New South Wales Supreme Court CITATION : Chen v Song, Chen v Song [2005] NSWSC 19 HEARING DATE(S) : 4-5/08/03, 14/08/03, 3-4/11/03, 16-20/02/04, 24-27/02/04, 4/03/04, 15-19/03/04, 21-23/06/04, 16-17/09/03 JUDGMENT DATE : 16 February 2005 JUDGMENT OF : James J at 1 DECISION : - CATCHWORDS : MORTGAGE - High interest short term loan - default - registration of mortgage - claim for possession - whether exception to indefeasibility - alleged forged mortgage - authority - whether defendants entitled to relief under the principles relating to unconscionability in Amadio - whether defendants entitled to relief under the Contracts Review Act - Fair Trading Act Contracts Review Act LEGISLATION CITED : Fair Trading Act Real Property Act Asia Pacific International Pty Limited v Dalrymple [2000] 2 Qd R 229 Assets Co Limited v Mere Roihi [1905] AC 176 Commercial Bank of Australia v Amadio (1983) 151 CLR 447 Frazer v Walker [1967] 1 AC 569 Garcia v National Australia Bank Limited (1998) 184 CLR 395 Grgic v ANZ Banking Group Limited (1994) 33 NSWLR 202 Khan v Hadid [2003] NSWSC 1191 Klement v Pencoal Limited [2000] QCA 152 CASES CITED : Mayer v Coe (1968) 88 W.N. (Pt 1) (NSW) 549 Mercantile Mutual Life Assurance Co Limited v Gosper (1991) 25 NSWLR 32 Multispan v Portland (No 2) [2001] NSWSC 1047 Permanent Trustee Co Limited v Frazis (1999) NSWSC 319 PT Limited v Maradona Pty limited (1992) 25 NSWLR 643 Rowe v B & R Nominees Pty Limited [1964] VR 477 Soyfer v Earlmaze Pty Limited [2000] NSWSC 1068 Storey v Advance Bank Limited (1993) 31 NSWLR 722 Yerkey v Jones (1939) 63 CLR 649 Hwa Chu Chen v Young Soo Song & Anor PARTIES : Hwa Chu Chen v Mi Kyung Song FILE NUMBER(S) : SC 11075/02; 11074/02 A J Tudehope - Plaintiff COUNSEL : R K Newton - 1 & 2 Defendants In Person - 3rd Defendant Paul C Fabian & Co - Plaintiff SOLICITORS : N/A N/A LOWER COURT JURISDICTION : IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION JAMES J Wednesday 16 February 2005 11074/02 – Hwa Chu Chen v Mi Kyung Song 11075/02 – Hwa Chu Chen v Young Soo Song & Anor JUDGMENT 1 HIS HONOUR: By consent these two proceedings were heard together. In proceedings 11074/02 the plaintiff Hwa Chu Chen ("Mrs Chen") sued a single defendant Mi Kyung Song, also known as Dianne Song, who I will generally refer to in this judgment as "Ms Song". In proceedings 11075/02 Mrs Chen sued two defendants Young Soo Song ("Mr Song") and his wife Dong Im Song ("Mrs Song"). 2 In each of the proceedings Mrs Chen claimed possession of certain premises pursuant to a purported mortgage to her from the defendant or the defendants and payment of the amount which she claimed was due under the mortgage, together with certain ancillary relief. In proceedings 11074/02 Mrs Chen claimed possession of the whole of the land in Certificate of Title folio identifier 25/SP61618 being premises known as 125/6 Cowper Wharf Road, Woolloomooloo, pursuant to a purported mortgage from Ms Song to Mrs Chen dated 31 August 2000. In proceedings 11075/02 Mrs Chen claimed possession of the whole of the land in Certificate of Title folio identifier 3/755 being premises known as 21 Long Street, Strathfield and she also claimed possession of the whole of the land in Certificate of Title folio identifier 12/SP61618 being premises known as 112/6 Cowper Wharf Road, Woolloomooloo. The latter property is a unit in the same block of units at Woolloomooloo as 125/6 Cowper Wharf Road, Woolloomooloo. Mrs Chen claimed possession of both 21 Long Street, Strathfield and 112/6 Cowper Wharf Road, Woolloomooloo pursuant to the same purported mortgage dated 31 August 2000. 3 In both proceedings defences and cross-claims were filed by the defendant or the defendants. 4 At the joint hearing of the two proceedings Mrs Chen was represented by counsel and Mr and Mrs Song were represented by counsel but Ms Song appeared for herself. HISTORY OF THE COURT PROCEEDINGS 5 Both proceedings were commenced by statements of claim filed on 17 April 2002. Both statements of claim were served on or about 16 May 2002. A notice of appearance by a solicitor was entered in both proceedings. On 16 August 2002 a judgment in default of any defence having been filed was entered in proceedings 11075/02 and on 19 October 2002 a judgment in default of any defence having been filed was entered in proceedings 11074/02. 6 On 17 December 2002 a notice of motion on behalf of the defendant or the defendants was filed in each proceeding seeking a stay of execution on the default judgment for possession of the property mortgaged. Stays of execution were granted on 20 December 2002 and on 24 December 2002 by Adams J and on subsequent occasions by other judges. 7 On 12 February 2003 a notice of motion was filed in proceedings 11075/02 in which Mr and Mrs Song applied for an order setting aside the default judgment. 8 The proceedings first came before me on 4 August 2003, when the application by Mr and Mrs Song to set aside the default judgment in proceedings 11075/02 was listed before me. Brief hearings took place before me on 4, 5 and 14 August 2003. On 7 August 2003 an application by Ms Song to set aside the default judgment in proceedings 11074/02 was filed. On 14 August the proceedings were stood over to 3 November 2003. 9 On 4 November 2003 Mrs Chen by her counsel consented to the default judgment in each proceeding being set aside. 10 A protracted hearing of both proceedings was conducted by me on a number of hearing days in February, March, June and September 2004. THE EVIDENCE 11 A very considerable volume of evidence was adduced in the hearing, all of which I have taken into account but not all of which I will refer to in this judgment. All of the evidence adduced was treated at the hearing as being evidence in both proceedings. Evidence for the Plaintiff 12 Mrs Chen is an elderly woman who lives in Taiwan and she did not herself give any evidence. 13 The affidavit evidence for the plaintiff consisted of:- (i) Two affidavits by Mr Albert Ling, the plaintiff's attorney, dated 19 December 2002 and 22 April 2003. (ii) An affidavit dated 22 April 2003 by Mr Younes Khan, a finance broker, who was the principal of a company called Corporate Finance Resources Pty Limited ("CFR"). (iii) Affidavits dated 28 April 2003 and 15 December 2003 by Mr Davidson Alfred James, a solicitor of Parramatta, who acted as solicitor for Mrs Chen in the mortgage transactions. (iv) An affidavit dated 23 April 2003 by Mr Anthony John Atkinson, a solicitor, who acted for Mrs Chen in 2002, when court proceedings were commenced. (v) An affidavit dated 28 April 2003 by Mr Jason Nicholas Baker, a finance consultant, who communicated with Mr Khan in August 2000. 14 Mr Ashley Irwin of Baline Financial Services Pty Limited did not make an affidavit but a short letter by him dated 1 November 2003 was admitted into evidence on a limited basis as exhibit AJ. 15 All of Mr Ling, Mr Younes Khan, Mr Davidson James, Mr Baker and Mr Irwin gave oral evidence. 16 A number of affidavits or parts of affidavits, which had been filed on behalf of the defendants Mr and Mrs Song, but which had not been read by counsel for Mr and Mrs Song or by Ms Song, were tendered by counsel for Mrs Chen and admitted into evidence, namely:- (i) An affidavit by Mr Song dated 17 December 2002, which became exhibit AA. (ii) An affidavit by Mr Song dated 19 December 2002 which became exhibit Z. (iii) Paragraph 3 of an affidavit by Mr Song of 6 February 2003, not having been admitted when the affidavit was read by counsel for Mr and Mrs Song, was later admitted into evidence as exhibit Y. (iv) An affidavit by Mrs Song dated 19 December 2002, which became exhibit AC. (v) The first five paragraphs of an affidavit by Gregory John Huxley dated 20 December 2002. Evidence for the Defendants 17 The affidavit evidence for the defendants consisted of:- (i) Several affidavits by Mr Song dated 6 February 2003, 24 February 2003 (2 affidavits), 26 May 2003, 4 August 2003 and 20 November 2003. (ii) Several affidavits by Mrs Song dated 6 February 2003, 24 February 2003 and 4 August 2003. (iii) An affidavit dated 23 May 2003 by Andrew Song, a son of Mr and Mrs Song and a brother of Ms Song. (iv) An affidavit by Ms Song dated 19 December 2002. (v) An affidavit dated 28 February 2003 by Christopher Ian Anderson, a forensic document examiner, and a subsequent report by Mr Anderson dated 13 February 2004, which became exhibit CIA. (vi) An affidavit dated 11 December 2003 by James Crow, a real estate agent, in support of a claim by the defendants as cross-claimants that they were entitled to damages for loss of rent from the premises at Woolloomooloo. 18 Certain other affidavits by Mr Song or Mrs Song or Ms Song, which had been filed, were not read or tendered by any party at the hearing and hence were not admitted into evidence. 19 All of Mr Song, Mrs Song, Ms Song and Andrew Song gave oral evidence at the hearing. 20 No evidence was given by Mr Fahmi Hussain, the solicitor who purported to act as solicitor for the mortgagors on the purported mortgages from Mr and Mrs Song of 21 Long Street and 112/6 Cowper Wharf Road, Woolloomooloo and from Ms Song of 125/6 Cowper Wharf Road, Woolloomooloo. UNDISPUTED OR CLEARLY ESTABLISHED FACTS 21 There were a number of keenly contested issues at the hearing, including issues of fact. However, the following facts were either undisputed or were, in my opinion, clearly established by the evidence. 22 Mr Song was born in Korea on 19 July 1942 and Mrs Song was born in Korea on 4 November 1941. Mr and Mrs Song migrated to Australia in 1991 and have since lived in Australia. 23 Mr and Mrs Song have four adult children, three sons who use the English names Joshua, Andrew and Michael and one daughter Ms Song. By the year 2000 Andrew Song and Ms Song had been living in Australia for a number of years. 24 Soon after arriving in Australia in 1991 Mr and Mrs Song bought 21 Long Street, Strathfield and they have lived in 21 Long Street, Strathfield as their home right up to the present. In 1999 the existing mortgage on 21 Long Street was discharged and Mr and Mrs Song mortgaged the property to Perpetual Trustees Victoria Limited, the mortgage having been negotiated through Bettaway Finance. 25 At the beginning of 1995 Mr and Mrs Song commenced carrying on a retail butchery business known as the Strathfield Meat Market, which they had purchased. This business has been carried on successfully up to the present. 26 In 1999 Mr and Mrs Song purchased for a price of $1,160,000 a unit in a block of business units erected by the Meriton Group, being unit 121/24-30 Albert Road, Strathfield. Vendor finance was provided and a mortgage over the unit was granted to a company in the Meriton Group. This unit was not mortgaged to Mrs Chen. 27 Also in 1999 another unit in the same block of units, unit 252/24-30 Albert Road, Strathfield, was acquired for a price of $1,190,000 by Golden Mountain Group Pty Limited, a company the shareholders in which have been Mr Song and Andrew Song. Vendor finance was provided for the purchase of this unit and a mortgage was granted over the unit to a company in the Meriton Group. As in the case of unit 121, unit 252 was not mortgaged to Mrs Chen. 28 In July 1999 Mr Song and Mrs Song entered into a contract to purchase unit 112/6 Cowper Wharf Road, Woolloomooloo and the contract was completed the following year. To finance the purchase an amount of $542,500 was borrowed from Permanent Custodians Limited and a mortgage over the unit was granted to that company. 29 In about the same period Ms Song acquired unit 125/6 Cowper Wharf Road, Woolloomooloo. Money to finance the purchase of the unit was obtained from a bank, to which a mortgage over the unit was granted. 30 In a number of the real property transactions I have just referred to the solicitor Fahmi Hussain acted for members of the Song family or for Golden Mountain Group Pty Limited. Mr Hussain practiced as a principal in a firm first known as Williams Hussain and then as Barclay Benson. Ms Song first met Mr Hussain in about 1996 and later worked as an employee in his office. Ms Song has no legal qualifications. 31 In early August 2000 an agreement in writing called a development and franchise agreement was made between AFC Enterprises Inc ("AFC"), an American corporation, as "franchisor" and Mr Song and a man named Tony Isaac (his name is variously spelt in the documents) as "the developer". In the agreement it was recited that AFC had developed and owned a unique system for operating restaurants specialising in serving uniquely seasoned spicy chicken ("Popeye's Chicken & Biscuits System"). By the agreement the franchisor granted to the developer the right to establish and operate thirty-five restaurants using "Popeye's Chicken & Biscuits System" at agreed locations within the Sydney Metropolitan area. A large deposit was paid to the franchisor. 