Lyons v Duke

1. [1]

   These proceedings arise out of an unfortunate family dispute concerning some disputed loan and mortgage documents. Anthony John Duke, the first defendant, is the father of Susan Larissa Lyons, the second defendant. Her now-estranged husband, Daniel Patrick Lyons, is the plaintiff.

2. [2]

   Mr and Mrs Lyons were married in 2008. They have two teenage children. The disputed documents (a loan agreement and a mortgage) were prepared in September 2017 at the time the Lyonses purchased a residential property at Arcadia as their new family home.

3. [3]

   The loan agreement purports to record a loan of $1.125 million from Mr Duke to the Lyonses. The mortgage purportedly makes the Arcadia property security for that loan. The documents bear what purport to be the signatures of all three parties. The mortgage is in registrable form, but no steps were taken at the time to register it, and it remains unregistered.

4. [4]

   The loan agreement provides for interest to be payable of the $1.125 million loan at 3% per annum. Interest at that rate on that sum was paid by the Lyonses up until the middle of this year, the payments partly being made from a company controlled by the Lyonses and partly from Mr Lyons’ personal bank account (with contributions from Ms Lyons’ personal bank account). This continued after the Lyonses separated in May or June 2023, with Ms Lyons moving out of the family home. But in the middle of this year the payments stopped.

5. [5]

   In July, solicitors acting for Ms Lyons foreshadowed divorce and property settlement proceedings in the Federal Circuit and Family Court of Australia. They also indicated that the September 2017 mortgage would be registered on the title of the Arcadia property. Mr Lyons lodged a caveat over the property as owner to prevent that from happening.

Claims and issues for determination

1. [6]

   Not long after Mr Lyons’ caveat was lodged, a lapsing notice was issued at the request of Mr Duke. I was informed that the mortgage has been lodged for registration, with the result that if the caveat is removed from the register, it will automatically be registered.

2. [7]

   The proceedings were commenced in early September, and the hearing has been expedited.

3. [8]

   Mr Lyons’ principal claim is for delivery up and cancellation of the disputed loan agreement and mortgage. He alleges that he never signed these documents; his purported signatures are forgeries and the instruments are void. Alternatively, he claims orders under the Contracts Review Act 1980 setting aside or varying the two instruments.

4. [9]

   It is not in dispute that when they acquired the Arcadia property the Lyonses did not have sufficient funds of their own to complete the purchase, and that some of the purchase moneys were advanced by Mr Duke. Mr Lyons accepts that even if the loan agreement and mortgage are delivered up and cancelled, he and Ms Lyons will remain liable to repay the funds advanced by Mr Duke.

5. [10]

   But Mr Lyons does not accept that as much as $1.125 million was so advanced. He only accepts the figure of $848,000. His contention is that, even if the loan agreement and the mortgage are not forgeries, they should be amended or rectified under the Contracts Review Act so as to reduce the principal amount to that figure.

6. [11]

   Mr Duke and Ms Lyons, who are commonly represented, maintain that the loan agreement and the mortgage were validly executed by Mr Lyons. They now accept that they are unable to prove that Mr Duke advanced the Lyonses any more than $1.072 million. But they do not accept that the loan figure should be varied on that account. If, however, the Court determines that the principal amount should be varied, they contend that it should only be reduced by $78,000 to $1.072 million.

7. [12]

   A cross-claim has been filed on behalf of Mr Duke to reflect this position. Mr Duke seeks in the first instance an order in the nature of an order for specific performance against the Lyonses compelling them to take all steps necessary to ensure that the mortgage is registered on the title to the Arcadia property. Alternatively, if the Court finds that the mortgage and loan agreement are forgeries which should be delivered up and cancelled, Mr Duke claims a declaration that the Lyonses are indebted to Mr Duke in the principal amount of $1.072 million.

8. [13]

   Ms Lyons has filed a submitting appearance to her father’s cross-claim. Mr Lyons has filed a defence which reflects his contentions as plaintiff.

Evidence

1. [14]

   The property arrangements between the parties which formed the context for the purchase of the Arcadia property were somewhat complicated. Mr Duke had separated from Ms Margaret Duke, Ms Lyons’ mother. He was living at Guyra in country New South Wales. Ms Duke was living at a residential property in Junction Road, Wahroonga. This property was registered in the name of the Lyonses. They themselves were living at a property in Grosvenor Street Wahroonga.

