01 March 2015


This has been a long running saga.

The registered proprietor's brother forged the mortgage. When the registered proprietor raised the forgery as a defence, the lender cross-claimed against the mortgage orginator, claiming under the indemnity in the mortgage origination deed.

The lender’s claim failed against the mortgage originator due to a lack of evidence and only succeeded against the registered proprietor in respect of the amount used to discharge an earlier mortgage (subrogation). Click here to see our case note.

The lender appealed. The Court of Appeal found for the lender on the basis that the mortgage originator never properly identified the person signing the loan application. The Appeal Court discounted the other possibility open on the evidence (namely that a family member impersonated the registered proprietor and the identification was properly performed). Click here to see our case note.

The trial judge held that the lender had failed to show that the legal costs were incurred in connection with the breach and refused to allow costs to be recovered under the indemnity clause. Click here to see our case note.

After judgment, but prior to the entry of orders, the lender sought to reopen the case. The rule is that a case should be re-opened if it is obvious to the judge that her decision miscarried and can be rectified. The lender claimed that the judge was wrong on causation, failed to give sufficient reasons for her finding that causation was not established and in not giving a figure for indemnity costs.

In response, (in the case we are now reporting on) on the question of causation, the trial judge said that she found causation was not established because it was not proved. The trial judge said: 

Perpetual’s approach to proof of the legal fees arising from the breach assumed, first, that all of the legal proceedings in respect of which fees are claimed arose from the breach and, secondly, that all of the legal costs charged by Gadens on the files relating to those proceedings arose from the breach. No evidence was adduced directed to the proof of those assumptions. Rather, they were simply assumed to be the fact (or the only available inference). It was accordingly clear that the premise of the application was that every cent of over $1,000,000 invoiced by Gadens in a series of legal proceedings over almost 9 years was a loss arising from CTC’s breach within the meaning of the deed. 

The trial judge found the narrative breakdown of services with attached copies of invoices with no further explanation or substantiation inadequate on the question of proof. The trial judge found that since the lender did not have the benefit of a certificate clause, it had to prove that all of the legal fees charged by Gadens represented the lender’s loss arising from the breach. The trial judge said it was impossible to perform the task herself because she did not know what many of the individual items were for, how much was charged for them and whether they arose from breach and the task was akin to that of a costs assessor. The trial judge was unpersuaded that her decision had miscarried. 

Click here to read the full judgment. 

LesawebLesa Bransgrove holds a Bachelor of Laws and Bachelor of Commerce from the University of Queensland and a Master of Laws from the University of London. Lesa was admitted as a solicitor of the Queensland Supreme Court in 1996 and the UK Supreme Court in 2002 and as a barrister of the NSW Bar in 2009. After working on the Lehman's litigation Lesa left the bar and joined Bransgroves.

Read more about Lesa Bransgrove