32 In late August 2000 AFC required payment by the developer by 31 August 2000 of $US118,000 (approximately $A200,000 at the rate of exchange then prevailing). If the money was not paid, the franchise agreement would be terminated and the deposit which had been paid to AFC would be forfeited. Mr Tony Isaac, the other person named in the franchise agreement as being one of the developers, who was to have provided or arranged finance, had ceased participating in the project and Mr Song urgently required $200,000, in order to pay that sum to the franchisor. Ms Song, with the consent of Mr Song, asked Fahmi Hussain to help find someone who would lend the money needed. 33 On Monday 28 August 2000 Mr Hussain telephoned Mr Baker. Mr Hussain enquired about private funding for Korean clients of his who were opening a chain of chicken shops. Mr Baker telephoned Mr Khan, who said that he knew someone who might be interested. Mr Baker telephoned Mr Hussain, who said that he would telephone Mr Khan direct. 34 Mr Hussain telephoned Mr Khan. Mr Khan made contemporaneous notes of the conversation, which became exhibit F. In par 5 of his affidavit Mr Khan said that in the telephone conversation Mr Hussain said words to the following effect (Mr Khan's evidence in par 5 of his affidavit is supported by his contemporaneous notes exhibit F):- "I have a Korean family of mother, father and daughter who are investing in a franchise business called 'Popeye's'. There are 3,500 stores worldwide and are big in the Middle East because Halal chickens are used. There have been 185 stores set up in Korea in the last 5 years. They have signed a contract for US$168,000.00 and have already paid US$50,000.00. They now have to pay the balance of US$118,000.00 in Boston USA by 31 August 2000 or they will lose their US$50,000.00 deposit and the franchise. I was informed by Jason Baker that you have lenders that can lend the money fast". 35 In the telephone conversation between Mr Hussain and Mr Khan an interest rate of 7½% per month was struck. Mr Khan told Mr Hussain that he would contact a prospective lender he knew. Later in this judgment I will consider further evidence by Mr Khan about this conversation between Mr Hussain and himself. 36 On 29 August 2000 Mr Khan communicated with Mr Ling, who he knew as a person who could lend money on short notice. Mr Ling expressed interest in the proposal. 37 On 29 August Mr Khan faxed to Mr Ling a document headed "Second Mortgage Loan Application for your consideration" (Mr Khan's affidavit annexure A). In this document Mr Khan said that he had received a request from Mi Kyung Song, Young Soo Song and Dong Im Song for a loan of $200,000 at an interest rate of 7.5 per cent per month for a term of two months to assist in the finalisation of a franchise contract, to be secured inter alia by "registered caveats with unregistered second mortgages to be held in escrow over residential home 21 Long Street, Strathfield and two investment properties in Woolloomooloo". In the document it was stated that the applicants were retail business proprietors, that they had a rental income of $3,500 per week and that the estimated (unencumbered) value of the property offered as security was $2,065,00. 38 On page 2 of the document appeared the following:- "Overview: The Client or another Broker has supplied the information furnished here to us either in a submission or on the phone. Any further information required should be directed to us and no contact must be made with the Borrower or their agents, as we do not hold the privacy form yet. The father, Mother and Daughter are of Korean background and have successfully applied for a franchise of Popeye's Chickens, apparently there were 90 applications and B.P too tried and failed. Coca-Cola under AFC (America's Favourite Chickens) owns Popeye's. There are already 3500 stores which include Middle East, China, Japan, Philippines, Malaysia, Singapore, Turkey and other countries not forgetting that they are very Big in the United States. There are 185 stores in Korea. It is understood that as soon as they tie up the deal they will sell their existing business. Younes please proceed with the loan offer, we will invest as lenders for the amount of $200,000. Subject to the conditions in the Letter of Offer". 39 There was then a space in which Mr Ling could sign. 40 On 30 August Mr Ling signed the document he had received from Mr Khan and faxed the page he had signed to Mr Khan. Mr Khan telephoned Mr Hussain and said that he had a possible lender but that he would need a written submission. 41 On the same day 30 August Mr Hussain, whose firm was then called Barclay Benson, faxed a document to Mr Khan, copies of which are annexure B to Mr Khan's affidavit and annexure AL10 to Mr Ling's first affidavit. This document speaks of a proposal for a loan already having been accepted but it is clear that the document was really the submission which Mr Khan had said he required. The document was in the following terms:- "Re: Golden Mountain Group Financing We refer to our previous discussion and confirm, following on from our various telephone discussions the following proposal has been accepted, namely: 1. Loan amount: $200,000 payable immediately. 2. Term: 8 weeks. 3. Establishment Legal Processing Fees $10,000.00 4. Interest: Payable in arrears. 5. Security Unregistered second mortgage, duly executed caveats over 3 properties owned by the Directors of the company. The Directors are happy to take the loans in their personal names, given that they are the mother, father and daughter. We do advise that ever since the Song family was granted the franchise for Popeye's Chickens there has been a great deal of publicity in the Korean community and there are a number of other interested parties wishing to purchase this business which, on our client's instructions, has a net turnover of $3,500.00 per week. To clarify your concerns in relation to why there is an urgency in the payment that is due, we do point out that our client's joint venture partner in this project, Mr Tony Isaac, was required to make the final payment under the franchise agreement. The Song family had already committed funds to this project. Mr Isaac was to make the final payment of US$118K by 20 August 2000. Mr Isaac runs a number of warehouses and was to refinance his operation in order to be prepared for the business. Whilst an audit was conducted to satisfy the Commonwealth Bank, who would be refinancing, it was found that there was a $700,000 discrepancy in his stock which meant that the Bank was not prepared to refinance and accordingly Mr Isaac was not in a position to raise the funds by the due date. We understand that this is being rectified but will still take 1-2 week to finalise. The requirements Development Agreement with the Franchisor require payment to be made immediately and accordingly the need for the urgent funding. Security Details We enclose the following:- 1. Title page of Contract for Unit 1.12 purchased for $775,000. Contracts exchanged July 1999, settlement occurred in May 2000, given that the property was purchased off the plan. 2. Copy letter from Kemp Strang Lawyers acting for the financiers, the Permanent Custodians disclosing the total amount of the loan of $542,500. 3. Title page of Contract for Unit 1.25, exchanged on 31 March 1999. We enclose a copy of front page of stamped contract. Settlement occurred March 2000. 4. First mortgage to Colonial State Bank in the sum of $440,000. We enclose copy of loan approval. 5. We also enclose updated title searches for the 2 properties. 6. We also confirm that as regards Unit 1.12, this is tenanted for a period of 12 months to June 2001, at the rate of $650.00 per week. 7. Unit 1.12/1.25 The Wharf – we require as a matter of extreme urgency to assist our clients in finalising their financial affairs the following: (a) Confirmation that both the abovementioned units are tenanted and for what rental. (b) Market appraisal in your opinion as to the value of both Units 1.12 and 1.25. We advise that our clients own other commercial properties in Strathfield, namely commercial unit 252 and 121/24-30 Albert Road, Strathfield, both acquired from Meriton Apartments. Unit 252 is presently tenanted with a 3 by 3 year lease with a monthly rental of $10,200. There is a first mortgage to Meriton Apartments requiring repayments of $6,500 per month. Unit 252 property is owned by the family company known as Golden Mountain Group Pty Ltd. Unit 121 is owned by Mr and Mrs Song, the owners of Unit 1.12 at The Wharf. Again this is mortgaged to Meriton Apartments, and is presently on a monthly tenancy with the Australian Central Church of approximately $4,500 per month. We have been advised that AMP are presently in discussions with the Managing Agents to look at leasing these premises. The contract value of the 2 commercial units is as follows: 1. Unit 252 $1,555,000 2. Unit 121 $1,160,000 As can be seen our clients have considerable assets and can service their existing liabilities. Our clients would require the funding to be available as a matter of extreme urgency so as to ensure that the franchise is not lost and to be telegraphically transferred to Atlanta by close of trade today . Please provide to us account details to provide the establishment and legal fees in the sum of $2,000.00. Our clients will be happy to execute the necessary mortgage documentation immediately. We are also obtaining the additional information as set out in your requirements, but confirm that the Accountants Details are Byrons Chartered Accountants, contact Mr Jason Yu, of 62 Burwood Road, Burwood, NSW 2134, tel: 8745 3433. Our firm are the lawyers for the Applicants. We have yet to receive the Privacy Act form and will provide Purpose of Declaration Form at the time of settlement". 42 At Mr Khan's request Mr Hussain sent an amended page 1, which altered the description of Mr Khan's fees. 43 On the same day 30 August Mr Khan faxed a document to Mr Hussain, copies of which are annexure D to Mr Khan's affidavit and annexure AL11 to Mr Ling's first affidavit and the original of which became exhibit Q. Parts of exhibit Q, which I will refer to as the letter of offer, were in the following terms:- "Our Ref: Hwa-Chu Chen advance to Mi Kyung Song, Young Soo Song Dong Im Song Attention of: Fahmi Hussain Solicitor Date: 30th August 2000 Your Telephone: 9715 7018 Your Fax No: 9744 6506 Re: Application for three Unregistered Second Mortgages (to be held in escrow) with five Registered Caveats as security for advance of $205,000 to assist in the finalisation of the Franchise Contract. Security Property: Unregistered 2nd Mortgage (to be held in escrow) and secured by a registered caveat over (1) Lot 12 in SP 6168 apartment 1.12 Woolloomooloo (2) Lot 25 in SP 6168 apartment 1.25 residential south Woolloomooloo (3) Lot 3 DP 755 Enfield. being 21 Long Street Strathfield. With Two Caveats on commercial units (4) 252/SP 60813 (4) 121/Sp 60199 Both in Albert Road Strathfield. We refer to your loan application and are pleased to offer a loan to you, subject to the following terms, conditions and Lending Criteria. The credit will be provided only on the basis that it is to be applied wholly for a business or investment purpose. Before we proceed we require an application fee of $2000.00 CASH for preliminary work by us and / or the Lender's solicitors. These funds will be not be returned if for any reason connected with the security the mortgagees decline to lend. If the mortgagees are prepared to lend and the documents are prepared and the mortgagor decides not to proceed then the funds will not be returned. If the loan does proceed then the $2000.00 paid will be credited towards our Brokerage, Finder's and Application fee payable to us. We note our Brokerage, Finder's and Application fee of $11,000.00 G.S.T. of $1000 is included and the Tax invoice will be supplied at settlement. The $11,000 is payable to us on or before draw down of the loan. Lender: Hwa - Chu Chen Borrower: Mi Kyung Song, Young Soo Song Dong Im Song Principal: $200,000.00 subject to Total LVR not exceeding, 72% . Should the principal sum not be advanced to you within seven (2) days of today's date for any reason whatsoever