New South Wales Supreme Court CITATION : Commonwealth Bank of Australia v Mohamad Saleh & Ors [2007] NSWSC 903 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S) : 16/07/07-19/7/07, 23/07/07-26/07/07, 30/07/07-3/08/07, 6/08/07-10/08/07, 13/08/07 JUDGMENT DATE : 28 August 2007 JURISDICTION : Equity Division Commercial List JUDGMENT OF : Einstein J DECISION : Plaintiff entitled to declarations and orders as recited in reasons. Short minutes of order to be brought in. CATCHWORDS : Banker and customer - Elaborate fraud committed against Bank - $7,000,000 proceeds of frauds swiftly disbursed following settlement - Provision to Bank of fabricated financial statements in support of a claim that borrowing company requiring receivables finance facility had in the order of $20,000,000 in sales per year - Fraud perpetrated by a variety of actors - Proceedings including claims in rem, claims for deceit, claims for misleading and deceptive conduct, restitutionary claims for mistaken payment, claims for negligent misstatement - Expert evidence in relation to documentary examination and access to computer deep memory - Consideration of tracing - Principles - Damages - General damages - Consideration of principles underpinning awards of exemplary damages A New Tax System (Goods and Services Tax) Act 1999 (NSW) Corporations Act 2001 (Cth) LEGISLATION CITED : Evidence Act 1995 (NSW) Fair Trading Act 1987 (NSW) Financial Transactions Reports Act 1992 (NSW) Trade Practices Act 1974 (Cth) Agip (Africa) Ltd v Jackson [1992] 4 All ER 451 Amalgamated Television Services Pty Ltd v Marsden (No 2) (2003) 57 NSWLR 338 ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1) (1990) 27 FCR 460 Black v S Freedman & Co (1910) 12 CLR 105 Boscawen v Bajwa [1996] 1 WLR 328 Brady v Stapleton (1952) 88 CLR 322 Briginshaw v Briginshaw (1938) 60 CLR 336 Cassell & Co Ltd v Broome [1972] AC 1027 Cox v Smail (1912) VLR 274 Diplock, In re: Diplock v Wintle [1948] Ch 465 Foskett v McKeown [2000] 3 All ER 97 CASES CITED : French Caledonia Travel Service Pty Ltd (in liq), Re: (2003) 204 ALR 353 Frith v Cartland (1865) 71 ER 525 Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 James v Hill [2004] NSWCA 301 James Roscoe (Bolton) Ltd v Winder [1915] 1 Ch 62 Lamb v Cotogno (1987) 164 CLR 1 Moses v Macferlan (1760) 97 ER 676 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449 Pascoe v Federal Commissioner of Taxation (Cth) (1956) 30 ALJR 402 Pedler v Richardson (unreported, Supreme Court of New South Wales, Young J, 16 October 1997, BC9705263 Stephens Travel Service International Pty Ltd v Qantas Airways Ltd (1988) 13 NSWLR 331 XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448 Watson v Foxman (1995) 49 NSWLR 315 Commonwealth Bank of Australia (Plaintiff) Mohamad Saleh (First Defendant) Neil Petts (Second Defendant) Zia UI-Islam Qureshi (Third Defendant) Australia and New Zealand Banking Group (Fourth Defendant) Hassanien Saleh (Fifth Defendant) PARTIES : Perpetual Trustees Australia Limited (Sixth Defendant) Quaid Real Estate Pty Limited (Eighth Defendant) William Lowe Edge (Tenth Defendant) Qureshi & Associates (Eleventh Defendant) Abdullah Saleh (Twelfth Defendant) Faowzi Saleh (Thirteenth Defendant) Khadige Saleh (Fourteenth Defendant) Fatima Saleh (Sixteenth Defendant) FILE NUMBER(S) : SC 50149/05 Mr A Henskens, Mr A Zahra (Plaintiff) COUNSEL : Mr M Newman (Tenth Defendant) Mr Z Qureshi (appeared in person) (Third Defendant) SOLICITORS : Henry Davis York (Plaintiff) Newman & Associates (Tenth Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST Einstein J Tuesday 28 August 2007 50149/05 Commonwealth Bank of Australia v Mohamad Saleh & Ors JUDGMENT The proceedings 1 The Commonwealth Bank of Australia ['the Bank'] brings these proceedings to recover moneys advanced by it in reliance on conduct alleged to have been misleading and deceptive, negligent and fraudulent and to recover damages. It seeks relief against persons and entities alleged to have engaged in such conduct and also against persons said to have received as volunteers, moneys advanced by the Bank. The Bank also claims pursuant to a contractual guarantee. The receivables finance facility 2 In about mid-May 2005, an application was made to the Bank for a receivables finance facility referable to the receivables of TDM Australia Pty Ltd. TDM was a company which appears to have operated as a wholesaler of electrical light switches, power points and other related products. It was a company with which the major actors for the purposes of the proceedings, Mr Mohamad Saleh, Mr Hassanien Saleh, Mr William Edge and Mr Zia Ul-Islam Qureshi, had been associated: i. Mr Mohamad Saleh was a joint director and company secretary of TDM from 18 October 2002 to 15 March 2004 and was involved in the business and operations of the company until some time after 3 June 2005; ii. Mr Hassanien Saleh was a joint director of TDM from 18 October 2002 to 15 March 2004, was the sole director of TDM from 15 March 2004 to 11 April 2005 and was involved in the business and operations of the company until some time after 3 June 2005. He is also the brother of Mr Mohamad Saleh; iii. Mr Edge was appointed the sole director of TDM on 11 April 2005 and was involved in the business and operations of the company from some time in 2005 until some time after 3 June 2005; and iv. Mr Qureshi alleges he was the accountant for TDM. That is disputed by the Salehs but the evidence establishes that Mr Qureshi (and his company, Qureshi & Associates Pty Ltd – now in liquidation) prepared various financial statements relating to TDM, prepared schedules detailing the receivables of TDM and wrote letters certifying key facts concerning the operations, receivables and tax position of TDM. Qureshi & Associates Pty Ltd traded under the name Mascot Taxation & Accounting Services. 3 The only defendants present throughout the hearing were Mr Edge, who was represented by his solicitor Mr Newman and Mr Qureshi who represented himself. Many of the defendants had however on earlier occasions been represented by legal advisers but by the time the hearing began Notices of Ceasing to Act had been given by those advisers. Mr Petts, himself a defendant, was called as a witness by the Bank. 4 During final address the Bank elected to restrict its claim against Mr Petts to one of nominal damages. The Bank made the point that the nature and gravity of the fraud and the participation of particular parties in that regard had developed during the course of the hearing. It submitted that it was now apparent on the detailed evidence that the respective proportion of responsibility by Mr Petts had reduced substantially from the position that appeared clear some time ago, even at the time when the default judgment was obtained against him. The ground for the default judgment involved his misleading and deceptive conduct under the Fair Trading Act where it had not been necessary to prove intent and where he had passed across to the Bank materials which turned out to have been fabricated and false. In the circumstance where the Bank accepted that by the end of the hearing it had great difficulty on the facts in being able to persuade the Court that there was a case for substantial damages against Mr Petts, it elected only to seek nominal damages. That being the case nothing further needs be said in this regard and a nominal damages award of $1 is appropriate as against Mr Petts. 5 The other defendants included: i. ANZ Banking Group Limited [the fourth defendant]; ii. Perpetual Trustees Australia Limited [the sixth defendant]; iii. [National Australia Bank Limited, the proposed seventh defendant was not ultimately served with a summons]; iv. Quaid Real Estate Pty Limited [the eight defendant]; v. [Proceedings were discontinued against the ninth defendant, J Biady and Associates]; vi. Abdullah Saleh [the twelfth defendant, who is the brother of Mohamad and Hassanien Saleh]; vii. Faowzi Saleh [the thirteenth defendant, who is the father of Mohamad and Hassanien Saleh]; viii. Khadige Saleh [the fourteenth defendant, who is the mother of Mohamad and Hassanien Saleh]; ix. [Proceedings were discontinued against the fifteenth defendant, the Arab Bank Australia Limited]; x. Fatima Saleh [the sixteenth defendant, who is the sister of Mohamad and Hassanien Saleh]. 6 The reasons detail the negotiations conducted with the Bank prior to the receivables facility being made available. 7 The essential gravaman of the Bank's case is that it was duped by an elaborate fraud constituted by the provision to it of fabricated financial statements provided in support of the claim that TDM was a substantial company in the order of $20 million in sales per year, requiring the receivables finance facility for a purpose which was itself a tissue of lies. Part and parcel of the fraud which these findings accept was perpetrated, involved oral and documentary representations by a variety of actors generally made to provide adjectival support for the false propositions · that TDM was a substantial company with the above described sales; · that TDM required the receivables finance facility for a purpose now shown to have been false. 8 In the main the many misrepresentations went to the Bank's prudential decision to grant the facility and to its security position. 9 Some only of the indicators of the fraud treated with in the reasons are the following: i. Mr Mohamad Saleh, Mr Hassanien Saleh and Mr Edge absconded shortly after the $7 million was paid. Although Mr Edge has returned, Mr Mohamad Saleh and Mr Hassanien Saleh apparently remain in Lebanon; ii. the very swift dispersal amongst many Saleh family members after the $7 million was paid, of hundreds of thousands of dollars; iii. the close down of TDM's office and storage facility buildings which took place virtually immediately upon payment of the $7 million; iv. the fact that Mr Mohamad Saleh and Mr Edge sought to avoid any discovery of the fraud until after the funds had been disbursed and jointly advanced a fictitious story that Mr Edge had travelled to China to avoid early detection by the Bank of the imaginary and exaggerated debtors; v. the fact that Mr Edge used both a false name and a false signature to hide his involvement in the fraud and receipt of part of its ill-gotten fruits. He also used a fictitious address. 10 A convenient flowchart setting the manner in which the funds were dispersed was admitted into evidence as Exhibit P32. The flowchart serves to explain some of the complexities treated with in the reasons: 11 In truth the evidence before the Court resoundingly establishes that TDM, which never in fact lodged a tax return in the entirety of its existence and for which accounting documents recorded sales income for the year to 30 June 2003 as zero and its sales income for the year ended 30 June 2004 as $238,500, was simply dressed up for the purposes of the fraud perpetrated upon the Bank as an entity which according to the accounts relied upon by the Bank had an entirely different trading history: the trading statement received by Mr Petts [then with GE Commercial Corporation (Australia) Pty Ltd] and later passed on to the Bank recorded sales income for the year ended 30 June 2004 at $24,310,430 and recorded sales income for the year ended 30 June 2003 at $22,964,117. In the same accounts the balance sheet recorded receivables as part of the current assets for the year ended 30 June 2004 in the sum of $7,012,514 and for the year ended 30 June 2003 in the sum of $5,350,000. In the same way the materials provided to Mr Petts by way of financial statements for the company for the nine months ended 31 March 2005 disclosed interim sales income as $22,392,260, the balance sheet recording receivables for those nine months of $8,564,645. Part of the documentation supplied to the Bank [exhibited to affidavit of Mr Budai as OB9 page 54] showed budgeted sales from June 2005 up to May 2006 of approximately $56 million throwing up a gross profit of $15,239,276. The same materials included a receivables finance trading analysis [at OB9 p56] recording total debtors outstanding at the end of April 2005 at $8,427,540. 12 In short the clear evidence proves a fraud of the most elaborate nature likely only able to have been successful because of: i. the careful homework carried out by the perpetrators of the fraud on a number of fronts, importantly including the fact that in the nature of things a non disclosed receivables facility would not permit the financial institution offering the facility to have direct access to debtors: [one of these preparatory steps involved a careful questioning of another institution as to what types of questions were likely to be asked by a lender approached for the grant of such a facility]; ii. the care with which accounting documents were simply fabricated; iii. the care with which the conspirators provided completely fabricated TDM St George bank statements to the Bank. 13 A feature of the evidence involves the steps taken by certain of the actors well in advance of the final grant of the facility to use fictitious addresses and/or names in already setting up purchases to be completed with the funds expected to be received as the proceeds of the fraud. 14 There are a large number of defendants outside of the main actors. They have been identified early in the judgment and in due course treated with in terms of the relevant findings concerning each of them. 15 The Bank's case is extraordinarily detailed and it is necessary to traverse many matters of fact. It is however trite that the Court does not require to set out all of the evidence in a judgment. An overview of the claims made by the Bank 16 The Bank pleads the following causes of action against the defendants: i. action in rem – as against the defendants into whom the funds are traced; ii. deceit as against Mr Mohamad Saleh, Mr Hassanien Saleh, Mr Qureshi, Qureshi & Associates and Mr Edge; iii. misleading and deceptive conduct as against Mr Mohamad Saleh, Mr Hassanien Saleh, Mr Qureshi, Qureshi & Associates and Mr Edge; iv. restitution as against the defendants who received the proceeds of the funds advanced by the Bank; v. breach of contract relating to the guarantee signed by Mr Edge; and vi. negligence as against Mr Mohamad Saleh, Mr Hassanien Saleh, Mr Qureshi, Qureshi & Associates, and Mr Edge. Chronicling the real issues 17 It is convenient to set out in some detail the critical issues which call for determination: Action in rem 1. Whether the plaintiff advanced $7 million to the first defendant in reliance on any fraudulent misrepresentations found to have been made to it. 2. Whether by reason of advancing money pursuant to any fraudulent misrepresentation found to have been made, the $7 million was immediately impressed with a constructive trust over the funds with the plaintiff as the beneficial owner of the funds. 3. Whether the plaintiff can trace the funds in equity into the hands of the defendants. 4. Does any defendant into whom the funds are traced, claim and prove that such defendant was a bona fide purchaser for value without notice of the plaintiff's equity? [No defendants who took the point were shown to be bona fide purchasers for value without notice.] 5. Whether in the absence of any plea under 4, the knowledge of the defendants of the fraud is relevant to the plaintiff's entitlement to trace into the funds? 6. Whether the plaintiff is entitled to declarations that it is and has always been the true owner of the funds traced into the hands of the defendants. 7. Alternatively, as against the sixth defendant, whether the plaintiff is entitled to a declaration that it has a subrogated interest in the mortgage securing the loan account into which part of the $7 million was paid. Deceit 8. Whether two or more of the first, third, fifth, tenth and eleventh defendants conspired to deceive and defraud the plaintiff. 9. Whether the pleaded representations by the first defendant; the third defendant; the fifth defendant; the tenth defendant and the eleventh defendant (respectively) were: a. Made with knowing falsity or reckless disregard for the truth by the first defendant; the third defendant; the fifth defendant; the tenth defendant; or the eleventh defendant (respectively); b. Made intending any one of them to be relied upon; c. With respect to the first defendant: i. made pursuant to a broader conspiracy with the third, fifth, tenth and eleventh defendants to defraud the plaintiff; With respect to the third defendant: ii. made pursuant to a broader conspiracy with the first, fifth, tenth and eleventh defendants to defraud the plaintiff; With respect to the fifth defendant: iii. made pursuant to a broader conspiracy with the first, third, tenth and eleventh defendants to defraud the plaintiff; With respect to the tenth defendant: iv. made pursuant to a broader conspiracy with the first, third, fifth and eleventh defendants to defraud the plaintiff; With respect to the eleventh defendant: v. made pursuant to a broader conspiracy with the first, third, fifth and tenth defendants to defraud the plaintiff; d. Relied upon by the plaintiff to approve the loan and advance the $7 million; e. The cause of the plaintiff's damage and if so, in what proportion having regard to other concurrent wrongdoers? f. Is the plaintiff entitled to exemplary damages? Misleading and Deceptive Conduct 10. Whether the pleaded representations (express, implied or by silence) by the first defendant, third defendant, fifth defendant, tenth defendant and eleventh defendant (respectively) were: a. Misleading or deceptive or likely to mislead or deceive in contravention of section 42 of the Fair Trading Act 1987 (NSW); b. Relied upon by the plaintiff in arriving at its decision to advance the $7 million to Mohamad Saleh; c. In respect of the eleventh defendant's representations, whether the third defendant is liable by reason of s 75B of the Trade Practices Act 1974 (Cth) for the misleading and deceptive conduct of the eleventh defendant. d. The cause of the plaintiff's damage and if so, in what proportion having regard to other concurrent wrongdoers? e. Did the plaintiff contribute to its own loss by its own negligence? f. Is the (relevant) defendant precluded from relying upon any contributory negligence by the plaintiff or proportionate liability by reason of it intending to cause the plaintiff harm or his participation in a broader conspiracy with: i. [In respect of the first defendant], the third, fifth, tenth and eleventh defendants to defraud the plaintiff? ii. [In respect of the third defendant], the first, fifth, tenth and eleventh defendants to defraud the plaintiff? iii. [In respect of the fifth defendant], the first, third, tenth and eleventh defendants to defraud the plaintiff? iv. [In respect of the tenth defendant], the first, third, fifth and eleventh defendants to defraud the plaintiff? v. [In respect of the eleventh defendant], the first, third, fifth and tenth defendants to defraud the plaintiff? Restitution – mistaken payment 11. Whether the plaintiff advanced $7 million to the first defendant pursuant to a mistake of fact entitling it to restitution against the defendants in that amount. Action Against Mr Edge under the Guarantee 12. Did the plaintiff and the tenth defendant enter into a guarantee in respect of the performance of TDM under its loan agreement with the plaintiff? 13. Has the plaintiff made a demand upon the tenth defendant for payment under the guarantee? 14. Has the tenth defendant failed to pay the sum demanded under the guarantee? 15. What damages are the plaintiff entitled to from the tenth defendant by reason of that failure? Negligent Misstatement 16. Whether the pleaded representations by the first, third, fifth, tenth and eleventh defendants (respectively) were: (a) Made in circumstances where the defendant realised or ought to have realised that the plaintiff would rely upon the information or advice; (b) Made in circumstances where it was reasonable for the plaintiff to rely on the information or advice; (c) Made in circumstances where the defendant failed to ensure that the information supplied or advice given was accurate and correct; (d) Relied upon by the plaintiff to approve the loan and advance the $7 million; (e) The cause of the plaintiff's damage and if so, in what proportion having regard to the other concurrent wrongdoers? (f) Did the plaintiff contribute to its own loss by its own negligence? (g) Is the defendant precluded from relying upon any contributory negligence by the plaintiff or proportionate liability by reason of it intending to cause the plaintiff harm or his participation in a broader conspiracy with: a. [In respect of the first defendant], the third, fifth, tenth and eleventh defendants to defraud the plaintiff; b. [In respect of the third defendant], the first, fifth, tenth and eleventh defendants to defraud the plaintiff; c. [In respect of the fifth defendant], the first, third, tenth and eleventh defendants to defraud the plaintiff; d. [In respect of the tenth defendant], the first, third, fifth and eleventh defendants to defraud the plaintiff; e. [In respect of the eleventh defendant], the first, third, fifth and tenth defendants to defraud the plaintiff; (h) Is the plaintiff entitled to exemplary damages? An overview of certain of the legal principles which fall for application Fraudulent conduct 18 There is a plethora of authority in support of the proposition that the Court is bound to see that a case of fraud is clearly proved. An allegation of fraudulent intent is one of the most serious allegations capable of being made. Actual dishonesty is said to be "the hallmark of fraud". The gravity of the allegation has been said to be such that whereas s140(1) of the Evidence Act 1995 (NSW) stipulates a single standard of proof for all civil cases, namely the balance of probabilities, s140(2) preserves the doctrine in Briginshaw v Briginshaw (1938) 60 CLR 336 at 361–362; Pedler v Richardson (Unreported, Supreme Court of New South Wales, Young J, 16 October 1997) at 10-11. See also McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 319. 19 In Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449 the High Court [per the joint judgment of Mason CJ, Brennan, Deane and Gaudron JJ], has put the matter in the following terms (at 449-450): "The ordinary standard of proof required of a party who bears the onus in civil litigation in this country is proof on the balance of probabilities. That remains so even where the matter to be proved involves criminal conduct or fraud. On the other hand, the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Thus, authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary "where so serious a matter as fraud is to be found". Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct." 20 The High Court has pointed out in Pascoe v Federal Commissioner of Taxation (Cth) (1956) 30 ALJR 402 at 403 [citing Cussen J in Cox v Smail (1912) VLR 274 at 283] that the evidence given by a man of his intention and state of mind, must: "be tested most closely, and received with the greatest caution." 21 Courts have emphasised that the best evidence of a man's purpose is to look at what was actually done: ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1) (1990) 27 FCR 460 at 482–483. Tracing 22 Tracing is a remedy available both at common law and in equity. The equitable and legal remedies co-exist (per Hope JA in Stephens Travel Service International Pty Ltd v Qantas Airways Ltd (1988) 13 NSWLR 331 at 341) but are not coextensive. Common law 23 Tracing at common law is available where it can be shown that the defendant has received the plaintiff's money and the extent of the defendant's liability will be determined by the amount received. Liability under this count at common law depends upon receipt of the money rather than its retention. As a result, dishonesty or lack of inquiry on the part of the recipient is irrelevant. 24 Because identification of the receipt is the crucial element at common law, the remedy is of limited or no utility where the plaintiff's moneys are mixed with those of others: Agip (Africa) Ltd v Jackson [1992] 4 All ER 451. The relevant test for tracing at common law is that of ascertainment so, for instance, where money was paid into a bank account, provided it could be identified as the product of the original money, the plaintiff would have a common law right to claim it. Equity 25 Equity, unlike the common law, allows money to be followed into a mixed fund. Tracing is a process available to a beneficiary of a trust when a trustee converts trust property to his or her own use, but can also apply to misappropriations by fiduciaries as well as other circumstances. It allows a claimant to follow misused trust property into the hands of third parties who have received it, or trace it into whatever different form it has taken by way of transaction, in order to retrieve it. In general, a beneficiary may recover misused trust property which has gone into the hands of a third party, provided that third party is not a bona fide purchaser for value without notice. 26 The property which is traced does not have to be the exact property which was misused in the first place. It is sufficient if the link between the original property and the traceable property can be established. 27 In Foskett v McKeown [2000] 3 All ER 97 at 120 Lord Millet described the process of tracing in the following terms: "Tracing is thus neither a claim nor a remedy. It is merely the process by which a claimant demonstrates what has happened to his property, identifies its proceeds and the persons who have handled or received them, and justifies his claim that the proceeds can properly be regarded as representing his property. … Given its nature, there is nothing inherently legal or equitable about the tracing exercise. There is thus no sense in maintaining different rules for tracing at law and in equity. One set of tracing rules is enough. … There is certainly no logical justification for allowing any distinction between them to produce capricious results in cases of mixed substitutions by insisting on the existence of a fiduciary relationship as a precondition for applying equity's tracing rules. The existence of such a relationship may be relevant to the nature of the claim which the plaintiff can maintain, whether personal or proprietary, but that is a different matter." [Emphasis added.] 28 Four years earlier his Lordship had provided a very useful analysis in Boscawen v Bajwa [1996] 1 WLR 328 at 334: "The submission that the deputy judge illegitimately conflated two different causes of action, the equitable tracing claim and the claim to a right of subrogation, betrays a confusion of thought which arises from the admittedly misleading terminology which is traditionally used in the context of equitable claims for restitution. Equity lawyers habitually use the expression 'the tracing claim' and 'the tracing remedy' to describe the proprietary claim and the proprietary remedy which equity makes available to the beneficial owner who seeks to recover his property in specie from those into whose hands it has come. Tracing properly so-called, however, is neither a claim nor a remedy, but a process. Moreover it is not confined to the case where the plaintiff seeks a proprietary remedy; it is equally necessary where he seeks a personal remedy against the knowing recipient or knowing assistant. It is the process by which the plaintiff traces what has happened to his property, identifies the persons who have handled or received it, and justifies his claim that the money which they handled or received (and, if necessary, which they still retain) can properly be regarded as representing his property. He needs to do this because his claim is based on the retention by him of a beneficial interest in the property which the defendant handled or received. Unless you can prove this he cannot (in the traditional language of equity) raise an equity against the defendant or (in the modern language of restitution) show that the defendant's enrichment was at his expense In such a case the defendant will either challenge the plaintiff's claim that the property in question represents his property (ie he will challenge the validity of the tracing exercise) or he will raise a priority dispute (eg by claiming to be a bona fide purchaser without notice)." 29 There is a view that, in equity, tracing can only be obtained where some pre-existing fiduciary relationship can be shown. But the better view must now be that tracing protects rights of property, rather than enforcing fiduciary obligations. That view is supported by the House of Lords decision in Foskett v McKeown [2000] 3 All ER 97 in which Lord Millet at 124, in particular, stressed that tracing was a process intended to vindicate rights or property rather than to prevent unjust enrichment, even though it may result in that effect. 30 Some support for this view is found in Black v S Freedman & Co (1910) 12 CLR 105 in which the High Court allowed an employer to trace moneys stolen by an employee and paid into an account in the name of the thief's wife. The fraudulent employee owed fiduciary duties to the employer but his wife did not. The moneys could be claimed from the wife since she received the identifiable proceeds as a volunteer, and were not taken by her as a bona fide party for valuable consideration. Griffith CJ observed [at 109] "it has been laid down in cases decided long ago that if the alienee is a volunteer the estate may be followed into his hands whether he had notice of the trust or not". Tracing principles under constructive trusts 31 The equitable principles of tracing are applicable to pre-existing equitable obligations as well as constructive trusts, which are imposed by the Court. However if there is no identifiable property, a constructive trust cannot be imposed. The issue of when the equitable interest is said to arise may have implications for priority disputes among other creditors or claimants. Tracing into a mixed fund 32 Where a trustee mixes trust property with his or her own property (or that of a third party) the remedy of tracing is not excluded. As long as the property is still identifiable, the fact that it has been combined with other property will, in equity, not prevent it from being traced. 33 This basic principle of tracing in equity and the mixing of funds was stated by Page-Wood VC in Frith v Cartland (1865) 71 ER 525 at 526: A trustee cannot assert a title of his own to trust property. If he destroys a trust fund by dissipating it altogether, there remains nothing to be the subject of a trust. But so long as the trust property can be traced and followed into other property into which it has been converted, that remains subject to the trust. A second principle is that if a man mixes trust funds with his own, the whole will be treated as trust property, except so far as he may be able to distinguish what is his own. [Emphasis added.] 