Justice Hargrave has declined to follow the earlier decision of Justice Pagone in Solak v Bank of Western Australia Ltd  VSC 82. The cases involved the construction of a registered “all monies” mortgage which included a forged mortgage document and a forged loan agreement. Justice Hargrave followed New South Wales Court of Appeal decisions in holding that the mortgage effectively secures nothing because the underlying loan documents had been forged.
Attempted challenge by a financial services provider to a determination by the Financial Ombudsman Service under its terms of reference
The decision of the Victorian Court of Appeal in favour of the Financial Ombudsman Service Ltd (FOS) highlights the difficulties for financial services providers in trying to challenge decisions of FOS and the dispute resolution process under the terms of reference (TOR). The TOR operate as a binding contract with a finality clause in favour of FOS’ decisions and determinations.
Non compliance of terms of settlement by a borrower in relation to repossession proceedings commenced by a lender
Co-authored by Kieran Hickie and Andrew Kirby. The decision of the Victorian Court of Appeal in favour of the NAB highlights some difficulties that might arise between lenders and recalcitrant borrowers in relation to terms of settlement for the compromise of repossession proceedings. The Court of Appeal’s decision demonstrates that borrowers who enter terms of settlement must comply with the conditions of the terms of settlement.
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.
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.