​Supreme Court decision ‘good news’ for lenders

by Amy Rosenfeld12 Feb 2014
A recent decision from the Supreme Court of NSW has ruled in favour of lender Permanent and broking groups Firstfolio and AFIG.

The decision held that a deed of settlement was binding on a borrower once the borrowers had signed and unconditionally delivered it, regardless of whether all other parties signed and delivered their part of the deed.

Gadens, the lawfirm which represented Permanent and AFIG in the case, says the decision is “good news for lenders. Which signals the Court’s reluctance to allow borrowers to ‘change their mind’ after settling a dispute with their lender”.

According to court records plaintiff Katherine Pratap entered into a $260,000 mortgage from Permanent for a property in Moorebank.

“There was obviously something fraudulent about the transaction involving the mortgage broker and when the money was not repaid and [Permanent] sought to recover its money the fraud became apparent.”

Permanent claimed that the matter was then settled by a Deed of Settlement executed by Pratap, Permanent and Firstfolio and exchanged on 4 June 2013.

It was then signed, sealed and delivered by a representative of Permanent and Firstfolio, but not by AFIG. One June 7 a representative of AFIG emailed Gadens a counterpart of the Deed of Settlement executed on behalf of AFIG. On the same date Partap’s son advised Gadens that his mother wished to amend the deed due to concerns about a confidentiality exclusion.

“It would seem that the basal difference in fact between the parties is that the plaintiff did not understand that the Deed contained a provision that she would not speak to the media about the settlement and that in fact she or her son had made some preliminary arrangements to do so,” said the judge’s statement.

“With some sorts of deeds particularly guarantees the Courts usually take the view that the deed is not to operate until all the parties have signed it. Does this apply to a deed other than a guarantee? Can a person who has delivered a deed on the basis that everyone else will deliver it by a certain time be freed from the deed if that circumstance does not arise?”

Citing cases Naas (Lady) v Westminister Bank Lrd and Katsaitis v Commonwealth Bank of Australia the judge ruled that it is “quite clear that once a person has signed, sealed and unconditionally delivered a deed that deed is binding on that person even if there is a party to the deed who has not executed it or delivered it unless the failure of that third party will throw an additional burden on the other parties”.


  • by Denise Brailey BFCSA (Inc) 19/03/2014 4:15:42 PM

    So the Broker was blamed for the fraud. Di anyone ask the Lender for the lender's copy of the LOAN APPLICATION FORM, and the Lender's copy of the Service Calculator before the lady was asked to sign the Deed? I'll bet Gadens didn't suggest "in fairness to the customer....." One day this information will flood out there.