Fitzsimons v CBA [2012] NSWSC 660

In 2009, we last reported on this case. In that report we wrote:

Proceedings for possession were resolved by the parties entering into a deed of release with provision for the lender to take possession of the security and sell it. The borrower then had a change of heart and sought an injunction preventing the sale and to raise new defences based on the Contracts Review Act. The borrower said it would be unconscionable for the lender to rely on the deed. The judge refused the injunction noting:

I do not understand in those circumstances why it would be unconscionable for the defendant to rely upon the terms of a deed of release entered into for the purpose, one would think, of avoiding just such a claim as is now made.

Undaunted, the borrower now, four years after the deed was entered into, once again sought to set aside the consent judgment and the deed. This time, on the grounds that the CBA failed to discover a certain letter.

Background
The borrower, Mr Christopher Fitzsimons, a solicitor, had been a heavy gambler for many years. This got out of control, and eventually, he was gambling over $20,000 per month. He eventually stole trust account monies to support his gambling. Once the embezzlement was discovered by the Law Society, it wrote a letter to the CBA in 2005 advising it had obtained a freezing order over Mr Fitzsimons’ assets. Despite this, in 2006 the bank allowed Mr Fitzsimons to open a new trust account which he used for further embezzlement of clients’ monies.

The Law Society sought to recover the money embezzled using the 2006 bank account and CBA wrote to the Law Society as follows:

We concede that, having received notification of the appointment of receiver to Mr Fitzsimons’ practice we ought not to have allowed the opening of the 2006 Trust Account and the subsequent depositing of the cheques totalling $70,167.34. In the circumstances the Bank will arrange to forward to you a cheque for that amount.

The borrower argued that because CBA did not discover the letter from the Law Society at the time of the enforcement proceedings, the consent judgment ought to be set aside. This was based on the argument that had they known that CBA knew of the freezing order then it would have been under an obligation to freeze the accounts.

The judge found that the CBA’s action could not have influenced the entering into of the consent judgment, noting:

Freezing of the Cairns Joint Account and the Chatswood Joint Account would not have prevented defaults occurring under the Potts Point, Darlinghurst and Clifton Beach mortgages. On the contrary, freezing of those accounts would have caused those mortgages to go into default, almost immediately.

Click here to read the full judgment

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