Tobaji and Anor v National Australia Bank Limited

JOHNSON J : The Plaintiffs, Antoine Tobaji and Mary Tobaji, have lived at 46 The Broadway, Punchbowl (“the Punchbowl property”) since 1980. In 2004, they borrowed money from the Defendant, National Australia Bank Limited, with a mortgage over the Punchbowl property as security for the loan. The Plaintiffs contend that their intention was to borrow $12,000.00 to allow concreting work to be carried out on the Punchbowl property. They say that a mortgage broker, Wally Estephan, duped them into borrowing some $440,000.00 from the Defendant. The Defendant contends that the Plaintiffs intended to borrow the full amount obtained with the intention of re-investing most of it to make a profit. Unfortunately, for the Plaintiffs, their borrower defaulted thereby leaving the Plaintiffs unable to service their loan from the Defendant. The central issues in the case are factual ones concerning the Plaintiffs’ true understanding as to how much was being borrowed and for what purpose. The Pleadings

In June 2004, the Defendant extended to the Plaintiffs a “Plain and Simple Home Loan” in the sum of about $128,000.00 (“the first loan agreement”) as refinancing of an existing 2001 home loan from the Defendant. At the same time, the Defendant provided to the Plaintiffs a “Peak Performance Equity Facility” in the sum of about $312,000.00 (“the second loan agreement”). Both loans were secured by way of a mortgage over the Punchbowl property.

By their Statement of Claim filed 4 May 2006, the Plaintiffs seek, in the alternative: (a) an order that the loan agreements and mortgage be set aside as being unjust under the Contracts Review Act 1980 (“CR Act”), unjust within s.70 of the Consumer Credit (New South Wales) Code 1995 (“the Code”) or upon the basis that it is “unfair and unconscientious” under the general law for the Defendant to rely upon them; (b) an order declaring the loan agreements and mortgage to be void; (c) an order varying the loan agreements in such manner as the Court thinks fit.

By its Amended Defence filed 31 July 2008, the Defendant denies that the Plaintiffs are entitled to relief. The Defendant says, amongst other things, that the Code does not apply to the second loan arrangement as, prior to entering into that facility, the Plaintiffs provided the Defendant with a written business or investment purposes declaration for the purpose of s.11 of the Code.

By Cross Claim filed 19 September 2006, the Defendant claims judgment for possession of the Punchbowl property, together with leave to issue a writ of possession to enforce that judgment together with judgment for the sum of $457,431.78 against the Plaintiffs, together with interest on the sum of $332,981.40 from 18 September 2006 until the date of payment at a specified rate of interest together with interest on the sum of $124,450.38 from 18 September 2006 until a date of payment at a rate specified in the pleadings.

By the Defence to Cross Claim filed 21 November 2006, the Plaintiffs deny that the Defendant is entitled to the relief pleaded in the Cross Claim and, in answer to the whole of the Cross Claim, they repeat the allegations contained in their Statement of Claim. Issues in Proceedings

The principal questions to be determined in this case are factual ones. After findings of fact are made, it will be necessary to consider legal issues by reference to the facts as found.

In broad terms, the principal issues to be determined in these proceedings include the following: (a) whether the Plaintiffs believed that the June 2004 agreements and mortgage were intended only to secure a $12,000.00 loan from the Defendant to enable them to undertake concreting work at the Punchbowl property; (b) related to issue (a) above, whether the Plaintiffs were deceived by Wally Estephan, their mortgage broker, into believing that the agreements and mortgage were for $12,000.00 only; (c) whether the Plaintiffs did not honestly believe that they had entered into agreements and a mortgage to secure advances in the order of $440,000.00; (d) whether the Plaintiffs had no knowledge that Wally Estephan had provided documents to the Defendant in May 2004, in support of the loan application, which represented that both were in employment; (e) whether, at the time of execution by them on 25 June 2004 of a loan agreement and caveat, the Plaintiffs did not understand the nature and contents of that agreement (and caveat) whereby the sum of $300,000.00 was lent by them to Gilzan Pty Limited (“Gilzan”); (f) whether any act or omission on the part of officers of the Defendant in the assessment of the Plaintiffs’ loan application, when taken with other circumstances in the case, assists the Plaintiffs in their claim for relief; (g) in light of the factual findings made by the Court, whether the Plaintiffs can demonstrate an entitlement to relief against the Defendant under the CR Act, s.70 of the Code or the general law. Evidence in the Proceedings

Mr Batley, counsel for the Plaintiffs, read the following affidavits: (a) affidavit of Antoine Tobaji sworn 7 November 2007; (b) further affidavit of Antoine Tobaji sworn 24 July 2008; (c) affidavit of Mary Tobaji sworn 7 November 2007; (d) affidavit of Sassine Bou Francis sworn 6 November 2008; (d) affidavit of George Tobaji sworn 7 November 2007; (e) affidavit of Georgina Bou Francis sworn 7 November 2007; (f) affidavit of James Joseph Lahood sworn 12 November 2008.

Each of the deponents referred to in the preceding paragraph were required for cross-examination, with the exception of Georgina Bou Francis. Mr Raed Rahal, the Plaintiffs’ then solicitor, gave evidence concerning his interpreting of the affidavits of each of the Plaintiffs and Mr Sassine Bou Francis from English to Arabic before signature by each deponent (T25-27, 112-114).

Mr White, counsel for the Defendant, read the following affidavits: (a) affidavit of George Caratzas sworn 13 December 2007; (b) affidavit of Jazz Nevill sworn 13 December 2007; (c) affidavit of Patricia Johnston sworn 13 December 2007; (d) affidavit of Gina Assimakis sworn 13 December 2007; (e) affidavit of Janine Kent sworn 13 December 2007.

Each of the deponents referred to in the preceding paragraph were required for cross-examination, with the exception of Janine Kent.

By consent, the Defendant tendered a bundle comprising 536 pages contained in two volumes (Exhibit 1). The Plaintiffs tendered, without objection, an additional bundle (pages 537-704) contained in a third volume (Exhibit A). A number of additional documents were tendered by the Plaintiffs and the Defendant during the course of the hearing. Factual Matters

What follows is a recital of factual matters, some of which are not controversial. Areas of controversy are identified and findings made with respect to those issues. The Plaintiffs

Antoine Tobaji was born in Lebanon in 1951. Mary Tobaji, his wife, was born in Lebanon in 1949. The Plaintiffs migrated to Australia in 1973 with two of their children. They had four other children after their arrival in Australia.

Mr Tobaji had formal education in Lebanon and can fluently read, write and speak Arabic. It is his evidence that he cannot read or write English and has difficulty speaking and understanding English.

Mr Tobaji undertook factory work for a period before purchasing a take-away business in Chullora which he operated with his wife and eldest son for about two years (in the 1990s) until he suffered back injuries and an injury to his elbow. The business was sold and he commenced to receive sickness benefits until December 1998, when he was granted a disability support pension (Exhibit A, page 584).

It was the evidence of Mrs Tobaji that, since her arrival in Australia, she has been occupied in domestic duties and had not undertaken any other employment (T118). The Punchbowl Property

The Plaintiffs purchased the Punchbowl property in 1980 for $33,500.00, with the assistance of a mortgage from the Commonwealth Bank of Australia.

Since 1980, George Shad acted as the Plaintiffs’ family solicitor.

In 1987, the Plaintiffs gave a mortgage over the Punchbowl property to the Defendant to secure a loan of $40,000.00. In 1990, the Plaintiffs borrowed $80,000.00 from the Defendant to purchase the take-away business at Chullora, with the loan being secured by mortgage over the Punchbowl property. The 2001 Mortgage to the Defendant

In August 2001, Mr Tobaji decided that the Punchbowl property needed renovations. He went with his daughter, Georgina, to the Lakemba Branch of the Defendant enquiring about borrowing $70,000.00 for renovations. He was informed that he did not have enough income to support the loan. Thereafter, Mr and Mrs Tobaji and their son-in-law, Sassine Bou Francis, applied for a secured home loan from the Defendant (Exhibit A, pages 570, 576). Mr and Mrs Tobaji signed an application for the loan on 27 August 2001 in which Mr Tobaji was described as being on a “disability pension” and Mrs Tobaji was said to be a “housewife” .

On 21 September 2001, the Defendant wrote to Mr and Mrs Tobaji and Mr Bou Francis advising that a variable rate home loan for $137,000.00 had been drawn down with repayments to be made at the rate of $959.00 per month (Exhibit 1, pages 26-31). This loan consolidated earlier loans so that the total principal secured by mortgage over the Punchbowl property as at September 2001 was $137,000.00. It appears that payments were made to the Defendant thereafter in accordance with this loan arrangement without any contribution from Mr Bou Francis.

As at 23 March 2004, the balance owed by the Plaintiffs to the Defendant on the home loan account was $128,596.46 (Exhibit 1, page 70). Wally Estephan and the 2004 Mortgage

Events of particular significance to the present proceedings occurred in and after May 2004. There is no dispute that the Plaintiffs came to borrow an additional sum from the Defendant which was secured by mortgage over the Punchbowl property. What is in dispute, however, is the Plaintiffs’ knowledge of the sum borrowed, the purpose of the loan and the knowledge of the Plaintiffs of their total indebtedness to the Defendant following the 2004 loan transaction.

Joseph Estephan lived near the Plaintiffs in Punchbowl. The evidence indicates that members of the Estephan and Tobaji families had known each other for many years. Walid (known as “Wally”) Estephan was the son of Joseph Estephan. Wally Estephan was a mortgage broker.

On 27 April 2004, a Choice Home Loans Licence Agreement was entered into between Pennley Pty Limited and Estephan Enterprises Pty Limited trading as First Stop Mortgages (as licensee) with Wally and Susie Estephan (as guarantors) (Exhibit 1, page 32). The signatures of Wally Estephan on the agreement were witnessed by Louis Allem of 29 Grose Street, Parramatta (Exhibit 1, pages 68-69). As will be seen, Mr Allem’s company, Gilzan, came to borrow $300,000.00 from the Plaintiffs in June 2004.

It was Mr Tobaji’s evidence that, in about early May 2004, he wanted to concrete the driveway and rear area of the Punchbowl property to use as an entertainment area for his family. He stated that his main motivation for fixing the driveway and back area was his daughter’s forthcoming pre-wedding party (A Tobaji affidavit, 7 November 2007, paragraph 11). Mr Tobaji states that he knew that he would have problems getting a loan from a bank as he had problems getting the loan in 2001.

Mr Tobaji states that, in about the week of 10 May 2004, he was at the house of Joseph Estephan and had a conversation with Wally Estephan in Arabic to the following effect (A Tobaji affidavit, 7 November 2007, paragraph 11): Antoine: “Wally, can you get me a loan for about $12,000.00 so that I can concrete the driveway and out the back before the wedding?” Wally: “Who is your current loan with?” Antoine: “National.” Wally: “No problem. I’ll get you a little bit more and I can invest it for you and you will make some good money.” Antoine: “I don’t want to get into any investments. I can’t afford any hassles with paying loans back.” Wally: “Don’t worry. You wont even feel it. You will get enough money to get rid of your loan even quicker.” Antoine: “I’m not interested but if you can get me the money on my house I am happy with that. Sassine had to borrow with us last time to get the loan. He can do that again. No problem.” Wally: “Just get me your licence and Medicare and I will organise the loan. Also get me your latest bank statement and your rates notice. I can probably get you a great rate where you wont need to repay any more than you are now. May be a few dollars extra.” Antoine: “That would be good.”

A number of observations should be made immediately concerning this aspect of the case: (a) although Mr Tobaji states that only $12,000.00 was required by way of a loan, he did not consider going down to his local branch of the Defendant (with which he was familiar) in the company of one or more of his children (to assist with interpreting, if required) to ascertain his prospect of obtaining a modest additional loan, and the requirements of the Defendant and cost to the Plaintiffs if this was done; (b) although the stated purpose for this work was said to be concreting required in the context of the forthcoming wedding of the Plaintiffs’ daughter, it seems that the wedding did not occur until a considerable time later, thereby raising a significant question concerning the genuineness of this proffered explanation for the purpose of the loan; (c) although the loan was said to be required for concreting purposes, it was the evidence of Sassine Bou Francis (Exhibit B; T140) that he undertook concreting work as part of his business, but that it had not been suggested that he could arrange or undertake this concreting work at no cost or reduced cost to the Plaintiffs; (d) Mr Tobaji gave somewhat vague and unconvincing evidence concerning the time when this concreting work was done, the manner in which an unnamed person was retained to do the work and the process of payment for the work - the unsatisfactory features of this evidence serve to undermine the finding sought by the Plaintiffs that the whole purpose for the loan application was to obtain a modest sum for relatively minor domestic renovation work; (e) if this was the true purpose for the loan, it is difficult to understand why the Plaintiffs would seek the services of a mortgage broker to deal with their own bank to secure a modest loan; (f) of course, the Defendant submits that the true purpose of the loan was that identified by Wally Estephan in the conversation set out at [29] above, namely to obtain a larger loan which could be used by the Plaintiffs to make money - this is what, in fact, happened and the Defendant contends that this is what the Plaintiffs understood was to happen.

According to Mr Tobaji, later in the week following his initial discussion with Wally Estephan, Wally Estephan came to the Punchbowl property with some papers. Mr Tobaji and Wally Estephan sat in the lounge room and the following conversation took place in Arabic (A Tobaji affidavit, 7 November 2007, paragraph 12): Wally: “This is the application for the loan which I need you and Mary to sign.” Antoine: “Let me call George [Shad] to go through it before we sign.” Wally: “It’s nothing. All it is for is to ask the bank to lend you some more money.”

Mr Tobaji says that he called out to his wife (who was in the kitchen) and she came to the lounge room and sat with them, with the following conversation occurring in Arabic (A Tobaji affidavit, 7 November 2007, paragraph 12): Antoine to Mary: “Wally is going to organise $12,000.00 for us to fix up the driveway for the pre-wedding party.” Wally: “I just need you to sign these papers.” According to Mr Tobaji, Wally Estephan showed he and his wife where to sign and both of them signed the papers. The conversation continued: Wally: “Do you have copies of the papers I asked for?” Antoine: “Yes.” Mr Tobaji states that he handed to Wally Estephan copies of his driver’s licence, Medicare card, bank statement, his wife’s passport and their rates notice.

Mrs Tobaji states that, in about May 2004, Wally Estephan came to the Punchbowl property. She was in the kitchen and her husband called out for her to go to him in the backyard. Mrs Tobaji states that a conversation to the following effect took place in Arabic (M Tobaji affidavit, 7 November 2007, paragraph 3): Antoine to Mary: “Wally has some papers here for us to sign so we can get the money for the driveway.” Mary: “What are they?” Wally: “It is just the loan documents from the bank to say they are giving you another $12,000.00 on the house and that is all.” Mary: “Don’t we need George Shad to go through these?” Antoine: “It’s OK. We can trust Wally. He won’t do the wrong thing.” Mary to Wally: “You are like my son. I trust you.” Mr and Mrs Tobaji then signed the documents in the places indicated to them by Wally Estephan.