34 The right to trace into a mixed fund will depend upon what happens to that fund after the trust moneys are paid into it. If the trustee continues to draw on the account and exhausts it, the trust funds will be gone. It will not matter that the trustee later pays in further funds. There is no presumption that the trustee, in paying money into the account, is repairing the breach of trust: James Roscoe (Bolton) Ltd v Winder [1915] 1 Ch 62. A purchase made with mixed money 35 The right to trace into a mixed fund is not limited to a claim for money which has been misappropriated. It can apply to chattels, provided that the chattels in question can be identified and can be separated from the mixed asset or assets. The claimant cannot simply take the property, because it is not purely bought with the trust money, but with a mixed fund. However the claimant is entitled to a charge on the property purchased, for the amount of the trust money laid out in the purchase. Where the trustee has mixed money in a bank account with his own money 36 Where a trustee has mixed money with his own money, the first money that is deemed to be withdrawn is that held by the trustee ("first in first out" principle of Clayton's Case (1816) 1 Mer 572; 35 ER 7781). This is because equity assumes that the trustee has acted honestly and reasonably and has withdrawn his own money first. In any case, the rules of tracing still require the money of the beneficiary to be identifiable. In this regard, the lowest intermediate balance rule applies – where the beneficiary is restricted to the lowest intermediate balance that exists in the particular account after the date of mixing the moneys but before the date of the claim. This is so that if the trustee makes a later deposit (after the mixing of moneys) the beneficiary cannot trace into that subsequent deposit: James Roscoe (Bolton) Ltd v Winder [1915] 1 Ch 62 (recently discussed in Re French Caledonia Travel Service Pty Ltd (in liq) (2003) 204 ALR 353 at [174]). Tracing into the hands of third parties 37 A bona fide purchaser for value, without notice of the existence of a prior interest, will take the trust property free from the claims of the beneficiaries. Hence it is important to distinguish a bona fide purchaser of the property and a mere volunteer. 38 Where third parties receive property as volunteers, they may be liable as constructive trustees: Diplock, In re: Diplock v Wintle [1948] Ch 465 at 530-2. 39 In Re Diplock a testator left his entire estate 'for such charitable institutions or benevolent object or objects as his executors should in their absolute discretion think fit'. The executors distributed approximately 210,000 pounds to over 229 charitable institutions over the following 3 years. The House of Lords subsequently held the bequest to be invalid. The next of kin sought to trace the funds into the various institutions and the Court held they were able to do this, since they held that the charities were volunteers and not bona fide purchasers. The following principles [amongst others] concerning recovery against third party volunteers were identified: · where trust property is transferred to a volunteer who takes without notice, and there is no question of mixing, then the volunteer will hold the property on trust for the rightful beneficiaries; · where the trust moneys were used to pay off a secured creditor, the trust was not entitled to be subrogated to the rights of the secured creditor who was repaid (at 548-549); · if the volunteer purchased property with a mixed fund including trust moneys then the beneficiary would be allowed a charge over the property in order to secure repayment of the trust moneys used for the purchase (at 553); · if an asset is purchased with mixed funds and it increases in value, the beneficiary will not be entitled to any proportionate share in that increase in value. In this respect, careful consideration needs to be given to renovations or improvements made upon real property. Defences to tracing 40 If the trust property has passed on from a volunteer or a person who took with notice, to a bona fide purchaser for value without notice, the property will not be recoverable. See Brady v Stapleton (1952) 88 CLR 322. The plaintiff must overcome such priority disputes with other claimants or creditors, which represent challenges to the tracing claim. 41 A third party who is a volunteer may raise the defence of change of position, where he can prove that he has innocently changed his position as a result of receiving the trust property: Moses v Macferlan (1760) 97 ER 676. Chronicling the material events 42 The difficulty in chronicling the material events concerns the amount of detail into which the Bank's case descends: likely for the reason that to prove a case of fraud and fraudulent conspiracy against particular persons, a plaintiff has to comply with the dictates set out in the above described authorities, the allegation constituting one of the utmost seriousness. In consequence almost every conversation, meeting, e-mail and document of relevance to the application for the facility is before the Court. 43 Notwithstanding the plethora of evidence of this type, the Bank's case in essence is a simple one. The case which the Bank has made out is that it was defrauded into granting the facility by numerous outright lies as to: i. TDM's past financial records; past annual net profits at particular points in time; receivables for past years; sales income over past periods; net assets as at particular points in time; aged payables at particular points in time; anticipated sales and turnover at particular points in time; monthly gross credit sales at particular points in time; monthly debtor payments at particular points in time; levels of stock at particular points in time in its warehouse and paid for: shipments of stock in China awaiting delivery; genuineness of receivables in terms of being genuine assets at particular points in time; ii. TDM being a reliable and reputable supplier; iii. TDM's financial accounts having been independently verified by an external accountant at particular points in time; iv. details of particular contractual arrangements between TDM and Carella Electrical Distribution and the prospects of those arrangements generating additional sales for TDM; v. Mr Edge having entered into a genuine arms length contract to purchase TDM for $17,000,000; vi. TDM being a company of such substance that it could command a purchase price of $17,000,000; vii. the $7,000,000 requested to be borrowed to be paid to the vendor to complete his purchase of TDM; viii. Mr Edge having paid a deposit of $10,000,000 in connection with a genuine arms length purchase by him of TDM; ix. TDM having fulfilled all of the terms and conditions of each sale to each of the debtors identified in the attachment to the Offer Statement. 44 The causes of action outside of the fraudulent conspiracy are generally also made out on the evidence before the Court. In a number of instances these causes of action [as for example the representational causes of action] simply overlap with the fraudulent conspiracy case. However the tracing claims require more particular examination. The witnesses called by the Bank 45 The Bank adduced evidence, usually in affidavit form, sometimes complemented by evidence in chief, from a large number of witnesses. In some instances those witnesses were not required for cross-examination. The way forward 46 There were so many witnesses called by the Bank that it seems appropriate as to very many of them, to simply end the judgment with a précis of their evidence. Adopting this procedure has the benefit of enabling the reader to follow the evidence without being distracted by the chronicling of much evidence which was often unexceptional. 47 Likewise and in light of the fact that there are a reasonably large number of critical documents which were provided to the Bank and in respect of which the finding is that the documents were misleading, the convenient course is simply to include a table at the end of the reasons identifying the significant documents and the evidentiary references to those documents. 48 In outlining the events which occurred and in terms of the general structure of the whole of these reasons, it seems convenient to: i. start with the evidence given by Mr Oscar Budai which is accepted as reliable. [The evidence given by the other witnesses called by the Bank corroborates the evidence given by Mr Budai. The documents to which the Court has been taken also corroborate that evidence]; ii then chronicle some of the other events both before as well as post 3 June 2005; iii. then set out the evidence given by Mr Edge; iv. then set out the evidence given by Mr Qureshi; v. then provide a précis of the evidence given by the other witnesses called by the Bank, only descending into certain particular detail when strictly required; and vi. thereafter to deal with the appropriate orders to be made. The evidence of Mr Oscar Budai 49 As at 2005, Mr Budai was a relationship executive in the Corporate and Business Services Division, having commenced working for the Bank on 21 March 2005. He is now an executive manager in the Business Development and Risk Management section of CBA. 50 Mr Budai worked at Bartercard Australia Pty Ltd between July 2000 and March 2005, during which time he met Mr Neil Petts. Mr Petts is a business broker and formerly worked at Bartercard between approximately 1996 and November 2004. During May and early June 2005, Mr Petts was an Associate Director of the Origination division of GE Commercial Finance. [The evidence establishes that the initial approach for the receivables facility was made to Mr Petts. Mr Petts' evidence was that he first became aware of TDM from a Bartercard sales consultant, Mr Chris Bensen, who had provided him with Mohamad Saleh's contact details. He subsequently met Mohamad Saleh to discuss his requirements, but the application for finance did not proceed since GE could not meet Mohamad Saleh's restricted time frame of six weeks for approving the finance. Mr Petts then referred the application to Mr Budai at CBA and also passed on TDM information he had received to Mr Budai in support of the application.] 51 Mr Budai was the principal relationship executive at CBA who dealt with Messrs Mohamad Saleh, Hassanien Saleh, Edge and Petts. He received the bulk of the information provided to CBA in support of the finance application and prepared a credit submission in support of the application. He attended key meetings at the premises of TDM where representations relied upon by the Bank were made. 52 The evidence given by Mr Budai is to be found in two affidavits: those of 14 June 2006 and 24 May 2007. His evidence was dealt with in a number of convenient headings and included the matters set out below. Prior dealings with Mr Petts 53 Mr Budai met Mr Petts in July 2000 when he commenced his employment with Bartercard. At that time, Mr Petts was the part owner and operator of a Bartercard franchise in Melbourne. 54 Some time around 2002, Mr Petts sold his share in the Melbourne franchise and commenced employment with Bartercard as the State Sales Manager for NSW. Mr Petts worked from Bartercard's head office in North Sydney. Mr Budai worked in the same office of Bartercard in North Sydney from July 2003 to 2004. They became friends. 55 Around December 2004 Mr Petts commenced working as a director for GE, where he was involved in commercial lending from a sales perspective. It was Mr Petts' responsibility to generate new business for GE. Mr Petts made a referral partner of the Bank 56 The Bank operates a program known as the "Referral Partner Program". Pursuant to the program, the referral partner introduces clients or prospective clients to the Bank in return for part of the disclosed establishment fee charged to the Bank's customers. 57 During the period from about April 2005, Mr Petts referred potential clients to Mr Budai and so Mr Budai decided to register Mr Petts as a referral partner. Prior to the TDM deal described below, Mr Petts had referred about three clients to Mr Budai at the Bank. The TDM Deal 58 In early May 2005, Mr Budai had a phone conversation with Mr Petts. Mr Petts said that he had a deal that might be suitable for CBA. It was a factoring deal that had been presented to GE, but it could not approve it in under six weeks and the borrower was looking to settle the deal in a few weeks. The company being purchased was TDM Australia. It seemed like a good company and had good turnover, good profit and no debt. Mr Budai asked Mr Petts to send the details to him. 59 Mr Budai met Mr Petts on 12 May 2005. The purpose of the meeting was to discuss the possible provision of finance by the Bank to complete a purchase of TDM. During the course of the meeting words to the following effect were said: Mr Petts : "I have a transaction which you may be interested in which we can't do. The borrower needs the transaction to be done in under six weeks and we are not able to do that. I have spent a lot of time on it but GE will not process it in time. The vendor is also pushing for a quick settlement and the purchaser has said he may go to ANZ. You only have a short window to approve the deal." … "William Edge (Mr Edge) is purchasing shares in a company called TDM Australia Pty Ltd (TDM). $11,000,000 has already been paid as a deposit. The purchase price is $18,000,000 and they require a $7,000,000 loan. There is no real property security. It will have to be secured by way of a charge over the company or a receivables facility. TDM has a broad customer base that would suit a receivables product. The customers are electrical contractors or builders and retail stores." … "The company sells electrical products to electricians, builders and electrical wholesalers. They import their product from China. I have been out to the warehouse and seen the operations. The products are quite impressive." Mr Budai: "I would be interested in having a look at it." Mr Petts: "I have some documents in relation to the company including a printout of the aged debtors list that I will fax through to you." 60 On the morning of Friday 13 May 2005 Mr Budai received a facsimile transmission from Mr Petts. It contained documents purporting to be financial statements for TDM for the 2002-3, 2003-4 financial years and the nine months to 31 March 2005, together with aged receivables and aged payables as at 31 March 2005 and TDM's credit application forms [PX 482–495] [PX 757–774]. 61 In reviewing the above facsimile Mr Budai was interested in TDM's turnover, profit, equity and receivables. He was aware that the Bank's receivables finance area would provide finance to a customer to an amount up to 80 per cent of its approved receivables. He was therefore interested to see the value of TDM's receivables, whether there was a positive growth in the value of its receivables over the years, how concentrated its customer base was and the age of the debtors. Based on his review of the documents, he thought that the financial position looked good. He also noted that the receivables were spread out amongst several debtors of TDM and that TDM was being paid within a relatively short period of time - there were no aged receivables outstanding more than 90 days. 62 It was not Mr Budai's role as a Relationship Executive to analyse TDM's financial statements to determine the company's credit worthiness or whether the Bank would grant final approval. The Bank had in place a two-stage approval process in relation to applications for a receivables finance facility. The first stage involved an assessment of the credit worthiness of the deal. The second stage involved a field visit by a Bank officer to verify the details of the level of debtors presented to the Bank as well as a satisfactory review by the receivables finance section with regard to the documentation of the borrower. As the reasons which follow make clear, Mr Harrison [a risk executive in the Corporate and Business Services Division of the Bank] reviewed and gave the Stage 1 approval of the TDM credit submission prepared by Mr Budai. Among other documents, he relied upon the financial statements for the year ended 30 June 2004 and the financial statements for the 9 months ended 31 March 2005 for this purpose [Exhibit MH2 pp29-58]. Mr Placek [a risk executive working in the Franchising and Factoring Division of the Bank] was the person responsible for approving Stage 2 of the receivables finance application. 63 On Friday 13 May 2005 Mr Budai discussed the contents of the above-described materials with Ms Sue Kenny, who held the position of Risk Executive in the Bank and to whom Mr Budai was assigned. 64 Ms Kenny's role in the Bank was that of analysing potential transactions with regard to credit risk to the Bank. 13 May 2005 – Mr Budai speaks to Mr Edge 65 On or about 13 May 2005, Mr Budai had a telephone conversation with Mr Edge in words to the following effect: Mr Budai: "I'm Oscar Budai from CBA. I'll be organising TDM's application for finance. What's the best way to contact you if I need additional information?" Mr Edge: "I'm on the road a lot repping TDM's products so best to contact me on the mobile". Mr Budai: "We need to arrange a meeting asap with a specialist from the Bank's receivables finance area. When would you be available." Mr Edge: "I'd be available at TDM's offices on Wednesday [18 May 2005]." Mr Edge and Mr Budai then arranged to meet at TDM's premises at 2:00 pm on Wednesday 18 May 2005. 66 On 13 May 2005, Mr Budai also had a telephone conversation with Mr Ian Morris [a receivables finance specialist and the head of Cash Flow Finance and Working Capital at National Australia Bank who was at 2005, the sales manager working in the receivables section of CBA]. The purpose of Mr Budai's discussion with Mr Morris was to enquire as to the sort of information that he required in order to assess the suitability of a receivables finance facility for TDM. Subsequent to this discussion, Mr Budai received an email from Mr Morris setting out a list of things he required [PX 898–900]. 67 After receiving Mr Morris' email, Mr Budai telephoned Mr Edge again and had a conversation in words to the following effect: Mr Budai: "It's Oscar again from the CBA. I have a list of things which we require from TDM." Mr Edge: "I'm on the road a lot. Just direct any requests for further information to Mohamad." Mr Budai: "William, the Bank requires you to give a statement of your assets and liabilities and your latest tax return. Can you send them through as soon as possible?" Mr Edge: "Yes, I will send them through." 68 After that conversation Mr Budai received a facsimile from Mr Edge which contained a personal statement of assets and liabilities and also his tax return for 2004 [PX 897; PX 470-476,]. 69 Mr Budai subsequently telephoned TDM's offices and had a discussion with Mohamad Saleh [often referred to as "Mo"] in words to the following effect: Mr Budai: "Hello Mohamad. I am Oscar Budai from the CBA. Neil Petts has given me your details. I am doing the application for William Edge and I need to get some additional information. I can send you an email with a list of what is required." Mr M Saleh: "Yes, that's fine. Anything you need, let me know." Mr Budai: "I have also arranged to meet with William at TDM's premises on Wednesday. It would be helpful if you were at the meeting too." Mr M Saleh: "I will be there." 70 Mr Budai then forwarded the attachments that he had received from Mr Morris by email to Mohamad Saleh on Friday 13 May 2005 [PX 901 – 903]. 71 On 17 May 2005, and in accordance with Mr Morris' request that he be provided with further information as available, Mr Budai sent an email to Mohamad Saleh asking if he could provide the Bank with the information referred to in his email to Mohamad Saleh of 13 May 2006 [PX 931]. 72 Also on 17 May 2005, Mr Budai received a facsimile from Mr Petts attaching the information which he had requested in the email of 13 May 2005 [PX 938-954]. The information provided in the facsimile was for the purposes of work being done by the receivables finance area of the Bank (Mr Morris and others) and not for the credit submission that Mr Budai was preparing with Ms Kenny. Accordingly, Mr Budai provided a copy of the facsimile to Mr Morris as soon as it was received so as to expedite things as much as possible. 73 Late in the afternoon of 17 May 2005, Mr Budai sent an email to Mr Harrison with an update on the TDM deal. Mr Harrison was working with Ms Kenny on the review and approval of the TDM deal because the amount to be financed exceeded Ms Kenny's authorisation level [PX 955]. Meeting of Wednesday 18 May 2005 at TDM's premises 74 On Wednesday 18 May 2005 Mr Budai attended TDM's premises at Wollongong Road, Arncliffe, with Mr Morris. They met Mr Petts and were introduced to two other gentlemen: Mohamad Saleh who was identified to Mr Budai by Mr Petts as the then-current owner of TDM and Mr Edge who was identified as the prospective purchaser of TDM. 75 The purpose of the meeting was to meet Mr Edge and Mohamad Saleh personally, to start developing a relationship with TDM and to explain the process involved in the application and the receivables finance facility. The focus of the meeting was not on auditing figures. That work was to be carried out later during the Stage 2 field visit referred to below. 76 TDM's premises were in an industrial complex. The entry into TDM's premises was via a roller shutter door or a side door. Inside the premises, three of the four walls of the warehouse had shelving and there were two levels of pallets on the shelves. In the centre of the warehouse, there were approximately 24 pallets on the floor. The pallets were stacked with sealed boxes. The warehouse was neat and tidy. 77 After entering the warehouse, Mr Morris and Mr Budai were led upstairs to an office where the meeting took place. The office contained a desk, a computer, a table, a buffet-type cupboard with drawers and about five chairs. There was a folder of documents on the buffet. During the course of the meeting, Mr Morris and Mr Budai were shown a folder of documents as Mr Edge and Mohamad Saleh were talking about TDM's products. The folder contained what was purported to be a folder of original patents that TDM owned. 78 Mr Budai gave evidence that Mr Edge was well-presented, eloquent and appeared knowledgeable about TDM's business and products. During the meeting, Mr Edge told Mr Morris and Mr Budai a little about his business background, saying words to the following effect: "I am also a property developer. I develop residential and commercial properties. I get my funding through ANZ for that." 79 Mr Budai gave evidence that that Mr Edge and Mohamad Saleh behaved like a "tag team". At certain times during the meeting, when Mr Budai directed a question at Mr Edge for his response, he would often refer it to Mohamad Saleh to answer and when Mr Budai directed a question at Mr Mohamad Saleh he would refer it to Mr Edge. For example, during the meeting, Mr Budai asked Mohamad Saleh a question about a product that he had designed thinking that he would be best able to answer. The question was answered by Mr Edge. Similarly, Mr Budai asked Mr Edge a question about whether TDM was prepared to offer the Bank any security and this was answered by Mohamad Saleh. That question and answer was in words to the following effect: Mr Budai: "Would there be other security available?" Mr M Saleh: "No. The company should be able to support the debt based on its balance sheet." 80 Mr Edge told Mr Budai that he had been working at TDM for several months and described its products as better quality, more extensively tested, offering a longer guarantee and more competitively priced [since they sourced their products from China] than any of their competitors. Mr Edge told him about his electrical engineering background and that he liked the TDM products so much that he bought the company. Mr Edge told Mr Budai that TDM had distributors around Australia. He described the negotiations with HPM [another competitor] to have HPM purchase TDM products and distribute them through HPM's own distribution channels. This was said to be possibly worth an additional $5 million per month in TDM sales. It was also said that a new contract had recently been signed with a new franchise electrical wholesaler called Carella Electrical Distribution which was to provide TDM with significantly more distributors [and hence, sales] in Australia. 81 There was then a discussion in words to the following effect: Mr Budai: "What is the purpose of the loan application?" Mr Edge: "I have signed a contract to purchase shares in the company. I need a loan to complete the transaction." Mr Budai: "How much have you paid for the company?" Mr Edge: "$17,000,000. I have paid a deposit of $10,000,000." Mr Budai: "I thought the deposit was $11,000,000." Mr Petts: "No I was mistaken it's $10,000,000." Mr Edge: "I require $7,000,000. I don't want to provide any real-estate security. The deal should be able to be financed on the strength of the company. ANZ are prepared to give a loan on that basis and you would have to do the same." Mr Budai: "We are happy to look at it." 82 Mohamad Saleh spoke of TDM's product superiority and their customers' high level of satisfaction. Mr Morris then described the two-stage approval process [referred to earlier in this Judgment] that the Bank had in place in relation to applications for a receivables finance facility. 83 Mr Budai asked what the working capital position would be after the settlement of the facility, to which Mr Edge replied that TDM's customers had been stocked up and that there was approximately $1 million worth of stock in the TDM warehouse and $1 million cash in the TDM bank account. In addition, Mr Edge said that another large shipment from China had already been paid for. 84 A discussion in words to the following effect then followed: Mr Budai: "We will need to see various documentation before the loan can be approved. William, we will need to see your tax returns, we will need identification to set up the accounts, we will need a statement of assets and liabilities from you William [Mr Edge] and the company's bank statements." Mr Morris "What process do you use for recording your debtors?" Mr M Saleh: "All the accounts receivable are processed by that one computer. I personally enter each invoice on the computer. I also record all payments that are received and do the banking myself." Mr Morris: "Under the receivables facility, TDM will be required to open up a new bank account which the Bank controls. All money paid to TDM by its debtors will need to be deposited into this account. TDM will need to provide the Bank with reconciliations at the end of each month. We will also need to check proof of delivery." Mr M Saleh: "It's all documented through parcel post. Our deliveries are done by Australia Post, who are next door to the warehouse." Mr Budai gave evidence that MYOB was mentioned by Mohamad Saleh as the software used by TDM, but Mr Budai could not recall whether it was first mentioned at this meeting or at a subsequent meeting. Mohamad Saleh and Mr Morris then discussed the monthly debtor figures as provided by TDM on the trading analysis document [PX 932]. [During cross-examination by Mr Qureshi, Mr Morris explained how the figures 'flowed' in the trading analysis document, which represented a summary of the past 12 months of trading [ending April 2005] for TDM. He referred in general terms to the discrepancy that was discovered when certain figures for TDM did not balance.] During the meeting at TDM Mohamad Saleh and Mr Morris had a conversation, in the presence of Mr Edge and Mr Budai in words to the following effect: Mr Morris: "Are the debtor figures correct?" Mr M Saleh: "The figures are correct. I have taken them straight from the computer." Mr Morris: "Well it doesn't add up, so there must be an error somewhere." Mr M Saleh: "I will check with the accountant and get back to you." 85 At the conclusion of the meeting they all went back downstairs to the ground floor of the warehouse. They opened boxes and looked at approximately 10 different products ranging from electrical switches to PVC mouldings. At one point, Mr Edge pointed to various pallets on the floor of the warehouse briefly describing their contents and their intended delivery to customers. Mohamad Saleh then pulled out a junction box and threw it on the floor to demonstrate the strength of the product. Mr Morris stood on the junction box to test its strength and quality and it did not break. [I interpolate to note that Mr Morris gave evidence of the various representations which were made at the meeting. Mr Morris was generally also involved in terms of reviewing documents provided to CBA in support of the receivables finance application and prepared an application which was submitted to Mr Placek for approval. Mr Newman cross-examined Mr Morris on why he did not query Mohamad and/or Mr Edge when one of them told him that TDM only employed two people – namely Mohammad and one other that Mr Morris could not identify [T274:35, Mr Morris's 26 June 2006 affidavit at [18]]. Mr Morris gave evidence that he accepted the explanation from either Mr Edge or Mohamad that part-time or casual people were employed when TDM required assistance with unpacking shipments and delivery of orders.] 86 After the meeting Mr Budai returned to the office. During the course of the meeting he had made some hand written notes of details which were supplied to him. Mr Budai inserted those details into the draft credit application, which he and Ms Kenny were preparing for Mr Harrison. He also created a call report which is a document prepared to show his superiors the contact he had with customers. It does not purport to be a detailed explanation of everything that was discussed at the meeting [PX 972]. Mr Budai destroyed his handwritten notes after entering the detail of them into the draft credit application and the call report. To the best of his recollection, the information recorded in paragraphs 2 to 4 of the report was provided during the meeting by Mr Edge and the information recorded in paragraph 5 was provided by Mohamad Saleh. 87 On 18 May 2005 Mr Budai spoke to Ms Kenny after returning from TDM's premises. The purpose of the conversation was to update her regarding the meeting. The discussion also revolved around potential technical difficulties with providing the entire sum of $7,000,000 sought by TDM on the day of settlement. Under the Bank's lending criteria for receivables finance facilities, the maximum amount able to be lent is 80% of the value of the customer's debtors (which are the security). In TDM's case, this 80% figure was in the order of $6,500,000. Ms Kenny and Mr Budai agreed that any shortfall could be advanced to TDM by way of a different product issued by the Bank – a Better Business Loan (BBL) – which would be repayable by TDM within 12 months. 88 Later on 18 May 2005 Mr Budai had a conversation with Mr Edge in words to the effect of: Mr Budai: "Due to the Bank's policies with regard to lending on the value of receivables, we will be unable to lend the entire $7,000,000 secured by the company's receivables. What we propose is any shortfall between the amount of money that we can lend based on the receivables and the $7,000,000 be made up by a separate better business loan. In this way we can advance you the $7,000,000." Mr Edge: "That is fine with me." 19 May 2005 89 On Thursday 19 May 2005 the credit submission for the TDM loan was completed by Ms Kenny and Mr Budai and submitted to Mr Harrison [PX 904 – 916]. 90 Sometime on or about 19 May 2005 Mr Budai received a facsimile from Mohamad Saleh dated that date with financial information in relation to TDM [Exhibit OB16 p100]. The facsimile was provided to Mr Morris and Mr Budai following on from the meeting they had with Mohamad Saleh, Mr Edge and Mr Petts on 18 May 2005. Mr Budai understood that document to contain the further information as to TDM's debtors which Mohamad Saleh had undertaken at the 18 May 2005 meeting to check with TDM's accountant and confirm. 91 After receiving the facsimile Mr Morris told Mr Budai there were still problems with the debtor figures and that Mr Budai needed to go back to TDM to get better details. 92 Mr Budai telephoned Mohamad Saleh on or about 19 May 2005 and informed him that Mr Morris still had some concerns with the debtor figures. Mr Budai had a conversation with Mohamad Saleh in words to the following effect: Mr Budai: "The debtor figures still don't balance. I think you need some help in reconciling them." Mr M Saleh: "I'll get my accountant to help me with it. It must be just timing issues." 