Landa v Perpetual Trustees Victoria Ltd

Court of Appeal (NSW)|2014-11-17|Before: Macfarlan JA, Meagher JA, Emmett JA, Young AJ, MacFarlan JA

Judgment 1MACFARLAN JA: I agree with Emmett JA. 2MEAGHER JA: I agree with Emmett JA. 3EMMETT JA: This appeal is concerned with a claim by the appellant, Dr Barry Landa, that certain arrangements entered into by him with the respondent, Perpetual Trustees Victoria Ltd (Perpetual Victoria), were unjust in the circumstances in which they were entered into, within the meaning of the Contracts Review Act 1980 (NSW) (the Review Act). Dr Landa borrowed money under loan contracts entered into with Perpetual Victoria. The loans were secured by mortgages of three properties owned by Dr Landa, at Bondi Junction, Pyrmont and Vaucluse. The loan contracts and mortgages were arranged by Mr Dominic Cincotta acting as an agent of Morgan Brooks Pty Ltd (Morgan Brooks). Mr Cincotta engaged in fraudulent activity that resulted in the misappropriation of the funds advanced by Perpetual Victoria and also of other funds belonging to Dr Landa or companies associated with him. 4Dr Landa commenced proceedings in the Equity Division against Perpetual Victoria, seeking declarations that the loan contracts and mortgages were void or voidable and should be set aside. The principal basis upon which Dr Landa claimed relief was the allegation that, in engaging in fraudulent activity, Mr Cincotta was acting within the scope of authority from Perpetual Victoria and that Perpetual Victoria was therefore responsible for the relevant fraudulent activity. In the alternative, Dr Landa asserted that each of the loan contracts and mortgages was unjust in the circumstances relating to them at the time they were made within the meaning of the Review Act, such that relief should be granted under the Review Act. 5A judge of the Equity Division (the primary judge) concluded that Perpetual Victoria was not responsible for the acts of Mr Cincotta. The primary judge also concluded that the Review Act had no application. Accordingly, his Honour dismissed the proceedings. Dr Landa now appeals to this Court from the orders made by the primary judge. In the appeal, Dr Landa does not press his claim that Perpetual Victoria was responsible for the fraudulent activity of Mr Cincotta. He relies only on his claim under the Review Act. 6The basic facts were either not in dispute or not challenged at trial, although their characterisation and significance may have been in dispute. As will appear below, however, there was one area of factual dispute that is the subject of some of the grounds of appeal.