I am satisfied that each of the Plaintiffs signed a loan application form at about this time. I am not satisfied, however, that each of them believed at that time that the application was being made for a $12,000.00 loan only. My reasons for this conclusion will be given later in the judgment. For the moment, it is sufficient to observe that an accumulation of events, involving the Plaintiffs, support the conclusion that the plan was to do as Wally Estephan had suggested, and to take out a loan from the Defendant for a substantial amount far exceeding the sum of $12,000.00.

I accept that Wally Estephan spoke to the Plaintiffs at the time when the loan application form was signed. I accept that each Plaintiff raised the prospect of obtaining advice at that time from George Shad, the family solicitor. Each had in mind the need to take legal advice from their own independent solicitor with respect to the matter. They determined not to do so. The 21 May 2004 Application to HomeSide

Wally Estephan prepared a mortgage application to be submitted to HomeSide Lending (“HomeSide”). HomeSide is a division of the Defendant. At all relevant times, it dealt directly with mortgage brokers. All loan applications were received from brokers and not applicants or customers directly.

On 21 May 2004, Wally Estephan sent a facsimile to the Broker Support Team of HomeSide, attaching the mortgage application by the Plaintiffs. The facsimile was sent on the letterhead of First Stop Mortgages, Suite 1, Level 1, 29 Grose Street, Parramatta. The transmittal sheet stated (Exhibit 1, page 103): “Dear Team, Following is a new application for Mr/Mrs Tobaji. Applicant has a current loan with NAB, and he wants to refinance it. Also get a peak performance for $322,000.00. Yours faithfully, Wally Estephan First Stop Mortgages”

Accompanying the facsimile of 21 May 2004 was a mortgage application to HomeSide completed on behalf of the Plaintiffs (Exhibit 1, page 104ff). I infer that the application was filled in by Wally Estephan. Each of the Plaintiffs admits signing the application.

The application sought a Plain and Simple Home Loan in the sum of $128,000.00 and a Peak Performance Equity Mortgage in the sum of $322,000.00. The sum of $128,000.00 was sought to refinance an existing loan and the sum of $322,000.00 as “equity/other investment” . The total sum sought was $450,000.00.

The application stated that Mr Tobaji had been employed since 10 June 1999 as a foreman at RSS Formwork Pty Limited at 4/42 Highclere Avenue, Punchbowl. This was the business conducted by Sassine Bou Francis. According to the application, Mrs Tobaji had been employed since 15 July 2003 as a kitchen hand at La Luna Lounge at 178 Eldridge Road, Bankstown. The statement of assets and liabilities stated that the Punchbowl property had a present value of $600,000.00 and that $85,000.00 was money lent to the Plaintiffs’ children. A 2003 Ford vehicle worth $44,000.00 was also disclosed as an asset. The liabilities column revealed the existing debt of $128,000.00 to the Defendant by way of mortgage over the Punchbowl property.

The application stated that Mr Tobaji had a gross annual income of $106,000.00 and a nett monthly income of $5,693.99. Mrs Tobaji was said to have a gross annual income of $10,400.00 with a nett monthly income of $758.33 (Exhibit 1, page 108).

Mr Tobaji’s mobile phone number was provided as a point of contact to enable access for the purpose of valuation (Exhibit 1, page 110).

The name, address and telephone number of George Tobaji, the Plaintiffs’ son, was provided by way of details of “nearest relative not living with you” (Exhibit 1, page 111).

A “100 point check” was completed with respect to Mr Tobaji for the purposes of the Financial Transaction Reports Act 1988 (Cth) , with the requirement being satisfied by Mr Tobaji being a customer of the Defendant of at least 12 months’ standing together with provision of a copy of his driver’s licence, Medicare card and a council rates’ notice. Mr Tobaji signed this document on 19 May 2004 (Exhibit 1, page 113). A “100 point check” form was also completed with Mrs Tobaji and was signed by her on 19 May 2004 (Exhibit 1, page 115).

Each Plaintiff signed a discharge authority on 19 May 2004 for the purpose of discharging the existing mortgage to the Defendant (Exhibit 1, page 116). Each of the Plaintiffs signed, on 19 May 2004, a Customer’s Acknowledgement and Consent for Wally Estephan, as their mortgage broker, to make the loan application on their behalf (Exhibit 1, page 117). Each Plaintiff signed a declaration on 19 May 2004 concerning the completeness and accuracy of the information supplied in support of the loan application (Exhibit 1, page 122).

A HomeSide Serviceability Assessment Calculator was included with the application, which produced various calculations using the information concerning the value of the Punchbowl property, the Plaintiffs’ income and liabilities. I infer that this document was prepared by Wally Estephan utilising a calculator apparently available on the HomeSide website (Exhibit 1, page 129).

Uncontroversial documents which accompanied the application were the following: (a) copy of a 2004 Canterbury City Council Rates Notice for the Punchbowl property (Exhibit 1, page 130); (b) copy of Mr Tobaji’s driver’s licence (Exhibit 1, page 131); (c) copy of the Medicare card for, amongst others, Antoine and Mary Tobaji (Exhibit 1, page 131); (d) copy of a Commonwealth Bank passbook in the name of Mary Tobaji (Exhibit 1, page 136); (e) copy of the loan account summary for the Plaintiffs and Sassine Bou Francis for the mortgage account arising from the 2001 mortgage, revealing payments made under the mortgage between March and September 2002 and September 2003 to March 2004 (Exhibit 1, pages 137-139).

It may readily be inferred that the documents listed in the preceding paragraph were supplied by the Plaintiffs to Wally Estephan for the purpose of the loan application.

The Plaintiffs gave evidence that they had no knowledge of certain documents provided to the Defendant in support of the application and that the contents of these documents were false. These documents related to the employment and income of each Plaintiff.

A document purporting to be on the letterhead of RSS Formwork Pty Limited dated 17 May 2004, and purportedly signed by Sassine Bou Francis, certified the employment of Antoine Tobaji in the following terms: “To Whom It May Concern This letter is verification that Antoine Tobaji has been employed by RSS Formwork Pty Limited for the past five years. Antoine is the company’s head foreman and is on a gross weekly wage of $2,038.46. If you have any further questions please contact me.”

The letter contained the correct address, telephone and facsimile numbers for that business and the correct ABN. It was the fact that Mr Bou Francis (the son-in-law of the Plaintiffs) conducted such a business at that time. It was his evidence that the document was a forgery and that the letterhead was not the form of letterhead being used by him at that time, although the details contained in it were correct. I will return to this issue later in the judgment. Also accompanying the application were two pay advice documents purporting to record the employment of Antoine Tobaji in May 2004 with “RSS Formworks Pty Ltd” (Exhibit 1, pages 133-134).

In support of the application was a letter purporting to be from Jodie Maroun-Moeratea dated 19 May 2004 certifying the employment of Mary Tobaji, for the previous 12 months, at La Luna Lounge at Bankstown (Exhibit 1, page 135). Mrs Tobaji gave evidence that she had never worked at this establishment. No evidence was adduced at the hearing which shed light on the existence of such a business, nor the accuracy or otherwise of the address and other information provided on the letterhead. Consideration by HomeSide of 21 May 2004 Application

In May 2004, George Caratzas worked as an Applications Co-Ordinator with HomeSide. Upon receipt of the loan application dated 21 May 2004 from Wally Estephan, Mr Caratzas carried out a servicing calculation to ensure that the Plaintiffs were able to meet the loans they were requesting. For this purpose, he used the income details contained in the supporting employment and financial documents provided with the loan application (that is, the pay slips concerning Mr Tobaji and the letter of employment concerning Mrs Tobaji) rather than the figures contained in the loan application document which was provided by the broker. Mr Caratzas said that this was to ensure that the figures used were accurate. He was satisfied that the income details were the same. With respect to Mrs Tobaji’s employment at the La Luna Lounge (where allegedly she earned a gross income of $200.00 per week), Mr Caratzas observed that a copy of her Commonwealth Bank passbook showed regular deposits being made into that account in excess of $300.00 per deposit.

Mr Caratzas stated that it is not standard practice to conduct business or company searches to verify employer details, unless the applicant is self-employed. He said that it is not necessary to conduct such searches or further investigations, particularly if the applicants have provided other financial source documents that verified the information contained in the employment letters, as is the case with the Plaintiffs’ application.

Mr Caratzas arranged for a valuation of the Punchbowl property to be carried out as soon as the loan application was received, this being a standard practice with all applications. On 25 May 2004, Scott Adams, valuer, conducted a residential kerbside inspection of the Punchbowl property, giving an estimate of market value of $550,000.00 (Exhibit 1, page 151). Mr Adams undertook an external inspection only and recorded that “the property appears to be of neat presentation and to have been extensively renovated in recent years” .

Mr Caratzas states that he reviewed the loan application to make sure that all signatures for Mr and Mrs Tobaji were consistent and that all supporting documents, such as bank statements, were properly aligned and did not appear to have been tampered with. They appeared to be legitimate. He did not see anything in the loan application, or supporting documents, that aroused his suspicions that the application or information contained in it was not genuine (affidavit, 13 December 2007, paragraph 18). As the documents all appeared to be legitimate, Mr Caratzas did not see any reason not to take the application, and information contained in it, at face value. He saw no reason to further investigate the application or question the documents that had been provided to him. On the information provided with the loan application, Mr Caratzas considered the Plaintiffs to be strong applicants, particularly on the basis of Mr Tobaji’s employment and income status. The 26 May 2004 Supplementary Material Provided to HomeSide

Prior to 26 May 2004, Mr Caratzas had completed a Decision Tools Approval Checklist (Exhibit 1, page 146). This document contained a notation that a tax assessment or group certificate was required in connection with the application. I infer that a request for such a document was conveyed to Wally Estephan.

Wally Estephan was informed of the valuation which came in $50,000.00 below the estimate provided in the Plaintiff’s application. On 26 May 2004, Wally Estephan sent a further facsimile to HomeSide, the transmittal sheet of which contained the following (Exhibit 1, page 140): “We have received advice of the low valuation. Applicant is happy to proceed with a unchanged [sic] refinance of his $128,000.00 and the line of credit at $312,000.00 as an 80% lend. Following is a copy of the Antoine Tobaji’s group certificate. If you require anything further please advise.”

Accompanying the facsimile was a PAYG payment summary for the year ending 30 June 2003, containing details of Antoine Tobaji’s employment with RSS Formwork Pty Limited with a stated gross annual income between 1 July 2002 and 30 June 2003 of $105,842.00. Contained within the “signature of authorised person” field appeared (in print) “S Bou Francis” and the date “1 July 2003” . The PAYG payment summary contained accurate address and contact particulars for both RSS Formwork Pty Limited and Mr Tobaji.

Mr Caratzas stated that the Plaintiffs had decreased the amounts they were requesting under the Peak Performance Loan, because the valuation on the security property was lower than expected, and HomeSide would not lend them the combined loan total of $450,000.00 they had initially requested. They requested that HomeSide proceed with a combined loan total of $440,000.00. Mr Caratzas observed that a copy of Mr Tobaji’s group certificate was required under the conditional loan approval. He could not recall exactly why Mrs Tobaji’s group certificate was not required, however, on review of the documents, he believed that it would have been because Mr Tobaji’s stated income alone was sufficient to service the loan in any event. He explained that if one applicant has a sufficiently strong income position, and provided all applicants have supplied sound letters of employment and other records to confirm their employment and income position, group certificate or tax assessment notices are not always required for all applicants (Caratzas affidavit, 13 December 2007, paragraphs 27-28). The Plaintiffs’ Application is Approved

Jazz Nevill worked as a Documents Co-Ordinator at HomeSide in 2004. This role essentially required him to receive loan application forms and supporting documents and to prepare the relevant loan documentation to send to customers. Mr Nevill explained his role in the 2004 loan to the Plaintiffs. He explained the procedure if an applicant for a loan from HomeSide was an existing customer of the Defendant. If an existing customer sought to refinance an existing loan with the Defendant and was applying for a new loan with HomeSide, their application is treated in the same way that it would be if they were refinancing the loan with any other financial institution. The loan application form would state that they have an existing loan with the Defendant, that HomeSide was not provided with a copy of the previous bank loan application or file, nor was it the usual practice of HomeSide to request a customer’s previous bank file. He explained that this was because HomeSide operated as an independent division of the Defendant. All customers and files were maintained separately and the Defendant and HomeSide offered different products. If the customers had provided all required documentation and information to support their new application with HomeSide, there was no reason to request a previous bank file of the Defendant (Nevill affidavit, 13 December 2007, paragraph 11).

Mr Nevill stated that, once he had prepared the loan documentation, he was required to attempt to contact the customers by telephone in order to confirm that the formal information on the loan application was correct. This was referred to as the “interview” stage. In 2004, Mr Nevill stated that document co-ordinators were required to attempt to contact the customers directly to confirm these details. However, if they were not able to make contact after approximately three attempts, and the customer had a broker, it was standard procedure for all document co-ordinators at HomeSide to call the customer’s broker to confirm the details.

By reference to contemporaneous records, Mr Nevill noted that he had contacted Wally Estephan on 31 May 2004. He recalled that he had spoken only once to Wally Estephan. He stated that his practice would have been to contact him directly only if he had been unable to contact Mr or Mrs Tobaji directly to confirm the loan details. Mr Nevill did not specifically recall his conversation with Wally Estephan, however, he believed he would have informed Wally Estephan that he was unable to make contact with either of the Plaintiffs and needed to confirm the loan details with him before sending the loan documentation to them. I accept Mr Nevill’s evidence to this effect. The Letters of Offer Dated 1 June 2004

By reference to HomeSide records, Mr Nevill stated that the letter of offer and loan documentation was sent directly by mail to the Plaintiffs on 1 June 2004. Separate letters addressed to each Plaintiff dated 1 June 2004 were sent to the Punchbowl property concerning the Plain and Simple Home Loan for $128,000.00 (Exhibit 1, pages 154-169). A letter dated 1 June 2004 was addressed jointly to the Plaintiffs at the Punchbowl property, care of Antoine Tobaji, with respect to the Peak Performance Equity Mortgage facility for $312,000.00 (Exhibit 1, pages 170-187).

These letters were sent by post to the Plaintiffs at the Punchbowl property and arrived there, in the ordinary course of the post, within days of 1 June 2004. A number of these documents were signed by the Plaintiffs and witnessed by Wally Estephan on 4 June 2004 (Exhibit 1, pages 166, 168, 169, 181A, 182, 185, 186 and 187). A further document in this bundle was signed by the Plaintiffs but dated 15 June 2004 (Exhibit 1, page 183).

There is some controversy concerning the means by which these documents reached the Plaintiffs. Mr Batley submits that it would be open to the Court to infer that Wally Estephan requested that these documents be collected by him for personal delivery to the Plaintiffs, rather than being put in the post addressed to the Punchbowl property. Mr White submits that the evidence of Mr Nevill, and the contemporaneous documentation of the Defendant, supports the conclusion that the letters were posted to the Plaintiffs at the Punchbowl property. More Documents Signed on 4 June 2004

I am satisfied that these letters were posted to the Plaintiffs and not delivered to them by Wally Estephan. That said, I accept that the Plaintiffs made contact with Wally Estephan upon their receipt and that he attended the Plaintiffs’ home on 4 June 2004 to assist in the completion of the documents. It is more probable than not, however, that the documents had been opened by the Plaintiffs and shown to one or other of their English-speaking children before Wally Estephan attended the property. This process would have assisted the Plaintiffs to have a clearer understanding of the contents of the documents, by means other than statements by Wally Estephan.