93 Mr Budai also called Mr Petts at about that time and relayed Mr Morris' concerns to him as well. He called Mr Petts because Mr Budai was aware of the urgency of the transaction and he wanted Mr Petts to impress on Mohamad Saleh and Mr Edge the importance of the debtor figures. They had a conversation in words to the following effect: Mr Budai: "We are running out of time here. I'm not sure that Mohamad understands exactly what we are trying to arrive at with this spreadsheet. If there is any way you can impress on him the urgency of getting it right, it would be greatly appreciated. Mr Petts: "Probably the external accountant can get it to balance the way you need. I will speak to Mohamad." 20 May 2005 94 On or about 20 May 2005, Mr Petts forwarded a fax to Mr Budai he had received from Mascot Taxation and Accounting Services addressed to TDM providing further information with regard to the finances of TDM. In the facsimile from Mr Petts of 17 May 2005 [Exhibit OB9 p56] the "Trading Analysis – Previous 12 Consecutive Months" document was incomplete. The facsimile originating from Mascot Taxation provided additional information. Mr Budai forwarded the information on to Mr Morris who was concerned with the Bank's Stage 2 approval [PX 990-991]. 23 May 2005 – In principle approval for Stage 1 95 In an email dated Monday 23 May 2005, Mr Harrison gave "in principle" approval for Stage 1 of the TDM deal (which is the credit approval stage) subject to Stage 2 approval by the Bank's receivables finance section [PX 994]. 96 After receiving this email, Mr Budai telephoned Mr Edge and had a conversation in words to the following effect: Mr Budai: "Can you please provide a copy of the contract for sale of business?" Mr Edge: "Yes." Mr Budai: "What is the situation with regard to the plant in China?" Mr Edge: "The plant is owned by a separate entity. I will have a 33 per cent share in that entity. There is no debt." Mr Budai: "I also need to know the timing of the purchase and source of funds for the initial deposit when you agreed to buy TDM." Mr Edge: "The deposit is held in a solicitor's trust account. I will send you a copy of the contract." Mr Budai: "Where did you get the money for the deposit?" Mr Edge: "It was sale proceeds from a recent property development." Mr Budai: "We have done a credit search which has also raised some issues. TDM Australia has one judgment recorded against it for $21,355 to Australian Exhibition Services." Mr Edge: "That has been settled. I will get confirmation of that from the solicitor." Mr Budai: "There is also a record of you having one default to St George Bank for $10,000 in the year 2000." Mr Edge: "That has been settled and I no longer bank with them. I bank with ANZ." Mr Budai: "We will also need to see 12 months of bank statements." Mr Edge: "Those are all held by the external accountant and may take some time to obtain." 24 May 2005 – Approval of stage 2 97 On Tuesday 24 May 2005, Mr Wal Placek confirmed approval of Stage 2 of the TDM deal in a telephone conversation with Mr Budai. Mr Harrison also confirmed to Mr Budai verbally that day that the Bank's documents, including the Business Facility Documentation (BFD), the receivables finance facility agreement, a registered equitable mortgage (REM) and guarantee could be prepared, subject to the condition that TDM would provide 12 months of bank statements. 98 On or about 24 May 2005 Mr Budai met with Mr Edge at TDM's premises. Also present at the meeting was Mohamad Saleh and Mr Petts. During the meeting Mr Budai provided Mr Edge with an update on the approval process during which they had a conversation in words to the following effect: Mr Budai: "We have the approval in principle. There are some forms that I will need you to sign to complete the approval. You are a hard man to get hold of." Mr Edge: "I have been in Queensland and Victoria repping TDM's products." 99 Mr Budai then conducted a formal identification procedure as required by the Financial Transactions Reports Act 1992 (NSW). This is carried out by filling out a Bank form known as a W4. It involves witnessing the prospective customer sign the form and comparing that signature against forms of identification provided by the customer. The forms of identification must add up to 100 points as set out in a table on the W4. 100 In support of his identification, Mr Edge provided Mr Budai with the originals of his Australian passport number and Heavy Vehicle Drivers Licence. Both of those documents contained photographs. Mr Budai identified the man in the photographs as Mr Edge. He took photocopies at TDM's premises of Mr Edge's passport and driver's licence which he retained. Mr Edge and Mr Budai were sitting at a small round table upstairs at the time that Mr Edge signed the W4 document. He was approximately one metre away from Mr Budai when he signed the document three times. 101 When Mr Edge signed the W4, Mr Budai noticed that the signatures he placed on the W4 were markedly different from those appearing on the passport and driver's licence, both of which were similar to one another. When asked why this was so, Mr Edge explained to Mr Budai that he was in the middle of a divorce and had changed his signature when he left his wife. Mr Budai accepted this explanation and did not question his signature on any subsequent occasion when he witnessed him sign documents. 102 Mr Newman's cross-examination of Mr Budai went some way to establishing the Bank's process of filling out the W4 document, and in particular, questioned Mr Budai about the W4 document signed by Mr Edge [PX 1000]. Somewhat curiously Mr Budai did not sign the W4 document where the words "[s]ignature of person verifying identification" and "date" appear. Mr Budai gave evidence that it was his practice not to sign his own name immediately after the client [relevantly Mr Edge] had done so, but rather it was normal procedure for him to return to the office with the W4 document and copies of the identification documents provided, and to then instruct his assistant, Mr Peter Allcock, to initial each place where the client [Mr Edge] had signed. Mr Allcock's initialling process was said to be for the purpose of verifying that the relevant sections had been completed, and not for the purpose of verifying that the person initialling [Mr Allcock] had witnessed the client's signatures [T425:30]. Mr Budai acknowledged that he should have signed the space under "[s]ignature of person verifying identification" and dated it [PX 1005] but had omitted to do so [T427:25]. 103 Mr Budai gave evidence [during cross-examination by Mr Newman] that upon filling out the W4 form, Mr Edge had told Mr Budai of his new address at Lot 2 Martins Ridge Road, Conjola, and that the 252 East Kurrajong Road, East Kurrajong address entered by Mr Budai prior to the actual meeting was no longer correct. 104 Also at the meeting, Mr Budai had a further discussion with Mr Edge in words to the following effect: Mr Budai: "You will also have to sign the security documents once they're ready and I still need a copy of the sale contract. Can you please send that through?" Mr Edge: "OK." 105 During the meeting (or a meeting at TDM's premises about that time) Mr Budai noticed that there did not seem to be a lot of activity at the warehouse and that the telephone did not seem to ring. Mr Budai asked how TDM received their orders. Mohamad Saleh replied in words to the following effect: Mr M Saleh: "We get some by fax and some by email but the rest I ring the customers myself and take the orders and go there and collect payments. I have a very good relationship with my customers. I call up the customers to see how their stock levels are going and whether they need to top up. Then I take an order over the phone." 24 or 25 May 2005 106 Either late on 24 May or early on 25 May 2005, Mr Budai had a telephone discussion with Mr Edge in words to the following effect: Mr Budai: "I haven't received the contract yet." Mr Edge: "My solicitor has been held up with Court matters and I will only be able to get the contract by about 11:00am." 25 May 2005 107 At about 1.30 pm on 25 May 2005, Mr Budai received a facsimile which contained the documentary information that he had requested from Mr Edge during their telephone conversation on 23 May 2005 [PX 1102-1104]. 108 After receipt of the facsimile on 25 May 2005, Mr Budai telephoned Mr Edge to ask him to explain the front page of the TDM contract of sale which stated a restraint time of three years and a restraint distance of 20 kilometres. Mr Edge replied in words to the following effect: Mr Edge: "Mohamad can't operate a similar business for three years within a 20 kilometre radius from the existing business." 109 On 25 May 2005, Mr Budai telephoned Mohamad Saleh to ask for TDM's bank statements for the past 12 months. Mohamad Saleh replied in words to the following effect: Mr M Saleh: "All the bank statements are with the accountant. The last three months are available now. The rest of the year is in archive." On or about 25 May 2005 Mr Budai received a facsimile from TDM who were forwarding on the TDM bank statements for February, March and April 2005 which had been received by TDM from Mascot Taxation and Accounting Services. The authenticity of these statements, among others, are discussed below. 110 On 25 May 2005 Mr Budai created a file note recording the matters of which he had been informed by Mr Edge in relation to the outstanding matters for the approval dated 23 May 2005 [OB 22]. 111 On 25 May 2005, Mr Budai provided a copy of his file note, along with the above bank statements to Mr Harrison for his approval. Mr Harrison made handwritten comments on the file note [OB22]. 112 On 25 May 2005, Mr Harrison provided Stage 1 approval [subject to the inclusion of a clause requiring the provision of bank statements in the relevant documentation] by email dated 25 May 2005 addressed to Mr Budai and others [PX 1082]. 113 Mr Budai received an email from Mr Morris on 25 May 2005 with a copy of the Bank's letter of offer in relation to the receivables finance facility that Mr Edge was required to sign. Mr Morris asked Mr Budai to sign the letter on his behalf and provide it to Mr Edge [PX 1083, 1090-1096]. Mr Budai printed the letter and signed it so that it was ready to be executed by TDM. 114 Sometime in the early afternoon of 25 May 2005, Mr Budai telephoned Mr Edge and they had a conversation in words to the following effect: Mr Budai: "I have received final approval and the security documents are ready for signing. When can you sign them?" Mr Edge told Mr Budai that he was on the road on the way to Bathurst and they arranged to meet at the McDonald's on Talavera Road, North Ryde. Mr Budai then left the office, with the documents that Mr Edge was required to sign, and drove to North Ryde to meet Mr Edge. 115 At this meeting, Mr Budai gave Mr Edge the BFD [Business Facility Documentation headed "Acceptance Document"], receivables finance facility letter and the standard terms and conditions. Mr Edge reviewed the documents and signed them in Mr Budai's presence. Mr Budai witnessed them being physically signed by Mr Edge. Mr Budai placed his signature shortly afterwards on the Acceptance Document and the standard terms and conditions [PX 1097-1101, 1090-1096, 1292-1319]. The Receivables Finance Agreement Standard Terms and Conditions is dated 1 June 2005. At the time that the document was executed there was no date upon it. The handwritten date is not Mr Budai's handwriting and appears to have been subsequently inserted by another person from the Bank. 116 At the conclusion of the meeting with Mr Edge on 25 May 2005 words to the following effect of were said: Mr Budai: "I will still need you to sign the guarantee and registered equitable mortgage as soon as they are done." Mr Edge: "Alright. This is dragging out. I should've done it with ANZ." 117 Mr Edge made a number of similar comments from time to time. Mr Budai believed at the time that if the Bank was not able to move the TDM deal along quickly, the business would be lost to ANZ. Approximately 27 May 2005 118 On or about 27 May 2005 Mr Budai made arrangements with Mohamad Saleh for a field visit to be carried out at TDM by Ms Lenore Smith of the Bank. At the material time, Ms Smith was a business analyst working in the Bank's receivables finance section. Her role was to attend a client's premises to inspect and verify their documentation and systems to ensure the business was suitable for receivables finance. The field visit was carried out on 2 June 2005. Meeting on 31 May 2005 119 On Tuesday 31 May 2005 Mr Andrew Watson [who held the position of General Manager in the Bank's Corporate and Business Services division for NSW and the ACT], Mr Mario Saia [who held the position of Executive Manager, Corporate], and Mr Budai visited TDM's premises. Mr Budai reported directly to Mr Saia and Mr Saia reported to Mr Andrew Watson. The purpose of the meeting was for Messrs Watson and Saia to meet with Mr Edge and confirm to him that the Bank was committed to providing a valuable service to TDM. At the time, Mr Budai believed that TDM had the potential to become a substantial and valuable customer of the Bank and wanted to introduce Mr Edge to some high level representatives to show that the Bank considered TDM a valuable customer. 120 Prior to the meeting, Mr Budai prepared a client briefing paper for Mr Watson and Mr Saia. 121 The meeting started in a coffee shop next door to TDM's premises. The meeting was attended by Messrs Watson, Saia, Edge and Budai. The discussion at the meeting was fairly high level and about TDM's business and plans for the future rather than on specifics of the TDM deal. 122 During the meeting there was discussion about the future direction of TDM in words to the following effect: Mr Watson: "What do you see as the future direction of TDM?" Mr Edge: "I have to do a bit of work there." Mr Watson: "We can recommend a consultant for you to do a business plan. We are keen to work with you." When Mr Edge said that there was a bit of work to do with TDM, Mr Budai observed that he looked uncomfortable and was a bit fidgety. It was the only time he noticed that he was hesitant in answering a question. The discussion continued covering topics such as TDM's products, the history of the business and Mr Edge's other interests. 123 After they had been at the coffee shop for a while, they all went to the TDM warehouse. When Messrs Saia, Edge and Budai entered the warehouse, Mr Watson [having left the coffee shop earlier] was already speaking to Mohamad Saleh. 124 They were taken on a tour of the warehouse and were shown some products. During that tour, Mr Edge continued to talk about TDM's business and products, saying words to the following effect: Mr Edge: "Here are some of our products. You can see the quality is of a very high standard. We do rigorous testing so we can offer a better guarantee than our competitors. …We are taking market share off competitors in Adelaide." 125 At some point during the meeting, Mr Petts arrived but to the best of Mr Budai's recollection he was not introduced to Mr Watson or Mr Saia and did not take part in the meeting. Messrs Saia and Watson then left the meeting. Mr Budai remained behind so as to obtain Mr Edge's signature on the guarantee and equitable mortgage. [I interpolate to note that Mr Watson – whose other evidence is also set out in brief in the reasons below – gave his opinion that Mr Edge's demeanour at this meeting did not seem out of the ordinary in that he appeared informed and did not seem to be nervous or on edge.] 126 After Messrs Saia and Watson departed, Mr Budai gave the guarantee and equitable mortgage to Mr Edge to review and sign. Mr Edge appeared to read the guarantee and the equitable mortgage and then signed the documents in the presence of Mohamad Saleh, Mr Petts, and Mr Budai. Mr Budai witnessed Mr Edge's signature on the guarantee and equitable mortgage. At Mr Budai's request Mr Edge also supplied him with a signed authority and direction [PX 1195-1211, 1212-1213, 1214-1225]. 1 June 2005 127 On 1 June 2005, Mr Budai prepared a note of the meeting attended by Messrs Watson, Saia and himself on 31 May 2005. The note was in the form of a call report. It did not comprehensively set out everything that was discussed at the meeting but was more focussed on future opportunities including foreign exchange services and the use of business consultants for TDM [PX 1322]. 128 On or about 1 June 2005 Mr Budai received what appeared to be 12 months of bank statements for TDM by facsimile from TDM, [who in turn had originally received them from Mascot Taxation] for the period May 2004 to May 2005 [PX 462, 466, 520, 554, 576, 580, 586, 650, 662, 690, 728, 791]. 129 Also on 1 June 2005, Mr Budai sent a facsimile to Ms Smith attaching copies of the bank statements for TDM [PX 1323-1335]. 130 Mr Allingham [a compliance officer employed by St George Bank Limited] provided affidavit evidence that the copies of St George bank statements said to be the TDM statements for the period May 2004 to May 2005 were not in fact genuine bank statements. A search of St George Bank's records in relation to all accounts held in the name of TDM show that only one bank account exists. Copies of all bank statements issued by St George in relation to this TDM account were exhibits to Mr Allingham's 3 May 2007 affidavit: Exhibit HAM pp14-77. Mr Allingham confirmed that when these official bank statements for the period May 2004 to May 2005 were compared to those provided to CBA by TDM on 25 May 2005 [Ex OB22 pp118-120] and 1 June 2005 respectively [Ex OB 32 pp216-227], those that CBA received did not reflect the true transactional history of the account. [For example, the true balance of the account never in fact exceeded $100,000 and show bank fees charged to the account. On the other hand the queried bank statements provided to CBA show closing and opening balances of approximately $1 million and show no bank fee transactions.] It was therefore concluded by Mr Allingham that the purported TDM bank statements provided to CBA in support of the application were fabricated bank statements. 131 Mr Parbery [a partner of PPB Chartered Accountants, appointed by the Bank as receiver and manager of TDM] gave evidence of how he came to realise that the TDM bank statements supplied to the Bank were not genuine bank statements. During cross-examination by Mr Qureshi, he provided a further description of the process [referred to in his 24 May 2007 affidavit] in which he discovered there was a discrepancy between the TDM bank statements that were provided to the Bank and the TDM bank statements from St George [later found out to be the genuine statements] [T 857:35]. 2 June 2005 132 Ms Smith was assigned to conduct a field visit of the TDM premises on 2 June 2005, where she met with Mohamad Saleh and Mr Petts. Among her key findings on the field visit and resulting Field Report [that she submitted to Mr Placek] was that she was unable to explain the differences for the October and July 2004 figures ('the July and October 2004 discrepancies') and also that there was a difference of $1.4 million in the reconciliation of the deposits (payments from debtors) for the month of April 2005. 133 Mr Placek reviewed Ms Smith's Field Report and other documents provided to CBA in support of the application. 134 Under cross-examination by Mr Qureshi, Mr Placek was asked why he did not contact Mr Qureshi, as TDM's external accountant, in relation to the discovery of the discrepancies in figures provided to the Bank. Mr Placek stated that his role was not to reinvestigate the proposal with the original sources but to act on the information supplied to him. If he had any problems, he would refer it to the people who passed the information onto him and ask them to provide the further information since he did not deal with clients directly [T511:42]. Mr Placek did not find it unusual that no one in his section contacted Mr Qureshi because in his experience discrepancies did occur from time to time. It was Mr Placek's evidence that this was because the information contained in the trading analysis could sometimes be hard to obtain, and difficulties could generally be worked out by the Bank from the company's records [T512:51]. 135 On 2 June 2005, Mr Budai received a call from Mr Placek. They had a conversation in words to the following effect: Mr Placek: "Settlement won't happen. There is a problem. I still have concerns over the balancing of the debtor figures." Mr Budai: "Can we sort this out?" Mr Placek: "I would like to go out and see the customer." Mr Budai: "I will arrange a meeting." 136 Mr Budai immediately telephoned Mohamad Saleh and arranged a meeting for 3 June 2005 at TDM's premises. They had a conversation in words to the following effect: Mr Budai: "There is still a concern with the discrepancy in the debtor figures. We want to come out and see you." Mr M Saleh: "I am not happy with this further delay. Settlement will happen on 3 June with or without your involvement." 137 During the evening of 2 June 2005 Mr Budai also telephoned Mr Edge and they had a conversation in words to the following effect: Mr Budai: "Wal and Gary from receivables want to meet with you as soon as possible to see if we can work out what the problem is with balancing the spreadsheet." Mr Edge: "For f…k sake, if we can't sort this out tomorrow, you will lose the deal. I'm not available to meet tomorrow but Mohamad will certainly be able to provide the answers you're looking for." 138 Later in the evening of 2 June 2005, Mr Budai received a telephone call from Mohamad Saleh and he said words to the following effect: Mr M Saleh: "I've spoken to the accountant and I think we can sort out what the difference is tomorrow. It's probably due to the accountant not having an opportunity to reconcile something before he sent in the submission. The receivables ledger from MYOB is 100% correct." 3 June 2005 139 On the morning of 3 June 2005, Mr Budai sent an email to Mr Placek and Mr Saia informing them of the delicacy of the situation [PX 1357]. The penultimate paragraph of that email stated that Mr Budai had spoken to the client and the accountant the night before. Mr Budai clarified during cross-examination by Mr Qureshi that he did not in fact speak to TDM's accountant directly but was given to understand that it was information from the accountant which was relayed to him by Mohamad Saleh as referred to above. 140 In further cross-examination Mr Budai gave evidence that in his email sent at 8.07 am on 3 June 2005, the reason why he stated that there was some urgency to 'get the deal done today' was because both Mohamad Saleh and Mr Edge had on several occasions told Mr Budai that if the transaction did not occur on that day [3 June 2005] they would lose the opportunity to provide the loan facility to ANZ [T469:10]. Meeting on 3 June 2005 at TDM's premises 141 During the morning of 3 June 2005, Mr Budai drove to the premises of TDM with Mr Placek and Mr Gary Cook of the Bank. Mr Cook held the position of Manager, Credit Control in the receivables finance section of the Bank with Mr Placek and Ms Smith reporting directly to him. At the premises they met Mohamad Saleh and Mr Petts. Mr Budai introduced Messrs Placek and Cook to Mohamad Saleh and Mr Petts. Messrs Cook and Placek were given a tour of the warehouse, in Mr Budai's presence, and were shown the TDM product range. They all then went to the upstairs office of TDM. At the start of the meeting, Mohamad Saleh put a letter from Mascott Taxation and Accounting Services on the table and Mr Placek took the letter. Mr Budai did not read the letter. [I interpolate to set out the content of the letter which was admitted into evidence as PX 1349-1350] "TDM Australia Unit 11/13-15 Wollongong Road Arncliffe NSW 2205 Dear Director, This to confirm that we act as the accountants for TDM Australia Ltd (TDM). In relation to the sale of TDM, we advise that the purchaser plans to utilise the services of an experienced accountant, who will be responsible for the efficient management of: · All Accounting functions from journal entries to final accounts. · All debtors and creditors. · Finance matters, i.e. payments overseas, foreign exchange management, cash flow etc. · General administration. We envisage that the person appointed will not only take full control of the above functions, but also install and implement a full accounting package that will be able to handle to needs of an expanding company like TDM. Hence financial reports will be available whenever required by the new owner and/or management. In terms of the difference between the July and October debtors, I confirm that the details in TDM's debtors' ledger are correct. However, since the accounts that were prepared by our firm were interim accounts and not final accounts, we will reconcile the year end accounts with your ledger details to ensure that the accounts for the 2005 financial year properly reflect the details in TDM ledgers. We would like to sincerely apologise to TDM for any inconvenience caused by this error on our part. Thanking you Yours sincerely, (Z Qureshi) Director 142 In short, the letter gave an explanation for the July and October 2004 discrepancies, and with respect to the $1.4 million April reconciliation discrepancy, he was told by Mohamad [and/or Mr Edge] that it was an amount received from Mr Edge. Mohamad's explanation and Mr Qureshi's letter gave Mr Placek comfort particularly since Mr Qureshi provided 'independent corroboration' as TDM's external accountant. This evidence was again repeated to an extent by Mr Placek during cross-examination by Mr Newman. 143 The explanation was given in a conversation in words to the effect of: Mr Budai: "We have few questions about discrepancies in the financial information." Mr Placek: "The spreadsheet which you have provided does not match the bank statement details. In this month there is an overpayment into the Bank account of about $1 million. Can you explain what this is?" Mr M Saleh: "That would have been a release of part of the deposit by Mr Edge. That would not show up on the spreadsheet as a debtor payment." Mr Placek: "Can I have a look at your MYOB system? I just want to have a look at how you input your payments. 144 Mr Placek and Mohamad Saleh conversed at the computer while Messrs Cook, Petts and Budai stood away from them in the office. Mr Budai did not hear the conversation between Mohamad Saleh and Mr Placek at that time. Mr Placek and Mohamad Saleh spent approximately 10-15 minutes at the computer. 145 Mr Budai left the office during the meeting because he had other business commitments. When he left the TDM premises Messrs Placek and Cook were still in the office with Mohamad Saleh and Mr Petts. Mr Budai left the meeting feeling confident that the TDM deal would settle. 146 Mr Budai was out of the office for most of the day on 3 June 2005 meeting with other customers. 147 Later during the morning of 3 June 2005 Mr Placek informed Mr Budai by telephone of the final amount they would be able to provide under the receivables finance facility pursuant to the Bank's lending criteria. That amount was $6,450,000. This determined the amount of the Better Business Loan to be $550,000. Mr Budai then attempted to contact Mr Edge. He was unable to reach Mr Edge on his mobile phone. Mr Budai then telephoned Mohamad Saleh and had a conversation with him in words to the effect of: Mr Budai: "The facility has now been approved and we are ready to settle. I cannot get hold of William [Mr Edge]. Do you know where he is?" Mr M Saleh: "He is in Western Queensland. He is repping the products out that way." Mr Budai: "I need to fax him an amended letter of approval and some other documentation in relation to the receivables loan. How can I get them to him?" Mr M Saleh: "Fax them to me. When I get hold of him I will forward them to him. He will be able to fax them from the Emerald Post Office." Mr Budai: "We will also need a direction as to payment signed by William." Mr M Saleh: "Alright. We will be sending down Neil [Petts] as agent to pick up the cheque." 148 While Mr Edge was required to sign certain documents, including the acceptance document, before the loan facility could be provided on that day, Mr Budai explained under cross-examination that it was not necessary, under the Bank's normal procedure, for Mr Edge to be present in Sydney to sign in person, nor was it necessary for him to attend the Emerald branch of the Bank in order to receive the documents required for signing [T472:11-T473:41]. The documents could be faxed to any fax machine located near the client and the Emerald Post Office was selected by Mr Edge for this purpose. 149 Mr Budai then telephoned Mr Allcock and instructed him to prepare the letter of approval, offer statement and prepayment request and send them to Mohamad Saleh at TDM who was to send the documents on to Mr Edge as arranged with Mr Budai. Later that day, Mr Budai received a telephone call from Mr Edge and they had a conversation in words to the effect of: Mr Edge: "It's William Edge. I am at Emerald Post Office. I am about to fax you the documents which you sent through to Mohamad. Please make sure the cheque is drawn today." Mr Budai: "The documents will be checked. If there is any problem they will call you. If everything is in order, the cheque will be drawn today." 150 Later in the afternoon of Friday 3 June 2005, Mr Edge faxed to the Bank the executed revised BFD, offer statement, prepayment request and direction as to payment. Mr Edge faxed some documents to Mr Budai's section [PX 1364-1366] and some to the receivables finance section of the Bank [PX 1384-1391]. Mr Allcock caused the documents received in Mr Budai's section to be faxed to the receivables finance section of the Bank on 3 June 2005. Mr Budai, in turn, also received by fax the documents that were originally send to the receivables finance section from someone in that section. 151 The documents from Mr Edge arrived while Mr Budai was still out of the office. Mr Budai was notified over the phone by Mr Allcock that Mr Edge had faxed the signed documents, including the direction to pay Mohamad Saleh, to the Bank. Mr Allcock confirmed with Mr Budai that he would prepare the bank cheque in accordance with Mr Edge's direction. 152 Mr Budai returned to the office at approximately 4:00pm on 3 June 2005. He reviewed each of the documents [PX 1364-1366, 1384-1391] as well as the bank cheque prepared by Mr Allcock. He confirmed that the bank cheque was made payable to Mohamad Saleh in accordance with Mr Edge's direction as to payment. 153 Mr Budai telephoned Mr Petts and informed him that the bank cheque was available for collection. Mr Petts attended at Mr Budai's office at approximately 4:30pm and collected the cheque. Mr Budai had a short discussion with Mr Petts in words to the following effect: Mr Budai: "Here's the cheque. You may have a problem depositing it today." Mr Petts: "Mohamad has already spoken to his branch manager and they've made arrangements for me to go straight there to deposit the cheque." 154 Later on 3 June 2005 Mr Budai unsuccessfully attempted to contact Mr Edge to let him know settlement had taken place and to make arrangements to set up the bank account into which the debtor payments were to be made pursuant to the receivables finance facility. He left voicemail messages on Mr Edge's mobile phone on 3 and 4 June 2005 where he said words to the effect of: "We need to set up the arrangements for the debtor payments into the correct accounts. This is usually arranged prior to settlement so it is urgent that this takes place. We need to meet on Monday to put these things in place. Otherwise settlement has taken place and everything else has gone through smoothly." 