2. [15]

   The Grosvenor Street property was registered in the name of Mr and Mrs Duke. But pursuant to a written agreement between the parties in 2013, the Lyonses had bought Ms Duke’s half-share of that property, in consideration of buying the Junction Road property for her. When sold, the Lyonses would receive half the proceeds of Grosvenor Street, and Ms Duke would receive a transfer of Junction Road. Caveats had been lodged over the Grosvenor Street property (presumably by the Lyonses) and the Junction Road property (presumably by Ms Duke) to protect the interests created by the 2013 agreement.

3. [16]

   The Lyonses exchanged contracts for the purchase of the Arcadia property in early June 2017. The purchase price was $2.3 million, with a deposit of 5% ($115,000). The purchase was eventually settled a bit over three months later, on 11 September.

4. [17]

   At the same time the Grosvenor Street property was sold so as to provide the funds for the purchase of the Arcadia property. The sale was settled on the same day as the purchase of the Arcadia property, 11 September.

5. [18]

   The sale price of the Grosvenor property was $3.02 million. The Lyonses’ half-share was insufficient to meet the purchase price and the additional money required to effect settlement came out of Mr Duke’s share of the Grosvenor Street proceeds. Several days later, on 15 September, the Junction Road property was transferred by the Lyonses to Ms Duke.

6. [19]

   Ms Lesley Dingley, a solicitor practising at Wahroonga, acted for the Lyonses on the purchase of the Arcadia property. She also acted on the sale of the Grosvenor Street property and the transfer of the Junction Road property to Ms Duke.

7. [20]

   Because the transactions in question took place more than seven years ago, the documentary evidence is incomplete. In particular, not all the documents signed by the Lyonses to effect the transactions are in evidence. The counterpart of the Arcadia contract signed by the Lyonses as purchasers has not been found. Nor is the transfer of the property in evidence, but it seems that it may have been signed on the Lyonses’ behalf by Ms Dingley, rather than by the Lyonses themselves, in any event.

8. [21]

   The loan agreement and mortgage were prepared by Mr Hugh Piper, solicitor, who was then practising in Armidale (Guyra is not far from Armidale). In evidence is a letter of advice from Mr Piper to Mr Duke which, it is agreed, was written on 18 August and which enclosed the documents. It is common ground that the documents were signed by Mr Duke (with his signature being witnessed, in the case of the mortgage, by Mr Piper), at that point.

9. [22]

   There is no documentary evidence which records how the documents got to Sydney, but it must have been by 6 September, as an email from Ms Dingley to the Lyonses on that date refers to the documents and contains advice about them. Further emails make it clear that the documents were not signed by the Lyonses before settlement. On 22 September it was agreed that the Lyonses would meet Ms Dingley on 27 September at 11am to sign them.

10. [23]

    There is no documentary evidence which confirms that a meeting took place with Ms Dingley on 27 September as had been planned. Text messages between Mr Lyons and Ms Lyons on the morning of that day are in evidence. After 9:55am, there is no further message until 12:01pm, when Mr Lyons texted “where are you?” to Ms Lyons. No further messages are in evidence after that.

11. [24]

    The final piece of documentary evidence to which I was referred on this question is an email sent by Ms Dingley to the Lyonses on 9 October. The email is addressed to “Suzy and Daniel” and states: “As discussed when we met I attach my invoice for the additional LPI registration fee that I paid on your behalf for the withdrawal of caveat.”

12. [25]

    The loan agreement is in conventional form. The parties are identified as Mr Duke (as “Lender”) of the first part and Ms Lyons and Mr Lyons (collectively the “Borrower”) of the second part. The agreement contains three recitals and twelve operative clauses, and extends over four pages.

13. [26]

    The recitals are:

14. [27]

    Clause 2 provides:

15. [28]

    Clause 3 provides that the principal is repayable on 30 September 2027 or such other date as may be agreed by the parties, and also provides for payment of monthly interest at 3% on the principal as already mentioned. Clause 4 obliged the Lyonses to give a registered first mortgage over the Arcadia property as security for their obligations under the agreement, or such other legal or equitable mortgage over that property as might be agreed between the parties.