Factual Background 7Prior to September 1993, Perpetual Victoria appointed Interstar Management Pty Ltd (Interstar) to have overall responsibility for arranging, disbursing and managing secured loans on behalf of Perpetual Victoria. From September 1993, Interstar entered into successive loan origination and management agreements with Morgan Brooks, whereby Morgan Brooks was given the right to request Interstar to arrange for Perpetual Victoria to advance monies on the security of mortgages. Morgan Brooks was empowered to act as the servicer, manager and supervisor of the mortgages so granted. 8Morgan Brooks, in turn, entered into a number of arrangements with Mr Cincotta, and a company controlled by him (ACN 067), to operate a business of originating loan transactions for Interstar and Perpetual Victoria. Mr Cincotta and ACN 067 operated that business at premises in Coffs Harbour and Double Bay. Mr Cincotta and ACN 067 acted as agents of Morgan Brooks, with a duty to market and promote the products and services of Morgan Brooks. In the course of operating the business, Mr Cincotta used a bank account in the name of ACN 067 (the St George Account). 9Dr Landa first met Mr Cincotta at a social occasion in 2001 at the home of Mrs Clara Sendro, who is the mother of Dr Landa's sister-in-law, Ms Anne Landa. After that first meeting, Mr Cincotta, Mr Tom Sendro (the son of Clara Sendro) and Dr Landa went to a coffee shop in Double Bay, where they met Mr Neil Wright, the manager of the Double Bay branch of Morgan Brooks. In the course of conversation with Mr Cincotta either at Mrs Sendro's home or at the coffee shop, Mr Cincotta said to Dr Landa that he was involved in brokering loans through "Morgan Brooks Home Loans". 10Several days later, Dr Landa met Mr Cincotta at Dr Landa's home at Point Piper. That was a social occasion and the meeting was not for the purposes of discussing investments. However, at that time, Dr Landa told Mr Cincotta that he had about $1,600,000 available for investment, being the net proceeds of the sale of his home in Point Piper. Mr Cincotta said that he could invest the sum for Dr Landa "at Perpetual", as he was doing with Anne Landa and Clara Sendro. He told Dr Landa that the investment would be at 8 percent per annum and that he would receive 1,000 shares in "Perpetual" for every million dollars invested, which would equate to a return of about 12 percent per annum. Mr Cincotta said that, in order to invest with "Perpetual", Dr Landa should make cheques payable to "Perpetual Trustees". 11Shortly before Dr Landa made his first investment through Mr Cincotta, Mr Cincotta again explained to him how the investment would work. He said that Dr Landa's money would be invested in Perpetual Trustees Australia Ltd (Perpetual Australia) and that he would receive "Perpetual Trustees" shares. Obviously enough, Perpetual Australia is a separate entity from Perpetual Victoria. In August 2001, Dr Landa provided $351,000 to Mr Cincotta for the purpose of such an investment in the name of Heperu Pty Ltd, a company controlled by Dr Landa (Heperu). 12In the course of a subsequent conversation with Mr Cincotta in about September 2001, Mr Cincotta asked Dr Landa whether he had any property that was not mortgaged. Mr Cincotta said that he could arrange mortgages "through Perpetual" and that the money could be reinvested at "the same rate as the cash already invested with Perpetual". He said that he did a large amount of that kind of lending with Perpetual Victoria through Morgan Brooks and that Dr Landa would be borrowing at 6 percent and earning 8 percent on the investment. Dr Landa subsequently made enquiries about the relationship between Perpetual Australia and Perpetual Victoria and was informed that Perpetual Victoria was owned 100 percent by Perpetual Australia. 13In September 2001, Dr Landa signed loan documentation for borrowing sums of $305,000 and $345,000 from Perpetual Victoria on the security of mortgages of his Pyrmont and Bondi Junction properties respectively. On 27 September 2001, Dr Landa was introduced to Mr Robert Shacklady, a solicitor at a firm practising as Coopers Lawyers, who was to witness Dr Landa's signature of the loan documents. Although Dr Landa never entered into any costs agreement with Coopers Lawyers or received any invoice from them, Mr Shacklady appears to have acted as Dr Landa's representative for the purpose of these transactions. 14On 27 September 2001, advances of the amounts of $305,000 and $345,000 were made on the security of mortgages of the Bondi Junction and Pyrmont properties. On settlement, bank cheques were drawn on the trust account of Perpetual Victoria's solicitors in the sums of $302,875 and $342,857. Those cheques, which were made payable to "Perpetual Trustees Australia Ltd", were provided to Mr Shacklady, in accordance with Dr Landa's instructions. Mr Shacklady, at Dr Landa's direction, subsequently delivered the cheques to Mr Cincotta. The cheques were not invested with Perpetual Australia, but were paid into an account with Perpetual Australia under the control of Mr Cincotta or his wife. The proceeds were subsequently withdrawn from the account and misappropriated by Mr Cincotta. 15On 17 October 2001, Mr Cincotta provided to Dr Landa three documents on the letterhead of "Morgan Brooks Group". One was an investment advice stating that Heperu had a mortgage offset account with Perpetual Australia, in which sums of $351,000, $342,857, and $302,875 had been invested. The two other documents set out information concerning the two loans secured over the Pyrmont and Bondi Junction properties. 16On 23 November 2001, Dr Landa made a further investment on behalf of Heperu, when he handed to Mr Cincotta a cheque in the sum of $502,070. That cheque was payable to "Perpetual Trustees" and drawn on Heperu's account with the Double Bay branch of Westpac Bank. On 9 August 2002, Dr Landa made a further investment through Mr Cincotta, this time in the name of Kirisi Pty Ltd (Kirisi), another company controlled by him. A cheque in the sum of $250,000 was drawn on another account with the Double Bay branch of Westpac and delivered to Mr Cincotta. The proceeds of both cheques were misappropriated by Mr Cincotta. 17By November 2002, Dr Landa had received letters, investment advices and statements showing that, as at July 2002, he had invested a total of $1,500,000 with Perpetual Australia in the name of Heperu, through Mr Cincotta and Morgan Brooks. The documents showed that interest payments at 8 percent per annum had been made each month into Heperu's Westpac bank account. They also showed that interest was being charged at the rate of 6.1 percent on the two loans totalling $650,000 from Perpetual Victoria and that Dr Landa had received 1,500 fully paid shares in Perpetual Australia. Those documents were in fact spurious, in that none of the moneys provided to Mr Cincotta had been invested with Perpetual Australia. The shares in Perpetual Australia had been purchased on the open market and had not been allocated as consideration for any investment in Perpetual Australia, as asserted by Mr Cincotta. 18In about November 2002, Mr Cincotta told Dr Landa that he could arrange a loan of at least $1,000,000 on the security of Dr Landa's home in Vaucluse on the same basis as the other two loans from Perpetual Victoria. He told Dr Landa: "you can have the equity in your home working for you". He said that the loan could be organised through Morgan Brooks and that the money would be at call. He also said that Morgan Brooks would pay for the necessary valuation and legal expenses. Dr Landa took up that offer and, through Mr Cincotta and Morgan Brooks, made an application to Perpetual Victoria to borrow the sum of $1,000,000 to be secured over his Vaucluse home. 19In December 2002, Dr Landa attended a meeting at Mr Shacklady's office, which was situated in the same suite as Mr Cincotta's office in Double Bay. Mr Cincotta participated on speaker phone. Dr Landa asked how the cheque for the proceeds of the loan from Perpetual Victoria secured by the mortgage over his Vaucluse home should be drawn for the purpose of investment. Mr Cincotta told Dr Landa on speaker phone to have the cheque made out to "Perpetual Australia" as before and to have the cheque sent to Mr Shacklady and said that he, Mr Cincotta, would pick it up and deposit it with Perpetual Australia. Mr Cincotta confirmed that Mr Shacklady was to ask for a cheque payable to Perpetual Australia and that the cheque be sent to Mr Shacklady. A cheque for the net proceeds of a third loan from Perpetual Victoria was ultimately delivered to Mr Cincotta and the proceeds were then misappropriated by him, after being deposited in the account with Perpetual Australia controlled by him or his wife. 20As I have said, Dr Landa did not enter into any costs agreement with Mr Shacklady or receive any invoice from his firm. He did not pay any fees for the work involved in the $1,000,000 loan. 21On 17 February 2003, Dr Landa told Mr Cincotta that he wished to withdraw $1,000,000 from his investment with Perpetual Australia to do a business transaction involving Brutone Pty Ltd (Brutone), a company associated with Dr Landa, and the UTT Group. The proposed payment of $1,000,000 was to be made to Brutone in support of an investment that was being made on behalf of Heperu. The UTT Group was a partnership between G Trad Pty Ltd (G Trad) and J Trad Pty Ltd (J Trad). G Trad and J Trad are associated with Dr Landa. Brutone is 50 percent owned by Paitan Pty Ltd, as trustee for the Landa Family Trust. The remaining 50 percent interest in Brutone is owned by G Trad and J Trad. 22The sum of $1,000,000 was in fact paid to Brutone as requested. At some time after the receipt of the moneys by Brutone, the sum of $250,000 was repaid to Dr Landa at the direction of Heperu. That payment left a balance of $750,000 invested with Brutone. The sum of $750,000 was then lent by Brutone to the UTT Group. The loan of $750,000 was to be repaid by the UTT Group over a period of seven months during 2003 by instalments of $100,000. 23Dr Landa said that, prior to receipt of any repayment of the sum of $750,000 from the UTT Group, he had a telephone conversation with Mr Cincotta in which he asked Mr Cincotta if he could repay the $1,000,000 secured over the Vaucluse property with the money lent by Brutone to the UTT Group. Dr Landa said that Mr Cincotta told him that he would make those arrangements and that, if Dr Landa sent him cheques payable to "Morgan Brooks Direct", he would arrange the repayment. However, Mr Cincotta, who was called as a witness by Dr Landa, gave evidence that he convinced Dr Landa not to use those moneys to repay the indebtedness to Perpetual Victoria, but instead to make further investments with Perpetual Australia. Between April 2003 and November 2003, cheques totalling $769,994.84 were provided to Mr Cincotta. The whole of the proceeds of those cheques, which were deposited in the St George Account, were misappropriated by Mr Cincotta. 24The primary judge did not accept Dr Landa's evidence about the discussion between him and Mr Cincotta concerning the application of the repayments by the UTT Group. Rather, his Honour found that Dr Landa had, in effect, agreed with the suggestion made by Mr Cincotta that, rather than applying the repayments by the UTT Group in reduction of the amount secured on the mortgage of the Vaucluse property, the repayments should be reinvested with Perpetual Australia. His Honour found that that conclusion was consistent with a facsimile written to Mr Cincotta by Dr Landa on 18 November 2003. 25In that facsimile, Dr Landa said that he wished to change the structure that was currently in place "with regard to my investments in and loans from Perpetual Trustees". He said that, following detailed discussions with his accountants, he had decided to repay the loans that were currently outstanding and to invest the balance "back into Perpetual". Dr Landa went on to say that he understood that he currently had approximately $2,200,000 invested in a mortgage offset account in the name of Heperu and approximately $880,000 invested in a mortgage offset account in the name of Kirisi. He said that he also understood that he currently had approximately $1,650,000 in loans with Perpetual Victoria, of which $1,000,000 was secured against his residence in Vaucluse, $345,000 was secured against the Bondi Junction property and $305,000 was secured against the Pyrmont property. He asked Mr Cincotta to discharge all of those loans using the monies invested in Heperu's name, leaving approximately $550,000 invested in Heperu's name and the Kirisi investment intact. 26Dr Landa continued to receive statements from Mr Cincotta setting out what, on the face of the statements, were the investments that he had made on behalf of Heperu and Kirisi with Perpetual Australia. The last statement was dated 21 July 2003. That statement, which was in the name of Heperu, showed an opening balance as at 1 January 2003 of $2,495,452.50. 27That statement of account shows credits of $100,000 from the UTT Group on 20 March 2003, 23 April 2003, 21 May 2003, and 26 June 2003. The statement also shows credits for interest received and debits to "Offset". The statement shows a balance as at 30 June 2003 of $1,895,452.50. The primary judge found that that was consistent with the repayments from the UTT Group being invested with Perpetual Australia, rather than being applied in reduction of the indebtedness to Perpetual Victoria. Further, his Honour held, Dr Landa could not have had the understanding that he set out in the facsimile of 18 November 2003 if the repayments of $769,994.84 had been applied in reducing the amount secured on the Vaucluse property.