5 June 2005 155 On 5 June 2005, Mr Edge telephoned Mr Budai and they had a conversation in words to the following effect. Mr Edge: "It's William here. I am not going to be able to make the meeting on Monday. I have to fly to China urgently to change over all of the supply agreements and approve some new products for production." Mr Budai: "Who is going to be in charge of the office while you are away?' Mr Edge: "The office will be locked up and no customers will be making payments while I am away.' Mr Budai: "When will you be back?" Mr Edge: "I am leaving tomorrow morning and I will be back on 20 June. I can meet with Wal and Gary when I am back." 6 June 2005 156 On 6 June 2005 Mr Budai spoke to Mr Placek. The conversation was to the following effect: Mr Budai: "William is leaving the country to go to China and won't be back until 20 June (2005)." Mr Placek: "I'm concerned that we don't have arrangements in place for the debtors to make payments into the new account." Mr Budai: "I'll try to contact William to see if we can arrange something in the meantime." 157 On 6 June 2005 Mr Budai attempted to contact Mr Edge. When he telephoned Mr Edge's mobile phone number he received a message which indicated that it had been disconnected. 158 Mr Budai then rang Mohamad Saleh. They had a conversation in words to the effect of: Mr Budai: "Do you know how I can get in contact with William in China?" Mr M Saleh: "Yes, I have the hotel and factory details. I will send those through to you. I will try and contact him as well." 159 On or about 6 June 2005 Mr Budai received a facsimile from Mohamad Saleh [PX 1401]. Sometime around Mr Budai's receipt of that facsimile he dialled the mobile telephone number provided in the facsimile and had a conversation with the person who answered the phone in words to the effect of: Mr Budai: "I am trying to locate William Mr Edge. Mohamad gave me this number. Do you know how I can contact him?" The person on the other end of the telephone said something which Mr Budai did not understand. It sounded to him like the person was speaking in an Asian language. Mr Budai: "Can you get a message to William to contact me on 0405 186 417. Do you know where William is?" Person: "I don't understand." 7 June 2005 160 On 7 June 2005, Mr Budai again had a conversation with Mohamad Saleh in words to the effect of: Mr Budai: "Have you been able to make contact with William? Mr M Saleh: "No." Mr Budai: "Have you the details where I can contact him in China? I've tried to call William through the person you told me about but I've had no luck." Mr M Saleh: "I'll send them through." 161 Mr Budai had no contact with Mr Edge from 5 June until 14 June 2005. After his last conversation with Mohamad Saleh on 7 June 2005 he attempted to make further contact with Mr Edge but his mobile phone was never answered. Mr Budai also telephoned the offices of TDM but there was a recorded message in a voice which sounded like Mohamad Saleh's, saying words to the effect of "the office will be unmanned until 20 June". Mr Budai left a message for Mr Edge to call him urgently. Mr Budai also sent an email to Mr Edge using the email address for TDM [PX 1524]. 162 During that period, Mr Budai also visited TDM's premises and found the premises locked. No-one answered when Mr Budai knocked on the doors. He left a handwritten note attached to the roller-door in words to the following effect in an effort to make contact with Mr Edge: "Please call Oscar from CBA." 163 Mr Budai was concerned and surprised that he was having so much difficulty contacting Mr Edge because during the period up to 3 June 2005, he was able to contact him without any real difficulty, sometimes speaking to him four to five times a day. 10 June 2005 164 On 10 June 2005, Mr Budai requested from Mr Placek, a brief outline of the process going forward in respect of the receivables finance facility [PX 1526-1527]. 14 June 2005 165 On Tuesday 14 June 2005, Mr Edge telephoned Mr Budai and they had a conversation in words to the following effect. Mr Edge: "I will be back from China sooner than I had expected – I will be back on Thursday 16 June." Mr Budai: "I will let Wal and Gary know. Did you get any of my messages?" Mr Edge: "No. I will deal with everything when I get back." 166 On Thursday 16 June and Friday 17 June 2005, Mr Budai unsuccessfully attempted to contact Mr Edge by telephone. On 17 June 2005, Mr Budai received an email from Mr Cook asking him to contact Mr Placek to arrange for a meeting with Mr Edge [PX 1555]. 167 On Monday 20 June 2005 Mr Budai had a telephone conversation with Mr Placek in words to the following effect: Mr Budai: "Wal, I cannot contact Mr Edge." Mr Placek: "This is getting serious. We will have to start contacting debtors to put arrangements in place for payments." 168 On 21 or 22 June 2005, Mr Budai had a further conversation with Mr Placek in which he said to him words to the following effect: Mr Placek: "We have contacted some of the debtors. It appears there is some fraud going on here. The amounts are either false or have been grossly exaggerated. I have advised Group Investigations." 169 On Friday 24 June 2005 Mr Budai received a phone call from Mr Edge. A conversation took place to the following effect: Mr Edge: "Oscar this is William Edge. I'm back and I am calling to organise a time to meet with Wal and Gary to set up payments from TDM customers. Mr Budai: "Where are you?" Mr Edge: "I'm in Bathurst today." Mr Budai: "Do you know what is going on?" Mr Edge: "What are you talking about?" Mr Budai: "It looks like the list of debtor amounts owing to TDM is fake. There are no debts owing." Mr Edge: "Can you repeat that?" Mr Budai: "The invoices are false. There is nowhere near the amount of debtors owing to TDM that has been stated in the documents given to the Bank." Mr Edge: "I'm f……..ed. What does this mean? I'm f…….ed. How am I going to pay back the $7,000,000?" Mr Budai: "You need to come in to sit down with us as soon as possible." Mr Edge: "I can come at lunch time on Monday." Mr Budai: "What number should I contact you on because your number has been disconnected?" Mr Edge: "Yes, here's the new number: 0405 149 067." 170 On 24 June 2005, the Bank appointed a receiver and manager to TDM. 171 After Mr Budai's conversation with Mr Edge, he telephoned Ms Glenda Hicks [from the Bank's Group Investigations Unit] and informed her that he had arranged a meeting with Mr Edge on 27 June 2005. Ms Hicks told Mr Budai that Mr Edge should meet with TDM's receiver. Mr Budai attempted to call Mr Edge back on the phone number that he had given him to let him know that it was best that he meet with the receiver, but could not get through to him on that number. 172 On Monday 27 June 2005, Mr Edge arrived at the Parramatta office of the Bank at approximately 11:30am and asked to see Mr Budai. He had a conversation with Mr Edge in words to the following effect: Mr Budai: "I tried to call you many times over the weekend because I need you to meet with the receiver and the Bank's group security." Mr Edge: "What's happened? What's going on?" Mr Budai: "The debtors on the list of debtors have been contacted and the amounts claimed to be owed are not owed." Mr Edge: "That can't be right. I've been working in the business for a few months. I've seen orders coming in. I've seen banking being done and I've seen bank statements. Everything seems to indicate the business is very strong. I've met with some of the customers, but thinking back, they all appeared Lebanese. I think I've been set up. I can't believe it. I've met Mohamad's father and mother. They seem like really nice people. I can't believe this has happened." Mr Budai: "What happened when you went to China and you went to the factory?" Mr Edge: "I didn't go to China at all. All I was really doing was stalling for time to have a new computer system put into the business. I can't believe this has happened. I don't know how I can repay the $7,000,000. I've got to make a payment to my ex-wife but the funds have been frozen. If I don't make this payment, I could be in contempt of Court. Are the police involved?" Mr Budai: "I don't know." At that point, Mr Budai telephoned Ms Hicks and placed her on a speaker phone in the meeting room. The meeting continued with words to the following effect: Mr Budai: "Glenda [Ms Hicks], I was not able to contact William and cancel this meeting so he is here. What would you like us to do?" Mr Edge: "Are the police involved in this?" Ms Hicks: "At this stage, the police are not involved. Are you available to meet with me and the receiver tomorrow?" Mr Edge: "Yes, I can stay in a hotel near the airport tonight." The meeting finished at that point and Mr Edge left. 173 Mr Budai has not spoken to Mr Edge since the meeting on 27 June 2005. 174 At no time did Mr Edge suggest to Mr Budai that he was to receive any part of the $7,000,000 advanced at settlement on 3 June 2005. Mr Budai was always led to believe that the $7,000,000 was advanced to finance completion of a purchase by Mr Edge of TDM. Mr Budai considers it is highly unusual for a "purchaser" to receive part of the proceeds of sale. Had Mr Budai been aware of this fact prior to 3 June 2005, he would never have recommended to the Bank to proceed to settlement and advance the $7,000,000 on 3 June 2005. 175 Mr Budai is now led to understand that the receivables of TDM which were represented to the Bank prior to the settlement of the TDM deal are substantially less than the approximately $8,700,000 which was represented and are probably worthless. Had Mr Budai been aware of that fact at the time of the loan application, he would not have recommended to the Bank to proceed to settlement and advance the $7,000,000 on 3 June 2005. 176 Mr Budai is also now led to believe that the bank statements for TDM that were provided to him as described above were not authentic and did not truly represent TDM's banking records. Had Mr Budai been aware of that fact at the time of the loan application, he would not have recommended to the Bank to proceed to settlement and advance the $7,000,000 on 3 June 2005. 177 In the course of preparing his affidavit of 14 June 2006, , Mr Budai had been informed by a solicitor for the Bank that Mr Petts received a payment of about $500,000 from the proceeds of the $7,000,000 advanced by the Bank on 3 June 2005. Mr Budai did not know at any time prior to these proceedings being commenced that Mr Petts had received such a payment and at no time did he know that it was anticipated such a payment would be made to him. Assessing the reliability of the witnesses called by the Bank. 178 It is appropriate at this stage to briefly outline the Court's assessment of the reliability of the witnesses called by the Bank. Notwithstanding that from time to time there were minor inconsistencies as between the evidence given by the many witnesses called by the Bank, I was entirely satisfied that each of these witnesses had carried out his or her best endeavours to accurately recall the events at the time in question. Generally their evidence was consistent with contemporaneous documentary materials which were also before the Court. In those circumstances it is unnecessary to otherwise deal with the credit of these witnesses. The witnesses were as follows: i. Ms Claudine Salameh; xii. Mr John Williams; ii. Mr Barry Watson; xiii. Mr Andrew Watson; iii. Mr Scott Atkins; xiv. Mr Gary Cook; iv. Mr Ian Morris; xv. Ms Lenore Smith; v. Ms Glenda Hicks; xvi. Mr Neil Petts; vi. Mr Marcus Ayres; xvii. Mr Thomas Gaffney; vii. Mr Colin McAlpine; xviii. Mr Mario Saia; viii. Mr Oscar Budai; xix. Mr Matthew Erwin; ix. Mr Peter Oberbillig; xx. Mr Paul Westwood OAM; x. Mr Wal Placek; xxi. Mr Stephen Parbery; and xi. Mr Michael Harrison; xxii. Mr Calvin Wills. xxiii. Mr Radwan Hamdan Chronicling some of the other events both prior to [as well as post] 3 June 2005 March to May 2005 Matthew Erwin – the parallel application 179 Mr Erwin is the State Manager of the NSW Business Development division at Bibby Financial Services Australia Pty Limited. Mr Erwin had dealings between March and May 2005 with Mr Rami Darwich of Qualiya Group Pty Limited in relation to an application for debtor finance relating to TDM. Mr Erwin was provided documents by Mr Darwich relating to the performance of TDM. 180 Mr Erwin attended the 18 May 2005 meeting at TDM where he met Messrs Edge, Mohamad Saleh, Darwich and an associate of Mr Darwich, Safaa Tarocco. At this meeting, Mr Erwin provided details of Bibby's receivables finance product and described the type of information required in support of the application. After this meeting, no further information was provided to Mr Erwin in support of the application and it did not proceed. 181 During his evidence in chief, Mr Erwin stated that at no time during his dealings with Messrs Darwich, Edge or Mohamad Saleh did they mention to him that Mr Edge required $7 million to complete the TDM acquisition. Early to late May 2005 Mr Oberbillig 182 Mr Oberbillig is a real estate salesperson employed by Quaid Real Estate Pty Ltd and was contacted by telephone in early to mid May 2005 by a person identifying himself as Will Barlow and expressing an interest in a property on Captain Cook Highway in Queensland. He met "Mr Barlow" in person in or about early to mid May 2005 when he came to inspect the property with a female companion, Ms Joyce Wakefield. Ms Wakefield is or was in a relationship with Mr Edge. [She was also involved as a party in Federal Court proceedings with Mr Edge and had dealings with Biady & Associates (Mr Edge's solicitors).] Under cross-examination by Mr Newman, [it not being in dispute that Mr Edge was the man who introduced himself under the alias Will Barlow (T461:21)], Mr Oberbillig gave evidence that Mr Edge had introduced himself to him as "Will Barlow" and then introduced his female companion as "Joy Barlow". On three occasions during May 2005 "Will and Joy Barlow" came to inspect the property and ultimately made an offer to purchase the relevant property. The purchase price was agreed to be in the sum of $2.3 million. A deposit of $230,000 was received by Quaid Real Estate on or about 9 June 2005 [part of the proceeds of the $7 million advanced by the Bank on 3 June 2005], but the sale was never settled. All documents relating to the purchase [for example the 'Selling Agent's Disclosure to Buyer' form, the Contract for Sale of the property and all correspondence] were signed by "Joy Barlow" on 30 May 2005 or addressed to "Joy Barlow" only. 183 Mr Newman's cross-examination merely sought to confirm that nothing had been signed by "Mr Barlow" in the documents relating to the proposed purchase. In this way, Mr Newman sought to establish that "Mr Barlow" did not claim at any time to be buying the property. During re-examination by Mr Henskens, Mr Oberbillig gave evidence that prior to the signing of the contract for sale [by "Joy Barlow"], "Mr Barlow" had given the impression from the beginning that he himself was the potential buyer. This impression was said to be created in Mr Oberbillig's mind because "Mr Barlow" had been 'doing most of the talking' [T462:10]. 28 June 2005 184 Mr Barry Watson, the Banks instructing officer for the TDM loan recovery matter [whose other evidence is later outlined in brief in these reasons] gave evidence of a meeting he attended on 28 June 2005 at the offices of PPB with Mr Robinson and Mr Ayres [both of PPB], Ms Hicks, Mr Charles Tilley [CBA in-house solicitor] and Mr Edge. During the meeting, Mr Watson heard Mr Edge telling Mr Robinson that he had never paid $17 million to purchase the shares in TDM, and that he had only paid $7 million. Later in the same meeting, Mr Edge said he had paid a $1.325 million deposit to Mohamad Saleh. Mr Watson's said "[a]re you now saying the purchase price for TDM was actually $8.325 million and not $7 million?" and Mr Edge replied "that's right". However, after subsequent questions from Mr Watson, Mr Edge maintained that the purchase price was $7 million, with the $1.325 million deposit 'being refunded to him by the Salehs from the $7 million settlement'. 185 Despite repeated requests for Mr Edge to provide copies of his travel diary, bank statements and receipt evidencing the deposit, Mr Edge had not provided to PPB such documents, despite agreeing to do so during the 28 June 2005 meeting. 186 Ms Hicks had had a phone conversation with Mr Edge on 27 June 2005 and on the next day attended the above-described meeting at the offices of PPB Chartered Accountants. She gave evidence during her examination in chief that this was not a meeting that became heated at all and that Mr Edge was not badgered nor bullied during the communication which took place. Admitted as Exhibit P4 were the handwritten 2-page note and subsequently typewritten notes taken by Ms Hicks at this 28 June 2005 meeting. [The typewritten notes also contained a note of observations made at the Supreme Court on 29 June 2005.] Outline of Mr Edge's case and the evidence adduced in that regard 187 Mr Edge claims that he too was an innocent victim of a fraud practised upon him by Mohamad and Hassanien Saleh. Mr Edge received $1.2 million of the proceeds of $7 million advanced by CBA, $970,000 being paid into the trust account of Biady & Associates and $230,000 being paid to the trust account of Cameron Price solicitors. 188 His claim in overview terms was as follows: i. he first learned of TDM in the offices of Mr Qureshi when he happened to meet Mohamad Saleh in the reception room whereby Mohamad Saleh gave him general detail of what he said was the business of TDM; ii. he later visited the TDM premises on a number of occasions during which he met Hassanien Saleh and Faowzi Saleh [father of Mohamad and Hassanien Saleh], was shown around the warehouse and inspected samples of the products; iii. in late March 2005 Hassanien Saleh on such a visit asked whether he would be interested in buying the business; iv. about a week later on another visit to TDM he asked Mohamad Saleh and Hassanien Saleh if he could see the figures "TDM were turning over". Mohamad Saleh said that the figures were not for the general public and were confidential but that Mr Edge could see them if he was a genuine buyer. Mr Edge said that he was a genuine buyer if the price was right, but upon Hassanien Saleh naming the asking price, Mr Edge responded that this named amount was way out of his league as he only had about $1,000,000 in cash. Hassanien Saleh then said that if Mr Edge could come up with $1.2 million, he knew a finance broker who could arrange the loan for Mr Edge without any problems. Mohamad Saleh also said that he had some very good contacts at the CBA. Mr Edge said that he thought that this would be too much money for him to borrow. Hassanien Saleh said that Mohamad Saleh was good at finance and would be able to obtain the money for Mr Edge without any problems and that he should think about the matter; v. Mr Edge in late March 2005 returned to have a detailed discussion with Mohamad Saleh and Hassanien Saleh. He enquired as to why they wanted to sell the business if it was as good as they had indicated. Mohamad Saleh said that he and his brother had borrowed money from the family to start the business and had also borrowed a large amount of money from Arab lenders at very high interest rates. The lenders had been putting pressure on Faowzi Saleh to pay back the full amount immediately or there would be trouble. In answer to Mr Edge's question as to whether the profit from TDM would be sufficient to pay that debt off he was told the problem was that there were several silent partners in the business based in Lebanon, that the brothers were supporting their large extended family and had to keep putting more money into the business to bring out the new products. They were finding the family interference too much for them; vi. in the same conversation Mohamad Saleh said that Hassanien Saleh would stay on for one month after Mr Edge purchased the business and that Mohamad Saleh would stay on as a manager for a further 12 months but would have to receive a management salary. Hassanien Saleh would work one month for free; vii. the evidence given by Mr Edge then included evidence that on 7 April 2005 Mohamad Saleh said that "all was good" in relation to the arranging of the loan. In answer to Mr Edge saying that he wished to see the bank statements, Mohamad Saleh gave him a TDM's accountant's business card showing the words "Hamdam and Associates, Certified Practising Accountants. Radwan Hamdam Chartered Accountant". Mohamad Saleh told Mr Edge that Mr Qureshi only did some work for them and that "Hamdam does the financials"; viii. Mohamad Saleh explained to Mr Edge the finance package which he could organise with some close contacts in the finance industry. He said that he was able to get Mr Edge a debtors finance loan which he explained involved the Bank lending the equivalent of the amount owing to TDM from sales debtors for a period of 12 months, Mr Edge being only required to pay interest on the amount owed. He said that the interest rate was approximately 8.5 percent so that Mr Edge would not have any trouble meeting interest repayments. The conversation continued: Mr Edge: All right, see what you can do and I'll have a look at the finance package when you have a proposal. Mr M Saleh: So I take it from that you are going to buy the business. Mr Edge: Yes, if you can arrange the finance that would be great, because I don't know how to put together a loan application like this. Mr M Saleh: It's as good as done. ix. thereafter Mr Edge came to meet Mr Hamdam, being introduced to him by Mohamad Saleh and Hassanien Saleh. Mohamad Saleh said that he would get Mr Hamdam to show him in detail the profit margins of TDM. Mr Hamdam said that Mr Edge was buying himself a very good business and explained that he had a spreadsheet and graph that he had prepared to show Mr Edge. He added that the profit margin built into most of the products [and the net profit before tax] was quite substantial. Mr Edge conceded that he was really not 'a figures man' and found it difficult to understand the financial reports. Mr Hamdam pointed out that he had the bank statements showing deposits which would not include cash sales and showed Mr Edge which were fixed overheads and which was a column for profit. Mohamad Saleh made the point that there would be an extensive check by the Bank anyway because they would have to satisfy themselves that the figures were correct before they would lend any money. Mr Edge said that he realised this because the Bank wouldn't lend money unless it could be repaid. The meeting continued for about another hour and both Mohamad Saleh and Mr Hamdam showed him sales invoices, financial spreadsheets, BAS statements, tax returns and bank statements; x. a few weeks later Mr Edge returned to TDM's premises where he was greeted by Mohamad Saleh and Hassanien Saleh. Mohamad Saleh said that he had started to arrange the debtor finance and that he could guarantee that he would be able to arrange the loan. He said that he had a good connection at the Bank but that a substantial holding deposit would be needed because there was a lot of work to do in preparing the financial statements for the Bank. He said that the deposit would be refundable when the loan came through and that another purchaser was still very interested so that it was 'first in' with the deposit. He said that he and his brother felt that a 20% deposit was appropriate given the profitability of the business. Mr Edge said that he would think about it; xi. Mr Edge then gave evidence that in April 2005 he agreed to purchase the business known as TDM Australia Pty Ltd for the sum of $7 million and agreed to pay a deposit of $1.2 million. At the request of Mohamad Saleh, Mr Edge signed an ASIC form for changes to the directorship of TDM, Mohamad Saleh saying that it would be filed on the day of settlement; xii. on 22 April 2005 Mr Edge took his friend Mr Johnstone to the premises of TDM and in the presence of the latter, proceeded to sign the contracts of sale of the business. At the same time he signed an agreement to purchase the shares of TDM from Hassanien Saleh. He had handed Hassanien Saleh the deposit of $1.2 million in cash. Upon signing what he described as the contract and agreement, Hassanien Saleh said that the Bank would need another $30,000 for the loan application fee and $20,000 for other incidentals. Mohamad Saleh said that the Bank needed an application fee to be paid before it would approve the loan. Mr Edge responded that he had not expected to pay any more money but supposed that was normal for the Bank; xiii. the totality of what was described by Mr Edge as the contract for the sale of the business was in the following terms: "Agreement between Mr H Saleh and Mr W Edge for the sale of shares in TDM Australia Pty Ltd I, Hassanien Saleh, the sole director of TDM Australia Pty Ltd [ TDM] confirm that I have received a cash deposit of $1,200,000… from Mr William Edge, being for the purchase of the ordinary shares in TDM, which will result in yourself being in full control of the company, its business and its intellectual property assets, including all of its patents and dies, whether situated in Australia or overseas. The full deposit of $1,200,000 will be repaid to Mr Edge, as per his instructions, on settlement of the debtor financing being organised for TDM" xiv. the agreement purports to be signed by Mr Edge and Hassanien Saleh as well as witnessed by Mr Johnstone. xv. on approximately 5 May 2005 Mr Edge paid $50,000 by direct deposit to cover the establishment fee and other incidental costs including a claim for valuation fees; xvi. in addition Mr Edge paid Mohamad Saleh and Hassanien Saleh a further $10,500 in two part payments of $5,250 which additional money Mohamad Saleh had said was to carry out the Banks valuation of the business; xvii. on about 13 May 2005 Mr Edge visited the premises of TDM. Mr Petts arrived at the premises and was introduced to him by Mohamad Saleh. Mohamad Saleh asked Mr Petts whether he had been able to negotiate a better interest with GE Finance. Mr Petts said that he could not get the interest rate down through GE and that he had tried everything. He said that he had sent figures which had been given to him by Mohamad Saleh to Mr Budai at the Commonwealth Bank who was a mate of his and who was going to put the loan application through them; xviii. on or about 18 May 2005 a meeting took place between Mohamad Saleh, Mr Petts, Mr Budai and Mr Ian Morris at the TDM premises. Mr Petts had arrived early and spent some time talking to Mohamad Saleh. Mr Petts said that Mr Budai could not stay long because he had another appointment. At the meeting Messrs Petts, Budai, Morris and Mohamad Saleh held a discussion about the finances of TDM and about its market share. Mr Morris said that the Bank would do a thorough due diligence which would go through a series of departments before final approval. He explained that there would be site inspections by a number of persons. He explained that the final decision would be made after contacting TDM's debtors to verify the amount each customer paid to the company. Mr Edge said that he was pleased to hear that the Bank took those precautions. Mr Morris explained that in fact the approval process required the Bank to contact a number of TDM's customers to verify the debts. He said that the set procedures laid down by the Bank's lending policies required a bank officer to attend the TDM premises and to analyse a typical series of sales on different days from the time of receipt of an order right through to delivery and to then independently verify each of the companies debtors. Mr Edge said that this was fine with him; xix. Mr Edge was telephoned at about 1 p.m. on 24 May 2005 by Mr Petts who said that he was calling from Mr Budai's office and needed to meet Mr Edge that same afternoon to have some form is signed. They met in Hurstville about an hour later outside the post office. Mr Petts drove Mr Edge to the car park located behind the shopping centre. Mr Petts then said that Mr Budai had sent him to have particular papers signed and faxed back to him. He explained that Mr Budai needed the 100 points ID signed and asked about what identification Mr Edge had with him. Upon Mr Edge answering this question Mr Petts said that he needed Mr Edge's passport and driving licence and asked whether Mr Edge had a photocopy of those documents. He was told that Mr Edge had in the car only the originals, and said that he needed a copy of them. Mr Edge said that this was no problem as Mr Edge could walk over to the 'copy shop' opposite the station and obtain the copies while Mr Petts waited. Mr Edge then used the photocopying machine in the newsagent where he copied his passport and driver's licence. He brought them back to the car. Mr Petts witnessed his signature in the car and Mr Petts wrote some handwritten details on to the photocopies, including Mr Edge's residential address. After the signing of the photocopy of the passport and driving licence, they both returned to TDM's office. They arrived at about 4 p.m. and found that the premises were locked. A little later Mohamad Saleh arrived and Mr Petts asked him to fax Mr Edge's ID details through to Mr Budai. Mohamad Saleh said that he did not have the keys to the office on him. Mr Petts said that there was no problem as he himself was going back to GE's office and would fax them from there. Mohamad Saleh told Mr Edge that he had arranged for Mr Edge to meet some of their good customers that evening over dinner; xx. Mr Edge then contends that late on that afternoon he accompanied Mohamad Saleh to a number of different cafes in Bankstown where he was introduced by Mohamad Saleh to persons described to him as customers. At the first meeting the person whom they met [who had been introduced to Mr Edge as Habib] said to Mr Edge "so you are taking over TDM". Mr Edge replied in the affirmative saying that it was business as usual and that Mohamad Saleh would be staying on for 12 months while Mr Edge learned the ropes. Mr Habib from time to time spoke in Arabic with Mohamad Saleh. Mr Habib said that had he known that TDM was for sale he would have bought it. The two other persons to whom Mr Edge was introduced at different cafes that evening, were Mr Abdulla Azzum, said to have been from a company called Hospitality Electrical Systems and another person described to Mr Edge by Mohamad Saleh as "his personal banker" who was said to be the manager of 'Amalgamated Finance Australasia'; xxi. on 25 May 2005 Mohamad Saleh at about 1 p.m. told Mr Edge who was then at the TDM premises that Mr Petts had called to say that he had organised with Mr Budai to rush the loan acceptance forms through and that Mr Budai would bring them over to TDM later that day. Mr Budai arrived during the afternoon. Mr Petts arrived shortly before that. Mr Budai said that he had to rush back to Parramatta for a meeting and asked Mr Edge to sign a number of documents which he said he would take back to the office. Mohamad Saleh said that after the documents were signed he would photocopy them and would put Mr Edge's copies with his other papers in the filing cabinet for safekeeping. Mr Edge said that was in order. The documents were hurriedly placed before Mr Edge and he was told where to sign. He did not read the documents but simply signed. A document he signed was a "Letter of Offer" with annexures. the letter of offer contained a list of conditions. He relied completely on the bank to ensure that the preconditions were fulfilled; xxii. on 31 May 2005 Mr Edge travelled from Queensland to Sydney where he met at the offices of TDM with