other then the fault of the Lender, the Lender may withdraw from this transaction. Term: Two Months Guarantors : Mi Kyung Song, Young Soo Song, Dong Im Song (Joint and Several guarantee to be provided) Interest Rate: The loan will be at an effective rate of 7.5% per month fixed Monthly in arrears reducing from 8.5% per month for prompt payment of interest instalments, within seven days of the due date. One-month additional interest payment will apply for any early repayment of the loan principal. All outstanding interest shall become part of the Principal sum and attract interest at the higher rate and compounded on the last day of each month of the due date. The Lender reserves the right to vary this rate at any time prior to acceptance of this loan advance. Special Conditions: The Lender specifically requested ; 1. An undertaking by Borrowers that : (a) Upon any breach or default, they will obtain deeds of priority as well as the production of titles for the second mortgages to be registered, until full payment of the principal loan and all outstanding interests and costs. (b) Apart from the current first mortgages they will not borrow any money against the security property, and will not do so during the continuance of this loan. 3. No alteration, amendment, or erasure shall be done to this document or to the attached indemnity. This offer will close 2.00 pm Thursday 31st August 2000 Acknowledgement Of Financial Advice In accepting this approval of mortgage finance the Guarantors and the Borrowers undertake to receive independent legal advice on their ability to comply with the loan commitments and risks. Translator: Borrower's Solicitor must be satisfied that Borrowers do not require a Translator Insurance: To be insured against fire, storm and tempest for full Replacement value with an insurance company acceptable to the Lender who shall be noted on the policy as Mortgagee. Bank Charges: FID and other bank charges are to be added on to all payments and are to be paid by the Borrower. Expenses: The Borrower shall be liable for a property assessment fee, and all other fees associated with this loan. ie. Brokers, finders, legal and stamp duties etc. Further Expenses: The Borrower shall be liable to pay the costs incurred by the mortgagee's Finance Broker/s to consider and manage the breach or default, banking expenses professional fees for time spent, postage, transport and attending the mortgagor and the mortgagee's representatives and agents to collect all moneys which may be overdue for payment at any time. Q860000: Provisions set out in the Memorandum Number Q860000 are incorporated in this Letter of Offer. Property Assessment: Valuation with Valuers Approved by us who have Professional Indemnity Insurance (We require copy of Certificate of Currency) With acknowledgement that this valuation is prepared for mortgage or finance purposes and (3) be assigned to the Lender/s. (4) Inspection Report highlighting Latent or Patent Defects and any abnormal expenses to be expected Settlement: Within thirty days from the date after we receive a signed Loan Application form together with the following: 1. Bankruptcy Search 2. Title Particulars / Rate Notice 3. Company and Directors Search 4. Proof of current insurance 5. Proof of clear land tax 6. Copy of Drivers License 7. Applicants Full Names, Residential Address, Spouse's Maiden Name 8. Accountant Name & Address 9. Solicitor Name and address 10. Purpose Declaration Form (Use only the form supplied by us.) 11. Privacy Act Form 12. Deed of Priority to be capped and should be according to Lenders approval Service: The Borrower agrees and irrevocably authorise and direct the Lender to serve upon their Solicitors each and every notice required to be served upon the Borrower pursuant to the provisions of Section 57 of the Real Property Act, 1900, and Section 111 of the Conveyancing Act, 1919. The Borrower agrees that service upon such solicitors shall be deemed to be and shall be accepted to be personal service upon the Borrower. In order to expedite the preparation of mortgage documents. Should your clients accept this offer and agree to our fee structure, kindly have them sign at the foot of this letter and return same back to us together with the Above Application fee / title particulars / Privacy act Form & Purpose Declaration Form. The $2000.00 Cash is to be deposited in the account of Corporate Finance Resources Pty Limited at Westpac Bank Miranda Account 032-250 13-7444. We reserve the right to withdraw or amend the loan approval at any time without liability and at our absolute discretion, if in our opinion or in the opinion of the Lender's Solicitors there arise any matter which may adversely affect the proposed loan. Any changes to the terms and conditions will be shown in the loan documentation which will also give further and better particulars of the Loan. If the applicant is a company we require: Company Search Personal Guarantee by all Directors (Jointly & severally to be provided) A Statutory Declaration By all Directors That the Company owns the Security Property on its own rights and not in Trust for Someone or any other entity. A Statutory Declaration By all Directors that there is no charge on or against assets of the company Yours faithfully………………… Younes Khan The Borrower agrees and understands that Corporate Finance Resources PTY Limited are Finance Brokers and their role in this matter is to introduce the Lenders to the Borrower through the Borrower's Business and Finance Brokers or Solicitors. The Borrower knows and understands that Corporate Finance Resources PTY Limited do not act in this matter or any other matter for the Lenders or for The Borrower. The Borrower notes and confirms that the Fee payable to Corporate Finance Resources Pty Limited is for Brokerage, Application Fee, Finding (Lender) Fee and all other associated work in securing the Lender. The Borrower irrevocably directs the Lender and the Lender's solicitors to deduct the sum of $11000.00 (Eleven Thousand Dollars) for the advance contemporaneously with the advance being made and further irrevocably directs the Lender and the Lender's Solicitor to pay Corporate Finance Resources Pty Ltd the sum of $11000.00 (Eleven Thousand Dollars). We understand that GST of $1000.00 is incorporated in the fees. In view of all the above The Borrower indemnifies Corporate Finance Resources PTY Limited and their Directors from any and all claims or proceedings against them. I / We hereby accept all the above terms and conditions". 44 There was then a space for the signatures of the borrowers. 45 On 30 August exhibit Q was signed by all of Mr Song, Mrs Song and Ms Song. 46 On 30 August Mr Ling instructed the solicitor Davidson James to prepare the mortgage documents. Mr James proceeded to prepare the mortgage documents. 47 On 30 August Mr James wrote a letter to Barclay Benson (Mr James' first affidavit annexure A), parts of which were in the following terms:- "RE: HWA CHU CHEN ADVANCE TO SONG FAMILY SECOND MORTGAGE UNIT 1.25, 1.12 THE WHARF AT WOOLLOOLMOOLOO AND 21 LONG STREET, STRATHFIELD We refer to the above and enclose herewith the following: 1. Mortgage and Loan Agreement, Deed of Guarantee and three Caveats to be executed and stamped. 2. Authority to Complete and Undertaking 3. Requisitions on Title. 4. Memorandum No. Q860000. 5. Acknowledgment of Legal Advice. 6. Declaration by Mortgagor. 7. Statutory Declaration. 8. Purpose Declaration Form. 9. Privacy Act Form. 10. Memorandum of our costs and disbursements. When returning the above documents please note that we will require the following documents as well: 1. Current Certificate of Insurance noting the Lender as Mortgagee. 2. Clear Land Tax Certificate. 3. Copy of current driver's licence of the Mortgagors. 4. Original Acceptance of Offer duly signed. Please note that all documents must be signed clearly. All parties to each document should sign at the foot of each page". 48 The letter of 30 August and the enclosures were delivered to the office of Mr Hussain. Ms Song asserted in her evidence that she picked up the letter and the enclosures from Mr James' office and that, while at Mr James' office she had a conversation with Mr James about the execution of the documents and that, after receiving the documents, she dealt with the documents in the ways she described. These parts of Ms Song's evidence are not uncontroversial and I will refer to them more fully later in this judgment. 49 On 31 August 2000 a letter from Barclay Benson to Mr James dated 31 August and the enclosures referred to in the letter, all of which had purportedly been executed by the mortgagors, were delivered by hand by Ms Song to Mr James' office. Ms Song did not assert in her evidence that on this occasion she had had any conversation with Mr James. The letter of 31 August 2000 from Barclay Benson to Mr James was in the following terms:- "Thank you for your correspondence of 30 August 2000. We now enclose the following:- 1. Mortgage and Loan Agreement, Deed of Guarantee and executed Caveats x 3. 2. Authority to Complete and Undertaking. 3. Acknowledgment of Legal Advice. 4. Declaration of Mortgage. 5. Statutory Declarations. 6. Purpose of Declaration Form 7. Privacy Act Form. 8. Cheque for your costs and disbursements. We confirm that you are already holding a copy of the insurance police regarding 21 Long Street and a Certificate of Currency relating to the Units at Woolloomooloo. We confirm from Mr Khan that policy notations will not be required. In relation to S47 Certificates, we undertake to provide the same to you within 14 days. We also enclose a copy of our clients' drivers licence and identification and original Acceptance of Offer. Given the urgency of this matter, we confirm that the funds will need to be telegraphically transferred this morning and that Mr Khan, subject to confirmation, will make funds available this morning to complete the transfer". 50 Mr James checked the executed documents which had been delivered to his office. While he was checking the documents, Mr Hussain telephoned him. Mr James, having checked the documents, was satisfied that they were in order. 51 Mr James spoke to Mr Ling and was instructed by Mr Ling to proceed with the transaction. Mr James then telephoned Mr Khan and told him that he had received the mortgage documents and that Mr Ling had given instructions that the transaction should proceed. Mr Hussain was notified that the transaction was proceeding. 52 The settlement of the transaction took place at the Miranda Branch of Westpac. Mr Khan and Ms Song attended at the Bank, Ms Song having been directed to do so by Mr Hussain. Mr Hussain had asked Mr Khan to assist Ms Song to telegraphically transfer the money being borrowed to the United States. At the Bank Ms Song signed a receipt that she had received the sum of A$200,000 from "Younes" and an amount of $A200,000 was telegraphically transferred to an account of AFC in Atlanta in the United States. 53 Many things happened after 31 August 2000, some of which were as follows. 54 On or about 7 September 2000 Mr James forwarded an epitome of the mortgage to Mr Hussain. 55 A number of payments were made by Mr and Mrs Song and Ms Song pursuant to the mortgages, including the following:- "11 October 2000 $17,000.00 7 November 2000 $15,000.00 7 December 2000 $13,000.00 2 February 2001 $15,000.00 1 May 2001 $5,000.00 22 October 2001 $5,000.00 2 January 2003 $5,000.00 4 February 2003 $5,000.00" 56 Notwithstanding that a number of payments were made, there was early default under the mortgages. On 6 November 2000 Mr James wrote to Mr and Mrs Song and Ms Song, stating that they were in default and that he was instructed to take immediate steps to register the mortgages. 57 By a variation of mortgage the mortgage from Mr and Mrs Song was varied so as to reduce the rate of interest to 6.5 per cent per month and extend the term of the mortgage to 31 December 2000. 58 On 16 November 2000 the franchisor agreed to an amendment to the franchise and development agreement. On 13 December 2001 the franchise and development agreement was terminated by an agreement called a voluntary termination agreement. 59 There was much correspondence between Barclay Benson and Mr Khan. Copies of correspondence between 25 October 2000 and 23 July 2002 form annexure AL14 to Mr Ling's first affidavit. In the letters from Barclay Benson there are requests to Mr Khan to reduce his fees, requests for a rollover of the existing facility, reports on attempts by Mr Hussain's clients to obtain other finance, reports on progress or lack of progress in the franchise project, and promises to repay the loan. There was no challenge to the validity of the mortgages. 