The documents posted to the Punchbowl property came to be signed by the Plaintiffs and witnessed by Wally Estephan on 4 June 2004. Mr Tobaji described this event in the following way (A Tobaji affidavit, 7 November 2007, paragraph 13): Antoine to Wally: “ Come out the back so I can smoke. My wife is making us some coffee.” The two men went to the backyard and sat on chairs around a table. Wally: “Here are the documents that I need you and Mary to sign.” Antoine: “That’s fine. When do you want them back.” Wally: “You can sign them now and I will get the money through this week for you.” Antoine: “I would like to take them to my solicitor George Shad.” Wally: “ Don’t worry. It’s nothing. You are like my father. George [Tobaji] and I are brothers. Don’t you trust your son?” Antoine: “Of course I do. But I prefer it like this.” Wally: “ Don’t you think that I would look after you like my father. You are insulting me by telling me this after the hard work I have done to get you this loan.” Antoine: “What hard work?” Wally: “I managed to get the bank to take Sassine off the loan.” Antoine: “How did you do that. They would not lend us the money last time because we aren’t working and I’m on the Disability Benefits. I don’t want anything to be done dishonest.” Wally: “It’s fine. The bank can see you always pay your loan and they are happy with this. Just sign the documents and don’t worry. Just worry about your daughter’s wedding.” Antoine: “Ok.” Mr Tobaji called his wife who came to the table. According to Mr Tobaji, a conversation to the following effect took place in Arabic (A Tobaji affidavit, 7 November 2007, paragraph 14): Antoine: “Wally has some papers here for us to sign so that we can get the money for the driveway.” Mary: “What are they?” Wally: “It is just the loan documents from the bank to say they are giving you another $12,000.00 on the house and that is all.” Mary: “Don’t we need George Shad to go through these?” Antoine: “It’s Ok. We can trust Wally. He won’t do the wrong thing.” Mary: “You are like my son. I trust you.” According to Mr Tobaji, Wally Estephan produced a number of documents and showed them where to sign in different parts of the documents and they did so. Mrs Tobaji then left to go inside to the kitchen. According to Mr Tobaji, the conversation continued (A Tobaji affidavit, 7 November 2007, paragraph 16): Antoine: “How much do I have to pay extra than my loan now?” Wally: “Not much about $35.00 per month.” Antoine: “That’s great.”

The documents signed by the Plaintiffs on 4 June 2004 included the following: (a) authority and undertaking (Exhibit 1, page 194); (b) declaration of receipt of independent legal advice - this document was witnessed by Gary Bond JP of 29 Grose Street, Parramatta and not Wally Estephan (Exhibit 1, page 196); (c) authority to pay out and discharge existing mortgage over the Punchbowl property (Exhibit 1, page 197); (d) business and investment declaration for the purpose of s.11 of the Code declaring that the credit to be provided by the Defendant is to be applied wholly or predominantly for business or investment purposes or both - witnessed by Wally Estephan who wrote the date as “06/04/04” , which I infer is a reference to 4 June 2004 written in the American style (Exhibit 1, page 182); (e) representations by mortgagors concerning the Punchbowl property (Exhibit 1, page 198); (f) direction to pay, including instruction to deposit balance of funds into the Peak Performance Account (Exhibit 1, page 200); (g) borrower’s certificate (Exhibit 1, page 201); (h) account authority card (Exhibit 1, pages 202-203).

As will be seen, I do not accept the version of the Plaintiffs of these conversations with Wally Estephan on 4 June 2004 insofar as the Plaintiffs maintain that each of them, at that time, believed that the loan sought from the Defendant was confined to $12,000.00 only. Final Approval by HomeSide

On 11 June 2004, Mr Nevill received the original executed loan application and other signed documents. However, the Direct Debit Request document had not been completed and signed by the Plaintiffs and the document was sent back with a note explaining that it needed to be completed, signed and returned to HomeSide (Exhibit 1, page 252). On 15 June 2004, Mr Nevill placed the original loan application on file (Exhibit 1, page 252).

After receipt of all documents which Mr Nevill considered had been executed correctly, he proceeded on 17 June 2004 to open the loan accounts and forward the file to the funding department of HomeSide (Exhibit 1, page 252; Nevill affidavit, 13 December 2007, paragraph 24).

As at 23 June 2004, the payout figure for the 2001 mortgage was $129,302.19 (Exhibit 1, page 253). On 23 June 2004, the Plaintiffs executed a mortgage in favour of the Defendant with respect to the Punchbowl property, with Wally Estephan witnessing their signatures (Exhibit 1, pages 257-259).

In June 2004, Patricia Johnston was employed as a Funding Co-Ordinator at HomeSide. On 23 June 2004, Ms Johnston sent letters to the Plaintiffs addressed to the Punchbowl property confirming that the drawdown of the Plain and Simple Home Loan and Peak Performance Facilities had taken place on 23 June 2004 (Exhibit 1, pages 260-265). That same day, the account for the 2001 mortgage was closed with a credit from the loan settlement of $129,302.19 (Exhibit 1, page 266). Again, on 23 June 2004, the new home loan account was debited with the sum of $128,159.81 (Exhibit 1, pages 319-320). The Evidence of Gina Assimakis

The Defendant called Gina Assimakis as a witness. Ms Assimakis has been employed since 2002 in the HomeSide division of the Defendant. She played no part in the assessment and approval process concerning the 2004 loan to the Plaintiffs. However, she examined the HomeSide lending file for the Plaintiffs and gave evidence with respect to the process followed. Ms Assimakis said that, as at May 2004, approximately 50 new loan applications were received by HomeSide from brokers every day (Assimakis affidavit, 13 December 2008, paragraph 18),

Ms Assimakis explained HomeSide’s policy concerning verification of employment information and stated that the information provided with the Plaintiffs’ application from employers together with the payslips, group certificates and Commonwealth Bank passbook records appeared to correlate with information contained in the loan application (Assimakis affidavit, 13 December 2007, paragraphs 15-17). Ms Assimakis stated that the Plaintiffs’ bank account statements provided as part of the application showed a history of the Plaintiffs servicing their 2001 mortgage without default. Ms Assimakis concluded that, on the face of the loan application and supporting documents, “the application was straightforward and there was no reason to make further inquiries before the application was approved in the usual manner” (Assimakis affidavit, 13 December 2007, paragraph 21).

Ms Assimakis confirmed that the Defendant used HomeSide to do business with customers via brokers (T245). The broker was paid an upfront commission by the Defendant and also a trail on the life of the loan depending on the balance (T245-246). The upfront commission payable in relation to the Peak Performance equity loan was 0.65% of the loan amount (T246).

Ms Assimakis confirmed that HomeSide officers had access to the Defendant’s database for customers (T249-250). She confirmed that a staff briefing note (Exhibit C) required the Applications Co-Ordinator, amongst other things, to see if the applicant had an existing profile with the Defendant and, if so, to print it off and include it on the paper file for the loan application (T250). Ms Assimakis was cross-examined concerning a computer printout headed “3200 Personal Summary” for Mr Antoine Tobaji (Exhibit A, page 552; T251ff). Given the submissions made on this topic, I will set out portions of the evidence of Ms Assimakis on this issue. Ms Assimakis was asked (T251-252): “Q. Do you see that's a document headed 3200 personal summary? A. Yes. Q. Do you recognise what that is? A. That's the 3200 EBOBS screen, which is our call mainframe that holds all our loans, deposits, credit cards, personal loan information. Q. It's organised by customer number; is that right? A. That is correct. Q. You will see in that document page 552 is the personal summary for Mr Antoine Tobaji? A. Yes. Q. Do you see that in about the middle of that box, there is an entry occupation class? A. Yes I do see that. Q. That says ‘30930 unemployed’? A. Yes it does. Q. Now, are the figures 30930, do they represent a code number for a customer of the bank who is unemployed? A. I'm assuming that, but yes. Q. So you're not sure of that? A. They are used for statistical purposes, so a bank can actually segment its customer base, so I would have assume it's linked to that status. Q. In your affidavit at paragraph 8 you talk about the application coordinator loading information contained in the loan application and supporting documentation into the system, and the application coordinator also being responsible for arranging a valuation to be conducted of the property. There is another role for the application coordinator which is not mentioned there relating to the customer profile? A. The role of the application coordinator in my affidavit, I would say, has a lot more levels to it. Q. So this is just the starting point is it? A. Yes. Q. But you have agreed with me that the role includes locating and printing out the customer profile? A. That is correct. Q. And the relationships group? A. Yes. Q. Are you aware, Ms Assimakas [sic] , that the loan application document submitted on behalf of Mr and Mrs Tobaji represented that Mr Tobaji had been employed by a company called RSS Formworks since 1999? A. I would have to look at the application. Q. Exhibit 1 page 146 in front of you at the moment. If you can turn back to page 106? A. Yes. Q. You're looking at that, and it says that Mr Tobaji worked full time for RSS Formwork Pty Ltd, and the date of employment started, 10 June 1999? A. That is correct. Q. On page 108 the loan application form has a section called borrower income? A. Yes it does. Q. That shows a gross annual salary in the name of Antoine of $106,000? A. Yes. Q. And a net monthly amount of 5643.99? A. Yes it does. Q. That information within the application is inconsistent with the information in the personal summary, isn't it? A. It is.”

Following an objection, the cross-examination of Ms Assimakis continued on this topic (T254-260) (emphasis added): “Q. Ms Assimakas [sic] , I asked you to have a look at pages 106 and 107 of Exhibit 1. Could you now please turn to page 132. Do you agree that that appears to be a letter from RSS Formwork Pty Ltd, first verifying that Mr Tobaji had been employed by that company for the past 5 years? A. Yes I do. Q. That letter is dated 17 May 2004? A. Yes it is. Q. And that forms part of the documents that were submitted with the loan application? A. That is correct. Q. Turn to page to page 113 and look at that page, and turn to 134, and look at that page. Would you agree that pages 133 and 134 appear to be two pay advice slips? A. Yes. Q. In the name of RSS Formworks Pty Ltd? A. Yes. Q. For Antoine Tobaji? A. That's correct. Q. The loan application and these documents at pages 132 and 134 suggest that Mr Antoine Tobaji at the time of the loan application was employed by RSS Formwork Pty Ltd? A. Yes it does. Q. And that he was paid a wage for that work? A. Yes. Q. And that he had been employed in that position since June 1999? A. That is correct. Q. Would you please have another look at exhibit A page 552? A. Yes. Q. I ask you to look down the page at that document where the left hand column has the words ‘profile status’, do you see that? A. Yes. Q. What follows is EST03 02 1987? A. Yes it does. Q. Would you agree that that suggests that this profile was established on 3 February 1987? A. Yes. Q. Then there is a slash after that and it says ‘amended 31 05 2003? A. That is correct. Q. And that represents that this record was amended on 31 May 2003? A. Yes. Q. I have already drawn your attention to the entry under occupation class unemployed? A. Yes. Q. Would you agree with me there is an inconsistency between this personal summary for Antoine Tobaji and the information in the loan application and the supporting documents that were submitted with that loan application? A. Yes. Q. What would you have done if that inconsistency had been drawn to your attention? A. Am I answering as a manager, or as an applications coordinator? Q. You are answering as a manager? A. As a manager. In hindsight, I may have looked at it differently. But having said that, the amendment that is shown in 2003 could be anything in that screen. So I would then take the application and the supporting documents as being the most current version and not necessarily question it, because it may have been updated in the course of the application . Q. Had you given any directions to applications coordinators about what to do in the case of an inconsistency between a personal summary and the documents in the loan application? A. As part of managing the unit, one thing that we always discuss, it wouldn't have been an exact directive around that occupation class, but it is always around ensuring that the data is correct and that where due diligence, we are looking at things that may stand out. But there was no specific written direction, no. Q. Ms Assimakas [sic] , the approach that's taken by Homeside Lending to lending is quite different from the branch based approach to lending, isn't it? A. Yes it is. Q. In a branch based system the borrowers give information to a staff member of the bank at a branch? A. That is correct. Q. They would see that staff member in person? A. Yes they would. Q. In the Homeside Lending approach to lending, at the time that the application is determined, there is no contact between Homeside Lending and the actual customer is there? A. No there isn't. Q. But there is within one of the functions of the document coordinator the role of contacting the customer to check details? A. That is correct. … Q. Ms Assimakas [sic] , the document coordinator for this file was a person by the name of Jazz Nevill? A. That is correct. Q. You agreed with me a moment ago that the document coordinator would make contact with the applicants at the time the documents were being prepared to clarify details? A. That is correct. Q. Is it your understanding of the role of Jazz Nevill in this application that if it had come to his attention there was an inconsistency between the information in the loan application and supporting documents and the personal profile of the customer about employment that he could have contacted the customer to clarify the position with them? A. The contact that we make with borrowers, or did make at that point in time, was to ascertain the details for the letter of offer that was to go out. So part of that duty would not be to look at the employment. They are there to phone to say, name, product, interest rate, security, to make sure that when we do deliver the letter of offer that it doesn't have to be reworded, and there is an error in it. Q. Could you please, in Exhibit 1, turn to page 146 under the heading credit/savings history? A. Yes. Q. There is the dot point ‘has the NAB system been checked for credit history, if customer has an existing NAB profile, and if any, is history satisfactory’? A. Yes. Q. If that box is ticked ‘yes’, would you interpret that as meaning that the applications coordinator has looked at the customer profile 3200 in the BOBS system? A. Yes. Q. Would you interpret that tick yes in that box as meaning they had printed out that profile and attached it to the paper line application file? A. Yes. Q. Would you agree, Ms Assimakas [sic] , that when the bank deals with brokers for information rather than directly with the customers there is a risk that the information that is being supplied comes from the broker rather than the customer? A. There is a risk . Q. The reason that the application coordinator is going through the decision tools approval check list is to address issues of risk, isn't it? A. Yes it is . Q. Would you agree with me that the inconsistency between Mr Tobaji's personal profile status as unemployed and the information in the loan application and supporting documents represents a risk to the bank? A. If you assume that the signature on the application form was not acknowledging current status . Q. Is it your evidence, Ms Assimakas [sic] , that the view of the bank within its Homeside Lending division is that the issue of risk of incorrect information from the customer is addressed by having the customer's signature on the application? A. It forms part of our risk . … Q. Based on your experience as production manager of Homeside Lendings New South Wales division, would you say that the question of the risk of incorrect information in a loan application form is addressed by the client having signed a form the applicant having signed the form? A. It's not the only factor, but yes, it forms part of the risk . Q. Homeside Lending requires a broker who is submitting an application to submit additional documents with that? A. That is correct. Q. And it's part of the process of assessment to confirm that the supporting documentation conforms with the information in the application form? A. That is correct. Q. Based on your experience as production manager, would you regard it as sufficient to take the information in that application form and support it with documentation at face value where there is inconsistent information in the customer profile? A. I think I think that inconsistency may have flagged something but the production of income documents came staggered and I would assume that the details are updated .”

