Lorraine Parker & Anor v Juan Campos [2011] NSWSC 306

Supreme Court New South Wales

Medium Neutral Citation: Lorraine Parker & Anor v Juan Campos [2011] NSWSC 306 Hearing dates: 24 March 2011 Decision date: 14 April 2011 Jurisdiction: Common Law Before: McCallum J Decision: 1.that judgment be entered against Juan Campos in favour of Lorraine Parker in the sum of $132,326.24. 2.that judgment be entered against Juan Campos in favour of Michael Moulds in the sum of $134,531.24. 3. the cross-defendant to the fourth cross-claim pay the cross-claimant's costs on the fourth cross claim Catchwords: DAMAGES - assessment - after default judgment entered against accountant who provided false accountant's letter to obtain Lo-doc loan - borrowers forced to surrender home Legislation Cited: Fair Trading Act 1987 Cases Cited: Todorovic v Waller [1981] HCA 72, (1981) 150 CLR 402; Whttaker and Paxad Pty Ltd [2009] WASC 47; Zoneff v Elcom Credit Union Limited (1990) ATPR 41-058 Category: Principal judgment Parties: Lorraine Parker and Michael Moulds (cross-claimants on the fourth cross-claim) Juan Campos (cross-defendant to the fourth cross-claim) Representation: Counsel: Mr P Batley (for cross-claimants on the fourth cross-claim) No appearance for the cross-defendant Solicitors: Legal Aid New South Wales (for cross-claimants on the fourth cross-claim) No appearance for the cross-defendant File Number(s): 2008/285661

Judgment 1HER HONOUR: The primary claim in these proceedings was a claim by Secure Funding Pty Limited against Ms Lorraine Parker and Mr Michael Moulds seeking an order for possession of their home (a property at Fisherman's Paradise) and judgment in a money sum. Secure Funding's claim was settled by agreement between those parties on terms that required Ms Parker and Mr Moulds to surrender possession of the home to Secure Funding. Secure Funding agreed to accept the net proceeds of sale of the property in full and final satisfaction of its claim against them. 2Ms Parker and Mr Moulds brought a number of cross-claims in the proceedings including, by the fourth cross-claim, an action against Mr Juan Campos, an accountant. Mr Campos was alleged to have provided a false accountant's letter relied upon by a broker to obtain an earlier loan which was subsequently refinanced by the loan from Secure Funding. Mr Campos has not defended the action and on 1 October 2010 the court entered judgment against him on the fourth cross-claim for damages to be assessed. This is the assessment of those damages. 3The evidence before me at the assessment hearing establishes the following facts to my satisfaction on the balance of probabilities. Ms Parker and Mr Moulds bought the property at Fisherman's Paradise in 2004 after Ms Parker sold a house she had inherited from her mother. Until about October 2005, they held the Fisherman's Paradise property unencumbered. In September 2005, Ms Parker's daughter approached her for assistance to obtain a loan for $50,000 on the understanding that Ms Parker would receive $10,000 and the daughter would receive $40,000. It was agreed that the daughter would make all of the loan repayments. 4The loan was arranged with the assistance of a mortgage broker, Mr Robert Diaz. Mr Diaz arranged a loan in the sum of $165,000 from Avahlon Pty Limited. The loan was for a term of 12 months and included an amount for pre-paid interest for the term of the loan. Of the amount advanced, $50,000 was paid to Ms Parker's daughter whilst almost $80,000 was paid at the direction of Mr Diaz as a loan to him to be repaid in 12 months. The whole of the amount advanced was secured by a mortgage over the property at Fisherman's Paradise. The only benefit of the loan received by Ms Parker was the sum of $10,000. Mr Moulds received no benefit from the loan. Neither Ms Parker's daughter nor Mr Diaz repaid the amounts received by them. Mr Diaz is an undischarged bankrupt. 5In February 2007, Avahlon commenced proceedings for possession and obtained judgment against Ms Parker and Mr Moulds. The Avahlon loan was subsequently refinanced with the loan from Secure Funding secured by a first mortgage over the property and a small further loan from Avahlon secured by a second mortgage. 6Ms Parker and Mr Moulds were unable to repay either of those loans. Both mortgagees commenced proceedings against Ms Parker and Mr Moulds. Their claims were compromised by agreement with Ms Parker and Mr Moulds. As already noted, the settlement agreement with Secure Funding included a term requiring Ms Parker and Mr Moulds to surrender possession of the security property for the purpose of a mortgagee sale. A cross-claim brought by Ms Parker and Mr Moulds against a firm of solicitors was also resolved. After deduction of legal costs, Ms Parker and Mr Moulds each received $25,000 from the settlement of that claim. 7The Avahlon loan was advanced after Mr Campos provided an accountant's letter dated 13 October 2005 to Avahlon on the letterhead of Marrickville Accounting Services. The letter represented that Mr Campos had acted as accountant for Ms Parker and Mr Moulds for the previous three years; that he knew their income and expenditure and that, based on that knowledge and his understanding of their financial position, he was of the opinion that they could repay interest on the Avahlon loan and repay the principal in accordance with the terms of the loan and without substantial hardship. 8Mr Campos had not in fact spoken to either Ms Parker or Mr Moulds before providing the letter. He had not been their accountant for the previous three years or at any time and knew nothing of their income and expenditure. There was no basis for his forming the opinion expressed in the letter. 9The letter provided by Mr Campos was plainly calculated to induce Avahlon to advance the loan arranged by Mr Diaz. After receiving the letter, Avahlon advanced the amount of $165,000 as directed by Mr Diaz. In those circumstances, it may fairly be inferred that Avahlon relied upon the letter in deciding to advance those funds and that the funds would not have been advanced otherwise.