By Elton Law Group
A NSW Supreme Court decision handed down on 27 March 2026 is one that anyone involved in private lending or commercial finance broking should take the time to read. The case, Three Corner Group Pty Ltd v La Rocca [2026] NSWSC 280, serves as a good reminder about best practice in managing private credit transactions.
What Happened (snapshot)
A Riverina winery owner was in serious financial trouble. Debt to local grape growers had climbed to around $5 million, and he needed funding fast. A finance broker was brought in to help, and he managed to arrange a $7.2 million private loan secured against the owner’s land. The interest rate was set at 3% per month, with a default rate of 6% per month.
When the first advance of $2.5 million was released, the funds were split across several accounts. Of that amount, $914,908 landed in the bank account of a third party who had no formal role in the loan. The winery owner later said he had no idea this was happening and attempted to sue the broker, claiming the money had been misdirected without his knowledge or consent.
The broker’s version of events was very different. He said the winery owner had always intended to use part of the borrowed funds for a separate investment, and that the payment had been confirmed by the winery owner’s own solicitor on the day of settlement.
The court believed the broker. The case was dismissed.
Brokers: The Court May See You as a Fiduciary
Here is the part that every finance broker needs to sit with for a moment. The court found that the broker was acting as the borrower’s agent in this transaction, and because of that, he was also a fiduciary. That is a legal status that carries real weight.
A broker becomes an agent when they are negotiating a loan on a client’s behalf, directing a lender to release funds, and specifying which accounts those funds should go into. Once that happens, the law expects a high standard of loyalty. There are two core duties: the “no conflict” rule and the “no profit” rule. Breach either of them without the client’s knowledge and consent, and litigation is likely to follow.
What Saved the Broker: Documented Consent
The single most important piece of evidence in the broker’s favour was a file note written by the borrower’s own solicitor. That note recorded that the solicitor had walked through the full funds flow with the borrower on settlement day, including the payment to the third party’s account, and that the borrower had confirmed all of the details.
The law is clear on this point. Informed consent from a client is enough to defeat a fiduciary duty claim. But that consent needs to be real, documented, and obtained independently of the broker. A quick verbal confirmation is not enough. An email to the broker saying “yes that’s fine” may not be enough. The gold standard is the client getting their own independent legal advice and having that confirmed in writing.
If funds are being directed anywhere other than the most obvious destination, that payment needs to be discussed with the client directly, confirmed in writing through their own adviser, and documented clearly before settlement proceeds.
The Borrower’s Solicitor: critical
This is where the independent legal advice point becomes critical, and it cuts both ways.
The winery owner did have a solicitor at settlement. But his evidence suggested he may not have fully appreciated what he was agreeing to when his solicitor walked him through the payment details. His solicitor’s file note ultimately became the strongest piece of evidence against him, not for him.
For borrowers, this is a sobering lesson. Having a solicitor present is not a formality. It is an opportunity to genuinely understand where the money is going, ask questions, and push back if something does not make sense. A borrower who nods along without understanding the funds flow is in a very exposed position if something goes wrong later.
For lenders and brokers, this case reinforces the importance of insisting that borrowers have genuinely independent legal representation.
A Note on Settlement Instructions
The case also turned on what documents the borrower had signed. The court found he had signed a PEXA settlement authorisation that specified the payment details, despite his later denials. The court was also prepared to draw negative inferences from the fact that the borrower’s own solicitor was never called as a witness.
The takeaway is straightforward. Settlement instructions need to be clear, complete, and verified directly with the borrower, not sourced from a third party on the borrower’s behalf. Every document signed at settlement is a potential piece of evidence. Treat it that way.
The Bigger Picture for Private Credit
The private credit market in Australia is growing, and with that growth comes more complex transactions, faster timelines, and higher stakes when things go wrong. This case is a timely reminder that courts will take the time to look closely at how these deals are put together when a dispute lands in front of them.
The basics matter: clean documentation, genuine independent legal advice for borrowers, and verified settlement instructions. These are not just good practice. They are the things that determine who wins and who loses when a deal ends up in litigation.
Talk to Elton Law Group
Elton Law Group works with private credit lenders, finance brokers, and commercial borrowers on the legal side of complex financing transactions. Our team can help with loan documentation, advice on broker obligations, and representation in disputes arising from transactions gone wrong. If this case raises questions about a current deal or an existing arrangement, get in touch with Elton Law Group today.
Phone: (02) 7240 6739
Email: info@eltonlaw.com.au