16. [29]

    The mortgage consists of an RPA form of mortgage (extending over two pages) together with a single page annexure marked “A”. The annexure states:

17. [30]

    The loan agreement bears signatures which purport to be the signatures of Mr Lyons and Ms Lyons in the signature block on the final page, and their purported initials at the bottom of the first three pages. There are two signature blocks on the mortgage, one on the first page and one on annexure A. Each contains purported signatures of Ms Lyons and Mr Lyons. Their purported initials appear at the bottom of the second page.

18. [31]

    Ms Lyons’ signature and Mr Lyons’ purported signatures on the mortgage (in both signature blocks) are witnessed by Ms Dingley. The signatures on the loan agreement have not been witnessed (and the document does not provide for those signatures to be witnessed).

19. [32]

    Mr Lyons gave evidence in support of his claims and was cross-examined. A forensic document examiner, Mr Clifford Hobden, was also qualified as part of Mr Lyons’ case. Mr Hobden’s report was tendered and he too was cross-examined.

20. [33]

    The defendant’s witnesses were Mr Duke, Ms Lyons and Ms Dingley. Several affidavits were read from Ms Lyons, and she was cross-examined at some length. Ms Dingley was also cross-examined on her evidence. Mr Duke’s affidavit was read and he gave very brief supplementary evidence. He was not cross-examined by counsel for Mr Lyons.

Validity of loan agreement and mortgage

1. [34]

   In his affidavit in chief, Mr Lyons deposed that he had never seen the loan agreement or the mortgage until they were provided to him by his estranged wife’s solicitors in July 2025. He deposed that he did not sign the documents, or indeed any mortgage or loan agreement with Mr Duke in connection with the Arcadia property purchase. His purported “signature” (by which I assume Mr Lyons meant his signatures and initials) on the documents “must have been forged”.

2. [35]

   In her first affidavit, Ms Lyons deposed that both she and Mr Lyons signed the loan agreement and mortgage before Ms Dingley in September 2017. She rejected Mr Lyons’ evidence that he was unaware of the loan agreement until 2025 and that he did not sign it as “false” and “ludicrous”.

3. [36]

   Ms Dingley in her affidavit likewise rejected the implication that her attestation of the mortgage was false:

4. [37]

   In her evidence, Ms Lyons referred to further correspondence and other circumstances which she (and ultimately, counsel for the defendants) argued, were inconsistent with Mr Lyons’ protestations of ignorance. These included the following.

   1. (1)

      Mr and Mrs Lyons had a joint email account named suzyanddaniel@gmail.com. This was the email address used by Ms Dingley to communicate with them for the purposes of the purchase of the Arcadia property. Ms Dingley’s emails contained five express references to the loan from Mr Duke, including the email of 6 September (see [22] above). According to Ms Lyons, both she and Mr Lyons made use of the joint email address for family matters, including the purchase of the Arcadia property. In this regard, Ms Lyons pointed to an email to the agent concerning the purchase which was “signed” with Mr Lyons’ typed name and sent from the joint address.

   2. (2)

      Ms Lyons pointed to the interest payments made from Mr Lyons’ bank account which were regularly made right up until the middle of this year. Ms Lyons also pointed to correspondence where Mr Lyons acknowledged the debt to Mr Duke. For instance, in October 2023 he sent a text message saying that his “main priority” was “to protect the family home and keep paying the mortgage to your dad”.

   3. (3)

      Ms Lyons pointed out that, as well as the loan transaction, the transfer of the Junction Road property to Ms Duke had required signatures from Mr Lyons, both on the transfer itself and on a related deed. She deposed that these documents had likewise been signed by Mr Lyons and pointed to the similarity between his signature on those documents and the signatures on the loan agreement and mortgage.

5. [38]

   Mr Lyons responded to these points with a mixture of evidence of his own, and cross-examination, through his counsel, of Ms Lyons. In summary, his response was as follows.

   1. (1)

      Mr Lyons accepted that he had access to the joint email account, but said that he did not use it for the purpose of communicating with Ms Dingley; he left this to Ms Lyons. In cross-examination of Ms Lyons, his counsel took her to a series of text messages with her husband. The messages showed that the email to the agent to which she had referred in her evidence was actually composed and sent by her under her husband’s name. In the end, Ms Lyons accepted that this was so.