Dr Landa's Claims as to the Contract Being Unjust 28The pleading of the Review Act claim is not entirely clear. The claim under the Review Act, as pleaded in the fourth amended statement of claim, may be summarised as follows:

Perpetual Victoria made available mortgage loans to borrowers who participated in a mortgage-backed securities program known as "the Interstar program";
Mr Cincotta was licensed and authorised, both directly and by way of ACN 067, by Morgan Brooks in respect of the business of mortgage originator and manager in relation to the Interstar program;
In conducting that business, Morgan Brooks and its agent, Mr Cincotta, had the actual or apparent authority of Perpetual Victoria to arrange loans secured by mortgage within the Interstar program, to disburse the proceeds of the secured loans on completion of approval requirements, and to manage settled secured loans, including receiving payments and transmission of such payments to Perpetual Victoria in respect of secured loans beyond the periodic payments by direct debit put in place at the time of settlement;
Morgan Brooks, through Mr Cincotta, introduced Dr Landa to the three loans from Perpetual Victoria secured on the Vaucluse, Bondi Junction and Pyrmont properties and Perpetual Victoria advanced sums totalling $1,650,000 by delivering cheques representing the loan proceedings to Mr Cincotta;
Mr Cincotta, in introducing Dr Landa to the loans and receiving the cheques, acted with intent to deceive Dr Landa into borrowing funds from Perpetual Victoria by inducing him to believe that the borrowed funds, together with other monies from Dr Landa and his companies, would be invested with Perpetual Australia, whereas Mr Cincotta intended at all times to use the borrowed funds and the personal funds for his own benefit, which he did;
On various dates, cheques totalling $769,449.84 were provided to Mr Cincotta at Dr Landa's direction for the purpose of repaying the loan secured by the mortgage of the Vaucluse property;
To effect that purpose, Mr Cincotta directed Dr Landa to provide him with cheques drawn in favour of "Morgan Brooks Direct";
In carrying out that activity, Mr Cincotta acted with intent to deceive Dr Landa into making the payments, by inducing in Dr Landa the belief that the cheques would be used for the purpose of reducing the amount secured on the mortgage of the Vaucluse property;
In acting in the manner described above (the relevant fraudulent activity), Mr Cincotta acted within the scope of his authority as an agent of Morgan Brooks, and Morgan Brooks, by Mr Cincotta, acted within the scope of its authority from Perpetual Victoria;
By reason of the foregoing, Perpetual Victoria is responsible and liable to Dr Landa for the relevant fraudulent activity and the relevant fraudulent activity constitutes the acts of Perpetual Victoria, by which acts Dr Landa was denied the benefit of the secured loans and the consideration for the grant of the mortgages;
Perpetual Victoria is to be imputed with the knowledge of the relevant fraudulent activity of Morgan Brooks, by Mr Cincotta, at the times of that fraudulent activity;
By reason of the absence of benefit of the secured loans to Dr Landa and the absence of consideration for the grant of the mortgages, either together with, or separately from, the responsibility, liability, acts and knowledge of Perpetual Victoria described above, each of the secured loans and each of the mortgages is unjust in the circumstances relating to that contract of loan or mortgage at the time the relevant contract was made;
The contracts of loan and the mortgages were unjust in that the structure or system described above for arranging, disbursing and managing secured loans and in respect of recruiting and monitoring mortgage originators and managers sought to distance Perpetual Victoria from the actual processes of arranging, disbursing and managing secured loans and to simplify those processes, while providing the benefit of that process to Perpetual Victoria and while providing for the close supervision, for the benefit of Perpetual Victoria, of: · recruitment of mortgage originators and managers to arrange, disburse and manage secured loans; and · monitoring of such mortgage originators and managers in relation to promoting the growth of the mortgage originating business; but without adequate monitoring of such mortgage originators and managers to detect abuse within the system and structure that facilitated the potential for such abuse. 29Thus, the essence of the claim under the Review Act appears to be that Perpetual Victoria established a system and structure that facilitated the potential for abuse by independent mortgage originators and managers such as Mr Cincotta and Morgan Brooks, but failed to monitor the activities of Mr Cincotta and Morgan Brooks as mortgage originators and managers in order to detect such abuse. No particulars are given of the manner in which the fraudulent activities of Mr Cincotta were facilitated by the system and structure established by Perpetual Victoria or what steps should or could have been taken by Perpetual Victoria to monitor such activities so as to detect and prevent them. That is a fatal difficulty with Dr Landa's case.