60 There was also much correspondence between Barclay Benson and Mr James. Copies of correspondence between 1 November 2000 and 8 June 2001 form exhibit DJ2 to Mr James' first affidavit. In these letters there are negotiations to reduce the rate of interest and to extend the term of the loan. In a letter of 16 January 2001 Mr James said that he had received firm instructions to proceed with the registration of the mortgages. In this correspondence there is no challenge to the validity of the mortgages. 61 Over a period of many months Mr James engaged in a protracted process of obtaining the execution of documents which would enable the registration of the mortgages from Mr and Mrs Song and Ms Song, with priority over earlier mortgages. Ultimately, on 21 January 2002 the mortgage purportedly from Mr and Mrs Song was registered and on 11 February 2002 the mortgage purportedly from Ms Song was registered. 62 Notices under s 57(2)(b) of the Real Property Act were served on Mr and Mrs Song on 27 February 2002 and on Ms Song on 4 March 2002. 63 On 8 March 2002 Klonis & Co solicitors wrote a letter to the plaintiff 's solicitors in the following terms:- "We refer to your notice pursuant to s.57 (2)(b) of the Real Property Act received from our clients on the 27 February 2002. We act on behalf of both Mr Y S Song and Ms M K Song. We are in the process of receiving instructions in relation to the notification received. Our clients presently are in the middle of completing the refinancing of a number of properties so they can consolidate their debts. Given the fact that there are 4 property's involved in the refinancing they anticipate to be in a position to advise you as to progress of this matter within the next 7 days". 64 On 29 May 2002, after the statements of claim in both proceedings had been filed and served, Stanford Lawyers wrote a letter to Mrs Chen's solicitors in the following terms:- "I have just received instructions to enter an appearance on behalf of the First and Second Defendants. Enclosed by way of service is a copy of my Notice of Appearance. I am yet to receive full instructions however I have been informed that my clients are finalising refinancing. Accordingly, I request you do not incur any further costs in relation to this matter until I have been able to ascertain the position". ISSUES 65 In each proceeding the statement of claim was in a simple, commonly encountered form. The plaintiff alleged that the defendant or the defendants had granted a mortgage which had been registered, that the defendant or the defendants had made default under the mortgage and that, consequently, the plaintiff was entitled to judgment for possession of the property mortgaged and to a judgment for the amount due under the mortgage. 66 In their amended defence and cross-claim in proceedings 11075/02 Mr and Mrs Song inter alia denied that they had granted the mortgage and said that the signatures on the mortgage purporting to be theirs were forgeries; that, if there had been an agreement to grant a mortgage, it was a term of the agreement that the mortgage would remain unregistered; that, if there had been an agreement to grant a mortgage, the plaintiff was not entitled to have the mortgage registered, because the defendants had a personal equity that the mortgage not be registered or because the plaintiff was estopped from asserting that she was entitled to have the mortgage registered; that no money had been advanced to the defendants and that, consequently, no monies were secured by the mortgage and the mortgage should be discharged; that any mortgage had been obtained in circumstances which rendered the mortgage unconscionable; that in procuring any mortgage the plaintiff had engaged in conduct which was unconscionable within s 43 of the Fair Trading Act; and that any contract to grant a mortgage had been unjust and relief should be granted under the Contracts Review Act. 67 In her defence in proceedings 11074/02 Ms Song admitted that she had executed the mortgage on which the plaintiff was suing but claimed that she was entitled to relief under the Contracts Review Act or because at the time the mortgage was executed she had been in a position of special disadvantage. 68 On 23 June 2004, after the adducing of evidence at the joint hearing had just been completed, I indicated a number of issues which appeared to me to have arisen in proceedings 11075/02. I made it clear that the list was tentative and that counsel in making submissions should not be diffident about departing from my list. In fact, the written submissions which I received from counsel and the oral submissions which were later made to me were, very largely, based on my list of issues and it is convenient to use this list of issues as a framework for considering counsel's submissions in proceedings 11075/02. 69 The issues which I indicated on 23 June can be stated as follows:- 1. Did Mr and Mrs Song sign the mortgage? 2. Did Mr and Mrs Song sign the other documents delivered to Mr James' office on 31 August 2000, which had purportedly been signed by Mr and Mrs Song? 3. If Mr and Mrs Song did not sign the mortgage or any of the other documents, who did write the purported signatures of Mr and Mrs Song on the mortgage or other document and, in particular, did Ms Song write the purported signatures of her parents? 4. If Ms Song signed the purported signatures of her parents on a document, was Ms Song authorised by her parents to write the signatures? 5. If Ms Song signed the purported signatures of her parents on a document and was not authorised by her parents to write the signatures, had her parents ratified Ms Song's writing her parents' signatures on the document? 6. If Ms Song signed the purported signatures of her parents on a document and there had been no authority or ratification, were Mr and Mrs Song estopped from denying that they had signed the document? 7. Whether or not Mr and Mrs Song had signed the mortgage or there had been authority, ratification or estoppel, had the plaintiff, upon registration of the mortgage and subject to any exceptions to indefeasibility, obtained an indefeasible title by virtue of the Real Property Act ? 8. Did any of the exceptions to indefeasibility apply? 9. Had any agent of the plaintiff been put on notice that Mr and Mrs Song might not have signed the mortgage or might not have been properly advised about the mortgage? 10. If there was an agreement to grant a mortgage, was it a term of the agreement that the mortgage not be registered or did Mr and Mrs Song otherwise have some right that the mortgage not be registered? 11. Was the money which was lent, lent to Mr and Mrs Song? 12. If the mortgage was otherwise binding on Mr and Mrs Song, were Mr and Mrs Song entitled to relief under the principles relating to unconscionability in Commercial Bank of Australia v Amadio (1983) 151 CLR 447? 13. If the mortgage was otherwise binding on Mr and Mrs Song, were Mr and Mrs Song entitled to relief under any other general law principle? 14. If the mortgage was otherwise binding on Mr and Mrs Song, were Mr and Mrs Song entitled to relief under the Contracts Review Act ? 15. If the mortgage was otherwise binding on Mr and Mrs Song, were Mr and Mrs Song entitled to relief under s 43 of the Fair Trading Act ? 16. If the mortgage was otherwise binding on Mr and Mrs Song, were Mr and Mrs Song entitled to any other kind of statutory relief? 17. If the mortgage was otherwise binding on Mr and Mrs Song, were Mr and Mrs Song entitled to any relief on the ground that the rate of interest under the mortgage was excessive? ASSESSMENT OF THE WITNESSES 70 Before dealing specifically with each of these issues, I will make some general findings about the witnesses. 71 I consider that the evidence of the witnesses for the plaintiff was generally reliable. Much of the evidence of these witnesses was corroborated by contemporaneous documents. 72 Mr Song gave evidence through an interpreter and I accept that his knowledge of English is very limited. 73 In August 2000 Mr Song was by no means a person lacking in business acumen or experience. He had had substantial business experience, both in Korea and in Australia. 74 By August 2000 Mr Song had engaged in a number of real estate transactions in Australia, including the purchase of 21 Long Street, Strathfield, the purchase of 121/24-30 Albert Road, Strathfield and the purchase of 112/6 Cowper Wharf Road, Woolloomooloo. On each of these purchases Mr and Mrs Song had borrowed a large part of the purchase price and had granted a mortgage over the property being purchased to secure repayment of the loan. I reject evidence given by Mr Song to the effect that he did not understand the nature of these transactions when they were entered into. I reject evidence by Mr Song that in August 2000 he did not understand what a mortgage is. Mr Song was keenly interested in the acquisition of the Popeye's franchise and had been "very busy" in the matter of the acquisition of the franchise. 75 In giving oral evidence, both in what was said in his answers and in his manner, Mr Song revealed himself as an autocrat, expecting his wife and his children to obey him. Although he owned a minority of the shares in Golden Mountain Group Pty Limited, he asserted, and I would accept, that he "controlled" that company. 76 At times in his evidence Mr Song claimed that he had been handicapped by his advanced age, but in August 2000 he was not yet sixty years old and when he gave evidence at the hearing he did not display any sign of premature senility. 77 In assessing Mr Song's general reliability as a witness it is necessary to make allowance for the fact that he was giving evidence through an interpreter. However, I consider that I should find that he was unwilling to make concessions, even about matters which were clearly true, that he often engaged in self-justificatory speeches and that his evidence was often unreliable. 78 As I have already indicated, counsel for Mr and Mrs Song did not read certain affidavits by Mr Song which had been filed. It was apparent that counsel's reason for not reading these affidavits was that they contained assertions by Mr Song which were inconsistent with assertions he now wished to make. Mr Song's explanation of how he had come to make the affidavits which were not read was implausible. 79 As an example of his unreliability as a witness, he asserted at times in his evidence that he had first become aware of the purchase of 112/6 Cowper Wharf Road after the settlement of the purchase, notwithstanding that, before the settlement of the purchase, he had signed an inquiry to the Australian Residential Mortgage Fund Limited concerning finance for the purchase, he had signed a loan agreement with Permanent Custodians Limited and he had signed numerous other documents connected with the purchase. 80 Like her husband, Mrs Song gave evidence through an interpreter and I accept that her knowledge of English is very limited. 81 I accept that Mrs Song had little personal business experience of her own. Throughout their married life she had habitually acquiesced in her husband controlling their financial affairs. The various steps that were taken by Mr Song to acquire and carry on businesses, to acquire properties and to acquire the Popeye's franchise were taken by him, not for his sole benefit, but for the benefit of both Mr and Mrs Song and indeed the whole family. 82 I find that Mrs Song's evidence was not always reliable. As in the case of her husband, counsel for Mr and Mrs Song did not read certain affidavits by her which contained assertions which were inconsistent with assertions she wished to make at the hearing. 83 As regards Ms Song, although her English is not perfect she is much more competent in English than either of her parents and she gave oral evidence at the hearing without needing an interpreter. 84 I find that Ms Song is sharp witted and commercially astute. She played an important part in the acquisition of 252/24-30 Albert Road, Strathfield and 125/6 Cowper Wharf Road, Woolloomooloo. It was she who initiated the application for the Popeye's franchise. When Mr Song was unable to find the sum of $200,000, she was authorised by Mr Song to attempt to find the sum. Ms Song played an active part in the obtaining and settling of the loan transaction, including attending at the Miranda Branch of Westpac. 