Following a further objection, the cross-examination continued (T262-263) (emphasis added): “Q. It's the policy of HomeSide Lending, isn't it, to require a tax assessment or a group certificate together with other information about employment, is that right? A. Yes. Q. But the minimum requirement is either a tax assessment from the Australian Taxation Office or a group certificate together with the other information? A. I would have to go back and review the policy at that given time because the verification policy does change, but with that being ticked as a no, I would agree. Q. I've already drawn your attention to two pay slips from RSS Formwork Pty Limited and the letter from RSS Formwork. That's pages 132, 133 and 134. A. Yes. Q. Would you agree with me that that's the totality of the verification information about employment that HomeSide lending obtained in relation to this application? A. In review of the file, yes. Q. Now that verification information and the information stated in the application at pages 106 and 107, those are the things that's the information, the totality of the information, collected by HomeSide Lending in relation to Mr Tobaji's employment? A. Yes. Q. There is an inconsistency between that information on the one hand, and on the other hand the record that National Australia Bank keeps in its customer profile about Mr Tobaji's employment as it appears updated on 31 May 2003? A. Yes. Yes. Q. Doesn't that inconsistency mean that if no further inquiry is made that there is a risk that the employment information that came in the loan application form and with it and followed up with that group certificate is wrong; is false? A. Yes . Q. One of the purposes of having the customer profile personal summary available is in order to deal with issues of risk to the bank, isn't it? A. The customer profile has is a summary of the borrower's, or the customer, not borrower's necessarily, existing accounts and most current information if it is updated. Q. Is what you're saying that this customer profile personal summary, page 552, can just be disregarded? A. No. I'm saying that it is a snapshot at a given point in time and subject to customers giving us that information, for example, changing address. Unless we get the call we don't know to update .”

Following objection, the cross-examination of Ms Assimakis continued (T265-267) (emphasis added): “Q. Don't you agree, Ms Assimakis, that the information within the personal summary that Mr Tobaji has recorded as unemployed within the customer profile and the information contained within the loan application and the totality of the information about employment which suggests that Mr Tobaji had been employed for the last five years by RSS Formwork, raises an alarm bell? OBJECTION HIS HONOUR: What is the objection? WHITE: The objection is that there is the premise remains to be elucidated, your Honour. Inconsistency. HIS HONOUR: I think Ms Assimakis has already agreed there is an inconsistency and I propose to allow the question. Could you answer the question. WITNESS: Yes there is an inconsistency. Alarm bells, in hindsight, yes. At the time it's not one of most obvious inconsistencies when assessing an application . BATLEY Q. Couldn't the bank, sorry HomeSide Lending, one of its officers dealing with this application have contacted Mr Tobaji and said, ‘We have you recorded as unemployed. But with the loan application we've received documents suggesting that you've been working for RSS Formwork for the last five years. Can you clarify that?’ A. Yes, they could have .”

I will return to consider submissions made with respect to the evidence of Ms Assimakis. Antoine Tobaji and Wally Estephan Visit the Defendant on 24 June 2004

Events of particular importance to the resolution of these proceedings occurred on 24 June 2004.

According to Mr Tobaji, on that day, Wally Estephan came to the Punchbowl property and said “I have a few more documents for you and Mary to sign and then we can go to the bank and finish things off” . Wally Estephan placed a number of documents in front of Mr and Mrs Tobaji and showed them where to sign and then he said to Mr Tobaji “Come with me to the National Bank so that you can get your money into your account” (A Tobaji affidavit, 7 November 2007, paragraphs 17-18).

Thereafter, Mr Tobaji and Wally Estephan travelled to the Riverwood branch of the Defendant in Wally Estephan’s vehicle (T108). They were at the premises of the Defendant for about one hour and then Wally Estephan gave Mr Tobaji a lift home (T108-109). Mr Tobaji states that Wally Estephan produced some pieces of paper and said “I need you to sign where I point” and that Mr Tobaji then signed his name in a number of different places. Mr Tobaji states that the following conversation ensued (A Tobaji affidavit, 7 November 2007, paragraph 19): Antoine: “What’s this for?” Wally: “This is so they know your signature on this new loan and then the money will be put into your account.”

In my view, the activities at the Riverwood branch of the Defendant on 24 June 2004 shed considerable light upon the true nature of the Plaintiffs’ dealings with Wally Estephan and, in particular, Mr Tobaji’s true understanding of what was happening.

A significant document, touched upon in cross-examination of Mr Tobaji, is a withdrawal slip dated 24 June 2004 in the sum of $300,947.66 (Exhibit 1, page 273). The withdrawal slip had originally been completed in the sum of $5,000.00 with Mr Tobaji’s signature appearing on the slip. The figures “5000” have been crossed out and figures “300,947.66” written in. Mr Tobaji’s signature appears under the replacement figure. Mr White asked Mr Tobaji in cross-examination (T82-83): “Q. So when you signed it a second time, it did have the number $300,947.66 marked on it, didn't it? A. INTERPRETER: Probably, but my God I didn't pay attention, I didn't take notice. Q. I want to suggest to you Mr Tobaji that when you say that I did not take notice, when you signed that form a second time, that you are not telling the Court the truth? A. INTERPRETER: No, my God, I am telling the truth. Q. Can you turn to page 275 please? Just before you look at that document, Mr Tobaji, you know just turn back to page 273 please. I am sorry jumped ahead too fast. When you signed that document on page 283 on the 24 June 2004 at the Riverwood branch of the National Australia Bank? A. WITNESS: Hm. A. INTERPRETER: Yeah, I sign. Q. When you signed it on that date you knew you were giving an instruction to the bank to withdraw over $300,000 from the loan account, didn't you? A. INTERPRETER: Yes, but I wasn't aware what he was doing. I went there to withdraw $12,000 to get me 12,000. Q. And wasn't aware? A. WITNESS: I wasn't aware even when we went to the bank that I would go to get the money. I thought when he said, ‘let's go to the bank’ that he and he would take me to see a Manager or to speaking with someone there. Q. Again, Mr Tobaji, you know that is not an answer to my question, don't you? A. INTERPRETER: What do you want me to explain? Q. You are trying not to answer my question because you know how bad this document makes your case look, don't you? A. WITNESS: Yes. A. INTERPRETER: I know. I am not aware of what this document is all about, and I know that I have signed, yes. Q. You now say you have no idea what this document, page 273 is about, is that correct? A. INTERPRETER: No.”

Mr Tobaji was cross-examined about 10 bank cheque applications, each of which was signed by him and dated 24 June 2004 (Exhibit 1, pages 275-278). Ten bank cheques were issued for sums between $5,000.00 and $150,000.00 payable to various persons and entities (Exhibit 1, pages 279-297). I infer that these bank cheques, in the total sum of $295,947.66, were directed to creditors of Gilzan to which reference will be shortly made.

In evidence, Mr Tobaji maintained that Wally Estephan required him to sign these many documents at the Riverwood branch of the Defendant on 24 June 2004 as the Defendant required the documents “to be familiar with [his] signature” (T81.39). Mr Tobaji gave the following evidence with respect to his signing of documents at the Riverwood branch on 24 June 2004 (T109-110): “Q. Did you ask Mr Estephan why he needed you to sign 10 different pieces of paper that were the same types of paper? A. INTERPRETER: Yes, and he told me that the bank wanted to identify the right signature. Q. Well, did you ask him why you had to sign on 10 pieces of paper? A. INTERPRETER: No, I did not ask him because I signed on many papers, and he kept asking me to sign here and there. So I didn't ask him about anything. Q. How many pieces of paper did you have to sign altogether for this business in 2004? A. INTERPRETER: A lot. I signed a lot of papers. Q. And what did you think you were signing these pieces of paper for? A. INTERPRETER: I was, I was signing it for him to get me the loan, $12,000. Q. So you thought all these signatures were needed for a $12,000 loan, is that what you are saying? A. INTERPRETER: He told me that. Q. Was there any arrangement between you and Mr Estephan for him to get any money for the assistance he was giving you in 2004? A. INTERPRETER: I didn't understand the question properly. Q. Did you offer to pay Mr Estephan any money for the work he was doing for you in getting a loan in 2004? A. No, he told me that you are like my father, and I will try to help you, to get you the loan. Q. Did you believe he was doing this for you for nothing, is that what you believed? A. INTERPRETER: Yes, because he used to be good friend of the family. Q. Why didn't you just go up to the National Australia Bank with one of your children to see if you could get a $12,000 loan? A. INTERPRETER: Because I was at his father's place and who informed me that he can get you the loan.”

In my view, Mr Tobaji’s evidence concerning the events at the Riverwood branch of the Defendant on 24 June 2004 is implausible. He agreed that he had some familiarity with bank documents and practices arising from his own experiences in depositing and withdrawing funds at that branch (T29-30; T73-79). I do not accept his evidence that he believed, at that time, that multiple signatures were required of him for the purpose of a $12,000.00 loan. Of particular significance is Mr Tobaji’s signature below the substituted eight-digit figure on the withdrawal slip. I am satisfied that this figure was on the document at the time when Mr Tobaji signed the slip for a second time, thereby authorising the withdrawal of the amended and substantially larger figure. There is no doubt that Mr Tobaji could read numbers (T43) and this number was clearly written and represented a figure many multiples of his proffered belief that all of these efforts were directed towards a small $12,000.00 loan. I am satisfied that Mr Tobaji had a clear understanding that events in the Riverwood branch on 24 June 2004 were part of an arrangement whereby a much larger sum would be borrowed with the Punchbowl property as security, with that sum to be lent (as suggested by Wally Estephan) so that the Plaintiffs could make a profit from these arrangements. What the documents reveal happened next strongly supports this conclusion. The Gilzan Loan Agreement

On 25 June 2004, each of the Plaintiffs executed a loan agreement with guarantee whereby a sum of $300,000.00 was lent to Gilzan (Exhibit 1, pages 301-314).

The loan agreement between the Plaintiffs and Gilzan provided for a 12-month loan of $300,000.00 from 25 June 2004 with interest payable at 17% per annum at the rate of $4,250.00 per month in advance commencing from the date of drawdown. Louis Allem of Level 1, 29 Grose Street, Parramatta was guarantor of the loan which was secured by a mortgage over property at 37/190-192 Willarong Road, Caringbah (“the Caringbah property”) with a caveat over the Caringbah property (Exhibit 1, page 311). The loan agreement was signed by each of the Plaintiffs in the presence of Wally Estephan on 25 June 2004 (Exhibit 1, page 312). The Caveat

On 25 June 2004, the Plaintiffs signed a statutory declaration as part of a caveat over the Caringbah property (Exhibit 1, pages 315-316). On the face of the document, the signatures of the Plaintiffs were witnessed at Parramatta on 25 June 2004 by James Lahood, solicitor, of 29 Grose Street, Parramatta. The interest secured by the caveat was the equitable interest created pursuant to a loan agreement dated 25 June 2004 whereby the Plaintiffs advanced the sum of $300,000.00 to Gilzan by deed of loan (Exhibit 1, page 316). The caveat was registered on 25 June 2004 (Exhibit 1, page 317).

At the time of commencement of these proceedings in 2006, Mr Lahood was the solicitor on the record for the Plaintiffs. As a result of questions asked during the hearing before me, Mr Lahood was granted leave to cease acting for the Plaintiffs and a different solicitor appeared in his stead (T152-158). Mr Lahood became a witness, and a controversial witness, at the hearing.

It is apparent that the caveat, on its face, was and remains a most significant document. It constituted part of the security documentation entered into as part of a loan from the Plaintiffs to Gilzan of $300,000.00. The Plaintiffs maintain that, to their knowledge, they had borrowed the sum of $12,000.00 only from the Defendant. The Gilzan loan agreement and caveat are fundamentally inconsistent with such a case. Given the significance of this document, it is appropriate to set out the evidence of the principal participants about it.

Mr Tobaji acknowledged that both his wife’s and his own signatures appeared on the caveat (T89). Under cross-examination, Mr Tobaji said (T90-91): “Q. You remember going to Parramatta on 25 June 2004, don't you? A. INTERPRETER: No. Q. You went to the offices of Louis Allem in Parramatta on that date; didn't you? A. INTERPRETER: Yeah, I remember that I went to see Louis Allem. Q. And you know that Louis Allem is the man behind the company called Gilzan? A. INTERPRETER: I don't, I don't know Louis Allem. Q. You know Gilzan is the company that is the party to the loan agreement that you entered? A. INTERPRETER: No. At the beginning, I didn't know about that. Q. Well I'm asking you about your knowledge now? A. INTERPRETER: Now, yes. Q. You travelled out to Parramatta on that day with Mr Estephan, is that right? A. INTERPRETER: When? Before we get the loan, or after we get the loan? Q. After you get the loan? A. INTERPRETER: Yes. Once we went with Estephan to Louis Allem. Q. And when you were out in Parramatta on 25 June 2004 at Louis Allem's office, Mr La Hood [sic] witnessed you sign the document which you see at page 316; didn't he? A. INTERPRETER: I haven't signed anything except at my place, and at the Bank. Q. Well, you do remember going out though to Parramatta in June 2004 to Louis Allem's office? A. WITNESS: Yes. A. INTERPRETER: Yeah, I remember that I went, but I don't remember the date. And I went with him and his father too, not only him. Q. Will you turn to page 312 please, Mr Tobaji. You see your signature on that page, don't you? A. WITNESS: Yes. Q. And you see your wife's signature on that page? A. WITNESS: Yes. Q. If you wish, you can flick through that document starting at page 301 on the first page? A. INTERPRETER: Yes, but what's in it? What does it mean? Q. You recognise that this is your agreement with Louis Allem's company, don't you? A. INTERPRETER: I don't know Louis Allem but. Q. But you acknowledge meeting him in June 2004 at his Parramatta office, don't you? A. INTERPRETER: First time I met Louis Allem when we had the problem and I went with Estephan and his father to see him, to see Allem, and he told me 'this is the man who get the money and don't you worry at all, I will get you the money'. Q. Mr Tobaji, you went to Parramatta on 25 June 2004 to sign this loan agreement, didn't you? A. INTERPRETER: And I haven't signed anything. I did not sign anything at Louis Allem. Q. And at the same time you signed a declaration to the caveat which appears on page 316; didn't you? A. INTERPRETER: Any documents, any paper I signed on it, it has been signed at my place, he brought them to my place. I haven't signed anything at Louis Allem. Q. When you signed those documents you knew you were loaning $300,000 to Louis Allem's company Gilzan, didn't you? A. INTERPRETER: No. Q. You knew you were getting a caveat to protect your investment with his company; didn't you? A. INTERPRETER: No. Q. And you knew this because just the day before you had told the bank to withdraw $300,000 to allow that investment to be made; didn't you? A. INTERPRETER: I didn't ask the bank for anything.”