Messrs Hassanien Saleh, Mohamad Saleh, Andrew Watson, Saia - the latter persons being from the Bank. He outlined his plans to Mr Watson in terms of expanding into low voltage lighting and security systems and video surveillance. Mohamad Saleh discussed the business of TDM. Various matters concerning things such as the price structure of TDM products were discussed. After the meeting Mr Budai accompanied Messrs. Watson and Saia back to their car and returned advising Mr Edge that Mr Watson liked Mr Edge and had told Mr Budai to look after him with anything he needed. Mr Edge was delighted to hear what Mr Budai said and felt very confident that the Bank was acting in his best interests and would check thoroughly the information provided to them by Mohamad Saleh. At the meeting Mr Budai had said that he would go back to his Parramatta office to prepare further papers for Mr Edge to sign. Those papers required to be signed that very day or otherwise the deal would have to be put back a couple of weeks because one of the Bank's officer was going on leave. Mr Edge believed that Mr Budai was referring to Mr Placek. During lunch with Mohamad Saleh, the latter received a telephone call and then informed Mr Edge that Mr Petts had called to say that he had organised with Mr Budai to rush the bank forms through and said that Mr Edge would have to go over to Parramatta that afternoon to sign them. Mr Edge said that it was too late at that time of the afternoon as he was flying off to Queensland that night. Mohamad Saleh said that if he did not go over on that particular day the deal would be put back as one of their friends in the Bank was going overseas. Mohamad Saleh said that he would ring Mr Petts to see whether he could assist. Mr Petts was apparently contacted and arranged for Mr Budai to meet Mr Edge at North Ryde. Mohamad Saleh drove Mr Edge to North Ryde and Mr Edge signed the papers which Mr Budai had brought along in the presence of Mr Budai at McDonald's, North Ryde. At that time he signed the equitable mortgage, the deed of guarantee and the receivables facility agreement. [Mr Edge gave evidence that in fact the receivables facility agreement recorded the date 1 June 2005 which date he had not then recorded. He had no knowledge as to who had completed that date on the document.]; xxiii. on 3 June 2005 Mr Edge was in Far North Queensland driving south on his way back to Sydney during the afternoon. When he reached Capella which is about 54 km from Emerald he received a telephone call from Mohamad Saleh who asked where Mr Edge was; said that he had been trying to reach him all day; said that Mr Petts and he had organised everything with Mr Budai for settlement that afternoon and that they needed Mr Edge to sign final loan papers urgently. Mr Edge said that he was more than 2000 km away from Sydney, asked what Mohamad Saleh was talking about and make clear that he was just outside of Emerald in Queensland. Mohamad Saleh said that the papers had to be signed that day. Mr Edge said that it would have to wait until Monday. He said that he still had 300 km to drive that afternoon to book into his motel. Mohamad Saleh said "No, No mate, we've all done our best for you. It must be signed this afternoon or the Bank will pull the plug on the deal". Mohamad Saleh said that he would find the number for the Emerald post office and would fax all the forms to Mr Edge there and would put Mr Budai's and Mr Placek's facsimile numbers on the top of the forms. He said that all Mr Edge had to do was to get to the post office and to sign them and to fax the copies to Mr Budai and Mr Placek and to fax copies to him as well so that Mohamad Saleh would know that the papers had been sent. Mr Edge said that this was not possible as it was too late in the afternoon and the Post Office would be closed. Mohamad Saleh said that he had tried to help Mr Edge and that if the papers were not signed that afternoon the deal was off and that he would not be refunding Mr Edge's application fee or valuation fee and had run out of patience. Mr Edge said that he would try to get to the Post Office but could not guarantee it; xxiv. Mr Edge then proceeded to find the Post Office in Emerald. He waited in the queue and whilst he was waiting the post office closed. He checked with the counter assistant several times as to whether they had received faxed documents. The documents were finally passed to him when they had been received. They were addressed to him and required his signature. They needed witnessing and he had to wait for the chief postal clerk to do this. He then completed two post transmittal sheet forms addressed to the Bank. The post-clerk then faxed the signed documents to the numbers written on them to the Bank. The bulk of the documents were to be transmitted to Mr Budai and two pages were to be transmitted to Mr Placek. [Mr Edge's evidence was that from enquiries he had caused to be carried out, it would appear that the post-clerk had inadvertently switched the transmissions and sent the larger bundle to Mr Placek instead of to Mr Budai who had received the other documents]; xxv. at around 5:45 p.m. on 3 June, having left the Post Office after closing time, Mr Edge telephoned Mr Budai and told him that he had faxed the documents. Mr Edge after faxing the documents immediately went to the Red Rooster Restaurant in Emerald for dinner. He annexed to his affidavit a copy of what was said to be his receipt for that meal. He then continued his trip home staying at a town called Banana; xxvi. on 7 June 2005, having arrived back in Sydney, he visited the TDM premises, Messrs Mohamad and Hassanien Saleh were there working in the premises, he accompanied Mohamad to Bankstown with a large delivery of stock, and then returned to TDM for lunch; xxvii. The following afternoon 8 June 2005, he attended the TDM premises and again on Thursday the same week, and it was business as usual; xxviii. in conversation with Mr Edge, Hassanien Saleh said words to the following effect: Mr H Saleh: "Mohamad will be on holidays for two weeks commencing Monday 13 June 2005 to visit family in Fremantle. I will stay on at the premises until 1 July 2005 managing the warehouse until Mohamad returns on 27 June 2005." Mr Edge: "When will my deposit be paid back?" Mr H Saleh: "Th[i]s week Wil" xxix. as Mohamad Saleh was going on holidays, Mr Edge had a discussion with him about taking over the business. Mohamad Saleh decided that it would be better if a proper reconciliation was done after he returned from Perth, as the new computers and software programs, promised by Hassanien Saleh, as part of the deal to purchase, would be installed. Mohamad Saleh, in discussion with him, said words to the effect: Mr M Saleh: "Wil, I think you should tidy up your affairs, ready for a clean start and on my return from Perth I will do a total reconciliation for you and the Bank. I can't really do it until the new computers go in." Mr Edge: "Yes that is a good idea. I really would like to get my things in order before I start. Yes, I'll tidy up my affairs and see you back here on your return from Perth." xxx. on Friday 10 June 2005, Mr Edge arrived at the premises of TDM and met Mohamad Saleh. Mr Edge agreed to drop Mohamad Saleh off at his home and during this trip, arrangements were made for Mr Edge to meet Mohamad back at the TDM warehouse later that day. However, Mr Edge did not make contact with Mohamad again that day, and left Sydney that evening to begin tidying up his own affairs in preparation for his start at TDM. xxxi. on 14 June 2005, Mr Edge attended the TDM premises and found a note affixed to the door, which recorded the words: Message: "To Wal and Gary: ------ Meeting cancelled, call Oscar for details." Mr Edge was unable to enter the TDM premises at that time, as he had not yet been given a set of keys. xxxii. after reading the sign, Mr Edge assumed that Hassanien Saleh was out on a delivery, so he telephoned Mr Budai telling him he had seen the sign on the TDM door and apologised for the delay in the computer program's installation. xxxiii. during this same phone conversation, Mr Edge told Mr Budai that he knew the settlement had proceeded but enquired as to when the Bank would be paying the Better Business Loan of $1 million into the TDM account. Mr Budai told him that the $1 million he had asked for was not approved, and that a $550,000 Better Business Loan was paid into his TDM account on settlement to make up a total of $7 million. It was at this point that Mr Budai queried Mr Edge about whether he had read the papers he had signed. Mr Edge replied that he had not as the deal was so rushed. He thought there must have been a mistake and told Mr Budai that Mr Budai himself had told Mr Edge early in the negotiations, [as well as Mr Edge signing documents to the effect], that the loan would have an additional $1 million advance for operating capital. xxxiv. Mr Budai explained that the total amount applied for had had to be reduced to a total loan amount of $7 million. This required a reduction in the Better Business Loan draw down and that was why Mr Edge 'signed fresh papers'. Following this, Mr Budai suggested that the Bank would have a look at how the business was running after the first few months of trading and if 'the figures [were] up' the Bank would be able to provide a loan for a further amount. xxxv. in the same conversation, Mr Edge mentioned the need for Mohamad to work with Messrs Placek and Cook to set up the accountancy program for TDM and that Mohamad was away and not due back until 27 June 2005. Mr Budai said that the program would be installed when Mohamad returned from his holiday. xxxvi. that afternoon, Mr Edge went back down the South Coast to complete arrangements for his move to Sydney. xxxvii. on or about 16 June 2005, Hassanien Saleh called Mr Edge to tell him he would be putting the TDM answering machine on in order to handle the orders since he was busy preparing orders and receiving shipments at the warehouse. Hassanien Saleh told Mr Edge to come back to TDM when Mohamad returned from his holiday the following week. xxxviii. Mr Edge called Mr Budai on 24 June 2005 to make arrangements to have Messrs Placek and Cook come over to TDM to have the computer program installed on Tuesday 28 June 2005, when Mr Edge understood the new computers were to arrive. At this point, Mr Budai told Mr Edge that Mohamad was not coming back and that the Saleh family were all in Lebanon. Mr Budai said to Mr Edge that "all the figures and information given to us by the Saleh brothers were false", which the Bank had come to realise after Mr Placek arranged for TDM's debtors to be contacted. Mr Edge questioned how this could have occurred since the Bank had assured him that all the debtors would be checked before the loan was approved. Mr Budai told him the priority was to get the money back first and that they should be able to freeze most of the funds. Mr Edge then confirmed he would come to see Mr Budai on Monday 27 June 2005. xxxix. Mr Edge attended Mr Budai's Parramatta office on 27 June 2005. Mr Edge said he did not know what Mr Budai meant when he asked him when he returned from China [since he had not been]. He queried who had told him about a China visit and Mr Budai said it was Mohamad Saleh who told him. xxxx. Mr Edge then asked Mr Budai to explain what Mohamad had done [in relation to the perceived fraud] and why the Bank had not protected Mr Edge. Mr Budai told him about Mr Placek arranging for some of the debtors to be contacted and finding them to be grossly over-exaggerated. Mr Edge again said that he was assured that the debtors would be checked prior to the money being given to Hassanien and that Mr Morris had personally assured him that a thorough check had been done. Mr Budai said that the priority was to try and get the money back first before more money was drawn out from the banks in Beirut by the Saleh family members. Mr Budai also told Mr Edge that Mr Petts had also been conned by Mohamad. xxxxi. Mr Edge left Mr Budai's office around 12.30pm. Just as he left, he received a call from Mr Petts who said to Mr Edge words to the effect "It looks like you've been conned also". Mr Petts confirmed he had intentions of going into business with Mohamad after the settlement and that he had known and worked with Mohamad for a long time. Mr Petts told Mr Edge that Mohamad had told him on the phone there had been a terrible mistake and that he would be returning on Friday week "to work everything out and to pay everybody off". Mr Petts said he believed Mohamad and that he would "make good on this". Mr Edge did not believe Mr Petts given that he was told by Mr Budai that the Saleh brothers were with the family in Beirut and were drawing out money from different banks. Mr Edge told Mr Petts that the situation looked like "you and the Bank [were] in on this scam". Assessing the reliability of the evidence given by Mr Edge 189 Mr Edge's evidence cannot be accepted as reliable save where corroborated by documentary evidence or by evidence given by witnesses whose credit was reliable. In truth Mr Edge would have to be one of the most unreliable witnesses who has ever given evidence before me. The close examination of him in relation to his history of providing fictitious addresses made quite clear that he has no credit whatever. His general habit of endeavouring to second-guess the cross-examiner and to give non-responsive answers [in the face of the direction to be responsive] was very noticeable. Under cross-examination his evidence was that his mind was a complete blank as to the income earning activities which he engaged in during the 2003 tax year and likewise in the 2004 and 2005 tax years. To the extent that the Court is entitled to have regard to the demeanour of a witness in terms of determining credit, it has to be said that his persistent habit in crisply and very audibly calling out the single word "denied" in answer to difficult propositions put to him and his prevarication with the cross-examiner were, it seemed to me, further clear indicators that he was about furthering his case at every possible opportunity. Even questions which only began towards a line of cross-examination which may have been somewhat sensitive were greeted with the word "denied": [there are 13 examples of his having used the one word answer "denied" to be found at transcript pp 1464-1465 alone]. Mr Edge is a person who is clearly shown by the entirety of the evidence to have been knee-deep in the fraudulent conspiracy practised on the Bank. The handwriting evidence given by Mr Westwood OAM 190 Before proceeding further it is convenient to refer to the handwriting evidence and in particular to that given by Mr Westwood. Mr Westwood is a forensic handwriting and questioned document examiner and is the managing director and principal document examiner of Forensic Document Services Pty Limited. Mr Westwood gave evidence of his analysis of the signatures of Messrs Edge, Mohamad Saleh, Hassanien Saleh and Qureshi. 191 Mr Westwood has extraordinary experience and expertise in relation to forensic handwriting evidence and associated forensic activities requiring specialised knowledge. To the extent that his evidence was sought to be contradicted by that of Mr Dale, also a forensic expert, the evidence of Mr Westwood is accepted. Mr Dale was a singularly unimpressive witness. Not only did he prevaricate with the cross-examiner and have considerable difficulty in even being able to be certain as to whether or not he had the New South Wales Experts Code of Conduct before him in preparing his report, but he also sought to express opinions outside of his acknowledged field of expertise. He was even content to accept specific instructions from the solicitors briefing him that he not pay regard to certain segments of documents furnished to him for examination. 192 The crucial issues to which the evidence given by Mr Westwood went, concerned: i. the payment direction addressed to the Bank in respect of into whose account the $7,000,000 was to be paid on settlement of the facility; ii. the contract for the sale of the TDM business alleged to have been signed on 22 April 2005. 193 As to the payment direction issue: i. the Bank contended that the direction it received on 3 June 2005 was to pay the $7 million to Mohamad Saleh and that that direction was contained within two faxes sent to the Bank being Ex P8 and Ex P9. ii. Mr Edge put forward an alternate document which he says he sent to the Bank on 3 June 2005 being Ex P25. This was a letter purportedly signed and sent by Mr Edge from the Emerald Post Office as part of the extensive suite of facsimiles sent to the Bank on that day. This document purported to give the Bank the direction to pay the $7 million in the name of Hassanien Saleh. iii. Mr Westwood to the highest level of confidence in his conclusion [ie without doubt], expressed the opinion that there had been digital manipulation of the original document put on the fax to the Bank, such that Ex P25 was a forgery. As he pointed out in his evidence, the words "do not hesitate to call" are larger in size than the rest of the document and on a different line to the rest of the page. A computer printer will not create that variation in its normal operation. Further, the letters "CBA" have been copied from the heading of the letter. The uniqueness of the pixilation created by the faxing process gave Mr Westwood confidence in concluding that Ex P25 had been taken from Ex P8 (or another copy of Ex P8 [T1284:26]) and was therefore a fabrication; iv. the finding of the Court is that there has been digital manipulation of the original document that was faxed to the Bank [or a copy of it], such that Ex P25 is a forgery. 194 As to the questioned signatures on the 22 April 2005 contract, here again Mr Westwood had the highest level of confidence in his conclusion. The evidentiary matrix and the materials throw up the following matters: i. the contract alleged to have been signed on 22 April 2005 and which is Annexure C to the principal affidavit of Mr Edge has signatures by Messrs Edge and Johnstone upon it (Q5, Q6 and Q10 to Mr Westwood's report). By comparing those signatures on the photocopies of the contract with the original signatures on the receipt (Q14), Mr Westwood was able to conclude that the signatures of Mr Edge and Mr Johnstone on the contract were reproductions of the original Edge and Johnstone signatures on Q14 using the technique of scanning the original signatures and then manipulating them using a computers software program such as Photoshop. There were particular characteristics of the signatures on Q14 which were reproduced on Q5, Q6 and Q10 which permitted Mr Westwood's conclusion. ii. as stated above Mr Westwood had the highest level of confidence in his conclusion about these matters. Mr Dale, although he gave a contrary view, has never had to consider computer enhanced signatures and has no expertise in such matters. Here again the evidence given by Mr Westwood must be preferred. iii. Mr Westwood's opinion is supported by the failure of Mr Edge to produce the contract document in response to a Notice to Produce returnable before Justice White on 1 and 2 August 2005. This is even though Mr Edge had given evidence that the contract was in his briefcase. His failure to explain its non-production is consistent with the proposition that the document did not exist at the time. iv. in further support of Mr Westwood's opinion, there are two versions of the contract. A second and slightly different version was discovered by Mr Edge (see Ex P68 tab 17). The other version is consistent with it being an earlier generation of a fabricated document which Mr Edge was careless with and allowed to be copied and sent to the plaintiff. v. as the Bank has submitted, the first page of the contract (Q5) has some writing of Mr Budai being the words "Chad Mikhael" which he placed on a different document faxed to the Bank in May 2005. Mr Budai was not present at TDM on 22 April 2005. The Bank had not been approached and he had nothing to do with TDM then. The document Mr Budai had written on was part of his affidavit sworn and served in August 2005. Mr Edge had the opportunity to copy and manipulate those words for the copy served on him. That is the only way that the writing of Mr Budai can be explained on the document. 195 The resultant holding is that the document purporting to be the contract for the sale of the business and purporting to have been signed on 22 April 2005 was a fabricated document. 196 There was also an extensive examination through the hearing in terms of the handwriting appearing underneath the photocopy of Mr Edge's driver's licence at the time the W4 details were taken from Mr Edge [PX2318]. I do not see that there is any substantive issue which is raised from this closely examined controversy. The matter which is raised concerns whether or not it was Mr Petts or Mr Budai who took these details from Mr Edge. Mr Petts denied during cross-examination that the handwriting underneath the photocopy of Mr Edge's driving licence was his own and gave evidence that he did not know whose handwriting it was. The balance of probabilities favours the finding that Mr Budai took these details, but even if in this respect, his evidence was incorrect, as sometimes may occur when many events are required to be recalled after the event, this would not alter the Court's overall acceptance of Mr Budai's general reliability in giving the overwhelming bulk of his evidence. From a handwriting expert's point of view, the Court accepts Mr Westwood's evidence that it is not possible to conclude other than a category 5 inconclusive result in relation to the questioned handwriting. 197 There are a large number of indicators in the evidence that Mr Edge's version of events cannot be accepted. Without being exhaustive these include the following: i. the evidence before the Court of the meeting on 28 June 2005 between Messrs Edge, Robinson, Watson, Ayres, Tilley and Ms Hicks demonstrates quite conclusively that during this meeting upon a close examination in the questioning of Mr Edge by Mr Robinson and Mr Ayres, quite inconsistent evidence was given by Mr Edge: a) at the beginning of the meeting Mr Edge said that the purchase price for TDM was actually $8.325 million and not $7 million; b) towards the end of the meeting Mr Edge retracted this statement and said that the purchase price of the business was $7 million, then explaining that the sum of $1.325 million was to be refunded to him by the Salehs from the $7 million settlement. ii. Mr Edge contended that at the meeting of 18 May 2005 at which Messrs Petts, Budai, Morris and Mohamad Saleh were present, Mr Morris had said that the final Bank decision would be made after contacting TDM's debtors to verify the amounts each customer over to TDM. This matter was: a) absolutely denied by Mr Morris, whose contrary evidence is accepted to the effect that he in fact made it very clear to Mr Edge that the type of facility offered by the Bank was a "non-disclosed" facility which meant that the Bank would not contact customers to verify the amounts owing. He had worked in the banking industry for about 35 years and in the area of receivables finance for an extended period. He was well aware as at May and June 2005 that the Bank only offered a non-disclosed receivables finance facility. His clear recollection was that when he told Mr Edge that the facility was a "non-disclosed" facility, Mr Edge appeared to be very pleased and at that time either Mr Edge or Mohamad Saleh said that was good because that was the facility which they wanted; b) absolutely denied by Mr Budai who had also always understood the facility as a non-disclosed facility and was quite certain that Mr Morris had not told Mr Edge or anyone else in his presence that TDM's end customers would be contacted to verify the amounts owing; c) also denied by Mr Petts who recalled that during the meeting Mr Morris had said that the receivables finance product offered was a non-disclosed facility; iii. Mr Edge's evidence of the 24 May 2005 occasion when Mr Petts obtained copies of the driver's license and passport from him during the car park session [said to have occurred behind Hurstville shopping centre] was denied by Mr Petts whose evidence in this regard is accepted as reliable. It is also contradicted in its entirety by the evidence given by Mr Budai who had witnessed the subject documents at TDM's premises; iv. the evidence given by Mr Budai and by Mr Cook with respect to the documents which Mr Edge transmitted back to the Bank late in the afternoon of 3 June 2005 is accepted as reliable. The documents received by Mr Cook's section from Emerald were sent by Mr Cook's section to Mr Budai's section within the Bank. Mr Budai's section in turn caused the documents it had received from Emerald (also by fax) to be 'on faxed' to Mr Cook's section. In relation to the controversy with respect to the last page of the facsimile which enclosed the direction to pay the clear finding is that the direction was to pay to Mohamad Saleh; v. the Court accepts as reliable the evidence given by Mr Budai that he had tried on 3 June to contact Mr Edge to let him know that settlement had taken place but that these attempts were unsuccessful. The Court accepts as reliable his evidence that he left voicemail messages on Mr Edge's mobile phone on 3 and 4 June stating the arrangements which the Bank needed to set up. The Court accepts as reliable his evidence that Mr Edge telephoned him on 5 June 2005 saying that he was not going to be able to make the meeting on Monday and had to fly to China urgently to carry out changes to supply agreements and to approve some new products for production. The Court accepts as reliable Mr Budai's evidence that on 6 June he telephoned Mr Edge's mobile telephone number but received a message which indicated that it had been disconnected and that he had not known that Mr Edge was in Sydney on 7 or 8 June 2005 and that had he known this he would have insisted that Mr Edge make immediate arrangements to meet with officers of the receivables finance division of the Bank. vi. Mr Edge's statement that he had to fly to China urgently to carry out changes to supply agreements and to approve some new products for production and his failure to respond to the telephone calls of Mr Budai is simply yet another indicator of his complicity in the fraud. The fact that when Mr Budai telephoned Mohamad Saleh on 6 June 2005 asking how he could get into contact with Mr Edge in China to be told by Mohamad Saleh: "Yes, I have the hotel and factory details. I will send those through to you. I will try and contact him as well" is a further indicator that Mohamad Saleh had conspired together with Mr Edge to mislead the Bank by concocting the story that Mr Edge had gone to China. This was calculated to gain time for the conspirators who would have appreciated that it would not take long for the Bank to unravel the frauds once they were unable to make arrangements to set up the bank account into which debtor payments would be made as part of the facility [indeed Mr Edge himself informed Mr Budai that he had not gone to China at all but was stalling for time in order for a new computer system to be installed]; vii. Mr Edge purported to sign the front page of the supposed contract for sale of the business in respect of which the document furnished to the Bank suggested that McBride Harle and Martin solicitors acted for TDM on the transaction. The front page of that contract for sale had been supplied to the Bank together with a number of documents from this firm of solicitors to make it look as if the same document was sent by the firm of solicitors. This was not the case, as the subpoenaed documents make clear; viii. another clear indicator that Mr Edge was a party to the fraud is that although he had represented to the Bank that he was a bona fide purchaser of TDM, he in fact received back $1.2 million of the $7 million which was purportedly paid over by him for TDM; ix. a clear indicator that Mr Edge was a party to the fraud being perpetrated upon the Bank and knowingly so, is seen in his attempts to set up the Port Douglas purchase of property in meetings which disguised his own name and sought to have the relevant contract set up in the name of Joy Barlow; x. the evidence is replete with detail of the degree of pre-meditation about the way Mr Edge was operating prior to the actual implementation of the fraud. Particular conveyances were conducted in a manner which would disguise that he was in fact the beneficial owner of parcels of land that were purported to be purchased. False names were used in respect of the directors of particular companies. His use of a nom de plume is suggestive of his attempt to disguise his receipt of the fraudulent funds [T 54]; xi. another clear indicator that Mr Edge was a party to the fraud being perpetrated upon the Bank is to be found in the negotiations which Mohamad Saleh and Hassanien Saleh were having with other financiers which proceeded almost side by side with the applications initially made to the Bank: these negotiations were upon an entirely different basis and suggested an entirely different transaction. xii. More specifically, Mr Edge was involved in meetings during May 2005 where an entirely different suggested transaction was being put to Bibby Finance. As these reasons make plain, at the end of March 2005, out of the blue Mr Erwin of Bibby Finance was approached by a finance broker called Mr Darwich, who worked for a company called Qualiya Group Pty Limited. He said to Mr Erwin that he had a client who wanted some debtor finance. After a discussion Mr Erwin, who was effectively in sales for debtor finance facilities [the same as a receivables finance facility], sent an email to Mr Darwich extolling the virtues of his company and they had a meeting on 31 March 2005. Mr Darwich said "I'm particularly interested in future debtor finance business with you. I've one potential customer called TDM Australia that operates from Sydney. It is an electrical wholesaler who is looking to use debtor funding to expand its business. The business is supplied with its goods from a manufacturer in China". xiii. These meetings between Mr Edge, Mohamad Saleh and Mr Erwin of Bibby Finance were held in the context that the loan was sought for the expansion of TDM's business. There was no suggestion of Mr Edge needing $7 million to complete a purchase of a business. This was all in the context of Mr Edge being the sole owner, Mohamad being the financial manager and financial controller of the business and it was for a completely different purported purpose. This was not about providing Mr Edge with funds to finish his purchase. Entirely different documentation was supplied to Mr Erwin than was later supplied to the Bank. The proposition put to him was that it was only working capital which was being sought in order to expand the business through franchises throughout Australia. xiv. Mr Edge's motivation to participate in the fraud was likely by reason of proceedings against him in the Federal Court which in late March 2005 were set down for a three-week hearing commencing on 19 September 2005. The proceedings involved an allegation against Mr Edge that he had been a party to the sale of the business whereby he had misrepresented and provided falsified customer records in relation to the customers of the business, it being alleged in those proceedings that fraudulent representations, had been made as to the value and worth of the company that had been purchased. Many millions of dollars in damages were being sought against Mr Edge in those proceedings which were ultimately settled for $900,000 through a payment by Mr Edge. Mr Edge's address 198 The addresses provided by Mr Edge are varied. He has provided the following addresses to the Bank and the Court: i. 2 Martins Ridge Road, Conjola; ii. Lot 2, 25 Martins Ridge Road, Conjola; iii. Lot 25 Martins Ridge Road, Conjola; and iv. 252 East Kurrajong Road, East Kurrajong. [see T 1406:36 to 1414:21; T 1416:37 to T 1421:13; T 1263:4 to 1263:19.] 