The Grounds of Appeal 30As I have said, the Review Act claim was an alternative claim to the principal thrust of Dr Landa's assertions, namely, that Perpetual Victoria was liable on the basis that, in his fraudulent activities, Mr Cincotta was acting within the scope of his authority from Perpetual Victoria. Those assertions were rejected by the primary judge and there is no appeal from that determination. 31The notice of appeal raises six grounds. The first three grounds are said to relate to the Review Act. They include error in failing to give adequate reasons, failing to consider all of the circumstances of the case and failing to find that the contract between Dr Landa and Perpetual Victoria was unjust. 32Grounds 4, 5 and 6 are said to relate to factual findings. Grounds 4 and 5 both relate to the finding made by the primary judge as to the arrangements made between Dr Landa and Mr Cincotta concerning the reinvestment of the monies received from UTT Group. 33Ground 6 is dependent upon a favourable conclusion that the contract between Dr Landa and Perpetual Victoria was unjust. Ground 6 asserts error in failing to find that it would be an unjust consequence or result of the unjust contract between Dr Landa and Perpetual Victoria for Perpetual Victoria to be able to take the benefit of the mortgage over Dr Landa's Vaucluse home while having no responsibility for the actions of Mr Cincotta.

Ground 1 - inadequacy of the primary judge's reasons 34Ground 1 asserts that the primary judge erred in failing to give any, or any adequate, reasons for concluding, for the purposes of s 7 of the Review Act, that the contract between Dr Landa and Perpetual Victoria was not unjust in the circumstances relating to the contract at the time that it was made. Ground 1 ignores the fact that there were three separate contracts between Dr Landa and Perpetual Victoria, one for each of the loans made in September 2001 and one for the loan made in December 2002. However, the argument proceeded on the basis that all three contracts would stand or fall together. 35The primary judge dealt with the claim under the Review Act very briefly. The brevity of his Honour's reasons is the first complaint that Dr Landa makes in the appeal. Dr Landa's complaint is that his Honour's reasons do not disclose the basis upon which his Honour concluded that the relevant contracts were not unjust. Dr Landa says that his Honour's reasoning was, at best, scant, and, at worst, non-existent and bears no relation to the case that was pleaded and run by Dr Landa. 36The primary judge began with the proposition that a contract may be held to be unjust under s 7 of the Review Act because of the way that it was made, or because of the way that it operates, or both (citing West v AGC (Advances) Ltd (1986) 5 NSWLR 610 at 621). His Honour did not consider that the present case fits neatly into either category. However, his Honour accepted that that would not be fatal, since a contract may be unjust if there is fraudulent or misleading conduct practised upon the claimant, even if the perpetrator is not the agent of the defendant. 37The primary judge then observed that s 9 of the Review Act "provides a list of matters" that the Court must take into account when considering making an order under the Review Act. His Honour said, however, that this case "stands apart from the usual case". His Honour said that he had nonetheless considered "the statutory factors". 38Section 9(1) provides that, in determining whether a contract or a provision of a contract is unjust in the circumstances relating to the contract at the time it was made, the Court is required to "have regard to the public interest and to all the circumstances of the case". That is to include such consequences or results as those arising in the event of:

compliance with any or all of the provisions of the contract; or
non-compliance with, or contravention of, any or all of the provisions of the contract. Section 9(2) then provides that, without any way affecting the generality of s 9(1), the matters to which the Court is to have regard, to the extent that they are relevant to the circumstances, include a number of matters that are listed in s 9(2). 39Specifically, s 9(2) provides that the Court must have regard to, inter alia, the following matters: (f) the relative economic circumstances, educational background and literacy of: (i) the parties to the contract (other than a corporation), and (ii) any person who represented any of the parties to the contract, [...] (i) The extent (if any) to which the provisions of the contract and their legal and practical effect were accurately explained by any person to the party seeking relief under [the Review Act], and whether or not that party understood the provisions and their effect; (j) whether any undue influence, unfair pressure or unfair tactics were exerted on or used against the party seeking relief under [the Review Act]: (i) [...] (ii) by any person acting or appearing or purporting to act for or on behalf of any other party to the contract; (k) the conduct of the parties to the proceedings in relation to similar contracts or courses of dealing to which any of them has been a party; and (l) the commercial or other setting, purpose and effect of the contract. 40Under s 9(3), a person is to be deemed to have represented a party to a contract if the person assisted the party to a significant degree in negotiations prior to or at the time the contract was made. Section 9(2)(j)(ii) does not refer to a person representing, but to a person acting on behalf of another party. 41The primary judge did not refer expressly to the public interest or the circumstances of the case or any of the matters referred to in s 9(2). His Honour did not elucidate what he meant by "list of matters" or "the statutory factors". Rather, his Honour simply observed that Dr Landa is "a highly intelligent man and apparently an experienced investor". His Honour said that the contracts that Dr Landa entered into with Perpetual Victoria contained no unjust provisions and did not operate oppressively. His Honour considered that the loss of Dr Landa's investment occurred not because of any unjust contract, but because he was deceived by Mr Cincotta. His Honour therefore concluded that Dr Landa's claim under the Review Act failed. 42Dr Landa contends that the requirement to give adequate reasons is of particular importance in relation to the claim that he made under the Review Act, in so far as it depended upon a consideration of "all the circumstances of the case". That question, he says, is one of fact, albeit one of ultimate fact, involving a broadly based value judgment. However, Dr Landa says, the primary judge made no findings at all and did not set out any of the steps that led him to the view that the contracts in question contained no unjust provisions and did not operate oppressively. 43Dr Landa points out that his Honour did not refer to any of the matters listed in s 9(2), other than the content of s 9(2)(f). Further, his Honour did not refer to any of the evidence in the proceedings as to how Perpetual Victoria's systems operated so as to facilitate the opportunity for fraud to be practised by mortgage originators and managers such as Mr Cincotta. Dr Landa relied on nine affidavits from five deponents, but his Honour did not refer to any of them. In the circumstances, Dr Landa contends, a fair-minded reader of the relevant paragraphs of his Honour's reasons would not be able to discern the basis upon which his Honour rejected Dr Landa's claim under the Review Act, or even what the nature of that claim was. 44Perpetual Victoria accepted that the reasons given by the primary judge were neither "optimal" nor "even desirable". Nevertheless, it contended that his Honour's reasons satisfied the minimum acceptable standard. 45Perpetual Victoria says that Dr Landa's submission that he ran a "systematic unjustness" case at the trial is not made out from an analysis of his final submissions. In any event, Perpetual Victoria says, the reasons of the primary judge for finding that the relevant contracts were not unjust can be readily inferred from other parts of his Honour's reasons, which draw heavily on a consideration of the lending structure adopted by Perpetual Victoria in dealing with the claims based on agency. 46The primary judge considered the relationship between, and the roles performed by, Perpetual Victoria, Interstar, Morgan Brooks and Mr Cincotta. His Honour considered the claim by Dr Landa that the relationship between Interstar and Mr Cincotta provided Mr Cincotta with special access and dispensation by Interstar's staff that enabled Mr Cincotta to mask some of his frauds. His Honour also gave consideration to the extent to which Dr Landa was, or could have been, aware of the relationships between Perpetual Victoria, Interstar, Morgan Brooks and Mr Cincotta. Finally, his Honour had regard to the argument that it was unconscionable for Perpetual Victoria to create a lending structure reliant on independent contractors, who were not the agents of Perpetual Victoria, to fulfil the role of loan originators where previously that role would normally have been performed by the staff of a lender. 47Perpetual Victoria contends that all of those matters are apposite to the conclusion reached by his Honour that the loss of Dr Landa's investment occurred not because of any unjust contract, but because he was deceived by Mr Cincotta. That conclusion is consistent with his Honour's finding that monies from Brutone were misappropriated by Mr Cincotta as a result of Dr Landa's agreeing to have the monies reinvested with Perpetual Australia, rather than anything to do with Perpetual Victoria. 48At first glance, some criticism could be directed at the brevity of the reasons of the primary judge in dealing with the claims under the Review Act. It may have been preferable for his Honour to have set out in more explicit terms the reasoning that led to his conclusion that no relevant unjustness had been established. However, it is clear that the case was conducted before his Honour principally on basis that Mr Cincotta was the agent of Perpetual Victoria and Interstar. The claim under the Review Act was inextricably tied up with that assertion. That is apparent from the summary of the allegations made in the statement of claim set out above. In circumstances where his Honour dealt with the agency claim at some length, very little was left to be said about the claims under the Review Act. I am not persuaded that there was a failure to give adequate reasons.

