Category: Banking and Finance

Solicitors acting for financers and lenders in financing transactions must take care to avoid nasty surprises after settlement

Co-authored by Andrew Kirby and Kieran Hickie: The Court of Appeal has affirmed the importance of solicitors acting for mortgagees to ensure payout figures and settlement instructions provided to settlement agents are accurate. Following settlements of refinancing transactions, an outgoing mortgagee will not necessarily be prevented from asserting that settlement funds are insufficient to finalise settlement. Rather, they may demand the return of a discharge of mortgage handed over at settlement on the basis the borrower has not complied with its obligation to pay out the registered mortgagee in full.

Guarantors as ‘privies’ of a principal debtor – can they be bound by a decision of a Court in circumstances where they are not a party to litigation?

Co-authored by Andrew Kirby and Kieran Hickie: Guarantors commonly have some association or relationship with a principal debtor. If proceedings are taken against a principal debtor, but not a guarantor, resulting in a binding judgment, the Victorian Supreme Court has recently held that in subsequent proceedings against a guarantor, the guarantor is not a ‘privy’ of the principal debtor and therefore is not bound by the determination of issues in the earlier proceeding.

Branch franchisees fail in a class action against the Bank of Queensland – Andrew Kirby and Kieran Hickie

The Bank of Queensland (BOQ) has recently won a large class action proceeding in the New South Wales Supreme Court. The Bank successfully defended claims of misleading and deceptive conduct, unconscionable conduct and negligence brought by franchisees who claimed loss and damage caused by the failure of their franchise branches.

International arbitration award for foreign company enforced by Federal Court

This case involved enforcement of a foreign award in Australia. Orders were made in aid of enforcement to prevent dissipation of shares in Australian companies owned by the award debtors. The award debtors were not permitted to re-agitate as a ground for resisting enforcement, a ground unsuccessfully agitated by them before the court at the seat of the arbitration to set aside the award.

Violet Home Loans Pty Ltd v Schmidt [2013] VSCA 56

In this case Mr Schmidt obtained a line of credit facility from Perpetual Trustees Australia Limited (Perpetual) and gave a mortgage over his home as security for the facility. Violet Homes Pty Ltd (Violet) was the mortgage originator and manager and processed the loan application on behalf of Perpetual. Mr Schmidt borrowed the money to invest in what he thought were property developments. He was duped into doing so by Mr Maddock, who has since been convicted of fraud. Most of the money advanced by Perpetual to Mr Schmidt was paid directly or indirectly to Mr Maddocks and was lost.