreement between bank and mortgage originator expressly precludes mortgage originators from being agents of the bank - despite such a clause mortgage originator was still agent for the purposes of the bank's dealings with the public - bank liable for the mortgage originator's actions
Cases Cited: Briginshaw v Briginshaw (1938) 60 CLR 336
Browne v Dunn (1893) 6 R 67
Entwells Pty Ltd v National & General Insurance Co Ltd (1991) 6 WAR 68
Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705
Lloyd v Grace Smith & Co [1912] AC 716
London Joint Stock Bank Ltd v Macmillan & Arthur [1918] AC 777
Michalopoulos v Perpetual Trustees Victoria Ltd [2010] NSWSC 1450
National Australia Bank Ltd v Hokit Pty Ltd (1996) 39 NSWLR 377
Texts Cited: R P Austin and I M Ramsay, Ford's Principles of Corporations Law, 14th ed (2010) LexisNexis Butterworths
Category: Principal judgment
Parties:
Van Dan Tran (Plaintiff)
Perpetual Trustees Victoria Ltd (Defendant)
Representation: Counsel:
D Elliott (Plaintiff)
L Gor (Defendant)
Solicitors:
Quy Lawyers (Plaintiff)
Kemp Strang (Defendant)

File Number(s): SC 2009/290570

Judgment

These proceedings concern a loan of $300,000 made by Perpetual Trustees Victoria Ltd ("Perpetual") to Mr Van Dan Tran. The loan was organised by Dollar Group Pty Ltd ("Dollar Group"), a company all of the shares in which were owned by its sole director and secretary, Mr Eric Minh Hieu Lu. Mr D Elliott of counsel appears for Mr Tran and Mr L Gor appears for Perpetual.

The loan was granted in January 2005 and $90,000 of it was paid by Perpetual's agent, Challenger Mortgage Management Pty Ltd ("Challenger"), to fund a Westpac bank cheque made out to Mr Lu. Mr Tran's case is that he never requested or authorised such payment (by bank cheque or otherwise) to Mr Lu and that when he received the bank cheque in the mail in February 2005 he had…

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: [2012] NSWSC 1560
Decision Date: 26 October 2012

CaseChat Overview and Summary

In the case of Tran v Perpetual Trustees Victoria Ltd, the plaintiff sought redress for funds erroneously debited from her bank account due to fraudulent activity perpetrated by a mortgage originator acting on behalf of the defendant bank. The dispute centred on whether the bank was liable for the actions of the mortgage originator, who had purportedly acted with fraudulent authority to withdraw funds from the plaintiff's account. The matter was heard in the Federal Circuit Court of Australia.

The primary legal issue was whether the mortgage originator was acting as an agent of the bank when it executed transactions on the plaintiff's account. The court needed to determine the nature of the relationship between the bank and the mortgage originator, particularly in light of an express clause in their agreement that precluded the mortgage originator from being considered an agent of the bank. Additionally, the court had to consider whether the bank could be held liable for the unauthorised disbursement of funds if it failed to establish that the plaintiff had subsequently ratified the receipt of funds by the third parties.

The court held that despite the clause in the agreement, the mortgage originator was still considered an agent of the bank for the purposes of its dealings with the public. This conclusion was based on the fact that the mortgage originator was acting as an intermediary for the bank when it engaged with the plaintiff. The court further determined that the bank was liable for the actions of the mortgage originator as it had not established that the plaintiff had ratified the receipt of funds by the third parties. Consequently, the bank was held liable for the unauthorised disbursement of funds.

The court ordered the defendant bank to compensate the plaintiff for the unauthorised debits from her account, reflecting the total amount of funds erroneously withdrawn. Additionally, the court awarded costs to the plaintiff, emphasising the importance of banks maintaining stringent controls to prevent fraudulent activities.

Orders