We recently published an article entitled " The Court of Appeal Clarifies Mortgage Brokers' Liabilities" which dealt with the Court of Appeal's decision in Perpetual Trustee Company Limited v Milanex Pty Limited (in liquidation) [2011] NSWCA 367.
To briefly recap, Perpetual Trustee Company Ltd (Perpetual) received an application for finance from a mortgage broker, Milanex Pty Ltd (Milanex), on behalf of Mr Kotevski who was, at the time, a 74 year old pensioner. As security for the loan, Mr Kotevski gave Perpetual a mortgage over his previously unencumbered property. At first instance (Supreme Court Proceedings), Patten AJ dismissed Perpetual's claim against Mr Kotevski and also dismissed Perpetual's cross claim against Milanex for, amongst other things, misleading and deceptive conduct.
In handing down its decision, the Court of Appeal overturned Patten AJ's decision and found that Milanex's misleading and deceptive conduct had caused Perpetual to suffer loss and damage.
Following the decision of the Court of Appeal, both Perpetual and Milanex filed notices of motion seeking, amongst other things, variations to the orders made by the Court of Appeal in relation to the costs of the appeal and the costs of the Supreme Court proceedings.
Perpetual sought orders that Milanex:
- pay its costs in respect of the cross appeal; and
- indemnify it in respect of costs orders obtained by Mr Kotevski against Perpetual in the Supreme Court Proceedings.
The Court found that Milanex was liable to pay Perpetual's costs of the cross appeal as Perpetual was the successful party of the appeal, notwithstanding that the quantum of Perpetual's claim was limited by the application of the proportionate liability provisions of the Civil Liability Act.
The Court also found that Milanex was liable to indemnify Perpetual against any costs which it might have to pay to Mr Kotevski as a result of the decision in the Supreme Court Proceedings. Milanex argued that it should not be made to indemnify Perpetual in respect of all of the costs which Perpetual was ordered to pay to Mr Kotevski as Perpetual had mounted an unnecessary and ultimately unsuccessful claim against Mr Kotevski. However, the Court held that for Perpetual to show that it had suffered damage as a result of the misleading and deceptive conduct of Milanex, it needed to show that the funds advanced by it to Mr Kotevski were irrecoverable. Accordingly, the Court held that Perpetual had to take the action it did in the Supreme Court Proceedings and found that Milanex was therefore liable to indemnify Perpetual against any adverse costs orders against it in the Supreme Court Proceedings.
Additionally, Milanex also argued that Perpetual was contributorily negligent and accordingly, sought orders that the Court consider its contributory negligence defence (which had not been raised at the hearing). The Court declined to make the Orders sought as Milanex failed to demonstrate at the hearing that Perpetual was owed a duty of care by Milanex or that it had been breached. Further, as Milanex had failed to raise this issue at the hearing, it was prevented from doing so after the Court of Appeal's Judgment had already been handed down.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