85 Ms Song was not always a reliable witness. One matter affecting her credibility is that, even on the account of events she gave in her evidence, she had told many out of court lies. For example, she told lies to Fahmi Hussain on 30 August 2000 that her parents had signed the mortgage documents and that she had explained the documents to her parents. 86 I will now proceed to deal with the issues I have already listed. It will be convenient to deal with some of the issues together. DECISION ON THE ISSUES Issues 1, 2 and 3 1. Did Mr and Mrs Song sign the mortgage? 2. Did Mr and Mrs Song sign the other documents delivered to Mr James' office on 31 August 2000, which had purportedly been signed by Mr and Mrs Song? 3. If Mr and Mrs Song did not sign the mortgage or any of the other documents, who did write the purported signatures of Mr and Mrs Song on the mortgage or other document and, in particular, did Ms Song write the purported signatures of her parents? 87 Early in the proceedings these were live issues but by the time counsel made their submissions the correct answers had become clear. 88 Each of the mortgage (exhibit G), the deed of loan of 31 August 2000 (exhibit H), the deed of guarantee of 31 August 2000 (exhibit J), the declaration of purpose for which credit was being provided (exhibit K), the Privacy Act form (exhibit L), the direction authority and undertaking (exhibit M), the statutory declaration (exhibit N), the acknowledgment of legal advice by mortgagor (exhibit O), the declaration by mortgagor (exhibit P) and the letter of offer of 30 August 2000 (exhibit Q) bear signatures purporting to be the signatures of Mr and Mrs Song, the latter in Korean script. The purported signatures on each document appear similar to signatures acknowledged to be genuine. 89 Mr Song gave evidence by affidavit and orally, denying that he had signed exhibits G, H, J, M, N, O and P. He admitted that one signature on exhibit K and one signature on exhibit L were his but said that otherwise the signatures on those documents purporting to be his were forgeries. 90 Mr Song admitted that he had signed exhibit Q and that all the signatures on exhibit Q purporting to be his had been made by him. 91 Mrs Song gave evidence denying that she had signed exhibits G, H, J, K, L, M, N, O and P. When cross-examined about exhibit K, Mrs Song said that she was not sure whether she had written a signature on exhibit K. 92 Mrs Song gave evidence that she had not signed exhibit Q but that she had asked her husband to sign the document for her and that she had been next to her husband when he had signed the document for her. On other occasions she had asked her husband to sign documents for her. 93 Ms Song gave evidence that on 30 August 2000, after she had picked up the unexecuted documents from Mr James' office, she had gone to the butcher shop in Strathfield looking for her parents but her parents were not there. She then went to Mr Hussain's office at Strathfield, which was only a short distance away, and at Mr Hussain's office she signed the mortgage that she herself was giving, in the presence of Mr Hussain. She then went back to the butcher shop but her parents had still not returned to the shop. She was in a hurry to pick up her young children. She wrote the signatures of her mother and her father on the mortgage and on the other documents in the bundle of documents she was carrying. 94 Ms Song said in evidence that she wrote the signatures of her parents on the mortgage, because her impression was that the document was not an important or serious document such as would have to be signed in the presence of a lawyer. Another reason she gave was "I need this money very quickly". 95 After writing the signatures on the documents Ms Song took the documents to Mr Hussain's office and gave them to Mr Hussain. She gave evidence "Mr Hussain asked, 'did your parents sign them?' I said, 'yes'. He said, 'Did you explain to your parents' and I said 'yes I did'". 96 In his preliminary report dated 28 February 2003 the forensic document examiner Mr Anderson expressed the following opinion:- "The Song Young Soo and Song Dong Im signatures on the question documents (which included the mortgage) had a number of differences in construction compared to Song Young Soo and Song Dong Im signatures on the specimen documents. These differences appear to be fundamental indicating that these writers did not sign them" 97 In his further report of 13 February 2004 Mr Anderson, having been provided with the originals of the questioned documents and with further specimen signatures of Mr and Mrs Song, expressed the opinion that the writer of the Yong Soo Song signatures on the specimen documents had not written the Young Soo Song signatures on the questioned documents and that the writer of the Dong Im Song signatures on the specimen documents had not written the Dong Im Song signatures on the questioned documents. 98 I find that Mr and Mrs Song did not sign the mortgage (exhibit G) and that Mr and Mrs Song did not sign exhibits H, J, M, N, O and P. 99 While not necessarily accepting all of that part of Ms Song's evidence which I have summarised, I find that Ms Song wrote the signatures purporting to be the signatures of Mr Song and Mrs Song on exhibits G, H, J, M, N, O and P. 100 I find that Mr Song wrote at least one signature on each of exhibits K and L and, despite her denial in her evidence, I find that Mrs Song wrote at least one signature on each of exhibits K and L. 101 I find that Mr Song signed exhibit Q and that either Mrs Song or Mr Song, in Mrs Song's presence and with her authority, wrote her signature on exhibit Q. Issues 4, 5 and 6 4. If Ms Song signed the purported signatures of her parents on a document, was Ms Song authorised by her parents to write the signatures? 5. If Ms Song signed the purported signatures of her parents on a document and was not authorised by her parents to write the signatures, had her parents ratified Ms Song's writing her parents' signatures on the document? 6. If Ms Song signed the purported signatures of her parents on a document and there had been no authority or ratification, were Mr and Mrs Song estopped from denying that they had signed the document? 102 Mr and Mrs Song gave evidence, both in affidavits and orally, denying that they had authorised anyone to sign on their behalf the mortgage or any documents relating to the loan (apart from exhibits K, L and Q). 103 Ms Song gave evidence that when she wrote her parent's signatures on the document which was in fact the mortgage, she did not know that it was a mortgage. 104 Counsel for the plaintiff submitted that I should find that Mr and Mrs Song had authorised Ms Song to write their signatures and referred to various parts of the evidence, including:- 105 (i) Evidence by Mr Song that it was important to obtain $200,000 to make sure of the Popeye's franchise and that Mr Hussain and Ms Song had Mr Song's permission "to organise a loan of $200,000 for Popeye's" 106 (ii) Evidence by Mr Song that he had often left legal matters to his children. I note, however, that Mr Song said in his evidence that "as far as signatures concerned, I have never authorised them (his children) to sign on my behalf". 107 (iii) Par 3(a) of Mr Song's affidavit of 19 December 2002 and par 5 of Mrs Song's affidavit of 19 December 2002. Paragraph 3(a) of Mr Song's affidavit was in the following terms:- "I believe that the mortgage document was signed by our daughter, Mi Kyung Song, on behalf of my wife and me. Our daughter often signs documents on my behalf as I have no knowledge of English and I cannot read English. I do not think that my daughter has done anything wrong in signing the mortgage on my behalf. I was not aware of the terms and conditions of the mortgage until very recently. I would never have agreed to sign a mortgage that has such a high rate of interest". 108 Paragraph 5 of Mrs Song's affidavit was mutatis mutandis in the same terms. 109 (iv) The absence of any claim by the defendants, before at least late 2002, that the mortgage was not binding because the signatures of the mortgagors had been forged, notwithstanding that before that time there had been copious correspondence between the solicitors for the mortgagors and the solicitors for the mortgagee, the mortgage had been varied, notice of default had been served on the mortgagors, the statement of claim had been served and Mr and Mrs Song had been represented by a number of solicitors Barclay Benson, Klonis & Co, Stanford Lawyers and Mr Foley. 110 (v) What had been said by Mr McEvoy of counsel for Mr and Mrs Song at the hearing before Adams J on 24 December 2002. 111 At the hearing Mr McEvoy said that there would appear to be some grounds on which the default judgment could be set aside. However, the grounds stated by Mr McEvoy did not include any ground that the purported signatures of the mortgagors on the mortgage had been forged. 112 At p 10 of the transcript Mr McEvoy said:- They say your Honour that they knew that the mortgage – that their daughter was signing the documents on their behalf and was their agent and understood that". 113 At p 12 there was the following exchange between Adams J and Mr McEvoy:- "McEvoy: Your Honour, if I might say briefly, with respect to the affidavits that were sworn on 19 December 2002 and the suggestions or the assertions raised as to who signed the documents and your Honour will note that I haven't raised those. His Honour: No suggestion. It appears that the person who signed was authorised to do so. McEvoy: Certainly your Honour and I just wanted to explain that". 114 Notwithstanding the evidence relied on by counsel for the plaintiff, which undeniably has substantial probative force, I have concluded that I should not find that Mr or Mrs Song authorised Ms Song to sign their signatures on the mortgage. 115 Both Mr and Mrs Song denied that they had authorised Ms Song to sign the mortgage. There is no direct evidence that any specific authority to sign the mortgage was given. I do not consider that I should infer that Ms Song had some implied authority, which would have authorised her signing her parent's signatures on a document whereby her parents mortgaged their home and a valuable investment property at a very high rate of interest. 116 Furthermore, in the overall mortgage-loan transaction, not merely the mortgage itself but a number of other documents closely related to the mortgage had to be executed. The execution of some of those other documents, such as the declarations and the acknowledgment of legal advice, could not properly have been done by an agent. 117 While I do not necessarily accept all of Ms Song's evidence, I note that, according to her evidence, she did not understand that the document she signed was a mortgage. She wrote her parent's signatures on the document, only after she had been unable to locate her parents, and, when questioned by Mr Hussain, she said that her parents, and not she herself, had signed the mortgage. 118 Issue 4 should be answered "no". 119 Issue 5, that is whether, if Ms Song had signed her parent's signatures on a document without having authority to do so, her parents had ratified the signing of the document, was an issue raised by me on 23 June 2004. 120 On the afternoon of 16 September 2004 during the making of oral submissions I informed counsel that during the luncheon adjournment I had done some quick research, which was far from complete, which suggested that a forged instrument could not be ratified. I referred counsel to Rowe v B & R Nominees Pty Limited [1964] VR 477 (Gillard J) and Klement v Pencoal Limited [2000] QCA 152. 121 Discussion between counsel and the bench followed in the course of which I was informed by both counsel for the plaintiff and counsel for the defendants that neither wished to submit that ratification had occurred. 122 In these circumstances, I do not consider that I should endeavour to determine whether there was any ratification of documents signed without authority by Ms Song, particularly as the law on the subject is not free from difficulty (see the discussion by Gillard J in Rowe) and was not explored at the hearing. In Klement v Pencoal the Queensland Court of Appeal held that there had been a sufficient foundation for the trial judge in that case to make a finding that there had been ratification of a forgery but the judgment of the Court of Appeal was principally concerned with other matters and ratification was dealt with briefly in a single paragraph. In Soyfer v Earlmaze Pty Limited [2000] NSWSC 1068 Hodgson CJ in Eq referred at par 93 of his judgment to Rowe but stated at par 95 that he did not need to consider (in the circumstances of that case) whether a forgery could be ratified. 