199 Mr Edge provided the address Lot 2, Martins Ridge Road, Conjola, New South Wales to representatives of the Bank on 28 June 2005 (Mr Barry Watson's 2 August 2005 affidavit at [5]). 200 The affidavit of Ms Neufeld [a legal assistant employed by the Bank's solicitors] sworn on 10 August 2005 discloses that there is no such address. When Mr Johnstone gave evidence, he gave his address as 25 Martins Ridge Road. 201 The address Mr Edge gives on his tax returns and on the ASIC records of TDM is 252 East Kurrajong Road [see PX 470-476; annex 'B' p 9 to Mr Barry Watson's 2 August 2005 affidavit]. 202 The affidavit of Mr McAlpine makes clear that no address of 252 East Kurrajong Road exists. 203 The account provided by Mr Edge to explain the change in street numbers at East Kurrajong Road following road changes in the 1960s was specious. Even if it were true, the account cannot explain Mr Edge's persistent use of that address in the years following that change (see his driver's licences which are Exhibits D10B, D10C and Ex P61 which show the use of that fictitious address by Mr Edge well after 2000). 204 Ultimately the evidence given by Mr Rankin [the very witness called by Mr Edge on virtually no notice at the end of his case] only serves to explode the falsity of the evidence given by Mr Edge on the address matter. This is because whilst there was a tiny kernel of truth in the evidence given by Mr Edge [that there had been a change effected to the former address 252 East Kurrajong Road] the burden of the evidence given by Mr Edge had been that the change took place in 2000 and that it had not been effected until 2002. Further he gave evidence that 252 East Kurrajong Road became part of Bull Ridge Road [T1263:10]. In actual fact, a change was effected in 1989 whereby 252 East Kurrajong Road became 1444 East Kurrajong Road. That the change took place in 1989 becomes all-important. The evidence given by Mr Johnstone 205 Mr Peter Johnstone gave evidence in 2 affidavits. As to the first dated 17 August 2005: i. The affidavit begins by stating that the deponent craves leave to refer to the affidavit of Mr Edge sworn on 1 August 2005. ii. Mr Johnstone then deposes that he was present on 22 April 2005 at the offices of TDM, when he saw Mr Edge hand to Hassanien Saleh, a bag containing cash. He saw Hassanien Saleh count the money. After completing the counting of the money he deposes that Mohamad Saleh stated: "Good, it is $1.2 million as agreed". iii. This affidavit continues: "Hassanien Saleh then signed the document a copy of which appears as Annexure A to Mr Edge's Affidavit". He then deposes that Hassanien Saleh signed the original of that document in his presence and that his signature was then affixed at the foot of that document. iv. He then deposes that present at the time, were Mohamad Saleh, Mr Edge, Hassanien Saleh as well as himself. 206 The second affidavit made on 6 October 2006 deposes that Mr Johnstone had known Mr Edge for many years and that they are friends. He further deposes that in late 2004 Mr Edge told him of an electrical business that he was considering buying. He deposes that he later came to know the business to be TDM. He deposes that he offered Mr Edge some advice and bought some product from TDM. 207 He then deposes that in April 2005 Mr Edge asked him to accompany him as a witness to his handing over to Hassanien Saleh, the sum of the $1.2 million as the deposit for the purchase of the business. On his evidence in this affidavit he and Mr Edge went to TDM's premises where they met Hassanien Saleh and Mohamad Saleh. There was some discussion about the conditions of sale, the installation of new computers and extra pallet racking to be supplied by Hassanien Saleh on settlement. He also recalled some discussion about vehicles that came with the business and stock. On his evidence Mr Edge said to Hassanien Saleh that he had the deposit money and needed a receipt. His evidence was that prior to going to the premises, Mr Edge and he had counted the money which added up to $1.2 million. His evidence was that it was in a black bag that Mr Edge handed over to Hassanien Saleh. His evidence was that Mohamad Saleh then went to a computer and typed out a document which receipted the handover of the moneys and that he had read it. His evidence was that the document looked to be acceptable and that then Mr Edge and Hassanien Saleh signed the document and that he witnessed the document. He annexed a copy of the document to the second affidavit and gave evidence in that affidavit that a contract document was also signed by the parties. 208 There were a number of difficulties with his evidence and with his recollection. During the course of his giving evidence in chief in the witness box he was shown a number of documents to be found in Exhibit P68 behind tab 17, namely the contract for the sale of business, the document entitled Terms and Conditions for the Contract of Sale, the list of electrical componentry, and the warranties and conditions document. In each case his evidence was that he had witnessed the signing of the documents, wherever his signature appeared. 209 Under cross-examination it eventuated that prior to swearing his first affidavit he had had a conversation with Mr Edge's then solicitor over the telephone and had never seen Mr Edge's affidavit. In that circumstance it was clear that he had not seen the document referred to in paragraph 3 of his first affidavit as "Annexure A to Mr Edge's Affidavit". The circumstance does not suggest that he was careful in what he did. Under cross-examination his evidence was that he had spoken to the solicitor at length but had only been sent a collapsed version of what he had told the solicitor and had simply signed and returned it. 210 He had further difficulty in that there had been no mention in the second affidavit about any document being signed other than Annexure A to that affidavit. Under cross-examination his evidence was that he was certain that he signed the particular documents to which he was taken in chief, on 22 April 2005. When he was shown that there were two versions of the signature page of the Warranties and Conditions document [the first being annexure C to Mr Johnstone's first affidavit (paginated during the cross-examination for convenience as page 3 and being dated 31st May 2005) and the second being that found behind tab 17 in Exhibit P68 which is dated 22 April 2005] he became confused as to how it could possibly be that what he said was his signature appeared on both documents. He had no explanation for this. He accepted [transcript 1574] that they were not the same document. 211 There is no doubt but that Mr Johnstone's recollections are problematic. Evidence had been given by Mr Atkins of Henry Davis York of the detail of a telephone call he had received from Mr Johnstone in early October 2005. Mr Atkins had kept a file note of the conversation. Many parts of the conversation which were put to Mr Johnstone under cross-examination as having taken place received answers in terms that he could not recall the conversation. As the file note details [Annexure A to Mr Atkins' affidavit of 8 June 2007], Mr Johnstone had called to ask that no further documents in the Edge proceedings be sent to his address and told Mr Atkins that he had told Mr Edge quite clearly that he did not want anything sent to his address but that the documents kept turning up and that he was really sick of it. Mr Johnstone did not agree that he had been concerned about the fact that he was receiving court documents addressed to Mr Edge. He could not recall telling Mr Atkins that he had ever seen Mr Edge hand over any amount of cash which looked like $1.2 million or a bag containing cash. Yet Mr Atkins file note includes the following: I asked Mr Johnstone whether he saw Mr Edge hand over a bag of cash, or any cash, while he was at the factory and he said : "No. I never saw Edge hand over any cash." [I specifically then asked Mr Johnstone whether he saw Mr Edge hand over an amount of cash which looked like $1.2 million or a bag containing cash and he said: "No, certainly not. I don't even know where Bill would get that sort of money from. I can promise you I didn't ever see any cash change hands, certainly no bags of cash either"] 212 This circumstance mandates a holding that the evidence given by Mr Johnstone cannot be regarded as reliable. With the passage of time his recollections are so vague as not to be able to be relied upon. Clearly Mr Atkins' file note is reliable. Mr Johnstone is an elderly gentleman as it appeared to me. The manner in which his instructions for his affidavits had been taken does not fill the court with any special confidence as to the evidence given in the affidavits. Even if somehow the Court was able to accept as reliable, his evidence in relation to having seen the money counted and having been present when some signatures were appended to some documents, it is always possible that he was simply himself innocently duped by a carefully played out charade of some type. In all of the circumstances the evidence given by Mr Johnstone is simply so unreliable that it provides very little assistance to the Court in determining what actually happened. His friendship with Mr Edge appears to have been likely the reason why he was prepared to make affidavits in the above-described fashion. At the very least it is absolutely plain that if Mr Johnstone did attend his signature as a witness to the above described documents, they have since been tampered with. 213 Further Mr Johnstone gave extensive evidence of a very significant and unfortunate medical condition from which he had suffered at material times such that from time to time his memory would be severely affected. It is not necessary to speculate as to whether the problems with his evidence and his recollection essentially stemmed from these difficulties. It may even be that during the times when he was in this state he was susceptible to being manipulated into thinking that events had occurred which had not in fact occurred. The short position is that his evidence on the significant matters which he was called to prove, cannot be accepted as reliable. Mr Edge's attempt to conceal the receipt of the proceeds of the fraud Queensland properties 214 The evidence of Mr Oberbillig and documents produced by Quaid Real Estate Pty Ltd and Cameron Price Solicitors demonstrates that Mr Edge used the alias Barlow to acquire property in Queensland. When the matter was pleaded, Mr Edge denied on oath his use of the alias Barlow and that his former partner, Joy Wakefield, had used the name Joy and/or Joyce Barlow. Only when confronted with the irrefutable evidence (including photographic evidence) of Mr Oberbillig did Mr Edge concede his use of the alias – seeking to justify it on the basis of preserving the honour of Joy Wakefield/Barlow. Mr Edge's explanation for the use of the alias is rejected particularly in circumstances where the evidence (contrary to Mr Edge's account in the witness box) demonstrated that the alias was also used with Cameron Price Solicitors and Biady & Associates. New South Wales properties 215 $970,000 of the funds advanced to Mr Edge was paid to his solicitor, Biady & Associates, to apply that sum for property purchases. The properties sought to be purchased were located at Lots 1 and 2 Wisemans Ferry Road, Somersby. 216 Corporate vehicles were used to purchase the properties to further mask the involvement of Mr Edge. The companies used were Korili Pty Ltd and JB Enterprises International Pty Ltd. 217 Korili appears to be a re-incarnated shelf company. Both Korili and JB Enterprises have Joyce Barlow as sole director and shareholder. The registered office address of both companies is care of Biady & Associates. 218 The key parts of the conveyancing files and documents produced on subpoena by Biady & Associates included: i. Biady timesheet recording work for "Barlow" on the Lot 1, Somersby property ('Lot 1') but sending a text message to Mr Edge; ii. Biady record of text message to Mr Edge which came from the file for the purchase of Lot 1; iii. Biady record of file opening for services to be provided re purchase of Lot 1 (client name is Joyce Barlow but contact has the name "Bill" crossed out). The mobile telephone number for Mr Edge (0415 160 042) is recorded; iv. Biady record of file opening for services to be provided re purchase of Lot 2 (client name is Joyce Barlow but contact has the name "Bill" crossed out). The mobile telephone number for Mr Edge (0415 160 042) is recorded; v. The "client" for Lot 2, is recorded as "Barlow William John & Joyce Barlow"; vi. Biady timesheet re work for "Barlow William John & Joyce Barlow" in respect of Lot 1; vii. Biady tax invoice to JB Enterprises re work on the purchase of Lot 1. It is noteworthy that the tax invoice charges for "SMS message sent to you " (the "you" was clearly Mr Edge); viii. Biady trust account receipt for $970,000 – received by Mr Edge as funds for proposed purchase of property. 219 The address for JB Enterprises used for correspondence in relation to the purchase of Lot 1 was PO Box 247 Kurrajong, NSW 2758 [PX 1228-1229]. 220 Further, the affidavit of Mr Oberbillig attaches the contract for sale document which identifies the purchaser as Joy Barlow and gives the address as PO Box 247 Kurrajong 2758. Annexure "J" to Mr Oberbillig's affidavit is a letter to Joy Barlow at PO Box 247 Kurrajong dated 2 June 2005 enclosing a copy of the contract. 221 The disguising of the receipt of funds through conveyancing transactions in a false name and through corporate entities, makes clear that Mr Edge intended to conceal his participation in the fraud and his receipt of its ill gotten fruits. The evidence given by Mr Qureshi 222 As has occurred with the approach to Mr Edge's case, I have approached the question of the endeavour to ascertain whether or not Mr Qureshi was a knowing participant in the fraudulent conspiracy, endeavouring wherever possible to give him the benefit of the doubt and closely appreciative of the heavy burden of proof which requires to be discharged by the Bank. One parameter of the exercise which must be taken as a given is that on my own assessment, Mr Qureshi is a very intelligent and well-qualified person [indeed this is conceded by Mr Qureshi]. He had obtained a Masters of Commerce degree from the University of New South Wales and a Masters of Applied Finance from Macquarie University. Of course when there is absolutely no doubt but that the Bank has been the subject of a carefully planned fraud in which Mohamad and Hassanien Saleh appear to have been the principal wrongdoers, it must be recognised that even a person as intelligent as Mr Qureshi may also have been duped. It has to be said that he certainly has engaged in highly suspicious conduct since the event, and has not made the task of the Court any easier by so doing. But in essence the evidence mandates a finding of his knowing participation in the fraud. 223 Mr Qureshi gave evidence in affidavit form and was cross-examined. 224 Without being exhaustive the substance of his evidence in affidavit form was as follows: i. he is an accountant in public practice; ii. in late 2003 the directors of TDM requested his firm's assistance in the preparation of accounting and financial information for that company; iii. at all material times Mr Qureshi spoke to Hassanien Saleh and his associate/manager, Mohamad Saleh; iv. during the initial meeting, books and records of TDM were forwarded to Mr Qureshi for comment and perusal. These included the 2002 financial statements for TDM which had been prepared by its previous accountant; v. at the meeting and after an initial view of the documents, Mr Qureshi advised Hassanien Saleh and Mohamad Saleh of his company's schedule of fees and later visited TDM's warehouse, being impressed with the facilities, the volume of stock and the company's product catalogue; vi. his impression was that TDM was a business growing at an extraordinary pace. He was told that this was due to the fact that the company had contracts with Chinese manufacturers and exporters who were prepared to provide them stock very cheaply and at a quality which was acceptable under Australian standards; vii. during the period between February 2003 and June 2005 Mr Qureshi, as well as his staff, provided accounting, taxation and business services to TDM. On around 31 March 2004 he advised the directors of the company that as their records showed their business was growing at an extraordinary pace, they would require a service company for effective tax planning. Mohamad Saleh on behalf of the company asked him to provide an estimate of his annual fees for his services and asked him to become a director of the new company, to which he consented. Hence a company known as "The Whitemore Group Pty Ltd" was incorporated and he was appointed a director with an agreement as to fees for the management of that company. For a number of reasons, mostly related to the non-payment of his day-to-day accounts, he did not effect a tax plan as envisaged and his services were terminated on 7 June 2005; viii. as his accounts remained unpaid by May 2005 he advised both Mohamad and Hassanien Saleh of his concern and did so on 4 May 2005 requesting payment of his outstanding fees, which by then totalled $80,450; ix. on approximately 9 May 2005 the two brothers visited his office and Mohamad Saleh said that TDM was being sold and had received a very good offer and that he needed TDM's accounts brought up to date. Mr Qureshi responded by saying that he wanted an ironclad commitment that his fees and expenses, both past and present, would be paid. Later that same day he was advised by the company that he would be paid. He was satisfied that he would be paid and proceeded with TDM's work [Under cross-examination Mr Qureshi gave evidence that he had never been told until after 3 June 2005 that Mr Edge was the purchaser of TDM's business. He had learned this from either Mr Edge or Mohamad Saleh after 3 June, although he was not sure of the exact date.] x. he continued to prepare financial records and statements for the company based on the information which the brothers provided to him; xi. during May 2005 through until 3 June 2005, he prepared further financial records based on information provided to him. The information provided to him by the brothers included bank statements, receipts, debtors list, creditors, stock valuations and patent valuations. At the time, all of the records provided to him seemed to be authentic and he did not dispute them; xii. in his opinion at that time the company seemed to be successful and based on the stock levels which he had personally seen at the company's warehouse, he did not doubt the authenticity of the information provided to him; xiii. by 3 June 2005 he had completed the work for TDM; xiv. on 3 June 2005 he advised the directors of the company that before he released any documents to them, he wanted payment for his services, and that he wanted the payment in the form of cleared funds; xv. on 7 June 2005 he received a telephone call from Mohamad Saleh who said that he would deposit $125,000 into Mr Qureshi's account in cleared funds. Mr Qureshi responded by asking if the funds could be placed into his National Australia Bank cheque account. Mohamad Saleh said that he wanted to do it by electronic transfer which was easier and safer. He asked Mr Qureshi if he could provide an ANZ bank account to make it easy for a transfer of the funds. Mr Qureshi said that he could provide an ANZ personal account if that was okay. Mohamad Saleh said that this would be no problem; xvi. later on that same day Mr Qureshi went to his branch of the ANZ to find that the funds were there. When he returned to his office, the brothers were waiting for him. Mohamad Saleh said that they had sold the business and that he had been paid and that they wanted their records returned to them. Accordingly Mr Qureshi returned all documentation relating to TDM to the brothers; xvii. Mr Qureshi recalled feeling as if he had offended the brothers and that he had lost their ongoing business relationship; xviii. he had not had any time faxed, sent or had delivered, any documents to the Commonwealth Bank, Mr Petts or Mr Budai. He did not agree to fax three months of bank statements to the Bank and did not do so: cf Exhibit OB6 p48 to the affidavit of Mr Budai of 3 August 2005; xix. he drew attention to the encoding at the top of the bank statements where the words "Mascot Taxation N Acc" appears. His only encoding on all documents faxed from his office [on his evidence] showed "Mascot Taxation" or "Mascot Taxation & Accounting Services". His evidence was that the encoding shown on the sheets was not his and was not produced by his facsimile machine. He made the point that the receiving phone facsimile number shown at the top of the bank statements was that for TDM and not for the Bank; xx. he observed that neither Mr Budai's or the Bank's fax number (02) 9891 9183 appeared at all on any of the faxed records for Qureshi & Associates Pty Ltd. Further upon closer examination of Exhibit OB1 to the affidavit of Mr Budai, Mr Qureshi observed that the TDM financial reports had a fax number and company name encoded on the top of each page of the report reading "13-May 2005 11 AM GE Commercial Finance". His evidence was that this encoding represented the time and place the documents were forwarded to Mr Budai and that as such, Mr Qureshi had not faxed those documents from his office to Mr Budai at all; xxi. his evidence was that this was the case with all of the documents prepared by him for the directors of TDM. His evidence was that it had been his practice to address and forward all documentation relating to TDM and its operations directly to the directors of the company for their perusal and comment only, and not for the use or reliance of third parties. He had always attached a disclaimer to any financial reports which he forwarded to clients. That disclaimer had warned third parties that should they, without his express authority or knowledge, wish to rely on his documents, then they would be doing that at their own risk. He observed that much of what was produced in documents was in draft form and unaudited and that the disclaimer applied equally so in such cases. He observed that his typical disclaimer was attached to the accounts of TDM; xxii. Mr Qureshi denied that there was anything unusual in the fact that his office would be closed from 1:15 p.m. to 2:30 p.m. each Friday. That was his regular practice and on 24 June 2005 he had been in the city at a business meeting; xxiii. his evidence was that Qureshi & Associates had only received $125,000 for its services and that there was a small amount which remained outstanding. He knew this to be so as it was his own duty to maintain and deposit all bankings; xxiv. with reference to an email sent at 8.07am on 3 June 2005 by Mr Budai to Mr Placek and copied to Mr Saia [in which Mr Budai had observed that during his discussions with the clients and the accountant on the previous evening, he thought that they had worked out what the discrepancy was in the accounts], Mr Qureshi gave evidence that he had not met nor spoken to Mr Budai or the directors of TDM on the night of 2 June 2005 and he denied that he had worked out the reason for any discrepancy in any accounts on that day or evening; xxv. his evidence was that during the course of his involvement as the accountant for TDM he had not spoken to Mr Petts, Mr Budai or any other bank officer in relation to the affairs of that company; xxvi. with reference to the schedules shown in Exhibit OB16 to the affidavit of Mr Budai [being the materials which Mr Budai had received in a facsimile from Mohamad Saleh dated 19 May 2005], the evidence given by Mr Qureshi was that he did not prepare those schedules. He made the point that the document bore the letterhead of TDM and was signed by "Mo"; xxvii. with reference to the evidence given by Mr Budai that on about 20 May 2005 he received a facsimile from Mascot Taxation and Accounting Services addressed to TDM providing further information with regard to the finances of TDM, Mr Qureshi gave evidence that he had not faxed any letter to the Bank regarding the debtors of TDM. His evidence was that from the business records at his disposal, the facsimile number on the letterhead for the Bank did not appear on those records; xxviii. with reference to the evidence given by Mr Budai of the lengthy telephone conversation he had with Mr Edge on 23 May 2005 [in the course of which Mr Edge had told him that all bank statements were held by the external accountant], Mr Qureshi denied that he had retained TDM's bank statements in his office. His evidence was that all records had been handed to the two brothers on 7 June 2005, being the day that his appointment was terminated. His evidence was that the bank statements referred to in the conversation between Mr Edge and Mr Budai were returned to the directors of TDM when they collected their accounts in early May 2005; xxix. the circumstances in which Mr Budai received a facsimile from TDM on 25 May 2005 which attached TDM's purported bank statements for February, March and April 2005 have already been referred to in these reasons; xxx. his evidence was that at no time did he receive any request from the Bank, Mr Budai or Mr Petts requesting any information in support of TDM's loan application; xxxi. Mr Budai's evidence that on or about 1 June 2005 he had received a full 12 months of TDM's bank statements [for the period May 2004 to May 2005] by facsimile from TDM has been earlier referred to in these reasons. Mr Qureshi gave evidence that the encoding at the top of those bank statements comprised the words "Mascot Taxation N Acc" which was not the encoding on all documents faxed from his own office, that the encoding shown on this sheet was not his own and was not produced by his facsimile machine. This issue of suggested inconsistencies in relation to the encoding on the fax headers did not receive any airing during the course of the hearing, and whilst untested, is not able to be the subject of any particular finding. Mr Qureshi's further evidence in relation to the bank statements was that on closer examination, the receiving telephone facsimile number shown at the top of the bank statements was that for TDM and not for the Bank. In other words he observed that those documents at first instance were sent to TDM; xxxii. where Mr Budai had said in an email addressed to Mr Placek that he had held discussions with the clients and the accountant on the evening of 2 June 2005, Mr Budai corrected himself during his cross-examination by clarifying that he did not speak directly with Mr Qureshi that evening [as referred to earlier in these reasons]; xxxiii. Mr Qureshi denied that he had ever maintained the general ledger for TDM, his firm having only been appointed to prepare the 2004 and interim 2005 accounts for TDM from information supplied to it by the directors of TDM. At no time had he prepared a trading analysis for TDM; xxxiv. insofar as his firm's letter of 3 June 2005 [PX 1349-1350] was concerned, it only referred to the mathematical accuracy of TDM's debtors' ledger and he observed that the letter was addressed to the directors of TDM and not to the Bank or to any officer of it; xxxv. At no time prior to settlement had any member of the Bank actually contacted any of TDM's debtors to confirm their indebtedness to it, in respect of which that this was unheard of in his accounting experience; xxxvi. At no time up to settlement of the loan on 3 June 2005 had any member of the Bank contacted him to confirm what the Bank had apparently been informed by the two brothers, was the explanation for the discrepancy in the figures for July and October 2004 [cf Mr Placek's affidavit of 14 June 2006 at [40]]; xxxvii. Mr Qureshi also took issue with a number of the statements made by Bank officers. Without being exhaustive these included: (a) the suggestion that he had a prepared or maintained the general ledger for TDM; (b) disputing the accuracy of the handwritten notes attached to the field report of 30 May 2005 [referred to by Mr Cook in his affidavit of 9 June 2006 at paragraph 7]. Mr Qureshi was not on holiday in Queensland and did not prepare quarterly accounts for TDM or the trading analysis for the company. At no stage had Mr Cook or Mr Placek called him to discuss any discrepancy and had that happened he would have recommended that an independent audit be undertaken. The evidence of Mr Wills 225 The evidence of Mr Wills [a forensic computer expert called by the Bank] requires to be carefully treated with as a backdrop to the determination of the reliability of Mr Qureshi's evidence. Mr Wills recovered from the deep memory of Mr Qureshi's computer which he examined, the documents which he annexed to his 4 affidavits in the proceedings. The computer which Mr Wills examined was a server with an NT operating system. The metadata recovered gave information on when files were created, modified and last accessed. If a document was deleted then its last accessed date [indicated by the metadata] was the date that it was deleted. No evidence challenging Mr Wills' methodology was called on behalf of Mr Qureshi. 226 The following is to be said in relation to the evidence given by Mr Wills: i. None of the documents recovered from the computer included any of the documents which Mr Qureshi is known to have created in 2005 relating to the TDM matter. ii. There were no financial statements and letters to TDM (which were sent to the Bank in hard copy). There was no soft copy of his invoices relied upon to justify the $125,000 payment which he received. There was no soft copy of his timesheet. iii. At page 24 of Mr Wills' 13 July 2007 affidavit he sets out an historical view of the documents created, modified and last accessed on the computer which was made available for examination. The graph shows virtually no documents created after 2004. Further, a large number of documents were last accessed in 2004. In Mr Wills' 30 July 2007 affidavit at [7], he explains that a large number of files, 9255 files, were deleted between 14 and 21 October 2004. iv. By reference to the meta data the documents deleted between 14 and 21 October 2004 included documents at: a) pages 28, 46, 48- 49, 51 – 69, 71 -89, 91, 93 and 95 of Mr Wills' 13 July 2007 affidavit; b) pages 11, 13, 15, 17 – 26, 28 – 30, 48 and 53 of Mr Wills' 26 July 2007 affidavit; and c) all of the documents annexed to Mr Wills' 30 July 2007 affidavit. v. Many of the documents were created in the "Zia" Users folder which Mr Qureshi identified to be his own. These include: a) pages 28, 46, 48 -49, 51 -69, 71 – 89, 91, 93, 95, of Mr Wills' 13 July 2007 affidavit; b) pages 11, 13, 15, 17 – 26, 28 -30, 48, 50 -51 ad 53 of Mr Wills' 26 July 2007 affidavit. 