Ground 2 - failure to apply the correct test 49The second principal complaint made in the appeal, assuming that the primary judge's reasons are accepted as adequate, is that his Honour failed to apply the correct test. Ground 2 asserts that, when determining whether the contract between Dr Landa and Perpetual Victoria was unjust in the circumstances relating to the contract at the time it was made, for the purposes of s 7 of the Review Act, the primary judge erred in failing to consider all the circumstances of the case, as required by s 9(1) of the Review Act. Once again, the three contracts for loans were treated on the basis that each would stand or fall together. 50Dr Landa contends that a fair inference to be drawn from the reasoning of the primary judge is that, when his Honour said, in referring to the "list of matters which the Court must take into account", that he had considered "the statutory factors", his Honour was referring only to s 9(2). Dr Landa says that the inference that should be drawn is that the matters in s 9(2) were the only things that his Honour considered, since no reference was made to having considered "all the circumstances" and no reference was made to having considered "the public interest", as referred to in s 9(1). Dr Landa says that, in those circumstances, his Honour's finding as to whether the relevant contracts were unjust for the purpose of s 7 necessarily miscarried, since his Honour failed to carry out the statutory requirement to consider the obligatory matters referred to in s 9(1) as well as the matters referred to in s 9(2). 51I would reject Dr Landa's contention that an inference should be drawn that the primary judge did not have regard to the requirements of s 9(1). Reading his Honour's reasons as a whole, it is clear enough that the reference to "s 9" included reference to s 9(1). That is apparent from his Honour's conclusion that the loss of Dr Landa's investment occurred not because of any unjust contract but because he was deceived by Mr Cincotta. In coming to that view, his Honour must be understood as having taken into account the surrounding circumstances, since it is difficult to see how his Honour would have reached that conclusion if he had had regard only to the matters set out in s 9(2). His Honour's reference to "the statutory factors" is broader than the term "list of matters" and would, in that context, include all of the matters set out in s 9(1).