Mrs Tobaji said under cross-examination that she had not signed any document with respect to the loan arrangements apart from documents signed at the Punchbowl property (T121-122). She could not recall the caveat and was uncertain whether her signature appeared on the document (T122). She was asked in cross-examination (T122.27): “Q. It's possible that on about 25 June 2004 you went to offices in Parramatta to sign some documents, isn't it? A. INTERPRETER: No, I don't remember. I don't know.”

Mr White asked Mrs Tobaji (T123.16): “Q. Mrs Tobaji, you were, before the questions from his Honour, you were really quite uncertain about whether you had gone out to sign documents at Parramatta on 25 June, weren't you? A. INTERPRETER: No, I'm not sure of that. Q. Isn't it true that it's possible that Mr Lahood witnessed your signature on this document in or about 25 June 2004? A. INTERPRETER: Witness on what? To get the money or what? Q. Can you please just attend to the question I've asked you. Isn't it true that it's possible Mr Lahood witnessed your signature which appears on the document at page 316 on or about 25 June 2004? A. INTERPRETER: Probably this is right but honestly I cannot remember.”

In re-examination, Mrs Tobaji said that she did not see Mr Lahood signing papers (T124). Did Mr Lahood Witness the Plaintiffs’ Signature on the Caveat ?

In an affidavit sworn 12 November 2008, Mr Lahood said that he did not sign the caveat and he did not know how or when the caveat was brought into existence (paragraphs 3-6). He said that he first became aware of the caveat when it was shown to him by the Plaintiffs in about February 2006. He said that he had informed the Law Society of New South Wales (“Law Society”) in about late February 2006 of the caveat and the fact that the signature was not his (paragraph 10). Mr Lahood stated that he had sought and obtained advice from counsel and had come to the view that the caveat was not material to the present proceedings (paragraphs 11-12).

There are a number of troubling features in Mr Lahood’s evidence.

Mr Lahood stated that he had informed the Law Society of the existence of the caveat bearing, on his account, a forgery of his signature (T159). He produced a file copy of a letter dated 25 February 2006 which he said reflected the letter sent by him (Exhibit 7). I observe that 25 February 2006 was a Saturday. The letterhead on Exhibit 7 states “Principal: James J Lahood” and “Senior Associate: Elias S Yamine” . The letter is in the following terms: “Law Society of NSW DX 362 SYDNEY Dear Sirs Re: False Signature of James Joseph Lahood We advise that we have been provided with a caveat purportedly witnessed by the writer. We feel it prudent to advise the law society that the writer did not execute this document, a copy of which we enclose for your information. Should you have any queries please do not hesitate in contacting the writer. Yours faithfully James Lahood & Associates Per: James J Lahood Solicitor …”

Mr Lahood said he did not receive a reply to this letter (T160). The Defendant caused a subpoena to issue to the Law Society seeking production of the letter dated 25 February 2006 from Mr Lahood (Exhibit 5). Ms Lucy Pang, a solicitor employed in the Corporate Legal Department of the Law Society appeared in answer to the subpoena and gave evidence that, after all appropriate enquiries had been made, the letter had not been located and there was nothing on the Law Society’s tracking system that revealed that the letter of 25 February 2006 had been received (T279-287).

A further difficulty for Mr Lahood arises from correspondence between the solicitors for the Defendant and his firm earlier this year. On 26 March 2008, a subpoena issued directed to Mr Lahood seeking production, amongst other things, of the caveat for the Caringbah property, described in the subpoena as the caveat “to which is subscribed the statutory declaration of the plaintiffs, witnessed by you” . Following service of the subpoena, Mr Lahood corresponded with the Defendant’s solicitors (Exhibit 4). Mr Lahood signed a series of letters directed to the Defendant’s solicitors in this context, dated 3, 10 and 11 April 2008 and 7 July 2008, none of which asserted that Mr Lahood had not witnessed the Plaintiffs’ signature on the caveat, let alone that the signature was a forgery. Other letters dated 24 April 2008 and 24 July 2008 signed by other persons within Mr Lahood’s office did not contend that Mr Lahood’s signature on the caveat was a forgery (Exhibit 4).

During his evidence, Mr Lahood stated that he had contacted the Land Titles Office and advised them of what he had discovered concerning the caveat (T182.2). A subpoena issued to the Proper Officer of the Department of Lands seeking a copy of any letter, telephone or file notes or any other records of any communication by Mr Lahood concerning the caveat or authorship or forgery of the signature of Mr Lahood on the statutory declaration appended to the caveat (Exhibit 6). In response to the subpoena, Joseph Steyns, a Public Enquiry Officer and Courts Officer with the Department of Lands, appeared and said that, after appropriate enquiries had been made, no record had been located of any contact by Mr Lahood concerning the caveat (T293-294).

A further issue raised with Mr Lahood concerned the description of Mr Yamine as a “Senior Associate” in the letterhead of the letter bearing the date 25 February 2006 (Exhibit 7). A series of letters from Mr Yamine, as a solicitor in Mr Lahood’s office, sent to the Defendant’s solicitors with respect to the present litigation, were tendered (Exhibit 8). The point of the tender was that Mr Yamine was described in the letterhead as an “Associate” and not a “Senior Associate” in letters dated 31 May 2006, 8 June 2006, 22 June 2006, 30 June 2006 and 31 July 2006. It was put to Mr Lahood in cross-examination, and denied, that the Law Society letter (Exhibit 7) was a recent invention given the variation in the description of Mr Yamine’s status in the letterhead.

Mr Lahood said in evidence that he did not report the matter to the police but advised his clients to report the whole transaction to the police, including the caveat (T181.4).

During the course of his evidence, I asked Mr Lahood (T181-182): “Q. I just want to have an understanding of why you say in paragraph 11 of your affidavit that you had the view that the caveat was not material to the proceedings. Why did you have that view? A. My view, your Honour, was that or the reason it wasn't material it was part of, I guess, a group of documents in relation to Gillzan [sic] , if I can call it the Gillzan [sic] transaction, and that wasn't subject of the proceedings, in my mind. My view was that the client had borrowed what they believed to be was $12,000. Q. Did you take instructions on this, without stating what they may be, but did you take instructions from the first and second plaintiffs concerning the caveat? A. Yes. Q. On its face the caveat appears to be a legal document securing an interest in the $300,000 loan to Gillzan [sic] ? A. Yes. Q. Are you saying that you didn't believe that that issue was material to this litigation? A. Yes. Q. Why? A. The, I guess the substance of what I believed to be the proceedings was that the plaintiffs weren't aware, weren't aware of what they were entering into when signing the loan agreements with the National Australia Bank. That's the scope of what I believed. Q. That was the plaintiffs' case. The question is what were the issues in the litigation? A. Yes. In my mind, and on the material that or the issues that had come up, I didn't believe at the time that it was going to go further than the documents for the National Australia Bank. I didn't believe it was going to get into that. Q. Did you have a concern in 2006 that your signature may have been misused on other documents? A. Definitely. Q. What did you do about that? A. I wrote to the Law Society and put them on notice of what I had found in the caveat. I had also contacted the land and property the LTO and advised them of what I had discovered. And they, the person that I had spoken to, initially misunderstood what I was saying. Q. I'm just asking at this stage what you did, Mr Lahood. But you still didn't contact the police? A. No.”

Mr Lahood acknowledged that the signature on the caveat bore similarities to his signature (T308) although he pointed to areas where he perceived differences between the questioned signature and his own (T182).

Mr Lahood said that, when it became apparent in 2006 that someone else had used his signature on the caveat, it “scared the hell out of me, to be honest” (T183.1). Mr Lahood was asked (T183.5): “Q. When you came to have the correspondence with the defendant's solicitors, in exhibit [4] , this year? A. Yes. Q. Can you offer any explanation why you did not say then, to them, this was not your signature, given the way it struck you in 2006? A. I honestly didn't turn my mind to it. I didn't believe it was a relevant matter.”

Mr Lahood said that, in June 2004, he was working as a solicitor with Sid Hawach & Associates in George Street, Parramatta (T180.23). In that time, Mr Lahood acknowledged that he did some work for Mr Allem and attended Mr Allem’s office at Grose Street, Parramatta for that purpose (T172-179; T184-185). His then firm had acted on a transaction where an individual had entered into an agreement to loan money to Gilzan (T185) and those funds were secured by a caveat (T185). Mr Lahood recalled witnessing the declaration of that individual and that was the only caveat that he can recall ever witnessing (T185.46). The Defendant tendered title search documents setting out caveats registered with respect to Gilzan properties (Exhibits 9 and 10). The only caveat on which Mr Lahood has purported to witness a signature is the caveat signed by the Plaintiffs with respect to the Caringbah property.

Thus, Mr Lahood acknowledged that he had provided legal services to Mr Allem, including attendances at Mr Allem’s Grose Street, Parramatta premises in mid-2004. His associations extended beyond Mr Allem to Wally Estephan as well. Mr Lahood was asked (T185.5): “Q. Have you ever met Mr Wally Estephan? A. Yes, at the offices of Louis Allem. I should clarify I went to school with Wally Estephan's younger brother. We all grew up in the same area, but I don't, I'm not a friend of Wally Estephan, but I have met him. Q. At Mr Allem's office? A. The time that I did meet Mr Estephan was at Mr Allem's office. Q. When was that? A. Your Honour, it would have been the period of my employment, at the beginning of my employment with Mr Hawach. Q. Between March 2004 and March 2005? A. Yes.”

Following the calls upon subpoenas directed to the Law Society and the Department of Lands, Mr Lahood was recalled to give further evidence. A number of his answers were given with the benefit of a certificate under s.128 Evidence Act 1995 . He acknowledged that the signature on the caveat was “similar to my signature” (T308.27). Mr Lahood maintained that he had not signed the caveat bearing the Plaintiffs’ signatures. With respect to the variations in the firm’s letterhead describing Mr Yamine as “Associate” or “Senior Associate” , Mr Lahood said in re-examination that the computer system at his office required the manual insertion of changes to the letterhead on each occasion when a letter was generated and that this was not done consistently (T314.27).

A significant issue in these proceedings is whether Mr Lahood witnessed the signatures of the Plaintiffs on the caveat for the Caringbah property. After seeming to accept the possibility that he had signed the statutory declaration on the caveat at Parramatta on 25 June 2004, Mr Tobaji then sought to distance himself from that concession. Mrs Tobaji’s evidence was surrounded by a level of uncertainty in this regard although she settled upon the position that all documents signed by her with respect to this loan arrangement were signed at the Punchbowl property. Mr Lahood maintains that he did not witness this document and that the signature on the document purporting to be his is a forgery.

In determining this issue, I have had regard to the gravity of the matters alleged for the purpose of s.140 Evidence Act 1995 , the statutory formulation of the principle in Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-363: Palmer v Dolman [2005] NSWCA 361 at [40]-[47]. I am comfortably satisfied, on the balance of probabilities, that Mr Lahood did witness the signatures of the Plaintiffs on 25 June 2004 in an office in Grose Street, Parramatta. At that time, Mr Lahood was performing work at that place and had associations with persons relevant to this transaction, including Mr Allem and Wally Estephan.

As the tribunal of fact, I am entitled to make a comparison between handwriting that is disputed and admitted: R v Doney (2001) 126 A Crim R 271 at 280 [61]; Jeans v Cleary [2006] NSWSC 647 at [157]. There is no expert evidence before the Court in this hearing. Mr White acknowledged that the Defendant determined not to seek an adjournment for such evidence to be obtained, given the further delay which would have been involved. Clearly, I must take care in giving weight to my own observations of the relevant signatures as part of the fact-finding process, in the absence of expert evidence. Nevertheless, I have to say that, to my observation, there is a close similarity between Mr Lahood’s admitted signature and the signature appearing on the caveat for the Caringbah property.

Mr Lahood is not assisted by the content of the letter allegedly sent to the Law Society on 25 February 2006 (see [102] above) nor by the absence of evidence that such a letter was ever received by the Society. It must be said that the somewhat sparse content of the letter does not have the flavour of genuine communication by a solicitor to his professional body reporting the forgery of his signature on a statutory declaration forming part of a caveat registered under statute by the Department of Lands. It might be thought that the alarm would have been sounded clearly, consistently, and persistently by Mr Lahood if he believed that his signature had been forged in such a way. Not only would the professional and ethical consequences for himself be clear, but the commercial consequences for others (including the Plaintiffs) would have been such as to bring about a different level of communication to that claimed by Mr Lahood. A perfunctory letter, lacking in detail and unaccompanied by any follow up does not, in my view, ring true as a genuine communication in the circumstances which presented themselves. Mr Lahood’s position is further complicated by the confusing picture presented by the differing descriptions of Mr Yamine in the letterhead. At the very least, this aspect serves to further undermine any confidence which could be placed in the genuineness of the letter as a contemporaneous communication sent by Mr Lahood on 25 February 2006. I regret to say that the strong probability is that this letter was created much later as a means of assisting Mr Lahood in a difficult situation.

I am comfortably satisfied that the Plaintiffs signed the caveat at Parramatta on 25 June 2004, in the presence of Mr Lahood, with each of the Plaintiffs knowing that the document was being signed as part of the arrangement made by Wally Estephan of a $300,000.00 loan to Gilzan from the proceeds of the loan obtained by the Plaintiffs from the Defendant. Far from the caveat being irrelevant to the proceedings, as claimed by Mr Lahood, I regard the caveat and its contents as being an important part of the body of accumulated evidence, comprising contemporaneous documents, which shed light upon the true nature of the loan arrangements between the Plaintiffs and the Defendant and, critically, the Plaintiffs’ knowledge of those arrangements and their true purpose. The Conduct of the Plaintiffs After 25 June 2004

Both Plaintiffs claim that the first time that they learned that a loan of more than $12,000.00 had been obtained form the Defendant was when, on about 25 June 2004, their son George opened mail from the Defendant received at the Punchbowl property which revealed the true nature of the loan. Both of the Plaintiffs and George Tobaji gave evidence of a conversation occurring at that time in which the Plaintiffs are shocked to find that a large loan had been obtained, far exceeding $12,000.00. I do not accept the evidence of Mr and Mrs Tobaji and George Tobaji that a conversation to this effect occurred at that time. I am satisfied that both of the Plaintiffs were aware before then that a substantial loan had been obtained on their behalf by Wally Estephan from the Defendant for the purpose of the Plaintiffs making money through the further loan to Gilzan of the sum of $300,000.00. The documents sent by mail by the Defendant to the Punchbowl property in early June 2004 had made clear the true quantum of the loan. I am satisfied that the Plaintiffs were aware before then that a large loan was to be obtained, with the assistance of Wally Estephan, to permit the Plaintiffs to re-lend the bulk of the funds at a profit.

In my view, the Plaintiffs’ conduct after 25 June 2004 is consistent with them having knowledge of the true position prior to that time. The Plaintiffs did not approach their long-standing family solicitor, Mr Shad, to seek advice as to what should be done. Nor did they contact the police. Although it might be said that reporting Wally Estephan to the police at that time might have been difficult given the Plaintiffs’ long-standing friendship with his family, this would not be an impediment to obtaining advice from Mr Shad. It is the evidence of both Plaintiffs that they raised expressly with Wally Estephan, on 4 June 2004, the taking of advice from Mr Shad but were dissuaded from doing so, yet the Plaintiffs would have the Court believe that they did not approach Mr Shad concerning their major financial predicament between June 2004 and at least late 2005. I do not find this evidence credible.