227 In assessing the reliability of the evidence given by Mr Qureshi [and in determining whether or not he knowingly participated in the fraud practised upon the Bank] the following matters are also taken into account: i. His curious behaviour which occurred in relation to the $125,000 which he received by inter-bank transfer by arrangement with Mohamad Saleh soon after the 3 May 2005 settlement: [notwithstanding that his practice already had accounts with the National Australia Bank and that he already had one personal account with the ANZ bank, he determined to open a further personal account with the ANZ bank – his explanation was that he was having marital difficulties at the time, by which he is presumably indicating that he wished to keep secret these funds from his wife]. [Likewise his evidence as to what he did with the moneys in the following weeks repays close attention: if the moneys were provided to him as legitimate professional fees, then of course he was perfectly entitled to do whatever he wished with the moneys. However they were certainly not paid into his office account and were utilised for the purpose of taking his family on a Hajj and for other purposes closely detailed in the reasons which follow.] ii. His having informed Mr Ayres of the receiver's office in a conversation in late June 2005 that TDM owed him money [it being the case that only a small amount may have still been owed to him following his receipt just a few weeks earlier from TDM of $125,000]. [I note that the finding is that his evidence is not accepted where he contended that there were moneys still owing to him for work which he had done in relation to consulting with the Whitemore Group.] He conceded that he never presented any accounts, time sheets or other records to suggest that he was owed any other money. Very importantly he did not inform Mr Ayres that he had received the $125,000 just a few weeks earlier; iii. The fact that: a) by letter dated 24 June 2005 from the receiver and manager, Mr Qureshi's firm had been formally notified of the receivership, notified that the receiver understood that the books and records of TDM were still in his office and notified that pursuant to s 431 of the Corporations Act , the firm was requested to provide Mr Ayres with the books and records of the company held by it for his inspection and that Mr Ayres would remove those records; b) on no occasion did Mr Qureshi ever voluntarily produce any soft copy TDM documents from his computer from 27 June 2005 until ordered by the Court to do so. [Indeed the whole sorry story in relation to Mr Qureshi failing to answer a Notice to Produce, unsuccessfully appealing from the Court orders to permit his computer to be imaged by an expert retained by the Bank, and only during the final hearing stating that a laptop had been lost overseas, may be thought to provide a reason for the very highest suspicion as to Mr Qureshi having been effectively in 'cover-up' mode.] [Mr Qureshi's contention that he was generally flustered at the time he was first approached by the receivers may be accepted, but cannot possibly explain why it is that years and years went by without his having produced the soft copy TDM documents from his computer which were ultimately only forced out of him by Court order.] iv. his explanation, which is rejected as unreliable, that particular documents were to his belief, produced by Mohamad Saleh, who had access to his office in order to run his own accountancy consultancy; v. the problems with his credit: as for example his having given evidence under cross-examination that after February 2003 when he first met Mr Faowzi Saleh he had perhaps seen him again on one or two occasions and had never met Khadige Saleh [the mother of Mohamad and Hassanien Saleh]: it then eventuating that in about May of 2004, Mr Qureshi had signed an identification record for a signatory to an account being a document [that would be used for the purposes of the Financial Transactions Reports Act ] certifying that he had known Faowzi Saleh as well as Mrs Khadige Saleh for four years; vi. indeed the whole of his close relationship with respect to some members of the Saleh family [in particular with Mohamad Saleh] needs to be taken into account. He had simply told Mr Ayres [on being asked whether he had a relationship with Mohamad or Hassanien] that he was their accountant, failing to add that he had allowed Mohamad to 'camp out' in his office for free between mid 2003 and May 2005 or that he had lodged Mohamad's friends' tax returns for free. 228 In relation to the close cross-examination of Mr Qureshi concerning his ANZ 'Access Advantage Cheque Statement' into which the sum of $125,000 was deposited by him on 7 June 2005, the following matters require to be noted: i. on the occasion when Mr Ayres spoke by telephone to Mr Qureshi on the afternoon of 27 June 2005 informing him of the appointment of the receiver and that he was from the receiver's office he asked a number of questions of Mr Qureshi including: "How long have you had a relationship with [TDM]". The response given by Mr Qureshi was: "About two years. TDM owes me money. I am not sure of the amount until I look into my records"; ii. he said nothing about having received the payment of $125,000 just a few weeks prior to that occasion as payment of his outstanding fees for a number of years; iii. in fact [during his voir dire cross-examination on the Notice to Produce documents] he gave evidence concerning the entries on the above-described ANZ statement recording his withdrawals of cash out of the monies which had been received. Initially the evidence was as follows: a) the withdrawal of $55,168 on 10 June 2005 was to the best of his recollection made in cash; b) half of the $55,168 was spent on personal expenses although he could not be certain about that matter; c) the money used for personal expenses were spent on an overseas trip at the end of December 2005 with his family and for household expenses; [The overseas trip would have cost between $30,000 and $35,000. It was a trip he went on with his wife and four children. He booked accommodation for when he went to the Hajj.] d) he gave most of the $55,168 which he withdrew on 10 June 2005 to his wife, on the same day or the day after; e) he gave $15,000 to Chartec Accounting and Consulting Services in payment for services to his firm; f) he paid $5,000 to Media Press Computer Suppliers, a company which had been retained by Qureshi and Associates; g) during the period of time that he had the cash, he kept it with him. He kept it at home or kept it in the office. If he kept it in the office, it could have been kept in his top drawer "or wherever was convenient" to him. In respect of the money kept at home, he said that he "would have given it to [his] wife to hold on to it". He gave it to his wife because they were planning to go overseas at the end of the year and that he had given her cash before, but not in a magnitude of $30,000-$40,000; h) he paid a cash amount of $15,000 to Mr Saeed [a personal friend] who had lent him money. There was no loan agreement or anything in writing in respect of that loan but the agreement had been a handshake agreement. iii. on the following day Mr Qureshi sought to correct some of the above [following conversations which he had had overnight with his wife and a friend of his]. This further evidence was as follows: a) he gave $35,000 to his wife on 10 June 2005; b) prior to going overseas in December 2005, his wife bought approximately $6,000 worth of clothes, presents for friends, shoes and luggage; c) the tickets for two adults, two adult children and two children cost approximately $17,000; d) his four children stayed in accommodation with people in Dubai and the accommodation cost for four children for forty days was approximately $9,000; e) out of pocket expenses for the Hajj for Mr Qureshi and his wife were approximately $8,000; f) the $55,000 amount was definitely withdrawn in cash; g) to the best of Mr Qureshi's recollection, the invoice in relation to Mr Saeed "could be with the liquidator"; h) the balance of the cash was kept in the bottom drawer in Mr Qureshi's office, not the top draw. Mr Qureshi misleads Justice White 229 During the hearing before Justice White in late June and early July 2005 the position was that approximately $80,000 of the $125,000 paid into Mr Qureshi's ANZ account had been disbursed from that account. One of the issues that had been raised with Justice White was that the Bank contended that as this amount had been dissipated, there was a risk that the balance of the funds would be also dissipated. The transcript of the hearing on 30 June 2005 discloses the following exchange between Justice White and Mr Qureshi, on an occasion when Mr Qureshi, representing himself, was speaking from the bar table: His Honour: I have one other question, part of one of the grounds on which the bank seeks this order is, it says there is a risk that if the order is not made the money will be dispersed so as to frustrate a judgment which it says it will be entitled to in due course. In that respect it says there has already been about $80,000 of $125,000 withdrawn from the account. When we look at the documents you produced in response to the notice to produce there is no trace of the money, therefore I am invited to infer if you are free to deal with the balance it will disappear into the ether. What do you say about that? Mr Qureshi: I used the funds for the running of my business. I put down in paragraph 27 in my affidavit (read)… I did work for TDM, I got paid, and that is basically it." [The paragraph referred to in his affidavit comprised one sentence only which read: "The freezing of my account has caused me and my practice considerable embarrassment and financial inconvenience".] 230 There is absolutely no doubt but that seen in the light of his own evidence given in the present hearing, this evidence at the very least, constituted a disingenuous answer given to Justice White. Very arguably it was simply false. Under cross-examination Mr Qureshi had no acceptable answer to this inescapable conclusion. Ultimately in final address he sought refuge in the proposition that the funds which had been received were used to pay existing business expenses it which included his own wages/directors fees. The matter was one of particular significance before Justice White. The answer was not that Mr Qureshi had had the moneys in a drawer of his desk and intended expending it in various ways including the trip to the Hajj. To say the least the whole episode casts a heavy pall on his credit. To my mind the episode is only one of the many indicators that Mr Qureshi's evidence cannot be regarded as reliable unless confirmed by contemporaneous written materials or by the evidence given by other witnesses who are in turn accepted as reliable. 231 There were many anomalies in the evidence given by Mr Qureshi concerning the manner in which computers were used and concerning documents which, on his evidence, were not his documents, as well as signatures on documents which, on his evidence, were not his signatures. In truth his evidence that an outside person, probably Mohamad Saleh, had created these documents within his office without his knowledge, when examined in the light of some of the objective materials, must simply be rejected. I give only one or two examples: Financial statements for 1 July 2003 up to 30 June 2004 i. Financial Statements for TDM for the period 1 July 2003 up to 30 June 2004 are to be found at PX 496-509. PX 509 appears to be a disclaimer on the letterhead of Mascot Taxation signed by Mr Qureshi. His evidence was that these were not his documents and that this was not his signature. It was put to Mr Qureshi that the accounts in question were given to Alexandria Real Estate in respect of the proposed sale of the business of TDM in or about mid November 2004. His evidence was that although a sale of the business had been mentioned to him on and off from time to time, he had no reason at the time to suspect that the two brothers wanted to sell the business. He was then shown: a) a file note [PX 596] of the meeting between Mohamad Saleh, Hassanien Saleh and their solicitor on 16 November 2004 [the file note being taken by the solicitor on 16 November 2004] in the course of which meeting the note records a reference being made to the accountant as 'Mascot Accounting and Taxation Services', reference being made to the name 'Zia' and Mr Qureshi's firm's telephone number and his own mobile number appearing in the note. The inference is of course that the brothers had told their solicitor that in respect of the proposed sale in November 2004, Mr Qureshi was their accountant and could be contacted in respect of information about TDM; and b) his own time sheet [for 11 November 2004] which refers to a telephone call in respect of capital gains tax on sale of the business. ii. the above evidence justifies the finding which is made rejecting his evidence that the above described Financial Statements for TDM for the period 1 July 2003 up to 30 June 2004 were not his documents and rejecting his claim that the disclaimer had not been signed by him. Financial statements for the year ended 30 June 2003 iii. PX 43-56 comprise a set of financial statements for TDM for the year ended 30 June 2003. The last page of this bundle appears to be a further disclaimer by Mascot Taxation which again appears to be signed by Mr Qureshi. Here again he gave evidence that this was not his signature. He denied that he had created the document to go with the above-described set of accounts. This denial flies in the face of the fact that [save for the signature], exactly the same document as the disclaimer was recovered from the hard drive of the server at the Mascot Taxation premises by Mr Wills. It was put to Mr Qureshi that it would be a terrible set of circumstances if someone not only forged his signature, but had 'snuck in' to his office and created the document on his computer. His answer was that the subject document was not his document "and that's the only explanation I have for it": T 1129:45. iv. The above evidence justifies the finding which is made rejecting his evidence that the above described Financial Statements for TDM for the year ended 30 June 2003 were not his documents and that the disclaimer had not been signed by him. Exclusion from the Institute of Chartered Accountants – the fabricated correspondence purporting to have passed between Mr Qureshi and TDM in respect of fees for accounting services v. Mr Qureshi gave evidence that in his 30 and 31 July affidavits he had taken great care to identify from the documents annexed to Mr Wills' affidavits [in short the materials which had been located from the deep memory], which materials were not Mr Qureshi's documents and had not been created by him, so that the other documents were indeed his documents [T 1155-1156]. He also agreed that at any particular point in time he only ever used one letterhead. He was shown page 91 of the annexures to the 13 July 2007 affidavit of Mr Wills [being a document which he accepted was his own document] which was a disclaimer on Mascot Taxation letterhead and he agreed that this was the letterhead that had been in use at that time which was back in July 2003. The document included the logo of the Institute of Chartered Accountants. In similar fashion he agreed that the letterhead appearing on page 93 of the same set of documents had been used in his practice in October of 2003, as had the letterhead appearing at page 95. vi. It then eventuated that in April 2005 a complaint had been made against Mascot Taxation by the Investigations Officer of the Institute of Chartered Accountants to the effect that the firm had continued to use the logo notwithstanding that Mr Qureshi had been excluded from membership of the Institute in late October 2001. An anonymous complaint appears to have been received by the Institute under cover of a facsimile of 7 April 2005 enclosing the non-compliant letterhead. Mr Qureshi accepted that this was probably the letterhead which he had been using some time shortly before 7 April 2005, but said that it had been an oversight on his part that he had not taken the logo off his stationery having been given notice to do so some years before. There were a number of other documents referred to in the Investigations Officer's letter of 12 April 2005 [Exhibit P38] by way of materials still being used, making reference to the fact that the firm were still chartered accountants, including an extract from the website, an extract from the Sydney Yellow Pages and an extract from the White Pages. Also admitted into evidence was a further letter from the Investigating Officer at the Institute dated 2 June 2005 [Exhibit P38], referring to their earlier letter, advising that it was evident that there had been no changes to the website and threatening to refer the matter to the Australian Competition and Consumer Commission. It was put to Mr Qureshi that after that letter he had removed the Institute's logo from the letterhead and his evidence was firstly "as per the requirements, yes" and was then, "I think I may have taken the logo off my letterhead well before that time". vii. Mr Qureshi was then taken to pages 91, 93 and 95 of the materials which had been annexed to the 13 July 2007 affidavit of Mr Wills, [the letters spanning the period between July 2003 until October 2004], it being put to him that in each case these letters still used the Institute logo. Indeed as Mr Qureshi had acknowledged, annexure A to his own principal affidavit, included a number of items of correspondence [dated between November 2003 and June 2005] passing between Mascot Taxation and TDM, purporting to set out fees for professional services rendered and letters in that regard and amounts which were said to still be outstanding as at June 2005. In each of these cases the letters had not included the Institute's logo. It was then put to Mr Qureshi that the reason that there were no logos on those letters was because they had all been created, not upon the dates which they bore, but for the purposes of his giving false evidence in these proceedings after he had changed his letterhead in June 2005. It was put to him that if this correspondence had been created at the dates which the letters appeared to bear, they should have had the Institute's logo upon them which had been used on his correspondence at that time. His evidence was: "The logo should be on there" [T 1163]. Notwithstanding his attempt to justify this position by reference to the suggestion that sometimes one took the logo from another file and copied it on to the letterhead, the clear finding mandated by this evidence is that the above described correspondence was fabricated for the purposes of these proceedings. viii. Yet another extraordinary circumstance seems to be presented by Mr Qureshi's contention that a memorandum of fees for professional services rendered by Mascot Taxation which is dated 9 July 2004 and addressed to TDM was not a genuine document which he created on that day but was likely created by Mohamad Saleh [the document is found on page 28 of the annexures to Mr Wills' 13 July 2007 affidavit]. The effect of Mr Qureshi's evidence is that Mohamad Saleh had created a liability of TDM to Mascot Taxation in the sum of $7,000. A motive for suggesting that the memorandum of fees had been fabricated is to be found in the circumstance that had it been a genuine document, it would contradict Mr Qureshi's contention as to the quantum of professional fees which he was charging to TDM. The content of the document said not to have been genuine is quite simply inconsistent with the accounts which Mr Qureshi had annexed to his own affidavit. On the balance of probabilities it is appropriate to reject as unreliable, Mr Qureshi's contention that the memorandum of fees for professional services rendered by Mascot Taxation which is dated 9 July 2004 and addressed to TDM was fabricated by Mohamad Saleh. The finding as to Mr Qureshi's memoranda of fees 232 The finding is that Mr Qureshi's memoranda of fees between August 2003 and June 2005 with regard to accounting fees of just over $125,000 were fabricated in May or June 2005 for the purposes of disguising his true involvement in the fraud. In this regard the following matters require to be taken into account: i. Mr Qureshi admitted that TDM operated on an accruals basis such that expenses had to be disclosed in the accounts in the period in which the expenses were incurred (T 1141:16 to 1141:24). ii. similarly, Mr Qureshi gave evidence that his own practice operated on an accruals basis (T 1199:36 to 1199:48). iii. despite that evidence, neither the accounts of TDM prepared by Mr Qureshi nor Mr Qureshi's own practice accounts disclosed accounting fees in the amounts claimed to have been billed by Mr Qureshi (compare Mr Qureshi's memoranda of fees at Annexure "A" to his 1 August 2006 affidavit with the accounts he says he prepared for TDM covering that period). iv. the several indicators of the illegitimacy of the memoranda of fees which he has propounded include the following matters: a) the failure of the memoranda of fees to comply with the requirements for a tax invoice: see s 29.70 of A New Tax System (Goods and Services Tax) Act 1999. The balance of probabilities strongly favours the proposition that an intelligent accountant would be aware of such basic requirements under the GST legislation; b) reference is made elsewhere in this judgement to the payment of the $125,000 into a new private bank account opened only weeks before the receipt of the payment. It is at the least very curious that the payment would not have been received by Mr Qureshi's firm; c) reference is made elsewhere in this judgment to the manner in which the $125,000 was dispersed and to the problems with the explanation given to Justice White; d) the assertion by Mr Qureshi in his affidavit that he had not received any moneys in respect of accounting services provided between the period 1 August 2003 and 7 June 2005 and that $125,000 was owing was in contradistinction to the above-described memorandum of fees found on his computer which was dated 9 July 2004, cited services totalling $7,000 but, significantly, recording a payment of $3,500 (see Mr Wills' 13 July 2005 affidavit at page 28); e) Mr Qureshi admits that he prepared the cash flow documents relating to TDM [T 1152:1-14]; f) those cash flows show accounting fees of only $650 per year from June 2005 up to May 2006 and there is no reference to an annual retainer fee of $25,000. g) the TDM Accounts for the financial year ended 30 June 2004 disclosed accounting fees of $14,650 for 2004 and $12,320 for 2003 (Exhibit OB2 at page 18); h) finally in relation to the evidence given by Mr Qureshi that his practice operated on an accruals basis, it is to be observed that Qureshi & Associates' own Business Activity Statements (tab 4 pp2-40 of Exhibit P64) disclose minimal accounting fees during the period during which Mr Qureshi claims to have provided services to TDM and issued memoranda of fees nothing like the amounts the subject of those claims. 233 There were a number of plain inconsistencies thrown up by the evidence as between the timesheets sought to be relied upon by Mr Qureshi and the observable facts. To take but a few of those as examples: i. the evidence was that on or about 11 April 2005 Mr Petts received a bundle of documents by courier which included annual financial statements for TDM to 30 June 2004, financial statements for the nine months ending 31 March 2005, aged payables as at 31 March 2005, aged receivables as at 31 March 2005 and a TDM credit application; ii. Mr Qureshi's time sheets however suggest that on 12 May 2005 he is still preparing 2004 final accounts; iii. these documents were sent by facsimile by Mr Petts to the Bank on 30 May 2005 and yet as late as 31 May 2005, Mr Qureshi's time sheet records that he is still preparing the interim 2005 accounts. 234 The evidence in relation to the Whitemore Group showed that Mr Qureshi was a founding director of the company which was registered in late March 2004. Mohamad Saleh was also a founding director of the company as at late March 2004. They were the only ever two directors of that company. Mr Qureshi was a 50 per cent shareholder owning one of the two ordinary shares in the company and Mohamad Saleh held the other 50 per cent shareholding in the form of the second ordinary share. Documents which were extracted by Mr Wills from the deep memory of Mr Qureshi's computer showed [and Mr Qureshi accepted [T 1178:45]] that the Whitemore Group was a proposal to amalgamate a number of businesses under the umbrella of the company 'the Whitemore Group Pty Ltd'. One of those companies was proposed to have been TDM. Another was proposed to be Mascot Taxation and Accounting Services. The proposal was also that other companies, namely Chullora Meats and Marrickville Bus Lines, a YMCA camp and a travel agency called Telfords Tours were all to be rolled into the group. All of this evidence clearly discloses that Mr Qureshi was part and parcel of a proposal for business activities to be rolled into the Whitemore Group, even if it be that those proposals never ultimately achieved fruition. Importantly also Mr Qureshi is shown to have been careful to deny any responsibility for documents retrieved from his own computer which related to the Whitemore Group. 235 There is a particular significance in the contraposition between: i. on the one hand, the document which Mr Wills extracted from the deep memory of Mr Qureshi's computer [in the form of the document at page 48 of the annexures to Mr Wills' affidavit of 13 July 2007] which records sales for TDM for the 2003 financial year at $2,695,000 and on the other hand, the document being the financial statements for TDM for the year ended 30 June 2003 [which Mr Qureshi prepared and which became Exhibit P41] and which records sales for that income year of $22,964,117; ii. the very same contraposition is apparent in relation to the 2004 year where the sales at page 48 of the annexures to Mr Wills statement recorded at $2,960,631 as compared to the financial statements for 2004; iii. the same circumstance may be seen in the contraposition between the sales at page 48 of the annexures to Mr Wills statement for the 2005 income year recorded at $4,141,893 as compared to the financial statements for 2005; iv. importantly the evidence of Mr Wills showed as the 'meta data' for the document appearing at pages 48 and 49 of the annexures, that the user shown on the computer system as having created the document was "Zia", which is of course a reference to Mr Qureshi. 236 The finding is that the documents extracted from the deep memory of Mr Qureshi's computer were his documents, the Court rejecting in its entirety the proposition which he put forward to the effect that Mohamad Saleh had fabricated these documents using his computer and without his knowledge or consent. The finding is that the documents were created by Mr Qureshi as indicated on the user folders. Examination of bank statements 237 The evidence established beyond a shadow of a doubt that Mr Qureshi's business account was chronically in debit from approximately December 2003 up to approximately August 2005, the bank statements disclosing a great many reversals of cheques and dishonour fees. 238 The Business Cheque Account bank statements showed a deposit into the account made on 16 May 2005 in the sum of $60,000. Mr Qureshi acknowledged that those funds came directly or indirectly from Mr Edge. It was put to him that the payment was in respect of his preparing false documents in relation to TDM but he disagreed. 239 Also before the court was the Business Provisions Account covering the period from December 2003 until August 2005 [explained by Mr Qureshi as a kind of trust account used when clients wanted him to deduct their fees from the refund: he would receive payments on behalf of clients and would deduct his fees and then disperse the balance]. In general terms the account did not deal in large sums of money. In one instance however this account shows a deposit into it of $237,560 made on 13 May 2005. Mr Qureshi was unable to recall where this money had come from. His answer was that it could have been an amalgamation of cheques [T 1197]. He could not tell until he saw the deposit book. The deposit book however had never been produced to the liquidator. It was put to Mr Qureshi that it was curious in the extreme, that he could not recall, at the very time when the fraud was starting to be perpetrated on the Bank, having received the amount of $237,560. 