Ground 3 - re-exercise of the Review Act jurisdiction 52Ground 3 asserts that the primary judge erred in failing to find that the contract between Dr Landa and Perpetual Victoria was unjust in the circumstances relating to the contract at the time it was made, within the meaning of s 7 of the Review Act, as alleged in the particulars to par 21 of the fourth amended statement of claim. I have summarised the allegations of unjustness in [28] above. Once again, the three contracts were treated on the basis that they stand or fall together. 53If the appeal were allowed on the basis of inadequacy of reasons, or on the basis of failure to consider matters that were necessarily required to be considered, the question would arise as to whether the claims under the Review Act should be remitted for retrial or whether this Court should rehear and determine the claims and make appropriate findings. Dr Landa contends that, in the absence of findings of fact upon which this Court can proceed, and having regard to the nature of the jurisdiction under the Review Act, there would be inherent difficulty for the Court in endeavouring to rehear the claims. In the absence of sufficient factual findings at first instance, it would be necessary to consider all of the evidence, of which there is some considerable volume. Perpetual Victoria accepts that, if the appeal were allowed on either of the first two grounds, it may be appropriate for the matter to be remitted for rehearing. 54Perpetual Victoria contends, however, that, if there were to be such a rehearing of the claims under the Review Act, none of the findings of fact relied on by Dr Landa would support a conclusion that the three loan contracts for sums totalling $305,000, $345,000 and $1,000,000, or the circumstances surrounding the entry of Dr Landa and Perpetual Victoria into those contracts, were unjust within the meaning of the Review Act. 55The primary judge found that Dr Landa's case, based on the organisational structure of Perpetual Victoria, failed. His Honour found that there was no evidence that the originator, Morgan Brooks, or Mr Cincotta, was authorised or was held out by Perpetual Victoria to be a person for whose acts Perpetual Victoria must bear responsibility. Interstar did not lend money on behalf of Perpetual Victoria. Perpetual Victoria was the lender, and Interstar was a mortgage manager appointed to arrange for Perpetual Victoria to advance monies on the security of mortgages. Interstar also managed secured loans made by Perpetual Victoria by, for example, making arrangements between borrowers and financial institutions for loan repayments to be made electronically by direct debit. 56Mr Cincotta was not involved in the making of loans or in the collection or overseeing of loan repayments. Mr Cincotta's involvement was limited to putting forward a loan application to the lender, Perpetual Victoria, and the limited role of "managing" the borrower after the loan was made, which role expressly excluded the receipt of loan repayments, which were to be effected by direct debit. None of the duties of Morgan Brooks or Mr Cincotta under the loan origination and management agreements in force at the relevant times involved the distribution of loan funds. 57There was no evidence of any fraudulent or misleading conduct practised upon Dr Landa by Perpetual Victoria that led up to the loan contracts of September 2001 and December 2002. Indeed, in the statement of claim, Dr Landa expressly eschewed any assertion of personal involvement or dishonesty on the part of Perpetual Victoria. 58Perpetual Australia is, as I have said, a separate entity from Perpetual Victoria. No evidence was given by Dr Landa that he would not have applied for any loans but for his understanding of the relationship between Mr Cincotta and Perpetual Victoria, including by reason of the branding of Mr Cincotta's office, which did not refer to Perpetual Victoria, but referred to Perpetual Australia. 59Perpetual Victoria did not run its mortgage business through Interstar. Perpetual Victoria asserts that there was no finding, and no evidence to support such a finding, that Interstar had "loose systems" in place, as asserted on behalf of Dr Landa. Mr Cincotta, as the agent of Morgan Brooks, did not have any authority to hold himself out as an agent for Perpetual Victoria. His Honour found that there was no act of Perpetual Victoria that was sufficient to establish that Mr Cincotta was an agent of Perpetual Victoria. There was no evidence that Perpetual Victoria was aware of any breach of any loan originating or managing agreement by Morgan Brooks or that there were such breaches that involved Dr Landa. There was no evidence of any facilitation of fraud by Perpetual Victoria. 60The fraud perpetrated by Mr Cincotta was carried out as a result of Mr Cincotta's personal relationship with Dr Landa, both as an investment adviser and as a friend. That relationship was entirely unrelated to Perpetual Victoria. No complaint was made by Dr Landa about any terms of the contractual arrangements with Perpetual Victoria. Dr Landa was not deprived of the opportunity to make an informed decision about his borrowings. Dr Landa made a choice about the investments that he decided to make with Perpetual Australia, in circumstances that were not made known in any way to Perpetual Victoria. No conduct on the part of Perpetual Victoria is the subject of any complaint by Dr Landa. The real complaint is that Perpetual Victoria failed to protect Dr Landa from Mr Cincotta and the consequences of Dr Landa's loss as the result of being defrauded by Mr Cincotta. Accordingly, Perpetual Victoria says, the claim under the Review Act could not succeed. 61Dr Landa formulated his case, for the purposes of the appeal, as being one of systematic unjustness, by reason of the fact that Perpetual Victoria was benefiting from its creation of a structure and system that removed it from any direct legal responsibility for the wrongful conduct of intermediaries acting within that system to benefit it. He asserted that the structure or system by which Perpetual Victoria and Interstar arranged, disbursed and managed secured loans and recruited and monitored mortgage originators, such as Morgan Brooks, sought to distance Perpetual Victoria from the actual processes while providing Perpetual Victoria with the benefit of that process. He asserted that the structure or system by which Perpetual Victoria did those things had provided for the close supervision, for Perpetual Victoria's benefit, of the recruitment of mortgage originators and managers to arrange, disburse and manage secured loans and monitor the promotion of the mortgage origination business, but Perpetual Victoria did not adequately monitor those mortgage originators and managers to prevent abuse within the system and structure that facilitated the potential for such abuse. 62Dr Landa contends that Interstar facilitated breaches of its guidelines at a time when Dr Landa was involved, whether or not the guidelines related to his loans. Those guidelines were issued by Interstar to Morgan Brooks and provided instructions to loan originators about matters including the maximum size of various loan products, methods of repayment and advertising. Dr Landa says that, at all times, Morgan Brooks and Mr Cincotta were to pass on information about repayments and that he was encouraged to believe that Mr Cincotta and Morgan Brooks were intermediaries between himself and Perpetual Victoria. 63Dr Landa contends that Perpetual Victoria should have operated differently from a structural point of view. Greater examination of proposed transactions would have put a check on them. Morgan Brooks sought special consideration from Interstar because a commitment had been given by Mr Cincotta and Interstar gave special consideration, thereby facilitating the transaction. Rather than rejecting a loan for more than $600,000, as the guidelines contemplated, the first application was split into two smaller loans. Dr Landa complains that Interstar ought to have enquired about the specific investment intended by him. He says that, had he been asked about the proposed investment, he may have been told that the proposed investment in Perpetual Australia would not be available. 64Whatever criticism may be directed to the lack of reasons, and any failure to have regard to the relevant provisions of s 9(1) or s 9(2), it is necessary to consider whether or not there was a miscarriage of justice. That is to say, this Court must consider whether or not there is at least an arguable case that the contracts in question, namely, the loan agreements and the mortgages, were unjust in the circumstances in which they were entered into between Dr Landa and Perpetual Victoria. 65The difficulty for Dr Landa, as the primary judge concluded, is that the loss occasioned by him was the result of his being duped by Mr Cincotta. He received the funds advanced by Perpetual Victoria and made a decision to entrust them to Mr Cincotta. Mr Cincotta misappropriated the funds. The repayments from Brutone or the UTT Group had nothing whatsoever to do with Perpetual Victoria. His Honour reached the correct conclusion in relation to the arrangements concerning the UTT Group investment. Dr Landa's loss resulted from his decision to entrust the funds to Mr Cincotta to invest in Perpetual Australia. Mr Cincotta misappropriated all of the funds without any involvement of Perpetual Victoria. 66There was nothing unjust about the contracts for loan between Dr Landa and Perpetual Victoria or the mortgages granted by Dr Landa to Perpetual Victoria to secure the advances made under those loan agreements in the circumstances in which those transactions were entered into. There was no fraud in relation to the making of the applications for loan or in the granting of the mortgages. This was not a case in which a misrepresentation was made to Perpetual Victoria or Interstar by either Morgan Brooks or Mr Cincotta. The evidence suggested that everything that was said to Interstar and Perpetual Victoria on behalf of Dr Landa was perfectly true and accurate. Everything that was put represented Dr Landa's intentions. That is to say, he wished to borrow money in the amounts that were the subject of the applications. He had every capacity to repay those amounts had they not been misappropriated by Mr Cincotta. 67Dr Landa relied on Mr Cincotta in making a decision as to how he would invest the proceeds of the advances and how he would invest the repayments from UTT Group. Mr Cincotta persuaded Dr Landa to have the advances drawn down by way of cheques payable to Perpetual Australia and to reinvest the UTT Group repayments with Perpetual Australia. Dr Landa believed that he was investing with Perpetual Australia. Nothing done by Perpetual Victoria or Interstar had anything to do with inducing either the desire to invest with Perpetual Australia or the belief that he was in fact investing with Perpetual Australia. All of that was the work of Mr Cincotta, totally independently of Perpetual Victoria and Interstar. 68Had there been a misrepresentation to Interstar or Perpetual Victoria that induced the making of advances to Dr Landa that would not have been made but for the misrepresentation, the position might have been different. That simply was not this case. There was nothing in the organisational structure or system involving Perpetual Victoria, Interstar, Morgan Brooks and Mr Cincotta that facilitated Mr Cincotta's fraudulent representation to Dr Landa that he could arrange for investment in Perpetual Australia and that he was in fact arranging for investment of the proceeds of the loans and repayments in Perpetual Australia.