Mr Tobaji maintains that he made efforts to contact Wally Estephan from late June 2004, but did not succeed in making contact until early September 2004 (A Tobaji affidavit, 7 November 2007, paragraphs 24-25). Mr Tobaji maintains that it was only then that Wally Estephan disclosed to him that the documents which the Plaintiffs had signed had involved a loan to Mr Allem. Mr Tobaji states that Wally Estephan promised to provide the money to service the loan and that, for approximately 14 months, he did provide Mr Tobaji with cash or cash cheques to deposit into the loan accounts, although sometimes the cheques would bounce and Mr Tobaji would get help from his children to pay the loan repayments. Mr Tobaji states that, towards the end of 2005, he could no longer get into contact with Wally Estephan and was concerned that the loan would not get paid. At this point, he tried to contact Mr Allem without success. Mr Tobaji states that his son, George, read the documents that Wally Estephan had given them and it was then decided that they should go to a lawyer and Mr Shad was approached who was unable to help “as he only practised in buying and selling property, not court matters” (A Tobaji affidavit, 7 November 2007, paragraph 26). According to Mr Tobaji, in early 2006, his wife’s cousin referred the Plaintiffs to James Lahood and he commenced to act for them (A Tobaji affidavit, 7 November 2007, paragraph 27).

The contemporaneous documents reflect use by Mr Tobaji of monies advanced by the Defendant under the loan agreement. For example, on 1 July 2004, Mr Tobaji drew a $700.00 cash cheque on the equity mortgage account (Exhibit 1, page 321). On 2 July 2004, $6,384.00 was transferred from the equity mortgage account to the credit of the Plaintiffs’ passbook account (Exhibit 1, pages 323, 437F, 439). In July and August 2004, other sums were credited to the equity mortgage account (Exhibit 1, pages 326, 327, 328, 329, 439, 440). In September and October 2004, further sums were credited to the equity mortgage account (Exhibit 1, pages 330, 331, 332, 442, 443).

By letter dated 10 November 2004, Smith Monti Legal wrote to Gilzan advising that they acted for Mr and Mrs Tobaji. The letter confirmed a loan agreement entered into between the Plaintiffs and Gilzan on 25 June 2004 in the sum of $300,000.00 with interest to be paid in the amount of $4,250.00 per month. The letter confirmed the existence of a caveat to protect the Plaintiffs’ interest over the Caringbah property. The letter stated that Gilzan had failed to make monthly repayments and demanded that the sum of $300,000.00 be paid by 17 November 2004 and that if payment was not made, a creditor’s demand seeking to wind up Gilzan would issue (Exhibit 1, pages 334-335).

On 18 November 2004, David Legal, for Gilzan, replied indicating that instructions were being sought from Gilzan (Exhibit 1, page 339).

On 20 December 2004, Smith Monti Legal informed David Legal that, given Gilzan’s failure to respond to the demand, instructions were being sought to commence proceedings immediately against both Gilzan and Mr Allem (Exhibit 1, page 342).

On 24 December 2004, Martin John Green was appointed as voluntary administrator of Gilzan (Exhibit 1, page 495). The first creditor’s meeting of Gilzan took place on 4 January 2005 (Exhibit 1, page 343A). Between 8 February 2005 and 18 July 2005, Mr Tobaji withdrew sums of money from the equity mortgage account on at least 22 occasions. These withdrawals were for sums between $100.00 and $3,750.00 and totalled the sum of $10,850.00 (Exhibit 1, pages 345, 346, 348, 349-357, 359, 367, 369, 370, 390, 391, 393, 394-395, 397, 398). At the same time, deposits were being made from time to time into the equity mortgage account. I accept that these payments were coming from Gilzan, probably through Wally Estephan.

On 5 May 2005, the Defendant issued a dishonour notice to the Plaintiffs with respect to a deposit of $3,750.00 by Business Accounting Solutions (NSW) Pty Limited (Exhibit 1, page 364). The registered office of that company was at Level 1, 29 Grose Street, Parramatta and company records reveal an association between that company and Mr Allem (Exhibit 1, pages 531, 533-534).

On 9 June 2005, Smith Monti Legal transmitted to GHK Green Krejci (Gilzan’s voluntary administrators), copies of the Gilzan loan agreement, the caveat over the Caringbah property and a property search (Exhibit 1, page 371). On 23 June 2005, a meeting of Gilzan’s creditors took place at the offices of GHK Green Krejci in Elizabeth Street, Sydney (Exhibit 1, pages 393A-393G). Amongst the creditors who were present were Mr Tobaji, who signed the list of attending creditors with the list disclosing the value of the debt payable to him as $300,000.00 (Exhibit 1, page 393G).

On 15 August 2005, an adjourned meeting of Gilzan’s creditors took place (Exhibit 1, pages 401A-401G). Again present was Mr Tobaji, who signed the list of attending creditors with a disclosed value of a creditor’s debt in the sum of $300,000.00 (Exhibit 1, page 401E).

On 8 November 2005, HomeSide issued letters to the Plaintiffs for overdue payments on the equity mortgage account, advising that the account had been in excess of the facility limit for 40 days (Exhibit 1, page 404).

On 31 March 2006, the Defendant wrote to the Plaintiffs cancelling the equity mortgage account facility and demanding repayment of the whole balance of $321,330.37 (Exhibit 1, pages 406-407).

On 4 May 2006, the Plaintiffs filed the Statement of Claim in these proceedings.

On 20 June 2006, the Defendant served notices pursuant to s.57(2)(b) Real Property Act 1900 on the Plaintiffs (Exhibit 1, pages 408-412) together with a default notice with respect to the new loan account facility (Exhibit 1, page 414).

On 24 July 2006, the Defendant served upon the Plaintiffs a demand for $329,073.24 with respect to the outstanding sum under the equity mortgage account facility (Exhibit 1, pages 416-417) and also served a demand for $124,780.88 being the sum outstanding under the new loan account facility (Exhibit 1, page 418).

On 13 November 2006, a further meeting of Gilzan’s creditors took place with the sum of $300,000.00 again being disclosed as the debt due to the Plaintiffs (Exhibit 1, pages 420A-420B). Submissions of the Parties

Counsel furnished detailed written submissions and spoke to those submissions. I record in this part of the judgment a summary of submissions made on issues of fact and law. I have already made findings on important factual issues, those findings being made after considering the submissions summarised hereafter. Submissions of the Plaintiffs

Mr Batley submitted that the Court should find that the Plaintiffs entered into the 2004 agreement and mortgage believing that they were obtaining an additional loan in the sum of $12,000.00 only. He submits that the Court should find that, in effect, Wally Estephan deceived the Plaintiffs into signing all relevant documents and that, in effect, Wally Estephan was involved in a frolic of his own to obtain the substantial loans advanced, for personal gain (by way of commission) and to assist his associates, Mr Allem and Gilzan. The Plaintiffs contend that it is open to the Court to find that Wally Estephan believed that the loans would be serviced by Gilzan and Mr Allem so that no detriment would ultimately result to the Plaintiffs. Mr Batley submits that the Plaintiffs were duped by Wally Estephan in this way. To this end, Wally Estephan utilised, without the knowledge of the Plaintiffs, forged and false documents concerning the alleged employment of each of the Plaintiffs.

Mr Batley submits that the Court should find that the Plaintiffs did not become aware of the true nature of the agreement and mortgage entered into until the letters dated 25 June 2004 were opened by their son, George, who then explained to them their contents. Mr Batley submits that the Court should find that thereafter the Plaintiffs sought out Wally Estephan who, for an extended period, caused payments to be made on behalf of Gilzan to service the Plaintiffs’ loans from the Defendant. However, the arrangements fell apart when Gilzan apparently could no longer service the debt. Thereafter, the loan facility was terminated and the Plaintiffs were exposed to recovery action by the Defendant.

Mr Batley submits that further findings ought be made to the following effect: (a) that each of the Plaintiffs had no capacity to understand the documents which they signed having regard to their limited understanding of English and their fundamental misunderstanding of the sum of money being advanced by the Defendant; (b) that the Code applies and the business and investment declaration signed by the Plaintiffs (Exhibit 1, page 250) is not effective in the circumstances of the case given the reliance of the Plaintiffs on Wally Estephan and his misleading of the Plaintiffs; (c) that unjust contract relief is available to the Plaintiffs by way of ss.70 and 71 of the Code and ss.7 and 9 CR Act; (d) that the Plaintiffs’ limited understanding of English rendered them unable to protect their own interests in relation to the transaction, and the Peak Performance equity mortgage credit contract placed an impossible burden on them because they were unable to repay the loan from their Centrelink income - the consequences to the Plaintiffs of default were serious because their lack of income meant that they would have been unable to obtain alternative finance, and the only way they could repay the principal amount and interest was to sell the family home in which they had resided since 1980 - the evidence does not support the conclusion that they made a conscious decision to place their family home at risk in order to borrow money to engage in high-risk lending; (e) Mrs Tobaji was entirely dependent on Mr Tobaji to deal with financial matters - she was vulnerable to Mr Tobaji and, by virtue of Mr Tobaji having placed his trust in Wally Estephan, she was vulnerable to Wally Estephan; (f) it was not within the ability of the Plaintiffs to create false documents in support of the loan application; (g) the Defendant’s system within its HomeSide Lending Division of dealing exclusively with brokers meant that the Plaintiffs did not receive the benefit of having the nature and extent of their obligations under the credit contracts explained to them by an officer of the Defendant - the Plaintiffs relied on Wally Estephan for an explanation and signed documents as directed by him, with no explanation of the meaning and effect of the documents; (h) the HomeSide Lending Staff Briefing No. 182 (Exhibit C) required the Applications Co-Ordinator to search the BOBS 3200 system to identify whether a customer profile was held for the loan applicants - the evidence suggests that Mr Caratzas, the Applications Co-Ordinator, failed to do this, but Mr Nevill, the Document Co-Ordinator, did identify and printout the customer profile for Mr Tobaji - this customer profile had been most recently amended on 31 May 2003 and described Mr Tobaji’s “occupation class” as “30930 Unemployed” - there was a discrepancy between the information submitted in the May 2004 loan application and supporting documents, which suggested that Mr Tobaji had been employed by RSS Formwork Pty Limited since 1999 and the entry in the customer profile (which suggested he was unemployed in 2003) - the Defendant did not advert to this discrepancy - Ms Assimakis gave evidence that it would have been possible for the Defendant to make enquiries of Mr Tobaji in order to clarify the discrepancy (T266.31-36); (i) the Defendant’s failure to identify and follow up the discrepancy between the customer profile and the May 2004 loan application and income verification documents is an element contributing to the overall unjustness of the credit contract and mortgage; (j) the benefit to the borrower from a proper risk assessment may, in appropriate circumstances, be entitled to significant weight in the determination of unjustness - it is clear from the list of factors contained in s.9(2) and (3) CR Act that a substantial purpose of the legislative scheme is to protect persons who are not able to look after themselves: Perpetual Trustee Company Limited v Khoshaba [2006] NSWCA 41 at [80]; (k) the Peak Performance equity mortgage credit contract and mortgage were unjust in the circumstances at the time they were entered into - the primary unjustness in the transaction arose from the involvement of Wally Estephan - although the Defendant was unaware of the conduct of Wally Estephan that contributed to the credit contract and mortgage being unjust, it is appropriate to have regard to the Defendant’s failure to properly conduct a risk assessment of the loan application in light of the information available to it at the time when determining what the appropriate remedy for injustice is: Perpetual Trustee Company Limited v Khoshaba at [80].

Mr Batley submits that the appropriate relief would be to set aside the Peak Performance equity mortgage loan and to direct that the sum of $12,000.00 plus interest at the rate from time to time for the Plain and Simple Home Loan since 23 June 2004 be added to the balance of the Plain and Simple Home Loan.

Alternatively, Mr Batley submits that, if the Court finds that the credit contract and mortgage were not unjust in relation to Mr Tobaji, the Court should find that the credit contract was unjust in relation to Mrs Tobaji: cf Elkofairi v Permanent Trustee Company Limited [2002] NSWCA 413. In those circumstances, Mr Batley submits that the appropriate remedy would be to order: (a) that the joint tenancy of the Punchbowl property be severed; (b) that Mr Tobaji’s liability to the Defendant be a charge on his half share of the property; (c) that Mrs Tobaji’s liability to the Defendant be limited to half of the amount paid in June 2004 in payment of the 2001 loan (that is, half of $129,000.00) plus half of $12,000.00 plus interest at the variable rate for the Plain and Simple Home Loan from 23 June 2004, amounting to $70,500.00 plus interest; and (d) that Mrs Tobaji’s liability to the Defendant be a charge on her half share of the property.

With respect to the Plaintiffs’ claim for relief based upon unconscionability at general law, Mr Batley relies upon Commercial Bank of Australia Limited v Amadio (1983) 151 CLR 447 at 474. He submits that, in this case, the circumstance of disadvantage was Mr and Mrs Tobaji’s limited English and their inability to understand documents in the English language. He submits that the Defendant was on notice of this disadvantage because it had dealt with the Plaintiffs in connection with the 2001 loan application when each of the Plaintiffs had required the assistance of their daughter, Georgina, to assist them in their dealings with the Defendant at its Lakemba and Campsie branches. He submits that the Defendant did not take any steps to ensure that Mr and Mrs Tobaji understood the 2004 transaction and has, therefore, not discharged its onus to show that the transaction was fair, just and reasonable. Submissions of the Defendant

Mr White submits that the Plaintiffs have failed to establish any entitlement to relief sought in the Statement of Claim and that the Defendant is entitled to orders in accordance with the Cross Claim.

It is clear, he submits, that: (a) the first loan agreement of about $128,000.00 was a refinance of the existing 2001 home loan from the Defendant; (b) the second loan agreement for about $300,000.00 was, according to the Plaintiffs’ loan application, taken out for investment purposes.

Mr White submits that the Defendant’s Cross Claim is a simple claim for possession of the residential property which was secured by each of the loans. The second facility is in substantial default and has been for an extended period of time. The Defendant relies upon the Plaintiffs’ defaults under the second facility as a cross-default under the home loan. No defence has been pleaded to that claim apart from the matters set out substantively in the Statement of Claim.

He submits that the Plaintiffs have received the incontrovertible benefit of the home loan, and no claim has been made that the 2001 loan was itself unfair or should be set aside.

Mr White observes that the Plaintiffs contend a liability to repay $12,000.00 only (plus interest) under the second facility upon the basis of their suggested belief that they were entering into an agreement to borrow that sum only for the purpose of concreting work to the Punchbowl property. He submits that this contention is not established by the evidence. In any event, should the Court decide that the second facility ought be set aside or otherwise limited to the extent of the Plaintiffs’ liability under it, Mr White submits that further allowance must be made for receipt by the Plaintiffs of income from the investment which they received via the broker, and which they continued to pursue through solicitors and in the liquidation of Gilzan after they say they learned of their error in the nature of the loan.