   2. (2)

      In cross-examination of Ms Lyons, counsel also put to her that her husband believed at the time of the purchase, as a result of two unrelated matters, that her father had behaved dishonourably towards the two of them. The suggestion was that this would have made it unlikely for Mr Lyons to want the Lyonses to have been in a formal business relationship with Mr Duke. Ms Lyons accepted that Mr Lyons had indeed been critical of her father as a result of the two matters. But she denied that this had prevented him from accepting the loan which was necessary to complete the purchase.

   3. (3)

      Mr Lyons said that he was not aware of the interest payments at the time of the transaction. Again, his was something he left to Ms Lyons who, at the time, operated the company bank account and had authority to operate his own personal bank account. He acknowledged that he became aware that interest payments were being made in early 2018 or thereabouts, and took no action to stop them. He said that this was to keep the peace with his wife.

   4. (4)

      Mr Lyons acknowledged the similarity of the signatures on the Junction Road documents to those on the disputed loan agreement and mortgage. But he claimed that he had not signed the Junction Road documents either, and that they too must have been forgeries.

6. [39]

   The issues between the parties were starkly drawn. Mr Lyons gave the following evidence in answer to questions from me about one of the allegedly false sets of initials on the Junction Road deed:

7. [40]

   Mr Lyons’ case also relied on the expert evidence of Mr Hobden. For the purposes of his report, Mr Hobden was provided with ten specimen, or groups of specimen, signatures for comparison purposes. Some of these predated and some postdated September 2017. He made visual comparisons of those specimen signatures with the purported signatures and initials of Mr Lyons on the loan agreement and the mortgage. Based on this comparison Mr Hobden concluded:

8. [41]

   Counsel for the defendants challenged Mr Hobden’s conclusion in cross-examination. Three main points emerged.

   1. (1)

      Insofar as Mr Hobden based his comparison on initials rather than signatures his reasoning, counsel suggested, was suspect. The specimens provided were all signatures and could not be used to draw any meaningful conclusion about the genuineness of the initials on the loan agreement and mortgage. As I understood it, Mr Hobden accepted the validity of this criticism.

   2. (2)

      Counsel pointed out that the three specimen signatures which preceded September 2017 were dated August 1994 (“S1”), August 2002 (“S2”) and July 2011 (“S3”). Likewise, the earliest of the post-September 2017 specimens was dated January 2024, more than six years later. Mr Hobden agreed with counsel that it was preferable to have contemporaneous signatures for comparison, but resisted counsel’s further suggestion that the specimen signatures were not sufficiently contemporaneous to allow inferences to be drawn about the genuineness of the questioned signatures. He explained that no two signatures, even if written on the same occasion, are exactly alike. But he asserted that, in his judgment, the differences between the specimen and questioned signatures could not be explained by the such “natural variation”. I must say however that I did not find this wholly convincing. Mr Hobden accepted that signatures can change stylistically over time. It stands to reason that, the more time which elapses between a specimen and a questioned signature, the more opportunity there will be for stylistic changes to confound the analysis. I simply do not see how using comparison signatures which were made more than six years before or after the questioned signatures makes it harder to draw the inference that the questioned signatures in the present case are not genuine.

   3. (3)

      This seems to be borne out by the next point. Mr Hobden had not been provided with the contemporaneous signatures on the Junction Road documents for the purposes of his analysis. When asked about the signatures by counsel he accepted the apparent similarities with the questioned signatures on the loan agreement and the mortgage. He conceded that, had he been provided with those signatures at the time he wrote his report, and assuming them to be valid, that would have affected his conclusions.

9. [42]

   In closing submissions, counsel for Mr Lyons invited me to find, on the strength of Mr Lyons’ and Mr Hobden’s evidence, that the purported signatures and initials of Mr Lyons on the loan agreement and the mortgage were forgeries, presumably by Ms Lyons. In this regard there were two possibilities. One was that Ms Lyons wrote a signature for Mr Lyons on the documents in the course of the meeting with Ms Dingley on 27 September (or whenever it actually occurred). The other, which counsel suggested was more likely, was that Ms Lyons wrote Mr Lyons’ purported signature on the document before the meeting with Ms Dingley and represented at the meeting to Ms Dingley that the signature was that of her husband.