123 I do not make any finding in relation to issue 5. 124 As to issue 6, no estoppel of this kind was pleaded or argued and the issue did not really arise. 125 Issues 7, 8, 9 and 10 7. Whether or not Mr and Mrs Song had signed the mortgage or there had been authority, ratification or estoppel, had the plaintiff, upon registration of the mortgage and subject to any exceptions to indefeasibility, obtained an indefeasible title by virtue of the Real Property Act ? 8. Did any of the exceptions to indefeasibility apply? 9. Had any agent of the plaintiff been put on notice that Mr and Mrs Song might not have signed the mortgage or might not have been properly advised about the mortgage? 10. If there was an agreement to grant a mortgage, was it a term of the agreement that the mortgage not be registered or did Mr and Mrs Song otherwise have some right that the mortgage not be registered? 126 It was not disputed that, even if the signatures of the mortgagors on the mortgage had been forged, on registration of the mortgage the plaintiff acquired an estate as mortgagee which was indefeasible, subject to their being any exception to indefeasibility: Real Property Act s 42, Frazer v Walker [1967] 1 AC 569, Mayer v Coe (1968) 88 W.N (Pt 1)(NSW) 549. 127 An exception to indefeasibility expressly recognised in s 42 of the Real Property Act is fraud. What is meant by "fraud" in this context was discussed by Lord Lindley in a well known passage in delivering the advice of the Privy Council in Assets Co Limited v Mere Roihi [1905] AC 176 at 210. His Lordship said:- "…by fraud in these Acts is meant actual fraud, ie, dishonesty of some sort, not what is called constructive or equitable fraud - an unfortunate expression and one very apt to mislead, but often used, for want of a better term, to denote transactions having consequences in equity similar to those which flow from fraud. Further, ... the fraud which must be proved in order to invalidate the title of a registered purchaser for value, ... must be brought home to the person whose registered title is impeached or to his agents." 128 In Grgic v ANZ Banking Group Limited (1994) 33 NSWLR 202 Powell JA, with whose judgment Mahoney JA and Handley JA concurred, said at 221, after referring to the passage in Assets Co which I have quoted:- "…and the many cases which have been decided in that period of ninety years, the position still remains that, for the purposes of s 42 of the Act, "fraud" comprehends actual fraud, personal dishonesty or moral turpitude on the part of the registered proprietor of the subject estate or interest or of that registered proprietor's agents…." 129 One basis on which it was submitted by counsel for Mr and Mrs Song that I should find that there had been fraud, was that Mr James' suspicion had been aroused that the mortgagors might have language difficulties and might not have been properly advised about the mortgage and that Mr James had then abstained from making enquiries for fear of learning the truth. 130 Mr James was cross-examined about certain features of the execution of the documents which were returned to him on 31 August 2000. It was suggested that, as the purported signatures of Dong Im Song were in a non-English script, Mr James had realised that Mrs Song might have an English language difficulty; that some of the purported signatures of Mrs Song differed from others; that some of the signatures on the documents were not in the correct places; that the name of the solicitor from whom advice had been received had not been inserted in the acknowledgment of legal advice by the mortgagors, that the evidence as to the identity of the mortgagors referred to in par 2 of the acknowledgment of legal advice had not been produced to Mr James; that a statutory declaration had not been signed in the correct place; and that a declaration of the purpose for which the credit was being provided had not been correctly signed. 131 In his evidence Mr James replied inter alia that he had some clients who spoke perfect English but chose to sign documents in their original language; that he had not noticed any differences between the purported signatures of Dong Im Song; that it very often happened that documents were signed in the wrong places; that Mr Hussain had telephoned him while he was checking the documents and had told Mr James that he, Mr Hussain, was the solicitor who had given the mortgagors independent advice and that Mr James had accepted what Mr Hussain told him; that the evidence of identity had to be produced to the mortgagors' own solicitor and not to the mortgagee's solicitor; and that while one declaration of purpose had not been correctly signed, another copy of the same document had been received, which had been correctly signed. Generally, Mr James said that the documents had been delivered to him by a solicitor, Mr Hussain, who was acting for the mortgagors, and he did not consider that he as the solicitor for the mortgagee was required to conduct any investigation. Given the urgency of the transaction, Mr James considered that he had done everything that needed to be done. 132 I am satisfied that the defendants have not established fraud on the basis that Mr James' suspicions were aroused and that he then abstained from making further enquiries. 133 It was submitted by counsel for Mr and Mrs Song that Ms Song had been guilty of fraud in forging her parent's signatures and in representing that the mortgage had been executed by her parents and that this fraud could be brought home to Mrs Chen, on the basis that Ms Song had been the agent of Mrs Chen's solicitor Mr James. 134 This submission depended on my accepting evidence by Ms Song that on 30 August 2000, when she had picked up the unexecuted documents from Mr James' office, she had had a conversation with Mr James in which Mr James had told her that her parents should sign the documents in the places where Mr James had affixed yellow stickers. 135 It was submitted that Mr James by this conversation had made Ms Song his agent for the purpose of having the documents executed. 136 I do not consider that any fraud by Ms Song can be brought home to Mrs Chen in this way. Ms Song attended at Mr James' office in her capacity as an employee of Mr Hussain and at the direction of Mr Hussain for the purpose of picking up documents and delivering them to Mr Hussain. 137 In his evidence Mr James denied that he had met Ms Song or had had a conversation with her on 30 August and he was not further cross-examined by either counsel for Mr and Mrs Song or by Ms Song. In my opinion, it is inherently unlikely that a solicitor like Mr James, who was sending a large number of important documents to another solicitor for execution by that other solicitor's clients, would seek to explain where the documents had to be signed to a young woman with less than perfect English and who was obviously not a lawyer, who had attended at his office to pick up the documents and deliver them to that other solicitor. I reject Ms Song's evidence about the alleged conversation with Mr James and I reject the submission that Ms Song became the agent of Mr James for the purpose of having the documents executed. 138 Apart from the evidence of Ms Song which I have rejected, there was no evidence that Mr James had notice of any inability of Ms Song to understand English. 139 It was submitted by counsel for Mr and Mrs Song that Mr and Mrs Song had in fact had a severe English language disability, that all of Mr Ling (the plaintiff's attorney), Mr James (the plaintiff's solicitor) and Mr Khan, who it was submitted was not merely an intermediary but an agent of the plaintiff, knew that Mr and Mrs Song were Koreans and were likely to have an English language disability. However, in my opinion, it was not established that the suspicions of any agent of the plaintiff were aroused that Mr and Mrs Song might not understand English and the plaintiff's agents were entitled to proceed on the basis that Mr and Mrs Song were represented by a solicitor who would perform his obligations as their solicitor, including the obligation to ensure that his clients understood the transaction they were entering into. 140 What the plaintiff's agents had been told about Mr and Mrs Song included that they had been in Australia for at least a number of years, that they had acquired very substantial assets in Australia and that against strong competition, they had acquired a franchise from a large international organisation. 141 As to issue 10, it was submitted, on the basis of the many references in the documents, including in exhibit Q and in cl 6 of the deed of loan, to the security for the loan being "unregistered" mortgages, that it was a term of any loan agreement between the parties that the mortgage of 21 Long Street and unit 112/6 Cowper Wharf Road was not to be registered. 142 I do not accept this submission. There are a number of parts of exhibit Q (which was signed by all of Mr Song, Mrs Song and Ms Song), which show that it was a term of the loan being offered that, in the event of default by the borrowers, the unregistered mortgages could be registered. 143 On p 1 of exhibit Q it was stated that the unregistered mortgages would be held "in escrow", which indicates that on the happening of some event there would be some change with respect to the unregistered mortgages. More specifically, on p 1 of exhibit Q there was a special condition requiring an undertaking by the borrowers that upon default they would obtain deeds of priority as well as production of titles "for the second mortgages to be registered". 144 On p 2 of exhibit Q it was provided that the provisions of memorandum No Q860000 were incorporated in the letter of offer and that the borrowers would authorise the lender to serve notices under s 57 of the Real Property Act on the borrowers' solicitors. Both these provisions indicated that the mortgages to be given by the borrowers were to be capable of being registered. 145 A further submission was made that Mr and Mrs Song had a personal equity which could be enforced against Mrs Chen as the registered proprietor of the mortgage. The submission was developed as follows:- 146 After Mr and Mrs Song made default under the mortgage to Mrs Chen, Mr James as the solicitor for the mortgagee had procured the production by the first mortgagee of each property of the certificate of tile for the property, so as to enable the registration of the second mortgage to Mrs Chen. It was submitted that Mr James had had no authority from either Mr Song or Mrs Song that the certificate of title should be used to register the mortgage to Mrs Chen. Paragraph 4 of the direction authority and undertaking (exhibit M), which contained an undertaking to comply with any requisition raised by the Land Titles Office concerning the registration of any document did not confer any authority, because the purported signatures of Mr and Mrs Song on exhibit M were forgeries and the registration of the mortgage had not operated to validate exhibit M. Nor was there any other source of authority. 147 Counsel for Mr and Mrs Song cited the decision of the Court of Appeal in Mercantile Mutual Life Assurance Co Limited v Gosper (1991) 25 NSWLR 32 as supporting his submission. 148 In my opinion, the submission by counsel for Mr and Mrs Song, that they had a personal equity of the type suggested, should be rejected. 149 I have already found that it was a term of any agreement between the plaintiff and the defendants that, on default by the defendants under the mortgage, the mortgage could be registered. Obtaining production of the certificates of title by the first mortgagees was a necessary step in having the second mortgage to the plaintiff registered. The special condition on p 1 of exhibit Q, to which I have already referred, explicitly required an undertaking by Mr and Mrs Song that on default they would obtain production of titles (that is, certificates of title), so as to enable the second mortgage to be registered. 150 Mercantile Mutual v Gosper is distinguishable. In that case Mrs Gosper had previously mortgaged her property to Mercantile Mutual. Her husband forged Mrs Gosper's signature on a variation of the mortgage by which the principal sum was purportedly increased. The variation of the mortgage was registered. 