YANDELL T/AS YANDELL SOLICITORS v GOLDENBERG [1998] NSWCA 270

YANDELL T/AS YANDELL SOLICITORS v GOLDENBERG

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

BEAZLEY and STEIN JJA and FITZGERALD AJA 26 October 1998, 13 November 1998

[1998] NSWCA 270

DAMAGES — loan monies used to discharge existing mortgages — default on loan — determination of loss — set off — whether transaction was of benefit or detriment — paucity of evidence — assessment of rights under Contracts Review Act 1980

On 24 September 1992, the plaintiff (John Roberts) lent Mrs Goldenberg (the respondent) $108,000 for 3 years secured by a mortgage over a home unit. The loan was guaranteed by the respondent's son and daughter-in-law. The appellant solicitors (Yandells) acted for the respondent in the transaction. The money was used, inter alia, to discharge a first mortgage to the Advance Bank and a second mortgage to Westpac.

On 24 August 1994, the respondent defaulted on the monthly payment and the default continued. The plaintiff sued the respondent who defended the proceedings and filed a cross-claim against the solicitors.

The trial judge held that the plaintiff was entitled to succeed against the respondent and the respondent was entitled to damages against the solicitors for the prejudice she suffered as a consequence of entering into the transaction. He also noted that there was a "sparseness of evidence' concerning the respondent's understanding of the mortgage she had entered into with Westpac in 1990.

In further argument on the quantification of the respondent's loss, her rights under the Contracts Review Act 1980 (the Act) were raised for the first time. The appellant argued that this submission was outside the pleadings and raised an entirely new case.

The judge held that the transaction involved both benefit and detriment to the respondent which must be set-off. He accepted the argument of the respondent that, in the event that Westpac had attempted to enforce the mortgage against her, she would have been entitled to relief under the Act. He assessed that, on the available evidence, there was a 50% probability that she would have obtained relief under the Act. The finding had the effect of adding $25,000 to her damages award.