10. [43]

    On any view, this submission involves an implicit criticism of Ms Dingley’s conduct as a solicitor. Obviously, that is so if Mr Lyons was not at the meeting and Ms Dingley attested to a purported signature of his written by Ms Lyons there and then. But it would also be so if Ms Dingley was presented with the purported signature of Mr Lyons by Ms Lyons and accepted in good faith an assurance from her that it was his. In such circumstances, the attestation would still have been false because Ms Dingley would not in fact have witnessed Mr Lyons sign the document.

11. [44]

    Counsel for Mr Lyons did not, in his cross-examination of Ms Dingley, make any attack on her credit as a witness. Nor did he directly put to her either of his theories as to how the purported signature came to be affixed and witnessed by Ms Dingley. A question thus arose as to the application of the rule in Browne v Dunn (1893) 6 R 67.

12. [45]

    Counsel submitted that he had put the allegation against Ms Dingley to her “implicitly” by putting that Mr Lyons had not been present when Ms Dingley witnessed his signature. This submission was made when counsel did not have the benefit of the transcript. When the transcript was provided to him and he was asked to identify the passage upon which he relied for the submission, he identified the following:

13. [46]

    The next question and answer were:

14. [47]

    Any allegation that a solicitor has made a false attestation as to a party’s signature on legal documents if sustained, is a very damaging one professionally. Although for the purposes of her affidavit, quoted above, Ms Dingley may have assumed that what was alleged was that she actually saw Mr Lyons’ signature being forged, she expressly and in strong terms made a defence of her professional probity. If her evidence in this regard was to be challenged, even by suggesting that she had acted in good faith but foolishly in accepting an assurance that the signatures was that of Mr Lyons when she had not seen him write them on the documents, that needed to be expressly put to her.

15. [48]

    In my opinion, the passage upon which counsel relied fell well short of conveying to Ms Dingley that such an attack was being made. Counsel’s submission that the attestation was false is not fair to Ms Dingley as a witness and is not fair to the defendants, as parties who have relied upon her evidence on what is a critical issue in the case. In my opinion, the rule in Browne v Dunn requires me to refuse to entertain the submission. It fails at the threshold.

16. [49]

    If I am wrong in this view, then I would still not uphold the submission. The grave consequences of accepting it engage the principle stated by Dixon J in Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-362 (see also Evidence Act 1995, s 140(2)(c)):

17. [50]

    In the present case, the Court would be required to find that: Ms Lyons forged Mr Lyons’ signature on the mortgage and took it to Ms Dingley; Ms Dingley falsely attested to Mr Lyons’ signature; and, both Ms Lyons and Ms Dingley lied about what had happened to cover it up. For the Court to reach that conclusion, and to do so by inference, the circumstantial case for drawing the inference would need to be absolutely compelling.

18. [51]

    In my view it is far from that. All that the text messages ([23] above) prove is that Mr Lyons and Mr Lyons were not in the same place at 12:01 pm on 27 September 2017. They by no means rule out that the meeting took place at 11:00 am on that day as had previously been organised, or that it was attended by Mr Lyons. And even if they were thought to make it unlikely that a meeting with Mr Lyons took place at that time, the meeting could always have been rescheduled and taken place on some other date or at some other time.

19. [52]

    In these circumstances it is unnecessary to go into the explanations Mr Lyons offered for the subsequent conduct in which he apparently accepted the existence and enforceability of the loan. Even if those explanations were accepted, they would by no means provide a compelling reason to infer that Ms Dingley’s attestation of Mr Lyons’ signature on the mortgage is false.

20. [53]

    Mr Lyons’ claim for delivery up and cancellation of the mortgage and loan agreement therefore fails.

Loan principal amount

1. [54]

   As already noted, there is a difference between the parties on this issue (as noted at [10]-[12] above) of about $250,000. At the beginning of the trial, the difference was somewhat wider. There were four components which are relevant for present purposes (the figure for each component is agreed by the parties; I have not attempted to reconcile the difference between them precisely).

