FMMI v Pittman (No 2) [2014] NSWCA 272

The trial judge set aside the loan as unjust and as a result had dismissed the cross-claim by the borrowers against the fraudster, as the borrowers were not required to pay anything to the lenders.

On appeal, the Court found that the borrowers must give credit to the lender because $1M was used to discharge previous mortgages, and therefore the borrowers had the benefit of those funds. The borrowers therefore sought to have the claim against the fraudster re-opened and remitted for hearing.

The law is that the court may re-open its judgment if there was a misapprehension of the fact or law or the interests of justice require. However, the Court of Appeal did not agree to set aside the order dismissing the claim against the fraudster, as the borrowers ought to have filed a cross-appeal, knowing that if the lender was successful in their appeal they would want to pursue the fraudster. However, the Court did order that the borrowers could now join the fraudster and proceed with the cross-appeal. In addition, due to the delay in cross-appealing, the Court did not grant a stay of the orders in favour of the lender.

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