Lorraine Parker & Anor v Juan Campos

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.

Assessment of Damages 10The fourth cross-claim pleads causes of action in contract, tort and under the Fair Trading Act 1987. It was not urged upon me that there should be any different amount awarded according to which basis of assessment was adopted. Mr Batley, who appeared for Ms Parker and Mr Moulds, noted that to the extent that damages were to be assessed under the Fair Trading Act , the Act as it was in force before the commencement of the Australian Consumer Law applies: see schedule 5, clause 16 of the Fair Trading Act . Section 68(1) of the Act as it then stood provided for recovery of the amount of the loss or damage suffered by conduct of another in breach of a relevant provision of the Act. 11On the strength of the facts summarised above, I am satisfied that the loss of the Fisherman's Paradise property and related expenses incurred by Ms Parker and Mr Moulds were caused by Mr Campos' provision of the letter and amount to loss or damage suffered by that conduct. 12The damages claimed by Ms Parker and Mr Moulds on that basis (verified by the affidavits read at the assessment hearing) are as follows. 13The sum of $200,000 is claimed for the loss of the value of the security property. That claim is supported by valuation evidence adduced at the assessment hearing. I am satisfied that is a proper assessment of the value of the property lost. The cross-claimants held the property as joint tenants and seek half that sum each. 14After surrendering possession of the security property, the cross-claimants moved to rental accommodation. The second head of damages sought is the reimbursement for their removal costs, consisting of petrol costs and "tip fees". The total amount claimed is $282. I am satisfied that it is appropriate to award that amount. 15In addition, the cross-claimants seek reimbursement for the housing expenses they now incur. Before the Avahlon loan was made, the security property was unencumbered and was the cross-claimants' home. The evidence at the assessment hearing sets out the costs now incurred by them in rent, allowing a deduction for previous housing costs no longer payable (rates and water). The net housing cost increase calculated in the evidence is a total of $6,775.48 for the period from September 2009 (when the cross-claimants left the security property) until August 2010. At the end of August 2010, the cross-claimants moved to a different rental property. 16The net increase in housing costs from September 2010 is calculated to be $8,252.28 per annum. The future cost of housing on that basis has been calculated for Lorraine Parker on the basis of a life expectancy of 24.1 years and for Michael Moulds on the basis of a life expectancy of 16 years. Mr Batley accepted that those future costs should be discounted to present value (he applied the discount from September 2010 but that is to the advantage of the cross-defendant). Mr Batley submitted that appropriate discount rate would be 3%, being the rate applied at common law: see Todorovic v Waller [1981] HCA 72, (1981) 150 CLR 402. I am satisfied that it is appropriate to discount the award for future housing costs to present value at that rate. 17Subject to that qualification, I am satisfied that the cross-claimants are entitled to the amounts calculated as set out in their affidavits. On that basis, there should be an award of damages to Ms Parker in the sum of $99,439.97 discounted with a multiplier of .492 to $48,924 and to Mr Moulds in the sum of $66,018.24 discounted with a multiplier of .623 to $41,129. 18The next head of damages claimed is for loan refinance expenses not paid by the amounts financed. I am satisfied that the cross claimants are entitled to those amounts. They are as follows:

Brokerage paid to Banca Avanti $562
Brokerage paid to AMT Mortgages $1,100
Legal fees of R Bayliss for advice on second Avahlon loan $600
Accounting fees to J Campos $800 Total loan refinance expenses $3,062

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