   1. (1)

      As already noted, the deposit on the purchase was $115,000. This was, in the usual way, paid on exchange of contracts. Ms Lyons deposed that it was paid by her father on the understanding that it would be part of the loan for the purchase of the Arcadia property. She pointed to an email sent to Ms Dingley on 31 May which stated “dad is lending us the deposit”. Mr Lyons, however, said that he paid the deposit from a bank account of his own. He accepted that he had no documentary record of making the payment, but said that was because he had not retained one, and no records covering the relevant period could now be obtained from the bank. [1]

   2. (2)

      The settlement sheets for both the sale of the Grosvenor Street property and the purchase of the Arcadia property were in evidence. But the evidence did not identify precisely how much of the Grosvenor Street proceeds forming part of Mr Duke’s share were applied by way of advance to the Lyonses’ purchase. This could only be calculated by subtraction from the amount which Mr Duke actually received following the settlement. Counsel noted that the sale of the Grosvenor Street property was undertaken through an agent and asked me to infer that the agent’s fees and disbursements had been borne by Mr Duke. There was no direct evidence of this, and no evidence to quantify what the amount of any such fees and disbursements would have been. Counsel initially invited me to accept her instructing solicitor’s estimate of $100,000, but, as counsel for Mr Lyons pointed out, there was no justification for doing so. Eventually, the agent’s letter was found after the hearing and tendered by consent. It showed that the commission had been $45,300.

   3. (3)

      The next item concerned fees charged to the Lyonses by a New Zealand firm of architects for work done on a property owned by them in New Zealand. Six invoices are in evidence, ranging in date from November 2015 to October 2016. They total NZD 71,760. Ms Lyons said that the invoices were paid by her father by way of loan. Mr Lyons denied that he had been party to any such arrangement or that he had agreed that any such amounts were to be treated as part of a loan for the purchase of the Arcadia property. In Mr Duke’s supplementary evidence in chief (see [32] above) he said that he paid the invoices by international transfer through his local bank branch. When asked whether paid them one at a time he said that he did not, and only visited the branch to make payments “probably, twice”. He was not asked for any further detail, and I was told from the Bar Table that no relevant documentary evidence was available. In her affidavit Ms Lyons put the amount allegedly lent at $71,760, which ignored the fact that the New Zealand dollar is not worth as much as the Australian dollar. Counsel for the defendants initially, using the current AUD/NZD exchange rate, put the figure at $62,421. In final submissions counsel calculated it as $67,883, based on the exchange rates for the months in which the bills were issued.

   4. (4)

      In her affidavit, Ms Lyons included in the alleged amount of the loan the sum of $25,000, representing a series of payments made by Mr Duke to the Lyonses’ company in late 2016 and early 2017. In cross-examination, however, she accepted that $5,000 had almost immediately afterwards had been repaid. She had not given credit for this repayment, even though it was the next entry in the bank statement after the payments which had been received. Ms Lyons also conceded that the net amount of $20,000 had been treated in the books of the company as a liability of the company, and not a liability of the Lyonses personally. Ultimately, counsel for the defendant accepted that the any liability was a liability of the company and the claim to include it was withdrawn.

2. [55]

   Counsel for the defendants conceded that even if their case was accepted in full, they had not established that the advances made by Mr Duke amount to, or exceeded, $1.125 million. But counsel submitted that if I rejected Mr Lyons’ claim to have the loan agreement and mortgage delivered up and cancelled as forgeries (as I have), the mere fact that the full $1.125 million had not been proved would not justify the grant of relief in the nature of rectification. More funds might have been advanced which had not been recorded in the documentary evidence which has survived.

3. [56]

   Counsel submitted that the onus lay on Mr Lyons to prove some positive ground for exercise of the Court’s power of rectification under the Contracts Review Act. Mr Lyons had not attempted to prove any such case so far as the loan principal was concerned. It might be one thing if Mr Lyons had accepted that he signed the loan agreement and the mortgage, but said that in doing so he had not checked the figures, or something along those lines. But he had not done this. His case had been forgery or nothing.

