FISCHER v ELDERS LENSWORTH FINANCE LTD [1992] NSWCA 68

FISCHER v ELDERS LENSWORTH FINANCE LTD SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

PRIESTLEY, HANDLEY and CRIPPS JJA 25 September 1992, 25 September 1992 [1992] NSWCA 68

CONTRACT — oral — mortgage of land — not intended to be binding until documented. One of two guarantors of a mortgage loan and an executive of the finance company lender made an oral arrangement for outstanding claims to be settled upon payment of a sum of money, part immediately and the balance in a year's time. The balance was to be secured by a charge over the guarantor's home protected by a caveat, and by a bill of sale and mortgage of lease in respect of a shop business. The borrower and guarantors sought specific performance. The trial judge held that there was no binding contract because the parties contemplated that their solicitors would document the transaction. On appeal Held: The trial judge was correct.

Handley JA This is an appeal by the plaintiffs from a decision of McLelland J in the Equity Division which was given as long ago as 22 December 1989. The plaintiffs in the proceedings were a borrower and two individuals, Mr and Mrs Fischer, who were guarantors of the borrowers' obligations to the defendant, Elders Lensworth Finance Ltd, under a deed of 5 August 1986 and the securities referred to therein.

The plaintiffs applied for specific performance of an oral contract said to have been made between Mr Fischer on behalf of the plaintiffs and Mr Ryan on behalf of the defendant in the course of two conversations in December 1986. McLelland J made findings of fact substantially in favour of the plaintiffs so far as the terms of the relevant conversations are concerned. I am content to adopt his findings of fact without repeating them. They are set out in his Honour's reasons for judgment which is before us in the appeal papers.