Mr White submits that a claim of unjustness under s.7 CR Act involves a two-stage enquiry. First, was the contract unjust? Secondly, what, if any, orders should be made? The first stage may be described as a judgment and the second stage is clearly discretionary: Perpetual Trustee Company Limited v Khoshaba at [34]. If a contract, or one of its relevant provisions, is neither unfair nor unreasonable so far as the applicant for relief is concerned, it is difficult to see how the existence of inequality in bargaining power, or lack of independent advice, can render the contract, or a provision of the contract, unjust: West v AGC (Advances) Limited (1986) 5 NSWLR 610 at 621. If a lender has not engaged in conduct depriving the borrower of a real or informed choice to enter into a contract, and the terms of the contract are reasonable as between the parties, the contract cannot be considered unjust simply because it was not in the interests of the applicant for relief to make the contract or because he or she had no independent advice: West v AGC (Advances) Limited at 621. A contract will not be unjust as against a party unless the contract or one of its provisions is the product of unfair conduct on his part, either in the terms which are imposed or in the means which are employed to make the contract: West v AGC (Advances) Limited at 622; Perpetual Trustee Company Limited v Khoshaba at [70]-[73].

Mr White relies upon the decision of Brereton J in Riz v Perpetual Trustee Australia Limited [2007] NSWSC 1153 at [75] and submits that evaluation of injustice requires that the Court have regard to the position of all the contracting parties. In circumstances where the Defendant is providing funds to be used for an investment purpose, the fact that the lender had no involvement of any kind in the investment was entitled to significant weight in its favour: Perpetual Trustee Company Limited v Khoshaba at [77].

With respect to the discretionary second matter in the two-stage enquiry under s.7 CR Act, there is a discretion to decline relief, despite a determination that a contract is unjust: Perpetual Trustee Company Limited v Khoshaba at [94]-[95], [119].

Mr White submits there is nothing pleaded to suggest that the terms of the second facility contain terms which are intrinsically unjust. The Plaintiffs’ pleaded claim under the CR Act is limited to three particulars of unjustness: (a) the Plaintiffs’ disadvantages in being poorly educated and unable to speak, read or write English as their first language; (b) the Plaintiffs’ ignorance of the contents of the agreement and mortgage; (c) the failure to afford the Plaintiffs the opportunity to negotiate alterations to the agreement or to obtain independent legal advice.

Mr White submits that neither of the Plaintiffs were ignorant of the contents of the mortgage. The only question is the quantum of the loan secured by the mortgage, that being a question relating solely to the second facility. In these circumstances, Mr White submits that the only matter requiring serious consideration is the question of the Plaintiffs’ state of knowledge that they were loaning money for the purpose of an investment with Gilzan. He submits that the balance of the particulars provided could not, even if established, be productive of any material unjustness.

The Defendant submits that Mr Tobaji was expressly aware of the quantum of the loan he was receiving at the time that he executed the loan documentation. The Defendant submits that Mr Tobaji’s state of awareness is evidenced by a number of compelling considerations: (a) his receipt by post at the Punchbowl property of mail from HomeSide in early June 2004 containing the unexecuted loan agreements together with covering letters referring to loan finance totalling $440,000.00; (b) his familiarity with basic banking procedures including writing and cashing cheques and processing over-the-counter withdrawal transactions - he had a business banking relationship with the Defendant before 2004 and his visit to the Riverwood branch of the Defendant with Wally Estephan on 24 June 2004 involving, amongst other things, his signing of a withdrawal slip for the sum of $300,947.66; (c) his knowledge of loan procedures and of the Defendant’s need to be satisfied with and verify an ability to repay, which he knew he had not provided to Mr Estephan or to the Defendant; (d) his account that he signed 10 bank cheque applications at the Riverwood branch on 24 June 2004 thinking them to be documents for taking sample signatures is inherently improbable; (e) Mr Tobaji produced his driver’s licence at the Riverwood branch on 24 June 2004, supporting a conclusion that the teller dealt with Mr Tobaji (as the customer) and Wally Estephan together on that occasion; (f) the implausibility of the loan purpose (to concrete the driveway) having regard to the pattern of withdrawals from the loan account and the absurdity of Mr Tobaji’s evidence that, despite taking out the loan for this express purpose, he then acquired a lump-sum payment from his daughter whom he repaid from instalments from the proceeds of the loan; (g) the implausibility of Mr Tobaji’s behaviour following his asserted realisation on 25 June 2004 that the loan was for an amount in excess of $400,000.00, including the continued withdrawals from the account and his failure to raise complaints with the police, the Defendant, his solicitor (Mr Shad) or Gilzan; (h) Mr Tobaji’s subsequent decision to recover the lost investment monies through normal channels by pursuing the debtor through solicitors and ultimately proving in the liquidation of Gilzan the full amount of the investment ($300,000.00); (i) the weight of the evidence suggests that both Mr and Mrs Tobaji attended the premises of Mr Allem at 29 Grose Street, Parramatta on 25 June 2004 for the purpose of signing a caveat by way of security for the $300,000.00 loan made in favour of Gilzan - the Gilzan loan agreement was signed at that time and place as well - neither of the Plaintiffs were convincing in their evidence that they did not sign any documentation at that place.

Mr White submits that a finding should be made that Mr Lahood witnessed the Plaintiffs’ signatures on the statutory declaration which formed part of the caveat executed on 25 June 2004 at Mr Allem’s Parramatta premises and that his denial of this ought not be accepted. The Defendant submits that this finding ought be made for the following reasons: (a) Mr Lahood worked at Sid Hawach & Associates during 2004 which led him to work, as a secondee, at Mr Allem’s Parramatta premises; (b) he says that he witnessed the declaration on one caveat lodged with respect to an entity associated with Mr Allem and Gilzan; (c) a search of Gilzan’s property holdings, and caveats lodged with respect thereto, reveals only one caveat witnessed by Mr Lahood; (d) he was subpoenaed in 2008, personally, to produce the caveat witnessed by him and eventually produced a caveat, never once informing the Defendant’s solicitors that he had not witnessed the Plaintiffs’ declarations to the caveat; (e) prior to production of the caveat in answer to the subpoena, there was extended correspondence in 2008 about his compliance, which must have placed the issue of production of the caveat clearly in mind; (f) the Plaintiffs discovered the Gilzan agreement, a company with which Mr Lahood was familiar, and that agreement expressly provided for the Plaintiffs to secure their loan to Gilzan by a mortgage and a caveat over the Caringbah property; (g) the evidence indicates that Mr Lahood concocted a letter dated 25 February 2006 addressed to the Law Society in which he purported to raise the issue of a forged signature as a witness to the declaration; (h) Mr Lahood gave implausible accounts of his giving notice to the Law Society and the Department of Lands about the existence of a caveat bearing his forged signature, and his failure to follow up the matter despite the lack of response and, in the case of the Department of Lands, a perception by him that the relevant officer had misunderstood his advice.

The Defendant submits that Mr Lahood had acted on behalf of the very company (Gilzan) that had caused loss to his clients, and resulted in them bringing the present proceedings. The only evidence of his involvement is the witnessing of the caveat. The Defendant submits that it stands to reason that Mr Lahood would not have remembered the Plaintiffs at the time he witnessed their signatures on the declaration. Mr White submits, however, that the evidence suggests that Mr Lahood must have realised this at some early stage of the present proceedings, yet he chose to continue to act for the Plaintiffs in the proceedings. The Defendant submits that the Court should find that Mr Lahood was professionally embarrassed by this potentially damaging revelation.

Mr White submits that the Plaintiffs proffer no explanation (logical or otherwise) as to what they thought they were doing executing the Gilzan loan agreement and caveat at the premises of Gilzan and Mr Allem, in the presence of Wally Estephan, the day after the substantial loan funds had been drawn down. On the Plaintiffs’ account, this was the same day when the Plaintiffs assert that they became aware of a fraud or, at least, a very serious mistake as to the quantum of loan funds. The Defendant submits that the Court should infer from this that the Plaintiffs knew that they had committed the loan monies to an investment with Mr Allem or an entity associated with him.

Mr White submits that the evidence which linked Mrs Tobaji to the detail of the transaction is not as clear or plentiful as that available to support Mr Tobaji’s knowledge about the detail of the transaction. He submits that an inference ought be drawn and a finding made that Mrs Tobaji had the same degree of understanding as her husband of the transactions, at least to the extent she knew that a large sum of money was being borrowed to invest, with that borrowing secured by a mortgage over the family home. He pointed to the statement in Micarone v Perpetual Trustees (Australia) Ltd (1999) 75 SASR 1 at 111 [591] that a wife deferring to the wishes of her husband must accept the consequences of relying upon her husband in that way.

With respect to the role of Wally Estephan, Mr White submits that the Court would not find that the Plaintiffs were simply duped into the loan for its true amount by Wally Estephan. Mr White notes that the Plaintiffs accept that Wally Estephan is not the agent of the Defendant, a proposition supported by authority: Con-Stan Industries of Australia Pty Limited v Norwich Winterthur Insurance (Aust) Limited (1986) 160 CLR 226 at 234; Micarone v Perpetual Trustees (Australia) Limited at 123 [632]; Steele-Smith v Liberty Financial Pty Limited [2005] NSWSC 398 at [104] and Hilton v Gray [2007] QSC 410 at [40]. To the extent that the Court may determine that Wally Estephan behaved dishonestly or in an unfair way short of dishonesty, Mr White submits that such behaviour cannot be sheeted home to the Defendant.

Mr White accepts that the question of the unjustness of the contract transcends a simple question of agency. He observes that it has not been suggested in evidence or submissions that the Defendant was motivated by asset lending considerations.

Mr White made submissions with respect to the issue raised in the cross-examination of Ms Assimakis (see [78]-[81] above). Although it had not been particularised, Mr White notes that the Plaintiffs contend that the Defendant had the means of detecting the alleged fraud by its possession of information (in the form of the 3200 BOBS screen dump) which indicated that Mr Tobaji had “unemployed” status (at least in or before 2003) and that the Defendant had failed to act. In cross-examination, Ms Assimakis agreed that there is “a risk” that when the bank deals with brokers for information, rather than directly with the customers, that the information that is being supplied comes from the broker rather than the customer (T257). Ms Assimakis acknowledged an inconsistency between the employment verification information received by HomeSide on the May 2004 application and the customer profile information as to employment status as updated on 31 May 2003 (T255, 263) and that such an inconsistency means that, in the absence of further enquiry, there is a risk that the employment information provided is false. Mr White pointed to the evidence of Ms Assimakis in cross-examination acknowledging an inconsistency and agreeing that it raised “alarm bells, in hindsight” , but that “at the time it’s not one of [the] most obvious inconsistencies when assessing an application” (T266.25). Mr White submits that this evidence must be assessed against the earlier evidence of Ms Assimakis which was based upon a false premise. In any event, Mr White observes that the customer profile information only contains what a customer tells the Defendant. He points to the evidence of Ms Assimakis that she would “take the [2004] application and the supporting documents as being the most current version and not necessarily question it” (T256.2).

Mr White refers to the evidence of Ms Assimakis that the customer’s signature on the loan application is, in part, the way HomeSide addresses the risk of incorrect information in the application process although there are other factors (T258.41). He submits that the highest point to which evidence on this topic rises is that: (a) a fairly senior manager in HomeSide; (b) with the benefit of hindsight (but not necessarily at the time of processing an application); (c) who assumed that the BOBS indicated that the customer was, at 31 May 2003, unemployed, because any amendment to the entry had been occasioned by the change of the customer’s employment status; and (d) who saw a loan application indicating that the customer had been employed since 1999 - would have “alarm bells” ring. He submits that this is not sufficient to have placed the Defendant on notice of behaviour which should lead to the setting aside of the loan transaction. The existence of risk is inherent in all commercial organisations. Equally, he submits, there is a risk that information provided by a customer directly is also fraudulent. To acknowledge this does not present any solution to a problem and is certainly insufficient to taint the transaction as unjust.

Mr White submits that the Defendant was in no special relationship with the Plaintiffs which imposed on the Defendant a duty to investigate whether the Plaintiffs were telling the truth about their financial position or whether the Plaintiffs, in fact, had the capacity to repay which they represented they had: Steele-Smith v Liberty Financial Pty Limited at [84]. He submits that a prospective borrower is not entitled to expect the lender to be alert for fraud by or on behalf of the borrower and a lender is not required, in the interests of the borrower, to have “a high index of suspicion” for fraud by the borrower or the borrower’s agent. He relies upon the statement of Brereton J in Riz v Perpetual Trustee Australia Limited at [78] that to “hold that the undetected provision of false information by or on behalf of a borrower to a lender in an attempt to obtain a loan resulted in the loan contract being unjust against the lender would be to invert commonsense, logic and justice by protecting the wrongdoer against the victim” .

Mr White submits that an objective assessment of the position not only of the Plaintiffs, but of the Defendant, its behaviour in the circumstances and its motivation, compels the conclusion that the loan agreement was not unjust for the purposes of the CR Act.

Mr White makes three submissions with respect to the claim that the loan agreement was unfair due to the lack of independent legal advice for the Plaintiffs. Firstly, both Plaintiffs say that they were aware of the importance of getting legal advice in relation to a loan transaction before they entered into this one, that they turned their mind to the question when the loan documentation was provided to them and they determined not to seek advice although they had a solicitor (Mr Shad) at the time. Secondly, it is not universally incumbent upon the lender to ensure that a borrower obtains legal or financial advice: St George Bank Ltd v Trimarchi [2004] NSWCA 120 at [79]. Thirdly, reliance is placed upon the observations of Spigelman CJ concerning “independent advice” in s.9(2)(h) CR Act in Perpetual Trustee Company Limited v Khoshaba at [89]-[90]. It is submitted that the asserted denial of opportunity to obtain legal advice is without factual foundation and, in any event, as a matter of principle, no significant weight ought be given to the nature of the transaction. Mr White submits there is simply no evidence that the Plaintiffs sought to negotiate different terms to the loan agreement, and it cannot be said that they were denied any opportunity to do so.

With respect to the claim of serious disadvantage due to poor education and lack of English as a first language, Mr White submits that the serious disadvantage said to afflict the Plaintiffs was simply not productive of any unjustness in the loan transaction. They had experience in the loan and mortgage transactions they were undertaking and knew they were undertaking such a transaction in this case. The Defendant submits that the Plaintiffs did, in fact, understand the true extent of the financial commitment they were undertaking. Even if they did not, however, each turned their mind to the question of legal advice and decided against that course.

Mr White submits that if, contrary to the Defendant’s submissions, the Court determines that the second facility was unjust, the Court should exercise its discretion not to grant relief. He submits that a similar approach to that taken by Brereton J in Riz v Perpetual Trustee Australia Limited at [84]-[85] ought be taken here, in circumstances where the lender has assessed the loan for serviceability and the Defendant has not demonstrated the indifference that was evident in Perpetual Trustee Company Limited v Khoshaba .