4. [57]

   There is some force in these submissions, but, in my view, not enough. I accept that the onus lies on Mr Lyons to demonstrate a reason for the Court to exercise its powers under the Contracts Review Act. But proof of sufficient facts on the balance of probabilities may be assisted by a shifting evidentiary onus. I do not think I should overlook the fact that the defendants went to some trouble to contest the quantum issue at trial and came up short, and ultimately short of the figure which they first advanced. The shortfall is relatively small but not insignificant. And there is no sign of any missing expense associated with the Arcadia property which has not been taken into account.

5. [58]

   It is also true that Mr Lyons did not assert that he had been misled about the quantum amount when signing the loan document and mortgage. But I think that by the end it was clear enough on the evidence that Ms Lyons would have been primarily responsible for determining the amount of the loan, in conjunction with her father. In such circumstances, if Mr Lyons, as I have found, executed the loan agreement and mortgage, it would not have been necessary for him to say that he was relying on his wife’s calculations.

6. [59]

   In this regard there is a further point. The evidence shows quite clearly, and it is common ground, that the figure of $1.125 million had been put into the loan agreement and the mortgage by mid-August, well before the settlement actually took place. At that time the precise amount which would be required to complete the settlement could not have been known. On any view, recital A to the loan agreement (reproduced at [26] above) cannot have been correct in stating that the sum of $1.125 million had actually been advanced.

7. [60]

   There was no evidence either from Mr Duke or Ms Lyons about where the $1.125 million figure came from. Their real intention may have been that the loan agreement would function as a facility agreement for an amount up to $1.125 million. On any view however, they cannot have known that that precise figure would be lent.

8. [61]

   Counsel vehemently insisted that even if the $1.125 million was an overstatement, that did not make the loan agreement “unjust” for the purposes of the Contracts Review Act. With all respect, I find it hard to see why not. The statement in recital A was false. Even if Mr Duke and Ms Lyons were conscious of that, there is no reason to think that Mr Lyons was. The result was to impose upon him a joint and several obligation to repay (and, prior to repayment, to pay interest on) money which the Lyonses had not borrowed. In my view, that is sufficient to make the terms of the agreement “harsh” or “oppressive” for the purposes of the definition of the term “unjust” in s 4 of the Act; see also West v AGC (Advances) Ltd (1986) 5 NSWLR 610 at 620F.

9. [62]

   I turn now to the two components of the principal figure which remain in dispute.

   1. (1)

      As to the $115,000 deposit, Ms Lyons’ evidence is supported by contemporaneous documentary evidence in the form of the email to Ms Dingley. Mr Lyons’ unsupported assertions are insufficient to satisfy me to the contrary. [2]

   2. (2)

      I accept that Mr Duke did in fact pay the New Zealand architects’ invoices, but the evidence does not establish precisely when that happened. The Australian dollar calculations made by counsel therefore lack any evidentiary foundation. More importantly, on no view were any such payments part of the cost of acquiring the Arcadia property. Inclusion of those amounts, whatever they in fact were, would be contrary to the terms of the loan agreement itself. This component should not be included in the loan figure.

Conclusions

1. [63]

   I have concluded that:

   1. (1)

      Mr Lyons’ claim to have the loan agreement and mortgage delivered up and cancelled as forgeries fails, and Mr Duke’s cross-claim falls away in consequence;

   2. (2)

      but orders should be made under the Contracts Review Act rectifying the principal amount in accordance with the conclusions which I have reached, or limiting its enforceability to that amount.

2. [64]

   On 18 November I issued to the parties a draft of the judgment to this point. I asked them to confer on the form of orders required to reflect the conclusions I had reached, and on costs. I also invited them to identify any errors or omissions in the draft judgment which would conveniently be dealt with now, rather than waiting for an appeal the result was a number of issues which were the subject of another hearing before me on 21 November.

3. [65]

   Counsel for the plaintiff pointed out that I had overlooked some of the evidence on who paid for the deposit on the property. Counsel invited me, in the light of the evidence as a whole, to reconsider my decision on that question. I have done so and added footnotes at the relevant paragraphs recording the further omitted evidence and my reconsideration on the question in the light of that evidence.