151 Two of the three judges in the Court of Appeal (Kirby P and Mahoney JA) held that Mrs Gosper was not bound by the purported variation of the mortgage. Kirby P held that the only way in which the valid original mortgage could be varied was by a deed and the variation of mortgage, on which Mrs Gosper's signature had been forged, was not a deed. Mahoney JA held that, in order that the forged variation of mortgage should be registered, Mercantile Mutual had to produce the certificate of title to the Registrar General but Mercantile Mutual had no authority from Mrs Gosper to produce the certificate of title for that purpose and it should be concluded that, in producing the certificate of title to the Registrar General, Mercantile Mutual had acted in breach of its obligations to Mrs Gosper concerning how it was to deal with the certificate of title. 152 In the later decision of Storey v Advance Bank Limited (1993) 31 NSWLR 722 Mahoney JA at p 739 explained what he had decided in Mercantile Mutual v Gosper as follows:- "In Mercantile Mutual Life Assurance Co Limited v Gosper , I was of opinion that a personal equity existed which entitled Mrs Gosper to have set aside a mortgage which, by the forging of her signature, had been accepted for registration. That 'personal equity' arose because the mortgagee had without proper authority made the title deed available for registration of the mortgage and that wrong enabled registration of the forged mortgage and was essential to the registration of it. In the relevant sense, the wrong allowed the registration to be effected. I concluded that that gave rise to a personal equity to have the effect of that wrong reversed". 153 In the present case Mr and Mrs Song by signing exhibit Q assented to the special condition requiring an undertaking that upon default they would obtain the production of the certificates of title so as to enable registration of a second mortgage to Mrs Chen. 154 Issue 7 should be answered "yes", issue 8 (subject to issue 14) should be answered "no", issue 9 should be answered "no" and issue 10 should be answered "no". Issue 11 11. Was the money which was lent, lent to Mr and Mrs Song? 155 It was submitted by counsel for the defendants that Mr and Mrs Song had not received any part of the amount which had been lent and that the amount which had been lent had been remitted to AFC for the benefit of Golden Mountain Group Pty Limited, a company in which Mr Song was merely a minority shareholder and Mrs Song held no shares. It was further submitted that the directions and receipts in documents on which Mr and Mrs Song's signatures had been forged were nullities and did not attain any validity through the mortgage having been registered. It was then submitted that, as no monies had been received by Mr and Mrs Song, no monies were secured by the mortgage and the mortgage should be discharged. 156 I observe that it is clear beyond argument that on 31 August 2000 the sum of $200,000, which had been advanced by Mrs Chen, was sent by telegraphic transfer to an account of AFC in the United States. 157 It is true that no part of the sum advanced by Mrs Chen was paid to Mr and Mrs Song personally. However, the evidence is overwhelming that Mr Song as a developer, and indeed the only remaining active developer, under the Development and Franchise Agreement with AFC, was attempting to obtain a loan of $200,000, solely for the purpose of paying that sum to AFC as franchisor, so as to prevent the loss of the franchise which had been granted and the forfeiture of the deposit which had previously been paid. The amount which was lent by Mrs Chen was applied precisely in the way in which Mr Song intended that any money which could be borrowed should be applied and the application of the amount lent in that way achieved for Mr Song the benefits he wished to achieve. 158 Although Mr Song did not own the majority of the shares in Golden Mountain Group Pty Limited, I am satisfied that he in fact controlled the affairs of that company. 159 The monies which Mrs Chen advanced can properly be regarded as having been lent to Mr and Mrs Song and applied, in accordance with their wishes, by remitting it to a third party to whom Mr and Mrs Song wished to make a payment. 160 I answer issue 11 "yes". Issue 12 12. If the mortgage was otherwise binding on Mr and Mrs Song, were Mr and Mrs Song entitled to relief under the principles relating to unconscionability in Commercial Bank of Australia v Amadio (1983) 151 CLR 447? 161 In Commercial Bank of Australia Limited v Amadio (1982-1983) 151 CLR 447 Mason J at p 462 spoke of:- "…an underlying general principle which may be invoked whenever one party by reason of some condition or circumstance is placed at a special disadvantage vis-à-vis another and unfair or unconscientious advantage is then taken of the opportunity thereby created. I qualify the word "disadvantage" by the adjective "special" in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasize that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party". 162 In Amadio Deane J said at p 474:- "…The jurisdiction is long established as extending generally to circumstances in which (i) a party to a transaction was under a special disability in dealing with the other party with the consequence that there was an absence of any reasonable degree of equality between them, and (ii) that disability was sufficiently evident to the stronger party to make it prima facie unfair or "unconscientious" that he procure, or accept, the weaker party's assent to the impugned transaction in the circumstances in which he procured or accepted it. Where such circumstances are shown to have existed, an onus is cast upon the stronger party to show that the transaction was fair, just and reasonable…" 163 In counsel for Mr and Mrs Song's written submissions the special disadvantage or special disability, which it was submitted Mr and Mrs Song had had, was their inability to understand documents in English, without their having an explanation of the documents, given independently of Ms Song, which had been translated into Korean. It was also submitted that Mr and Mrs Song had a special disadvantage or special disability, in that, because they had lived in Korea most of their lives, they lacked the awareness an Australian born person would have of mortgages. 164 I accept that Mr and Mrs Song had a special disadvantage or special disability by reason of their inability to understand documents in the English language, unless the documents were explained to them in Korean. I do not accept that any such explanation would have to be given independently of Ms Song. 165 I do not accept evidence given by Mr and Mrs Song that in August 2000 they did not have a basic understanding of what a mortgage is. By August 2000 they had entered into mortgages of 21 Long Street (at least two and it would seem, three, mortgages), of 121/24-30 Albert Road, Strathfield and 112/6 Cowper Wharf Road, Woolloomooloo. 166 However, whatever disability or disadvantage Mr and Mrs Song had, I do not accept that I should find that the plaintiff by her agents knew or ought to have known of the disability or disadvantage or that the disability or disadvantage was evident to the plaintiffs' agents. As I said earlier in this judgment, what the plaintiff's agents had been told about Mr and Mrs Song included that they had been in Australia for at least some years, that they had acquired very substantial assets in Australia and that they had obtained a franchise from a large international organisation. Importantly, so far as the plaintiff's agents were concerned, Mr and Mrs Song were represented by a solicitor and the plaintiff's agents were entitled to assume that, if Mr and Mrs Song had any disadvantage or disability in understanding English, the solicitor acting for them would take appropriate steps to remedy that disadvantage or disability. 167 There was nothing in the communications to the plaintiffs' agents to suggest any possibility of a conflict between Mr and Mrs Song on the one hand and Ms Song on the other hand. 168 This issue should be answered "no". Issue 13 13. If the mortgage was otherwise binding on Mr and Mrs Song, were Mr and Mrs Song entitled to relief under any other general law principle? 169 Counsel for the defendants referred to Yerkey v Jones (1939) 63 CLR 649 and Garcia v National Australia Bank Limited (1998) 184 CLR 395 but the principles discussed in those cases are concerned with guarantees by married women of loans to their husbands or, possibly, analogous transactions and have no application in the present case. Issue 14 If the mortgage was otherwise binding on Mr and Mrs Song, were Mr and Mrs Song entitled to relief under the Contracts Review Act ? 170 A claim that Mr and Mrs Song were entitled to relief under the Contracts Review Act was not strongly pressed in counsel for the defendants' written submissions. Difficulties in the way of such a claim succeeding, as apprehended by counsel, included:- 171 (i) In the absence of prior authorisation or subsequent ratification of the mortgage (counsel contending that there had not been prior authorisation and counsel not seeking to argue that there had been subsequent ratification), there might not have been a contract to which the Contracts Review Act could apply, the estate or interest which Mrs Chen had obtained on registration of the mortgage not amounting to a contract. 172 (ii) Relief might be precluded by s 6(2) of the Contracts Review Act, which provides that a person may not be granted relief under the Act in relation to a contract so far as the contract was entered into for the purpose of a business carried on or proposed to be carried on by the person, unless, in the present case, it could be argued that any contract that had been entered into was a contract for the purpose of a business proposed to be carried on, not by Mr and Mrs Song, but by Golden Mountain Group Pty Limited. 173 In counsel for the plaintiff's written submissions counsel said that it appeared that any claim by Mr and Mrs Song under the Contracts Review Act had been abandoned but that, if such a claim was still being pressed, it should fail on the grounds that there was no contract to which the Act could apply and, even if there was such a contract, the contract would fall within s 6(2). 174 In counsel for Mr and Mrs Song's oral submissions the claim for relief under the Contracts Review Act was pressed. It was submitted that there was a contract, that I should find that a number of the matters referred to in s 9(2) of the Act had been present and that, in any event, the provision of the contract relating to interest was unjust in permitting the charging, indefinitely, of an extremely high rate of interest. 175 In counsel for the plaintiff's oral submissions it was submitted that there was no contract to which the Act could apply. What had been made indefeasible on registration of the mortgage by the operation of s 42 of the Real Property Act did not amount to a contract. Counsel cited Khan v Hadid [2003] NSWSC 1191 (Cripps AJ) 18 December 2003 especially at par 24). 176 Counsel for Mrs Chen further submitted that, even if there had been a contract, the contract would have fallen within s 6(2) of the Act. The money had been borrowed for the purpose of a business proposed to be carried on and the business proposed to be carried on was to be carried on by Mr Song and not the company Golden Mountain Group Pty Limited. Counsel pointed out that the development and franchise agreement, the amendment to the development and franchise agreement and the voluntary termination agreement of the development and franchise agreement had all been made by AFC with Mr Song and not with Golden Mountain Group Pty Limited. 177 Counsel for Mrs Chen further submitted that, even if the Act was applicable and relief was not barred by s 6(2), the provision relating to interest was not "unjust". Counsel referred to Multispan v Portland (No 2) [2001] NSWSC 1047 (Barrett J) and Asia Pacific International Pty Limited v Dalrymple [2000] 2 Qd R 229 (Shepherdson J). In the course of argument reference was made to exhibit Q and to the fact that exhibit Q had been signed by all of Mr Song, Mrs Song and Ms Song. 178 The first issue to be determined is whether there was a contract to which the Contracts Review Act could apply. 