All Monies Mortgages Still in Use Despite Exposing Lenders

all monies mortgages

All monies mortgages still in use despite repeated warnings about exposure to the lender.

In Hunt & Hunt Lawyers (a firm) v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10 the High Court was required to consider whether the liability for damage suffered by a lender was solely attributable to the negligent conduct of the lender’s solicitor or whether a proportion of this liability could be attributed to the fraudulent conduct of other parties.


Mr Caradonna and Mr Vella opened a joint bank account for their business venture (a boxing event to be held in late 2005). On that same day both parties attended Mr Vella’s solicitor and took possession of certificates of title to three properties. Mr Caradonna, without Mr Vella’s knowledge, took these certificates of title and used them to fraudulently obtain money for his own purposes. Mr Caradonna’s cousin acted as his solicitor and dishonestly certified the signature on the loan and mortgage documents. The lender advanced more than $1,000,000 to the joint bank account secured by the mortgage registered over Mr Vella’s property. Mr Caradonna then forged Mr Vella’s signature to withdraw money from the joint account. 
Hunt & Hunt Lawyers acted for the lender and prepared both the mortgage and loan documents fraudulently entered into by Mr Caradonna.

Decision of Supreme Court of New South Wales 

The primary judge found that the loan agreement was void because of forgery. This meant that Mr Vella was not liable to the lender under the loan agreement. However, Hunt & Hunt had breached its duty of care to the lender. It should have prepared a mortgage containing a covenant to repay a stated amount rather than an all monies mortgage. The Court held that Hunt & Hunt were concurrent wrongdoers alongside the fraudsters, and that its liability should be set at 12.5% of the amount advanced by the lender.
The lender appealed this decision.

Decision of New South Wales Court of Appeal

On appeal, the Court held that Hunt & Hunt was not a concurrent wrongdoer because the fraudsters’ conduct did not cause the loss or damage which the lender claimed. Hunt & Hunt’s failure to use adequate security documentation was the cause of the loss suffered by the lender. There could be no proportionate liability. This meant that Hunt & Hunt had sole liability for all the loss suffered by the lender. 
Hunt & Hunt sought leave to appeal this decision to the High Court.

Decision of High Court of Australia

The majority of the High Court (French CJ, Hayne and Kiefel JJ) allowed Hunt & Hunt’s appeal. The following is an outline of the majority’s reasoning:
  • The lender’s claim was based upon Hunt & Hunt’s breach of an implied term in its retainer that it exercise proper skill, diligence and care. 
  • The lender’s claim against Hunt & Hunt was an apportionable claim for the purpose of the Act. The loss identified by the majority was the lender’s inability to recover the moneys it advanced. Although the lender’s claim was based on a different cause of action from the claims it would have had against the fraudsters, both claims were founded on their inability to recover the moneys advanced and the acts or omissions of all of them materially contributed to their inability to recover that amount.
  • A defendant is a “concurrent wrongdoer” if there are others whose acts or omissions caused the damage the plaintiff claims. The question is whether each concurrent wrongdoer contributed to the loss or damage suffered.
  • The damage in this case was the harm the lender suffered in being unable to recover the moneys advanced.
  • There may be wrongdoers whose acts or omissions occur successively, rather than simultaneously, and who may be liable for the same damage. It is enough for liability that a wrongdoer’s conduct be one cause of the damage. In this case, Hunt & Hunt was a wrongdoer whose actions were a definite cause of the lender’s inability to recover the sum advanced. However, did the fraudsters’ acts also cause this damaged?
  • This question was answered in the affirmative. The fraudsters’ conduct did contribute to the lender’s inability to recover the money advanced. It was therefore a material cause of the harm that resulted. But for the fraudsters’ conduct, the lender would never have had the need to take out a mortgage. Also, it would have been inconsistent with the provisions and overall purpose of the Act to find Hunt & Hunt wholly responsible for the damage.
The appeal was allowed with costs.


Importantly, Bell and Gageler JJ were in dissent. They held that Hunt & Hunt was not a concurrent wrongdoer with the fraudsters. The fraudsters had not caused the lack of security over the properties. Rather the negligence of Hunt & Hunt in drafting the security documentation was the sole cause.
Elliott May Lawyers act for a diverse range of private lenders who are active in both the commercial and consumer lending markets. We ensure that their loans are documented and settled efficiently and effectively, often in demanding and time sensitive circumstances.   
As part of our commitment to our clients we have developed our own suite of documents. This includes a composite Mortgage Memorandum which incorporates a mortgage, loan agreement, guarantee and PPSA security agreement into a single, cohesive document.  Please review our Mortgage Memorandum, which we consider to be the best of its kind in terms of the rights granted to lenders, as well as its structure and presentation, which is vital when courts are being asked to rule in favour of a lender.  
This publication is provided for your general information and interest only. It is not intended to be comprehensive, and does not constitute and must not be relied on as legal advice. You must seek specific advice tailored to your circumstances.

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