4. [66]

   The parties agreed on the form of the orders to be made. An order will be made under the Contracts Review Act rectifying both the loan agreement and the mortgage substituting for the loan principal figure in those documents for $1.125 million a lesser figure calculated in accordance with my conclusions. The parties agreed that the relevant figure, based on the conclusion I have reached on the deposit issue, would be $982,000. The result is that there has been an overpayment of interest in the amount of $20,000 which will be noted in the orders. It is agreed between the parties that the mortgage in its rectified form will then be registered. My Lyons’ claim, and Mr Duke’s cross-claim will otherwise be dismissed.

Costs

1. [67]

   Mr Lyons has failed in his claim for delivery up and cancellation of the loan agreement and mortgage as forgeries. He has succeeded, however, in obtaining rectification of the loan principal amount, albeit not the full extent claimed.

2. [68]

   Counsel for Mr Lyons acknowledged that he had failed on the forgery claim, but submitted that most of the costs of the proceedings would have been costs attributable both claims. The costs solely referable to the forgery issue would have been relatively small in the scheme of things. Counsel invited me to make a costs order in favour of Mr Lyons with a relatively small percentage discount to reflect his lack of success on that issue. Counsel proposed an order that the defendants pay something like 80% of Mr Lyons’ costs.

3. [69]

   Counsel for the defendants took a diametrically opposed position. Counsel emphasised the serious nature of the allegation of forgery. Mr Lyons must have known that the allegation was false, and never should have made it. Counsel submitted that Mr Lyons should pay the whole of the defendants’ costs of the proceedings on an indemnity basis.

4. [70]

   The forgery allegation was an extremely serious one to make, not only against Ms Dingley, but against Ms Lyons. The vindication of Ms Lyons and Ms Dingley has more than a monetary value.

5. [71]

   In my view the seriousness of the forgery allegation is a relevant factor, but it would be wrong to give it the overwhelming significance attributed to it by counsel for the defendants. Even if the forgery allegation had succeeded, counsel for the plaintiff accepted that the Lyonses would remain liable to repay amounts which had demonstrably been advanced by Mr Lyons. It was accepted that those amounts were advances and not gifts. The practical outcome of the forgery issue, therefore, was only as to the onus of proof. If the allegation succeeded, Mr Lyons would need to prove affirmatively how much he had advanced. If the allegation failed, Mr Lyons would have to prove affirmatively that the $1.125 million exceeded the amount actually lent.

6. [72]

   Nor would it be correct to ignore completely that Mr Lyons achieved a degree of success in the proceedings on the loan principal issue. As I have described, the grant of relief was vigorously opposed and some of the figures originally put forward in support of it were unjustified. Mr Lyons has obtained a reduction in the liability under the loan of $143,000. That is not an insignificant matter in the context of the amounts actually in dispute in this case.

7. [73]

   In these circumstances, I think that an order that Mr Lyons pay the whole of the defendants’ costs of the proceedings, and on an indemnity basis, would have a punitive quality. It would in effect amount to a penalty for having brought the unsuccessful forgery claim. That would be wrong, as the purpose of awarding costs is compensatory rather than punitive.

8. [74]

   I have concluded that justice will be done if I order Mr Lyons to pay the costs of the defendants solely referable to the forgery claim, and otherwise make no order as to the parties’ costs of the proceedings. I am unwilling to specify a percentage figure of the defendants’ overall costs, as this would be nothing more than a guess. If the parties cannot agree on the quantum of costs payable, there can be an assessment at which the necessary identification and apportionment of costs can be undertaken: see Southern Oil Refining Pty Ltd v Hydrodec Australia Pty Ltd (No 2) [2021] NSWSC 336 at [35]-[39].

Orders

1. [75]

   The orders of the Court are:

   1. (1)

      Order that the Mortgage and Loan Agreement (at Annexure D to the affidavit of Daniel Patrick Lyons sworn 2 September 2025) be varied pursuant to s 7 of the Contracts Review Act 1980 so that:

   2. (2)

      Order that the parties do all things necessary to ensure that Caveat No. AV269959 is withdrawn and the Mortgage varied as set out above is registered.

   3. (3)

      Note the agreement between the parties that as at 30 November 2025, the plaintiff and second defendant will be in credit under the Loan Agreement in the amount of $19,809.90.

   4. (4)

      Order that:

   5. (5)

      (a) the plaintiff pay the costs of the defendants solely referable to his claim of forgery; and

   6. (6)

      (b) otherwise there be no order as to costs.