179 At the hearing argument on this issue tended to focus on the mortgage itself (exhibit G). If, as I have held, the purported signatures of Mr and Mrs Song on the mortgage were written, not by them, but by Ms Song, and if, as I have held, Ms Song had no authority to write her parents' signatures on the mortgage, and if, as I have already recorded, neither counsel sought to argue that Mr and Mrs Song had ratified the writing of their signatures by Ms Song, then, on registration of the mortgage on which the signatures of the mortgagors had been forged, Mrs Chen acquired an indefeasible estate or interest as mortgagee but the registration of the mortgage did not validate all the terms and conditions of the mortgage but only "those which delimit or qualify the estate or interest or are otherwise necessary to assure that estate or interest to the registered proprietor" (PT Limited v Maradona Pty Limited (1992) 25 NSWLR 643 at 679 per Giles J). It would seem that what is validated by the registration of a forged instrument does not amount to a contract to which the Contracts Review Act can apply. Khan v Hadid; Permanent Trustee Co Limited v Frazis (1999) NSWSC 319 (Dunford J). 180 However, even if the mortgage by itself was not a contract, there clearly was a contract between Mrs Chen and Mr and Mrs Song constituted by the letter of offer exhibit Q, the acceptance of that offer by Mr and Mrs Song (and Ms Song) and the notification of that acceptance to an agent for Mrs Chen. There was no dispute at the hearing that the purported signatures of Mr and Mrs Song on exhibit Q were genuine signatures by them. 181 The existence of exhibit Q distinguishes the present case from other cases where a forged mortgage or other instrument has been registered, where there was no contract between the lender and the owner of the registered estate and the only person with whom the lender dealt was the forger of the forged instrument. 182 Apart from exhibit Q, there would have been a contract between Mrs Chen and Mr and Mrs Song, if the true position is that the mortgage was ratified or if the true position is that the mortgage became binding by a bilateral process of adoption, as distinct from ratification. However, as neither ratification nor adoption was argued before me, I base my finding that there was a contract between Mrs Chen and Mr and Mrs Song, solely on exhibit Q. 183 The next issue to be determined is whether Mr and Mrs Song are precluded from being granted relief by s 6(2) of the Act. 184 It is clear that the money which was lent was being borrowed for the purpose of the business of the Popeye's franchise. The critical question is by whom was the business of the Popeye's franchise proposed to be carried on. 185 As I have already stated, counsel for Mrs Chen, relying on the fact that the party with whom AFC made the franchise and development agreement and the two subsequent agreements was Mr Song, and not Golden Mountain Group Pty Limited, submitted that I should find that the business was proposed to be carried on by Mr Song. I note in passing that, even if this submission is correct, Mrs Song, as distinct from Mr Song, would not be precluded from being granted relief under the Act. 186 Counsel for Mr and Mrs Song submitted that I should find that the business was proposed to be carried on by Golden Mountain Group Pty Limited. 187 There is undoubtedly some force in counsel for Mrs Chen's submissions. However, I have concluded that I should find that the business was proposed to be carried on by the company Golden Mountain Group Pty Limited and that, accordingly, s 6(2) of the Act is not an obstacle to Mr and Mrs Song being granted relief. Mr Song and Ms Song asserted in their evidence that the business was proposed to be carried on by Golden Mountain Group Pty Limited. The first lines in Mr Khan's contemporaneous notes of his telephone conversation with Fahmi Hussain on 28 August 2000 read:- "Borrower = family MA (mother) PA (father) daughter Golden Mountain Group P.L". 188 The letter of 30 August 2000 written by Fahmi Hussain to Mr Khan, which is annexure B to Mr Khan's affidavit, is headed "Re: Golden Mountain Group Financing". On page 1 of the letter it is stated:- "The directors are happy to take the loans in their personal names…" 189 On page 3 of the letter it is stated that unit 252/24-30 Albert Road, Strathfield is owned by the family company known as Golden Mountain Group Pty Limited. 190 Section 7 of the Contracts Review Act provides that where a court finds a contract or a provision of the contract to have been unjust in the circumstances relating to the contract at the time it was made, the court may, if it considers that it is just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, do any one or more of the things set out in pars (a) to (d) (subject to s 19). Section 9 of the Act provides that in determining whether a contract or a provision of a contract is unjust in the circumstances relating to the contract at the time it was made, the court should have regard to the matters set out in s 9. 191 I do not consider that the contract or any provision of the contract, apart from the provision relating to the payment of interest, was unjust. 192 As regards interest, exhibit Q contains the following provision:- "Interest Rate: The loan will be at an effective rate of 7.5% per month fixed monthly in arrears reducing from 8.5% per month for prompt payment of interest instalments, within seven days of the due date. One month additional interest payment will apply for any early repayment of the loan principal. All outstanding interest shall become part of the Principal sum and attract interest at the higher rate and compounded on the last day of each month of the due date. The Lender reserves the right to vary this rate at any time prior to acceptance of this loan advance". 193 Clause 3 of the mortgage (exhibit G) provided for the payment of interest at 8½% or 7½% per month but did not provide for the compounding of interest. Clause 4(b) of the deed of loan (exhibit H) is in similar terms to the mortgage and cl 4(h) provides that all outstanding interest is to become part of the principal sum. 194 Mr Khan gave evidence that the interest rate of 7½% (8½%) per month had been arrived at in a telephone conversation between himself and Fahmi Hussain. Mr Khan had initially sought an interest rate of 10% per month and it was Mr Hussain who had suggested 7½% per month. Mr Khan gave evidence that the interest rate of 7½% per month was reasonable, given that the loan being sought was bridging finance, "a speedy, fast loan", and having regard to the risk the lender would be undertaking, the urgency with which the money was required and the amount of work required to be done in a hurry by or on behalf of the lender. Later in his evidence Mr Khan said "I am in a very specialised field, bridging finance. I only do short term loans, which is bridging finance". 195 Ms Song gave evidence, which I accept, that after Fahmi Hussain had told her that a lender had been found and what the rate of interest would be, she had telephoned her father and told him "we found the money $200,000, $15,000 per month… over three months" and her father had said "yes… for three months". 196 Mr Irwin of Baline Financial Services Pty Limited gave expert evidence that the interest rate charged was below the market rate at the time for short term funding required urgently. 197 In the light of the evidence I have referred to, I find that the rate of interest was not unjust for a short term bridging loan, where the loan was required urgently, and would not be unjust for the original term of the loan and perhaps somewhat longer. However, in the present state of the evidence I would be disposed to find that the rate of interest of 8½% or 7½% per month, especially if compounded, would be unjust, as a rate of interest continuing year after year, after the loan had ceased to be a short term bridging loan. The evidence of Mr Khan and Mr Irwin to which I have referred, to the effect that the rate of interest was reasonable, was evidence about the rate of interest for a short term bridging loan. The cases to which I was referred by counsel for Mrs Chen in which there were high rates of compound interest were not cases on the Contracts Review Act or any similar legislation. 198 However, it seems to me that, before I make any finding that the provision of the contract relating to interest was unjust, and, if so, whether I should exercise the discretion under s 7 of the Contracts Review Act and, if so, what order I should make, including what order I should make varying the rate of interest, I should give the parties an opportunity of adducing any further evidence and making any further submissions, including evidence and submissions as to what would be an appropriate rate of interest after the initial period of the loan. Issues 15 and 16 15. If the mortgage was otherwise binding on Mr and Mrs Song, were Mr and Mrs Song entitled to relief under s 43 of the Fair Trading Act ? 16. If the mortgage was otherwise binding on Mr and Mrs Song, were Mr and Mrs Song entitled to any other kind of statutory relief? 199 Section 43(1) of the Fair Trading Act provided that a supplier should not in trade or commerce in connection with the supply of services to a customer engage in conduct that was in all the circumstances unconscionable. 200 By s 4 of the Act "services" are defined as including any rights conferred under a contract for or in relation to the lending of money. 201 Under s 43(5) (since repealed but in force in August 2000) a reference in s 43 to services was a reference to services of a kind ordinarily acquired for personal domestic or household use or consumption. 202 In the present case any services acquired were not services of a kind ordinarily acquired for personal domestic or household use or consumption and hence s 43 had no application. 203 There is no other kind of statutory relief to which Mr and Mrs Song would be entitled. 204 I answer issues 15 and 16 "no". Issue 17 If the mortgage was otherwise binding on Mr and Mrs Song, were Mr and Mrs Song entitled to any relief on the ground that the rate of interest under the mortgage was excessive? 205 I do not consider that Mr and Mrs Song are entitled to any relief on the ground that the rate of interest under the mortgage was excessive, on any basis other than the Contracts Review Act. This conclusion is supported, in my opinion, by the cases to which I was referred by counsel for Mrs Chen. PROCEEDINGS AGAINST MS SONG 206 I can deal quite briefly with proceedings 11074/02 in which Ms Song was the defendant. Earlier in this judgment I made an assessment of Ms Song. Most of the issues which I listed in the proceedings against Mr and Mrs Song simply do not arise in the proceedings against Ms Song. Ms Song admits that she signed the mortgage over 125/6 Cowper Wharf Road, Woolloomooloo and that she signed exhibit Q. On the registration of that mortgage Mrs Chen obtained an indefeasible title, Ms Song having no right that the mortgage not be registered and there being no exception to indefeasibility. The amount lent by Mrs Chen was applied in the way in which Ms Song desired that it should be applied and the amount lent can be regarded as notionally lent to Ms Song. 207 Ms Song claimed in her evidence that she did not know that the document she signed was a mortgage and that she did not in August 2000 understand what a mortgage was. I reject this evidence by Ms Song. I do not consider that I should find that Ms Song has any claim under Amadio or under any other general law principle or under the Fair Trading Act. 208 Ms Song also claimed relief under the Contracts Review Act. In Ms Song's case there was clearly a contract between her and Mrs Chen to which the Contracts Review Act could apply and, on any view, she is not barred from relief under the Contracts Review Act by s 6(2) of the Act. I do not consider that she is entitled to any relief, otherwise than in relation to the provision relating to the charging of interest. What I said earlier in this judgment in dealing with a similar claim by Mr and Mrs Song and particularly at paras 190 to 198, applies generally to this claim by Ms Song. CONCLUSION 209 I have finally determined all issues in proceedings 11075/02, with the exception of issue 14 relating to the Contracts Review Act. I have finally determined all issues in proceedings 11074/02, other than the issue relating to the Contracts Review Act. On the outstanding issues I propose to give the parties the opportunity of adducing further evidence and making further submissions. At this stage I do not make any orders or grant any other relief. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.