I have been told that this is very rare. I have a sealed transmission in an el falcon, recently it started playing up. so off to the mechanic.
diagnosis box is overpressurising and oil coming out breather to relieve pressure.

Has anyone heard of this before.

RUBBISH!!

The breather is in the top of the casing itself, about a foot above the max oil level, and about 5-6 inches (~big hand width) above the oil cooler return.

What your mechanic is saying is that the trans is physically building pressure inside the housing itself and blowing the oil out of the top of the trans??? If that was true you would be leaking fluid out of the rear output seal too.

Get a new mechanic.

I have an EF Series 2 Fairmont Ghia The transmission oil was coming out of the seal around the servo on the side. Changed the pan seal as thought it was coming out of there, as it was running down and then along the pan. Was about to replace Pan when noticed coming from servo