Grounds 4 and 5 - findings of fact 69 Ground 4 asserts that the primary judge erred in:

failing to find that Dr Landa instructed Mr Cincotta to use the series of payments made by Brutone from 20 March 2003 to 7 November 2003 totalling $769,994.84 (the UTT monies) to reduce the $1,000,000 loan borrowed by Dr Landa from Perpetual Victoria;
finding that Dr Landa agreed to leave the whole of the UTT monies invested in an offset account;
finding that the whole of the UTT monies were misappropriated by Mr Cincotta as a result of Dr Landa's agreeing to have all of the UTT monies reinvested in an offset account;
failing to find that the whole of the UTT monies were misappropriated by Mr Cincotta as a result of Perpetual Victoria's structure or system for arranging, disbursing and managing secured loans and the inadequate monitoring and supervision of mortgage originators and managers, such as Mr Cincotta and Morgan Brooks, who were recruited to arrange, disburse and manage such secured loans, for the benefit of Perpetual Victoria. 70Ground 5 asserts, alternatively to ground 4, that the primary judge erred in:
failing to find that any conversation between Dr Landa and Mr Cincotta in which Dr Landa agreed to leave the UTT monies reinvested in an offset account did not relate to payments of UTT monies that occurred after the date of that conversation;
finding that the UTT monies that were paid after any conversation between Dr Landa and Mr Cincotta in which Dr Landa agreed to leave the UTT monies reinvested in an offset account were misappropriated by Mr Cincotta as a result of Dr Landa's agreeing to have all of the UTT monies reinvested in an offset account; and
failing to find that the UTT monies that were paid after any conversation between Dr Landa and Mr Cincotta in which Dr Landa agreed to leave the UTT monies reinvested in an offset account were misappropriated by Mr Cincotta as a result of Perpetual Victoria's structure or system for arranging, disbursing and managing secured loans and the inadequate monitoring and supervision of mortgage originators and managers, such as Mr Cincotta and Morgan Brooks, who were recruited to arrange, disburse and manage such secured loans, for the benefit of Perpetual Victoria. 71In his written submissions, Dr Landa deals with grounds 4, 5 and 6 on the basis that they relate to findings as to the cause of his loss. He contends that this Court should set aside the finding made by the primary judge that the loss of his investment occurred not because of any unjust contract, but because he was deceived by Mr Cincotta. Dr Landa says that that finding appears to have been based upon the earlier finding made by his Honour that the monies were misappropriated by Mr Cincotta as a result of Dr Landa's agreeing to have the monies reinvested in what he thought was the offset account, rather than anything to do with Perpetual Victoria. That was itself based on the finding made by his Honour that Mr Cincotta convinced Dr Landa to invest the UTT monies with Perpetual Australia, rather than use it to repay the loan secured on his Vaucluse home. Dr Landa says that, by inference, his Honour appears to have found that that occurred at some time in or about June or July 2003, although his Honour made no finding as to exactly when it occurred. 72The primary judge placed the conversation at "some time after [Mr Cincotta] issued the statement to which I have already referred". However, it is not clear to which statement his Honour was making reference. Dr Landa suggests that it may be deduced that the statement to which his Honour was referring was one prepared in July 2003. In cross-examination, Mr Cincotta said that the conversation occurred in July 2003. On the other hand, the cross-examination of Mr Cincotta on which his Honour relied proceeded on the basis that the relevant conversation occurred on 26 June 2003. 73Dr Landa contends that the finding that Mr Cincotta convinced him to invest the UTT monies with Perpetual Australia, rather than use them to repay the loan secured on his Vaucluse home (the intermediate factual finding), was incorrect. He contends that that the intermediate factual finding was made notwithstanding the evidence, recorded and accepted by the primary judge, that each of the payments of the UTT monies was accompanied by a notation from Dr Landa's accountants, McBurney & Partners, saying that "this payment is to reduce the $1,000,000 loan Barry currently has with Morgan Brooks. The loan is mortgaged over his home in Vaucluse". His Honour recorded that Dr Landa's case was that McBurney & Partners had instructed Mr Cincotta to apply the UTT monies to reduce the $1,000,000 loan secured over Dr Landa's Vaucluse home. 74Dr Landa asserts that the intermediate factual finding was, in effect, that he had given a contrary oral instruction to Mr Cincotta in about July 2003, and that that oral instruction related to all of the payments of the UTT monies, both past and future. He contends that there are difficulties with that finding, both as a matter of logic and as a matter of evidence. 75The conversation relied upon by the primary judge was, in terms, a conversation expressed with respect to past payments of the UTT monies, recorded in the statement prepared by Mr Cincotta in July 2003. However, in the absence of a finding that the conversation occurred after the last payment of the UTT monies, which was made on 11 November 2003, Dr Landa contends that there was no logical basis for finding that it extended to all payments of UTT monies made by Brutone. He asserts that it is not logical to consider that any "agreement" to countermand the instructions given by McBurney & Partners in respect of past payments also extended to future payments, which were not the subject of the conversation, and which were accompanied by instructions from McBurney & Partners to apply the monies to pay down the $1,000,000 loan secured on the Vaucluse home. His Honour did not explain how the oral instruction could be reconciled with the ongoing written instructions from McBurney & Partners. Without such a finding, Dr Landa says, the intermediate factual finding is illogical and contrary to the evidence. 76Thus, Dr Landa asserts that the intermediate factual finding was in error to the extent that it attributed to the conversation in mid-2003 a legal significance in respect of future payments of the UTT monies, in circumstances where, at the most, he says, it was expressed to relate to the UTT monies that had already been paid. As at 26 June 2003, only $300,000 of the UTT monies had been paid. Up to 25 July 2003, however, $400,000 of payments of the UTT monies had been made. 77Further, Dr Landa contends, the primary judge should not have found that he agreed to leave the UTT monies invested, but should have found that, through McBurney & Partners, he gave instructions for all of the UTT monies to be applied to reduce the $1,000,000 loan secured over the Vaucluse home. The primary basis for that contention is the unequivocal documentary evidence that McBurney & Partners had given written instructions to apply each payment of the UTT monies to reduce the $1,000,000 loan. That evidence was accepted by his Honour. 78Further, in his affidavit evidence, Dr Landa said that he instructed McBurney & Partners to confirm that each payment of the UTT monies was to be applied in reduction of the loan secured over the Vaucluse home and that, in November 2003, he discovered that it was not being so applied. In cross-examination, he specifically denied ever agreeing that the UTT monies should remain invested in the offset account. He asserts that his cross-examination about the terms of the letter of 20 November 2003 did not rise higher than establishing that, by that time, he had suspected or realised that the instructions given by McBurney & Partners had not been followed. He asserts that it was not squarely put to him in cross-examination that he knew that the monies were not being applied in reduction of the $1,000,000 loan from mid-2003 onwards. It was not put that he had fabricated his evidence that he only discovered that fact in November 2003. He asserts that the primary judge made no adverse finding about his credit. 79The only evidence that Dr Landa agreed to leave the UTT monies invested in the non-existent offset account was given in cross-examination by Mr Cincotta. Dr Landa asserts that, in circumstances where Mr Cincotta was a convicted fraudster, his evidence ought to have been accepted only where it conflicted with his evidence in the clearest of circumstances and was supported by objective documents. He says that Mr Cincotta's evidence was not the only explanation consistent with the terms of the letter of 20 November 2003. An equally plausible explanation, he says, is that the letter was written when he came to suspect that the instructions given by McBurney & Partners had not been followed. That is to say, he had a conversation with Mr Cincotta rejecting the suggestion that the monies be left invested and then wrote the letter of 20 November 2003. 80Dr Landa asserts that the intermediate factual finding was not based upon matters in respect of which the primary judge had an advantage by reason of seeing the witnesses, which might require this Court, as an appellate court, to have some reservations in setting the finding aside. He says that it was not a credit-based finding and that this Court is in as good a position as was the primary judge and that it would be open to this Court to reach a different conclusion from that reached by the primary judge. 81Perpetual Victoria contends that the reason why Dr Landa agreed to reinvest the UTT monies with Perpetual Australia, rather than make repayments of the loan to Perpetual Victoria, was that he had been led by Mr Cincotta to believe that the investment with Perpetual Australia was giving him a return of 8 percent per annum paid monthly, whereas the interest on the loan made by Perpetual Victoria to Dr Landa was accruing at a rate of 6 percent per annum. The net position, therefore, was that Dr Landa believed that he would obtain the benefit of an additional 2 percent on the UTT monies if they were invested with Perpetual Australia. If Dr Landa was persuaded that he would be obtaining the benefit of an additional 2 percent if he reinvested the UTT monies with Perpetual Australia, it would not be illogical, in the absence of any evidence to the contrary, to assume that Dr Landa would have wanted to obtain that additional 2 percent in respect of all of the UTT monies, including the monies repaid after the date of the relevant conversation. The fact that the directions from McBurney & Partners required the UTT monies to be applied to the repayment of the $1,000,000 loan does not detract from that conclusion because McBurney & Partners gave the same direction in respect of all payments, including the payments made prior to the date of the conversation. 82The finding made by the primary judge that Dr Landa agreed to leave the UTT monies invested with Perpetual Australia was readily available on the basis of the evidence before his Honour. His Honour held that he believed, and "should accept", the evidence of Mr Cincotta. Thus, his Honour turned his mind to whether Mr Cincotta was a credible witness who should be believed in respect of that evidence. His Honour was in a unique position to make that credibility finding, having seen Mr Cincotta in the witness box. Further, the mere fact that Mr Cincotta is a convicted fraudster is not a basis for suggesting that he had any reason to provide untruthful evidence or that he stood to obtain any advantage by doing so. Finally, his Honour recognised that there was other evidence consistent with Mr Cincotta's evidence. Thus, his Honour noted that Mr Cincotta's evidence was consistent with Dr Landa's letter of November 2003 and concluded that the figures in Dr Landa's letter were consistent only with what Mr Cincotta said. 83It is also significant that the payment by Dr Landa of the UTT monies was not pursuant to the terms of any contract between him and Perpetual Victoria. Morgan Brooks had no actual or apparent authority from Perpetual Victoria to receive such monies as its agent. Perpetual Victoria's operations manual specifically prohibited a loan originator from receiving repayment of monies on behalf of Perpetual Victoria. While there was authority to receive monies "otherwise due and payable", the monies in question were not yet due. Morgan Brooks certainly had no authority to receive funds on behalf of Perpetual Victoria in the name of Morgan Brooks. 84There was no evidence that Perpetual Victoria represented to Dr Landa that Morgan Brooks was authorised to receive payments on its behalf. Further, there was no evidence of Dr Landa relying on any statements to that effect. The terms of the loan contracts between Dr Landa and Perpetual Victoria specifically required that all payments were to be made by direct debit. Dr Landa conceded in cross-examination that that was in fact the manner in which his loan repayments were made. Thus, there was no scope for an argument that Perpetual Victoria had represented by word or conduct to Dr Landa that Mr Cincotta or Morgan Brooks had the apparent authority of Perpetual Victoria to receive loan repayments on its behalf and certainly no apparent authority to receive such payments not in the name of Perpetual Victoria, but in the name of Morgan Brooks.