The Defendant observes that the Plaintiffs’ claim, as pleaded under the Code, is limited to five particulars of unjustness, and that these particulars raise issues similar to those already considered in the context of the CR Act claim of the Plaintiffs. Mr White submits that the Code really replicates, in the context of consumer lending, the regime for setting aside an unfair contract that is already provided for under the CR Act. For reasons advanced by the Defendant with respect to the CR Act claim, Mr White submits that the Court would not find any unjustness for the purpose of s.70 of the Code that would justify the grant of relief to the Plaintiffs.

With respect to the controversy as to whether the provisions of the Code apply to the second facility, Mr White queries the necessity for separate examination of issues that relate solely to the question of application of the Code given the availability of CR Act.

With respect to the Plaintiffs’ claim under the general law of unconscionability, Mr White submits that the Court would not grant the Plaintiffs equitable relief. The only special disadvantage which the Plaintiffs could arguably identify is poor education and their limited ability to speak or write English as their first language. Mr White invites a similar approach to that taken by Brereton J in Riz v Perpetual Trustee Australia Limited at [87], whereby the reasons for concluding that the loan was not unjust equally inform a conclusion that it was not unconscionable. He submits that there is no evidence that the Defendant had knowledge of any asserted disadvantage. He submits that, from HomeSide’s perspective, the loan transaction was not an imprudent, let alone an improvident, one. Accordingly, he submits that there can be no basis for concluding that the Defendant unconscientiously took advantage of the Plaintiffs.

Mr White submits that there should be judgment for the Defendant on the Statement of Claim and judgment for the Defendant on the Cross Claim. He submits that the Court should direct the Defendant to bring in Short Minutes of Order giving effect to the reasons for judgment, accompanied by a final affidavit of debt. Resolution of Competing Submissions

It is appropriate to record the facts as found, and to then apply relevant legal principles in light of those factual findings.

I have already made a number of findings of fact in the course of the judgment. See, in particular, the findings at [30], [34]-[35], [63], [67], [70], [90], [95], [114]-[118], [119]-[120]. My findings of fact with respect to the conduct of the Plaintiffs, may be summarised as follows: (a) probably from the time of his initial conversation with Wally Estephan in May 2004, and certainly by early June 2004, Mr Tobaji was well aware that Wally Estephan was obtaining loans in favour of the Plaintiffs using the Punchbowl property as security for a sum far beyond $12,000.00, being a figure in excess of $400,000.00; (b) Mr Tobaji was aware that Wally Estephan would be required to provide employment information to the Defendant so as to demonstrate a capacity on the part of the Plaintiffs to service a loan in excess of $400,000.00 - although it is probable that Wally Estephan caused the false documents to be created with respect to the alleged employment of Mr and Mrs Tobaji, the appropriate inference to be drawn is that Mr Tobaji and Sassine Bou Francis provided the detailed information to Wally Estephan which was then used to create the relevant documents; (c) Mr Tobaji was aware that the true purpose of the loan was to obtain a substantial sum at a lower interest rate which could be then lent at a higher interest rate, thereby providing a profit to the Plaintiffs - the true purpose of the loan was not to obtain a loan for $12,000.00 to permit concreting work to be undertaken at the Punchbowl property; (d) although there is less direct evidence against Mrs Tobaji to support findings against her in the terms of subparagraphs (a) and (c) above, an inference is available, and ought be drawn, that she was aware as well by early June 2004 of the true purpose and quantum of the loan - in this respect, the variety and number of documents signed by her, including the execution of the Gilzan loan document and caveat at Parramatta on 25 June 2004 supports this finding; (e) the Plaintiffs executed the statutory declaration forming part of the caveat over the Caringbah property on 25 June 2004 at Parramatta in the presence of Mr Lahood; (f) from June 2004 to early 2006, the Plaintiffs acted in a manner consistent with their knowledge of the true quantum of the loan and the existence and purpose of the Gilzan loan - payments were made to the Plaintiffs by Gilzan and withdrawals were made by Mr Tobaji in this period - the conduct of the Plaintiffs, including their failure to raise the matters with Mr Shad, let alone to report them to the police, points to their belief that matters were proceeding as planned until Gilzan defaulted in payment thereby leading to the Plaintiffs defaulting on the loans to the Defendant; (g) although each of the Plaintiffs have limitations upon their ability to read and understand documents written in English, each of them had a true understanding, at the time of execution by them in June 2004, of the content of the loan documents and, in particular, the fact that the sum being borrowed exceeded $400,000.00 - I am satisfied that each Plaintiff could read and understand numbers and that the numbers contained in a multitude of documents in this case spoke eloquently of the true dimension of the loan; (h) the Plaintiffs utilised the services of Wally Estephan, a mortgage broker, because they accepted his statement that a large loan could be obtained from the Defendant which could be lent by them at a higher interest rate to the financial advantage of the Plaintiffs - the Plaintiffs were content to have Wally Estephan take all necessary steps to assist them to obtain the relevant loans, with any falling out between them only truly eventuating after Gilzan defaulted in its repayments to the Plaintiffs; (i) the absence of independent legal advice to the Plaintiffs does not bear in any real way on the present proceedings - at all times, the Plaintiffs had Mr Shad available from whom advice could be sought if they so wished - it was the Plaintiffs’ choice not to seek advice from Mr Shad or anyone else, but to entrust matters to Wally Estephan who was acting on their behalf.

I note that neither counsel submitted that any inference ought be drawn, one way or the other, as a result of Wally Estephan not being called as a witness at the hearing. My task is to determine the proceedings by reference to the evidence adduced by the parties.

I make the following findings of fact with respect to action taken within HomeSide concerning the Plaintiffs’ loan application: (a) the application was accompanied by a range of supporting documentation which provided a reasonable and objective foundation for the statements contained in the application concerning the Plaintiffs’ employment, income and banking history; (b) additional documentation was sought from Wally Estephan which resulted in the production of a group certificate concerning Mr Tobaji which constituted additional objective support and corroboration of his employment; (c) no officer of the Defendant contacted the Plaintiffs (as opposed to Wally Estephan) to check the accuracy of the information contained in the application - I accept the evidence of Mr Nevill (see [63] above) concerning this aspect - in any event, I am satisfied that any contact which an officer of the Defendant had made, in particular with Mr Tobaji or Mr Bou Francis (as his alleged employer), would have seen confirmation being given that this was true - any contact would not have revealed the true position.

The high point of the Plaintiffs’ argument arises from the evidence of Ms Assimakis with respect to risk (see [78]-[81] above). Upon the basis of certain assumptions, an inconsistency or tension could be observed between the information provided in May 2004 concerning Mr Tobaji’s employment and the information contained in the computer-generated customer file note. I do not accept, however, the Plaintiffs’ submissions on this issue. There are a number of reasons for this conclusion.

Firstly, it is necessary to understand, and fairly read, the totality of the evidence of Ms Assimakis on this topic. Properly understood, it rises no higher than a hindsight assessment giving greater weight to the computer-generated customer file than is objectively warranted. I accept Mr White’s submissions in this regard.

Secondly, particular care must be taken where the conduct of the parties is seen through the “prism of hindsight” : Rosenberg v Percival [2001] 205 CLR 434 at 441-442 [16]. As Gleeson CJ there observed, there is a danger in a failure, after the event, to take account of the context, before or at the time of the event, in which a contingency was to be evaluated. The documents provided in support of the loan application on 21 May 2004 included letters purporting to certify the employment of both Mr and Mrs Tobaji. In the case of the letter purporting to come from Sassine Bou Francis of RSS Formwork Pty Limited, correct particulars and contact numbers were provided, together with an invitation that further information could be obtained by telephone contact with Mr Bou Francis. As it happened, officers of HomeSide sought additional information which came on 26 May 2004 in the form of a group certificate supportive of the original documentation.

In my view, there is an air of unreality in the Plaintiffs’ submission that this body of direct and contemporaneous material with respect to Mr Tobaji’s suggested employment ought to have been viewed with suspicion because of an entry in a computer-generated customer file. Proper analysis of the evidence on this issue, in my view, does not support the Plaintiffs’ argument that this evidence warrants a finding of unjustness for the purpose of the CR Act.

The submissions of the Defendant at [148]-[150], [158], [162] and [164] summarise accurately the relevant principles. I agree with the observations of Palmer J in Steele-Smith v Liberty Financial Pty Limited at [84] and Brereton J in Riz v Perpetual Trustee Australia Limited at [78]-[79]. In the circumstances of this case, it would invert commonsense, logic and justice to hold that the undetected provision of false information by or on behalf of a borrower to a lender, in an attempt to obtain a loan, resulted in a loan contract being unjust against a lender. Such an approach would protect the wrongdoer (the Plaintiffs) against the victim (the Defendant). The evidence does not demonstrate any indifference or recklessness on the part of the Defendant: Riz v Perpetual Trustee Australia Limited at [78].

The loans obtained by the Plaintiffs from the Defendant in May-June 2004 did not involve asset lending: Riz v Perpetual Trustee Australia Limited at [70]-[71]. There is no other intrinsic feature of the loans which supports a finding of unjustness with respect to them.

I have made a number of findings of fact adverse to the Plaintiffs. Given those findings, the Plaintiffs are driven to contend that they ought be granted relief under the CR Act because of the Defendant’s failure to detect the Plaintiffs’ wrongdoing. Even it if it was established that the Defendant or its officers had departed from their own lending guidelines and due diligence procedures, that alone does not establish the injustice of the loan. Rather, any departures would need to be part of a process of reasoning, the ultimate outcome of which is that the loan in question was unjust: Kowalczuk v Accom Finance Pty Limited [2008] NSWCA 343 at [117]. I am not satisfied that the circumstances of this loan leads to the conclusion that the contract and mortgage were unjust under the CR Act in the circumstances in which they were made. Even if such a finding had presented itself at the first stage of the inquiry (which it does not), I would decline relief, in any event, at the second stage of the inquiry.

Wally Estephan was the Plaintiffs’ broker and thus their agent. This was so notwithstanding the fact that he apparently received commission from the Defendant: Micaroni v Perpetual Trustees Australia Ltd at 123 [632]; Hilton v Gray at [40].

I am not satisfied that the Plaintiffs have established a basis for relief under s.70 of the Code. A consequence of my findings of fact is that the Plaintiffs were aware that the vast bulk of the money being borrowed from the Defendant in May-June 2004 was for investment purposes. The business and investment declaration signed by the Plaintiffs and witnessed by Wally Estephan was, in my view, a true indication of the purpose of the loan as understood by the Plaintiffs. My reasoning in rejecting the CR Act claim leads to the rejection of the claim under the Code.

Similar reasoning leads me to reject the Plaintiffs’ claim based upon unconscionability under the general law. Although the Plaintiffs did not have a strong command of English, each of them had an accurate understanding of the quantum and purpose of the loan being obtained from the Defendant in May-June 2004. Each Plaintiff understood that the loan was secured by a mortgage over the Punchbowl property.

I do not consider that the Plaintiffs’ case is advanced by the fact that officers of the Defendant at the Lakemba and Campsie branches would have had some knowledge of the language limitations of the Plaintiffs arising from the 2001 mortgage obtained through that branch with the assistance of the Plaintiffs’ daughter. I do not accept that knowledge of some officers of the Defendant (in 2001) can be called in aid to advance materially the Plaintiffs’ case arising from events, in different circumstances, involving other officers of the Defendant (in 2004): cf The Bell Group Ltd (In Liq) v Westpac Banking Corporation [No. 9] [2008] WASC 239 at [6138]-[6165].

I am not satisfied that either Plaintiff suffered from a relevant special disadvantage with respect to their dealings with the Defendant for the purpose of these loans. I reject the Plaintiffs’ claim for relief under the general law.

The Plaintiffs have failed to establish an entitlement to relief as sought by them in the Statement of Claim.

In closing submissions, Mr Batley advanced an alternative argument which sought to differentiate between Mr and Mrs Tobaji (see [141] above). Although there is a more substantial volume of direct evidence against Mr Tobaji, I have concluded that Mrs Tobaji was aware of the quantum and purpose of the loans being obtained from the Defendant in May-June 2004. This finding is not dependent upon any process of reasoning which deems Mrs Tobaji, as the wife, to be vested with the knowledge of Mr Tobaji, her husband. Rather, my findings with respect to the state of knowledge of Mrs Tobaji are based upon inferences to be drawn from her involvement in the substantial process of document completion to obtain the loans and the execution of the Gilzan loan agreement and caveat at Parramatta on 25 June 2004 in the presence of Mr Lahood. I do not accept Mr Batley’s submission of an alternative approach differentiating the relief to be granted with respect to Mr and Mrs Tobaji. In my view, this case is far removed from the factual circumstances in Elkofairi v Permanent Trustee Company Limited.

Accordingly, the Plaintiffs have failed entirely with respect to relief sought in the Statement of Claim.

With respect to the Cross Claim, I agree that the Defendant’s claim is a simple one for possession of the Punchbowl property which is secured by the loans and mortgage taken out by the Plaintiffs with the Defendant in June 2004. The Defendant has demonstrated substantial default on the part of the Plaintiffs under the mortgage and Mr Batley does not contend that a contrary finding ought be made. The Plaintiffs have not pleaded a Defence to the Cross Claim apart from agitating the matters advanced in the Statement of Claim which I have rejected.

Accordingly, I am satisfied that the Defendant has demonstrated an entitlement to relief as sought in the Cross Claim. Referral to Law Society Concerning Mr Lahood

The witnessing of a signature on a registrable document is a solemn and important function: Graham v Hall (2006) 67 NSWLR 135 at 143 [58]-[59]. Mr Lahood’s account to this Court (which I have rejected) was to the effect that someone had forged his signature on the caveat. If Mr Lahood’s signature had in fact been forged, such a false attestation would constitute an attack on the integrity and reliability of the registration system: Graham v Hall at 143 [59]. If Mr Lahood had truly thought that his signature had been forged on the caveat, his response to such a gross and serious act of dishonesty would have far exceeded the modest steps which he says he took, and the response of the relevant authorities would have been of a type which recognised the gravity of the allegation as an attack on the integrity and reliability of the registration system. As I have concluded above at [114]-[118], it was in truth Mr Lahood who witnessed the Plaintiffs’ signatures on the statutory declaration forming part of the caveat. Serious issues are accordingly raised concerning the professional conduct of Mr Lahood which warrants investigation by the appropriate authorities.

Having regard to the findings made by me with respect to Mr Lahood’s witnessing of the signatures of the Plaintiffs on the statutory declaration forming part of the caveat dated 25 June 2004, I will direct that a copy of this judgment be furnished to the Chief Executive Officer of the Law Society for the purpose of investigation with respect to Mr Lahood. Conclusion and Orders

There should be judgment for the Defendant on the Statement of Claim. There should be judgment for the Defendant (as Cross Claimant) on the Cross Claim. I direct the Defendant to bring in Short Minutes of Order giving effect to these reasons for judgment, accompanied by a final affidavit of debt.

I direct that a copy of this judgment be furnished to the Chief Executive Officer of the Law Society of New South Wales for the purpose of investigation of the conduct of James Joseph Lahood.