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Vella v Permanent Mortgages Pty Ltd

Vella v Permanent Mortgages Pty Ltd

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CITATION: Vella v Permanent Mortgages Pty Ltd [2008] NSWSC 505

HEARING DATE(S): 3, 4, 5, 6, 7, 10, 12 and 13 March 2008

JUDGMENT DATE :
28 May 2008

JURISDICTION: Equity Division

JUDGMENT OF: Young CJ in Eq

DECISION: Orders to be made restoring the plaintiff to the title as holding his interest unencumbered by the mortgages of Permanent. Judgment for Permanent against Ms Palumbo for $1,151,500 plus interest. Other orders made in associated litigation.

CATCHWORDS: BANKING AND FINANCE [20]- Bank paid money by finance company because of customer's fraud- Whether bank "received" money to be liable to refund it on count for money had and received- Held "No". BANKING AND FINANCE [20]- Joint account with both customers to sign cheques- Bank paid out on one genuine signature- Whether other customer could recover whole or only half the money paid. CONVEYANCING [206]- Torrens system- Mortgage registered- Forged document- Secures money under loan agreement as defined- That agreement forged- Thus no money secured by indefeasible mortgage. MORTGAGES [4][5][6]- Forged mortgage- Registered- Refers to all monies owing under forged loan agreement- Mortgagor not liable despite indefeasibility. PROFESSIONS AND TRADES [67]- Solicitors- Forged mortgage- Solicitors relied on false statement by another solicitor- Problem could have been avoided if appropriate form used- Evidence of NSW practice- Whether could be practice widely accepted in Australia. TORTS [71]- Apportionment- Proportionality- Liability of fraudster and solicitor making false statement and solicitor drawing mortgage apportioned: 72.5%- 15%- 12.5%- Civil Liability Act 2002 (NSW) ss 34-35. -

LEGISLATION CITED: Australian Securities and Investments Commission Act 2001 (Cth), s 12GF
Cheques Act (1986) (Cth), s 32
Civil Liability Act 2002, ss 5B, 5C, 5 O, 34, 35
Consumer Credit (New South Wales) Act 1995, ss 5, 6, 11
Contracts Review Act 1980, s 6
Fair Trading Act 1987, ss 42, 68, 72
Law Reform (Miscellaneous Provisions) Act 1946, s 5
Law Reform (Miscellaneous Provisions) Act 1965, s 9
Real Property Act 1900, s 80A

CATEGORY: Principal judgment

CASES CITED: Abigail v Lapin [1934] AC 491; 51 CLR 58
Adamastos Shipping Co Ltd v Anglo-Saxon Petroleum Co Ltd [1959] AC 133
Agius v Great Western Colliery [1899] 1 QB 413
Aktieselskabet Ocean v B Harding & Sons Ltd [1928] 2 KB 371
Alati v Kruger (1955) 94 CLR 216
Ardern v Bank of New South Wales [1956] VLR 569
Associated Midland Corporation v Bank of New South Wales [1983] 1 NSWLR 533
Astley v Austrust Ltd (1999) 197 CLR 1
Auburn MC v ARC Engineering Pty Ltd [1973] 1 NSWLR 513
Australia & New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662
Australian Bank of Commerce Ltd v Perel [1926] AC 737
Babcock International Ltd v Babcock Australia Ltd [2003] NSWCA 6
Baker v Barclays Bank Ltd [1955] 1 WLR 822
Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd [1980] QB 677
Berkeley v Hardy (1826) 5 B & C 355; 108 ER 132
Bevanere Pty Ltd v Lubidineuse (1985) 7 FCR…

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: [2008] NSWSC 505
Decision Date: 28 May 2008

CaseChat Overview and Summary

The case of Vella v Permanent Mortgages Pty Ltd involved a complex dispute concerning the fraudulent activities of a customer, the bank's liability, and the implications of a forged mortgage within the Torrens system. The dispute arose when the bank, Permanent Mortgages, paid out funds due to fraudulent actions of a customer, leading to a claim for a refund on the basis of money had and received. Additionally, the case examined the liability of a joint account holder and the impact of a forged document on the registration of a mortgage.

The central legal issues included whether the bank's liability for a refund existed due to its receipt of the funds and the extent of liability of the joint account holder when a cheque was drawn by one signature only. Furthermore, the court had to determine the effect of a forged mortgage on the registration under the Torrens system and the liability of the mortgagor despite indefeasibility. The case also scrutinised the role of solicitors who relied on a false statement by another solicitor, and the apportionment of liability among the fraudster, the solicitor making the false statement, and the solicitor drawing the mortgage.

The court held that the bank was not liable for a refund as it had not "received" the money in the requisite legal sense, absolving it of the obligation to repay the money had and received. The joint account holder's liability was limited to the amount drawn by the genuine signature. The court further ruled that the forged mortgage did not secure any monies owing under the forged loan agreement, thus the mortgagor was not liable despite the indefeasibility of the mortgage. The liability of the fraudster, the solicitor making the false statement, and the solicitor drawing the mortgage was apportioned at 72.5%, 15%, and 12.5%, respectively, based on proportionality principles.

The final orders of the court detailed the apportionment of liability among the parties involved and clarified the legal principles regarding the bank's liability, joint account holder's liability, and the effect of a forged mortgage on the Torrens system.

Orders