Ground 6 - the causation finding 85Dr Landa contends that, once the intermediate factual finding is rejected, either in whole or in part, the finding that his investment occurred not because of any unjust contract, but because he was deceived by Mr Cincotta, must also be set aside. He says that the consequence of the unjust contract as between himself and Perpetual Victoria was that Mr Cincotta, who was not an agent of Perpetual Victoria, was able to practise a fraud upon him by receiving the UTT monies and misappropriating them. He says that the unjust features of the contract created the opportunity for Mr Cincotta to do so, while holding himself out as an integral part of the lending organisation of Perpetual Victoria which had no legal responsibility for his conduct as principal qua agent. He says that the business organisation erected by Perpetual Victoria was a significant contributing factor to the losses sustained by him, and that, but for the circumstances in which the contract was made, he would not have borrowed the monies from Perpetual Victoria to make the non-existent investments that Mr Cincotta persuaded him to make. In those circumstances, he says, the mortgages would not have been given. Further, or alternatively, the UTT monies would have been applied in reduction of the $1,000,000 loan secured by mortgage of the Vaucluse home. 86The primary judge correctly held that the real cause of Dr Landa's loss was the fraud of Mr Cincotta and not any unjust contract entered into between him and Perpetual Victoria. The structure of Perpetual Victoria's lending organisation played no part in Mr Cincotta's fraud in leading Dr Landa to believe that his money was being invested in an offset account with Perpetual Australia. The investing by Dr Landa of monies through Mr Cincotta commenced months before Dr Landa had any involvement with Perpetual Victoria. The fact that Mr Cincotta had claimed that he was investing Dr Landa's money with Perpetual Australia was not known to Perpetual Victoria. There is no basis in the evidence for asserting that Perpetual Victoria's lending structure provided any greater opportunity for Mr Cincotta to deceive Dr Landa than would otherwise have existed if Perpetual Victoria's lending structure was in any way different.

Conclusion 87Even if there were inadequacies in the reasons of the primary judge, it is clear, from the analysis set out above, that there was nothing unjust about the loan agreements or the mortgages entered into by Dr Landa in the circumstances in which they were made. Dr Landa has not shown any error in the conclusion ultimately reached by the primary judge. It follows that the appeal must be dismissed with costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 17 November 2014

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