240 Additional matters which require to be taken into account in relation to the ultimate decision concerning Mr Qureshi's part played include the following: i. An examination of the level of contact between those alleged to have been the fraudulent conspirators during May and June 2005 and continuing, to a lesser degree, into July 2005 discloses telephone records exhibiting a level of telephone contact that cannot be innocently explained. With regard to the several phone calls Mr Qureshi made to Mr Edge in May, June and July 2005, Mr Qureshi stated that [according to the phone records produced by the plaintiff Ex P33] approximately three quarters of the calls went to Mr Edge's message bank. However, as the plaintiff submits, the evidence of the phone records which identify which calls go through to a message bank and which are actually picked up by the receiver [read with the aid of the table starting at p1 of Exhibit P70 which identifies those calls which went through to a message bank], shows that there were a number of calls [of varying duration] made which were inconsistent with Mr Qureshi's submission. Of note, there were several lengthy phone calls of approximately 3-5 minutes duration between 8 June 2005 and the remainder of that month. Mr Qureshi in final address maintained that one of these lengthy phone calls made to Mr Edge on 8 June 2005 was for the purpose of congratulating him on the purchase of TDM and to offer his accounting services for TDM [MFI D3]. With respect to the calls made by Mr Qureshi to Mohamad Saleh, Mr Qureshi stated [with reference to the phone records] that the vast majority of those calls went to Mohamad Saleh's message bank, with only one or two phone calls getting through to Mohamad Saleh in person. Leaving aside the calls that were not answered [but went to a message bank] the phone records reveal several lengthy calls made by Mr Qureshi and Mohamad Saleh on 8 and 9 June 2005. The plaintiff submitted that the frequency and length of the phone calls during this time was inconsistent with Mr Qureshi's evidence that on or about 7 June 2005 he felt that he had offended the Salehs, received payment for his services and that the Salehs had collected all their TDM records from Mr Qureshi. Further, the plaintiff submitted that it was plainly inconsistent with the account provided on oath by Mr Qureshi that he spoke to Mr Edge on only two or three occasions in May and June 2005 [T 1044:49 to 1045:1] or that he had no contact with the Salehs after 7 June 2005 [T 1036:17 to 1036:20]. Mr Qureshi in final address maintained that the volume of phone activity to Mohamad Saleh after the Salehs were said to have picked up their records for TDM, were for the purpose of maintaining or improving his relationship with a client he was unhappy to lose. This explanation is rejected. The timing and frequency of calls between these individuals is consistent with a collaborative effort by those persons to mislead and deceive the Bank. [Indeed and even though this, by itself, could not affect the conclusion with respect to Mr Qureshi, if one may return to the evidence given by Mr Edge, it may be seen that he was so evasive in his evidence as to the frequency of communications that he was prepared to "pluck" a number out of thin air after giving a overly broad estimate of 7 to 35 communications (T 1404:39 to 1404:54).] ii. To return to the topic already referred to concerning some of the chronology relating to what occurred in relation to Mr Qureshi's approach to and evidence with respect to computer records the following matters are taken into account: a) when required by orders made by the Court of Appeal on 11 June 2007 to identify which computers were used to create documents relating to TDM, Mr Qureshi only identified the server in his offices. The evidence of Mr Wills established that that server could not have created or modified Word or Excel documents and that it had seen very limited activity after 2004; b) when pressed to identify other relevant computers prior to the commencement of the hearing, Mr Qureshi asserted for the first time ever and on the eve of the final hearing that he also had a laptop computer which had either been lost or stolen en route to the Hajj in December 2005. Mr Qureshi was unable to say whether any documents relating to TDM were on that laptop (T 1089:22 to 1091:40; T 1235:52 to 1237:16); c) in the witness box, Mr Qureshi's evidence about the laptop changed dramatically. Knowing that the laptop could not be forensically examined and that he needed an explanation for the documents missing from the server examined by the Bank's computer expert Mr Wills, Mr Qureshi asserted that it had been used to create financial statements and correspondence relating to TDM, prepare income tax returns for Mr Edge and that he had copied files from his server to a CD-ROM before transferring those files to his laptop; d) despite the belatedly admitted use of the laptop for work relating to TDM, Mr Qureshi was completely unable to explain why he did not discover the documents held on that computer before travelling to the Hajj or make copies of those documents available to the receiver of TDM, disingenuously suggesting that it may have been a mistake or an oversight on his part. iii. In truth no satisfactory explanation has ever been given by Mr Qureshi as to why he was unable or unwilling to produce basic records relating to TDM. As the Bank has submitted his evolving evidence on that issue did not satisfactorily explain his failure to keep paper records, his failure to maintain electronic records, his failure to provide records to the receiver of TDM, his failure to provide proper discovery, his failure to identify (whether in his list of documents, in answer to Notices to Produce or subpoenas or in correspondence) the current or past location of such documents. He admitted the destruction of documents on a number of occasions (for example T 1080:6-1080:18; 1224:43-1225:2; 1225:4-1225:15), conduct clearly in contravention of the requirements prescribed by s 286 (1) of the Corporations Act 2001 to maintain records for 7 years. iv. As the Bank contended Mr Qureshi asserted, inconsistently with the position that all documents on the hard drive were private and confidential, and only when incriminating documents were located, that Mohamad Saleh had access to the hard drive and that they were Mohamad Saleh's documents and not Mr Qureshi's private and confidential material. v. Taking into account the strictures in relation to the onus of proof where fraud is alleged, the evidence clearly establishes that Mr Qureshi was plainly doing more than just checking the mathematical accuracy of figures provided to him. On his own evidence he sought further financial information from TDM when preparing its accounts [T 1113:7 to 1113:36] and visited TDM's premises with his laptop on a number of occasions to collect information to assist in the preparation of those accounts [T 1115:6 to 1115:25]. vi. The finding is that he must have known from dealing with TDM over an extended period that it could not have sales of more than $20 million per annum. vii. Mr Qureshi also has admitted on the pleadings to providing a budget analysis for TDM. It is difficult to accept that a budget could be prepared without the need to get into the records of the company, getting a feel for the customers and understanding the business. Returning to the letter of 16 May 2005 241 There is significance in the letter of 16 May 2005 [PX 946] which Mr Qureshi clearly prepared and in which he confirmed that TDM's quarterly BAS forms and payments were handled by his office and that TDM's GST commitments were up to date. In fact, TDM lodged monthly BAS forms rather than quarterly forms but had not lodged any BAS forms after March 2004 (cf Mr Parbery's 24 May 2007 affidavit at [24]). Mr Qureshi's evidence that he prepared cheques in respect of the GST payments made payable to the Australian Taxation Office and provided those cheques to the directors of TDM [T 1239:15 to 1239:33] is inconsistent with the cheque reconciliation prepared by Mr Parbery which discloses no evidence of cheque payments to the ATO and the fact that no BAS forms had been lodged after March 2004. Hence there arises a high question mark in respect of the evidence given by Mr Qureshi of preparation of the cheques. 242 Ms Smith had given evidence that she had checked what now turns out to have been the fraudulent bank statements against the BAS forms. In advance of her spot-checking she checked that the bank statements showed payment of the BAS amounts and she crossed checked the BAS forms against the bank statements. She had seen a problem which she took up with Mohamad Saleh. It is true that only cheques which were in fact presented were in evidence and that from time to time there were a limited number of gaps. However upon close examination of all of the cheques of TDM which were in fact in evidence, it may be seen that none are for the payment of BAS. 243 Plainly enough properly read, the above described letter of 16 May 2005 represented that Mr Qureshi's firm handled TDM's quarterly BAS forms and GST payments. Indeed the letter stated that the "completed form and cheques for the net GST were forwarded to the Australian Taxation Office". I do not see that any of these anomalies were properly clarified by any of the evidence given by Mr Qureshi. The letter which was written clearly suggested his office's involvement in the supervision and payment of GST by TDM. 244 Ultimately applying the s 140(2) Evidence Act 1995 dicta set out early in these reasons, the detailed cross-examination of Mr Qureshi, assessed in the light of all of the evidence from the many witnesses called by the Bank including the documentary evidence, as well as the evidence of Mr Wills and Mr Westwood, has satisfied the Court that Mr Qureshi was a knowing participant in the fraudulent conspiracy. The question is one of fact. The decision is certainly aided by the materials extracted by Mr Wills from the deep memory of Mr Qureshi's computer. The comparison of documents referred to in the reasons are of considerable assistance to the termination of the question. The notion that Mr Qureshi was himself no more than a victim of a conspiracy engaged in by Mohamad Saleh, Hassanien Saleh and Mr Edge is inconsistent with the evidence now before the court viewed as a whole. 245 Indeed the evidence which Mr Qureshi gave in terms of the circumstances in which he initially permitted Mohamad Saleh to have the use of an office within his firm and in respect of the whole of his relationship with Mohamad Saleh is very strongly suggestive that he was not frank with the Court in truly explaining the parameters of that relationship. Nor is it possible to speculate as to what if any other discussions or arrangements may have been entered into between himself and Mohamad Saleh with respect to the proceeds of the frauds committed on the Bank. 246 From beginning to end Mr Qureshi has sought to extricate himself from the frauds by contending that Mohamad Saleh in particular was responsible for fabricated documents and for achieving total access to Mr Qureshi's computer without Mr Qureshi's knowledge or consent. This contention is rejected. There are far too many anomalies in Mr Qureshi's evidence to permit the Court to uphold this "I know nothing" claim. Indeed almost every indicator in Mr Qureshi's behaviour relating to this litigation speaks volumes in terms of his endeavours to 'cover up' the realities of what occurred. To name but one matter, why would he have fabricated his own memoranda of fees, had he been innocent of wrong doing. 247 In Cross on Evidence (7 ed), Heydon sets out (at [3275]) types of conduct that are indicative of a consciousness of guilt, almost all of which apply to the conduct of Mr Qureshi: "It is part of human experience that persons who are conscious of their guilt of some crime or their liability for some civil wrong will often, on being accused of the crime or wrong, flee, or remain silent, or answer evasively, or lie, or destroy evidence, or procure witnesses to remain silent or absent themselves or commit perjury, or refuse to supply evidence. For that reason, conduct of this kind may, depending on the circumstances, be treated as an admission or as corroboration." The broad approach to cross-examination 248 Before turning to the evidence given by the many other witnesses called by the Bank it seems convenient [without being exhaustive] to very shortly endeavour to thumbnail sketch some of the principal topics with which Mr Newman and Mr Qureshi treated in the cross examination of witnesses called by the Bank. 249 Mr Newman often sought to test the veracity of evidence given by the many witnesses of the Bank: as for example asking why they had carried out a particular function or failed to carry out some other function or failed to carry out some other enquiry. Sometimes for example he would question whether or not the Bank offered a disclosed receivables facility. He would test whether or not a particular witness was present at a particular meeting. He would test how a particular witness came to be in a position to recall what was said at a meeting. He had a special focus upon the facsimile machine which had been at TDM's premises when the receiver was appointed and which had been donated to charity along with other items of seemingly such little value as made it appropriate for the receiver to take similar action. Mr Newman asked a number of witnesses many questions about facsimile machines and their knowledge thereof, seemingly on a quest to establish if he could, that there was something untoward about the way in which the TDM facsimile machine had been given away. He also cross-examined wherever he could in relation to the facsimiles which were sent from the Bank to the Emerald Post Office late in the afternoon of 3 June 2005 and which were later sent from that Post Office to the Bank. 250 Whilst from time to time as may be expected a Bank officer being closely questioned on his or her recollection of the documents which came into existence at the time may have been mistaken or may have mis-recalled a particular section of a particular document or a particular date, by and large Mr Newman's cross-examination simply failed dismally in seeking to expose some form of material unreliability in any significant evidence given by any of the Bank's witnesses. 251 Mr Qureshi tended to ask questions as to whether or not the Bank witness then in the witness box had ever seen him or had ever spoken to him prior to 3 June 2005 or had received any communication [addressed specifically to them] from him at or prior to that date. [Ms Hicks, Messrs Andrew Watson, Budai, Barry Watson, Gaffney, Harrison, Placek, Cook, Morris, Saia and Erwin all confirmed that they had never met nor spoken to Mr Qureshi before 3 June 2005, nor seen any correspondence addressed to them from him at or prior to this date.] 252 In some instances Mr Qureshi also cross-examined witnesses called by the Bank in relation to particular figures: as for example is to be seen in the fact that the balance sheet of TDM as at 30 June 2004 [Exhibit ME5 p45] under current assets recorded a trade debtors amount of $8,564,645 and the very same figure is to be found in the Receivables Finance Trading Analysis document [Exhibit OB9 p56] in so far as the second last entry which is for March 2005 under the column "Total Debtors Outstanding at Month End" is concerned. 253 On many occasions he also enquired of particular witnesses as to why they had not sought to contact him directly when issues arose in relation to which his own involvement had come up. A précis of the evidence given by some only of the other witnesses called by the Bank Mr Barry Watson 254 Mr Barry Watson is a Manager in the Credit Management Unit of the Bank, whose work involves recovery of funds by the Bank or other impaired assets as well as any related litigation. 255 On 23 June 2005 Mr Watson became the instructing officer for the TDM loan recovery matter and appointed a receiver and manager [PPB] on 24 June 2005. 256 Mr Watson gave evidence of the meeting on 28 June 2005 at the offices of PPB Chartered Accountants which was attended by Messrs Robinson, Ayres, Hicks, Tilley and Edge [affidavit of 2 August 2005], as well as the service on Mr Edge of documents relating to the appointment of receivers to TDM [affidavit of 4 August 2005]. Mr Watson also gave evidence as to the flow of funds following payment of $7 million by CBA on 3 June 2005 [affidavits of 23 June 2006 and 10 July 2007]. 257 During cross-examination by Mr Qureshi, Mr Watson was asked why, in a loan facility of $7 million to TDM, the Bank did not conduct their own independent audit of the company prior to the loan of funds. Mr Watson gave evidence that it was not a procedural requirement and that the Bank had followed normal lending procedures which involved an inspection of the company's books, records and a visit to the company offices [T214:35]. 258 Under cross-examination by Mr Newman about the 3 June 2005 direction to pay [PX 1366] received via fax by Mr Budai at the Bank's Parramatta office, Mr Watson stated that the Bank had a practice of acting not only on original documents, but also on directions received in faxed documents [T217:15]. These faxed directions did not have to be signed by a witness and upon receipt by the Bank, the Bank would act on the directions if the signature in the fax reflected the signatures kept in the Bank's records [verification of the signature's authenticity] and if the instructions were consistent with the Bank's understanding of the customer's requirements [T217:26 and T220:35]. 259 Under questioning by Mr Newman of the Bank's procedure after a fraud was suspected of having been committed, Mr Watson stated that once such an event occurs, the file is usually transferred to his recovery department and he takes over the work from that point onwards. In the case of the suspected TDM fraud, Mr Watson took over the file immediately before it had even been reported to his department. He had instructed Mr Budai to send the files to him straight away [T 229:6], files delivered include MFI P11, P11a, P12]. The evidence that exists outside of the Bank's control, such as documents and equipment found at the TDM premises is not quarantined by the Bank itself, but rather the receivers appointed by the Bank took possession of and secured whatever company assets where available at the TDM premises [T 231:42]. Mr Watson could not materially assist Mr Newman's line of questioning on the present whereabouts of the fax machine found by the receiver at the TDM premises on or about 24 June 2005 [T 235]. Ms Salameh 260 Ms Salameh is a solicitor employed by Henry Davis York, the solicitors for CBA. Ms Salameh gave evidence about Federal Court proceedings involving Mr Edge and a company called Needlework Warehouse Pty Limited, a discussion with Mr Edge on 29 September 2005 during which Mr Edge admitted deceit in relation to his alleged travels to China [14 October 2005 affidavit], notices to admit facts and authenticity of documents served on the active defendants. Mr Atkins 261 Mr Atkins, referred to earlier, is a partner of Henry Davis York, solicitors for CBA. Mr Atkins annexed company searches of [among others] JB Enterprises International Pty Limited and Korilli Pty Limited. Mr Atkins also gave evidence of his conversation with Mr Peter Johnstone on 4 October 2005 where Mr Johnstone explained his dealings with Mr Edge and says that he did not witness Mr Edge handing over any cash at the premises of TDM. Mr Ayres 262 Mr Ayres was an employee of PPB Chartered Accountants and Business Reconstruction specialists, the receivers of TDM in June 2005. Mr Ayres gave evidence of his visit to TDM's premises on 24 June 2005 when he found the premises vacant. Mr Ayres also gave evidence of his visit to the offices of Mr Qureshi and discussions with Mr Qureshi and his assistant in relation to the books and records of TDM. Mr Ayres gave evidence of the meeting on 28 June 2005 between Messrs Edge, Robinson, Hicks, Watson and Tilley. Mr McCoy 263 Mr McCoy is a bank manager employed by Arab Bank Australia Limited. Mr McCoy gives evidence of the receipt of $3,450,000 into Hassanien Saleh's Arab Bank account on 7 June 2005 and the subsequent transfer of funds from that account to the accounts of other members of the Saleh family. Mr McCoy also gives evidence of the transfer of funds from Arab Bank back to CBA on 23 and 27 June 2005. [ ] 264 [ ] Mr John Williams 265 Mr Williams is a chartered accountant and a partner of PPB Chartered Accountants. He provided opinion evidence [in the form of an expert report dated 1 June 2007] as to the records and documents required to be kept by an accountant conducting a practice of the type similar to Mr Qureshi's practice. 266 Mr Williams, during his examination in chief, gave his opinion on the additional documentation and records an accountant would require to prepare financial statements assuming the client only maintained records of its list of receivables and creditors in electronic form [T 602-3]. He gave a description of the process of coding bank statements and the creation of a general ledger to summarise all the transactions that had taken place for the client in the relevant financial year. 267 He explained that the working papers produced are kept and used by the accountant to enable him or her to reconcile the numbers in the financial statements with those documents supplied by the client. They reflect the workings of how the accountant came up with each figure in the financial statements and any tax returns. Copies of bank statements used to reconcile figures and with the accountant's own workings would form part of these working papers [T 605:21]. 268 As referred to in paragraph 25 and 26 of Mr William's report of 1 June 2007, Mr Williams provides evidence of the documents that would be retained by a prudent accountant after termination of the retainer by a client – namely records, client and third party correspondence and working papers that belong to the accountant and reflect the work carried out. Mr Williams gives evidence of a common accounting profession standard that no documents or records are to be destroyed prior to 7 years. 269 Mr Williams was asked during his examination in chief to look at the documents in Exhibit P14 and gave evidence that on the assumption that they were the only records kept by an accountant for a client who had since terminated his retainer, the retention by the accountant of only these documents at Exhibit P14 was not acceptable or prudent accounting practice. 270 During cross-examination by Mr Qureshi, Mr Williams believed it would be unusual for all of the records of a client to be returned to the client if they insisted on it [T 615:26]. This was at least in part because working papers belonged to the accountant and not the client. In addition, records would be kept because they provided support for the work performed by the accountant and that the obligation to justify the work produced for a client did not end simply when the client terminated an accountant's services [T 616:2]. Mr Stephen Parbery 271 Mr Parbery, as referred to earlier in the judgment, is a chartered accountant and registered liquidator. He is a partner of PPB Chartered Accountants and was appointed by the Bank as receiver and manager of TDM on 24 June 2005. Mr Parbery gave evidence about the books and records of TDM, and in particular, the genuine St George Bank records of TDM. He also gave evidence of his dealings with the ATO and the position of TDM in respect of the lodgement of tax returns and business activity statements. The fraudulent conduct of Mohamad and Hassanien Saleh 272 It is convenient to attempt a short overview of the fraudulent conduct of Mohamad and Hassanien Saleh: i. Mohamad and Hassanien were the founders of the TDM business. They were associated with the business after the appearance of Mr Edge in the affairs of TDM. Mr Edge became a director of TDM by a form signed by him [Supp PX 148-152] . Mr Edge was the sole director of TDM from 11 April 2005 to 3 June 2005. ii. TDM only had three people ever working at it: Mohamad, Mr Edge and Hassanien. The father of Mohamad and Hassanien was in the warehouse from time to time. iii. There is ample direct evidence of Mohamad advancing the fraud by conversations and documents sent to the Bank following conversations with the Bank. iv. The documents which were presented to the Bank are diametrically inconsistent with the true financial position of TDM. Those documents come to the Bank after conversations with Mohamad and Edge where Hassanien is often in the warehouse and clearly knows what is going on. The receipt of nearly $3.5 million dollars of the fraud by Hassanien gives rise to very strong inferences as to his involvement and knowledge. v. Further, Mohamad and Hassanien were the only two persons authorised to transact business on the TDM St George account [PX 95-96]. They were signing the cheques and receiving money from TDM. They knew that TDM was a pig in a poke and not worth $7 million. To operate a business account requires persons to have regard to the balance of that account from time to time to ensure funds are not overdrawn. vi. Hassanien and Mohamad must have known that the level of business activity at which TDM was actually performing did not warrant a sale price of anything like $7 million. They were regularly drawing cheques (particularly Hassanien). They must have known the true account balances. vii. Mohamad was involved with Mr Edge in the deception over China. After the last $1.3 million was transferred out of Mohamad's account on 14 June 2005 to Lebanon, Mr Edge reappears. Everything was calculated for them to jointly act so that the fraud was not discovered by the Bank before all of the money was safely got away. viii. The receipt by Hassanien Saleh of approximately $3.5 million gives rise to strong inferences as to his involvement. Hassanien Saleh was also present at TDM at the time of several meetings with the Bank. All of the Saleh defendants rely on the same consolidated form of Defence filed on 16 December 2005. ix. The answers provided by Mohamad and Hassanien Saleh to the Interrogatories (Exhibit P29) are indicative of a consciousness of guilt. It is inconceivable having regard to the involvement of Mohamad and Hassanien Saleh in the affairs of TDM that they would be unable to answer the questions posed. The answers are false denials and give rise to adverse inferences against them. Misleading and deceptive conduct and negligent misstatement 273 There is an overlap between the deceit claim, on the one hand, and the misleading and deceptive conduct and negligent misstatement claims, on the other hand, in that the representations relied upon are the same. The allegations of falsity in respect of the alleged representations are as set out in paragraphs 100 to 330 of the plaintiff's Further Amended Summons and Commercial List Statement [filed 6 July 2007]. The key factual matters relied upon to demonstrate the falsity of the representations, shortly stated, include the following: i. TDM was a small operation at best with negligible sales and debtors; ii. Mr Edge did not pay a deposit of $10 million or any other amount towards the purchase of TDM; iii. Mr Edge never travelled to China; iv. Mr Qureshi and Qureshi & Associates had not independently verified the factual accuracy of the information disclosed in the financial statements of TDM issued by Mascot Taxation & Accounting Services and the information disclosed in those statements was false; v. the St George Bank statements provided to the Bank were forgeries and false; vi. TDM's GST commitments were not up to date. vii. The evidence discloses that Mohamad Saleh, Hassanien Saleh, Mr Qureshi, Qureshi & Associates and Mr Edge engaged in misleading and deceptive conduct by making false and misleading representations which were relied upon by the Bank. viii. In the case of representations made by Qureshi & Associates (in liquidation), the evidence discloses that Mr Qureshi was the guiding hand of that company and was intimately involved in the conduct and operations of it. To the extent that Qureshi & Associates has contravened the TPA, Mr Qureshi is accessorily liable by reason of s 75B of the TPA. ix. It is alleged by some of the defendants that, to the extent they were negligent, the Bank was contributorily negligent. There is no basis for a finding that the Bank was contributorily negligent as alleged or at all. Restitution 274 The evidence discloses that the Bank relied on the representations made to it when it made the $7 million payment to Mohamad Saleh. To the extent that it relied upon those matters, the Bank was operating under mistake of fact. The Bank is therefore entitled to restitution of the amount of $7 million paid to Mohamad Saleh as against him and those who received part of those monies from him and were accordingly unjustly enriched. The findings 275 The real issues calling for determination were outlined earlier in these reasons. It is unnecessary to exhaustively repeat the findings which the extensive reasons set out. A non-exhaustive précis of the essential findings should suffice. I proceed accordingly: i. the plaintiff has proven that fraudulent misrepresentations were made to it and that it advanced $7 million to TDM in reliance upon those misrepresentations; ii. the plaintiff has also proved that the $7 million became immediately impressed with a constructive trust over those moneys with the plaintiff having beneficial ownership of the funds; iii. the plaintiff has proven its entitlement to trace the funds in equity into the hands of the defendants; iv. none of the defendants into whom the funds have been traced has been in a position to prove that it was a bona fide purchaser for value without notice of the plaintiff's equity: it is of course apparent that none of the defendants who were absent from the courtroom adduced evidence of any type. v. Hence the plaintiff is entitled to declarations that it is and has always been the true owner of the funds traced into the hands of the defendants; vi. the finding is that the first, third, fifth, tenth and eleventh defendants conspired to deceive and defraud the plaintiff: in short the pleaded representations by each of these defendants have been found to have been made, have been found to have been false, have been found to have been made with knowing falsity or reckless disregard for the truth of the representations and have been found to have been made with the intention that they would be relied upon by the plaintiff. These findings extend to cover both the cases in deceit as well as the cases pursued pursuant to the Fair Trading Act and the Trade Practices Act . vii. In the circumstances of the knowing intent and fraud findings, no questions arise in terms of proportionate liability or in terms of contributory negligence. viii. The plaintiff's case in restitution in so far as mistaken payment is concerned, has been made out. In short the finding is that the plaintiff advanced $7 million to the first defendant pursuant to a mistake of fact entitling it to restitution against the defendants in that amount. ix. The plaintiff has succeeded as against Mr Edge in terms of its case that the plaintiff and Mr Edge entered into a guarantee in respect of the performance of TDM under its loan agreement with the plaintiff. The plaintiff has proven that it made a demand upon Mr Edge for payment under the guarantee and that he failed to pay the sum so demanded. x. The plaintiff's case in negligent misstatement is also made out. The general damages calculation 276 The approach taken by the plaintiff in their general damages calculation is adopted. In short this involves commencing with the amount of $7,175,102.45 loss constituting the principal and interest excluding any tracing [cf affidavit of Mr Barry Watson of 10 July 2007 paragraph 24 annexure H]. From this overall figure there is to be deducted the categories constituting: i. moneys already recovered without any final orders from the court [but in respect of which the Bank seeks protective declarations, already having its hands on these funds]; ii. the moneys to be received by reason of the tracing orders [the circumstance being that none of the defences to the tracing claims had succeeded]. 277 Hence the calculation is as follows: $ 7,175,102 .45 loss being principal and interest excluding any tracing Less money already recovered: $ 2,160,683.17 from the Arab Bank (re Hassanien and Fatima) $ 92,300.97 from CBA (re Abdullah) $12,004.96 from CBA (re Fawzi) $ 93,142.14 from CBA (re Hassanien) $ 92,767 from CBA (re Fawzi) $ 95,356 .45 from CBA (re Khadige) $ 91,710.22 from CBA (re Fatima) $ 441,280.67 (from Petts) A. Sub Total: $ 3,079,245.58 Add further recovery from Tracing: $ 94,426 from ANZ (re Hassanien) $ 1,299,934 from ANZ (re Mohamad) $ 552,000 from Perpetual (re Fawzi and Khadige) $ 230,000 from Quaid Real Estate (re Edge) $ 970,000 against J Biady and Associates Solicitors (re Edge) B. Sub Total $ 3,146,360 Total loss – A Sub Total – B Sub Total $ 7,175,102.45 - $ 3,079,245.58 - $ 3,146,360 = Total General Damages: $ 949,496.87 Exemplary damages 278 A recent decision of the Court of Appeal suffices to state the general principles applicable in respect of exemplary damages. In James v Hill [2004] NSWCA 301, the reasons of Tobias JA [Sheller and Hodgson JJA agreeing] upheld the decision of Bergin J awarding exemplary damages, his Honour observing that an award of exemplary damages is not compensatory in nature but punitive and quoted from XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448 at 471 (per Brennan J): "As an award of exemplary damages is intended to punish the defendant for conduct showing a conscious and contumelious disregard for the plaintiff's rights and to deter him from committing like conduct again, the considerations that enter into the assessment of exemplary damages are quite different from the considerations that govern the assessment of compensatory damages. There is no necessary proportionality between the assessment of the two categories. … The social purpose to be served by an award of exemplary damages is, as Lord Diplock said in Broome v Cassell & Co [[1972] AC 1027 at p1130], 'to teach a wrong-doer that tort does not pay'. 279 In the joint judgement of the High Court in Lamb v Cotogno (1987) 164 CLR 1, the joint judgement (at 9) observed that the object, or at least the effect, of exemplary damages was not wholly punishment or deterrence but that it also served "to assuage any urge for revenge felt by victims and to discourage any temptation to engage in self-help likely to endanger the peace" and, further, (at 10) "to mark the court's condemnation of the defendant's behaviour". 280 Reference was also made to Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 at 311 [55] where Spigelman CJ referred to the first of these additional objectives as "vindication" and to the second as "denunciation". The Chief Justice observed that each of the purposes so identified by the High Court in Lamb was primarily, if not exclusively, a public purpose (at 312 [56]). 281 Tobias JA concluded in James v Hill (at [69]) as follows: "Accordingly, the objectives of an award of exemplary damages are to punish the wrongdoer, deter him and others from committing like conduct again, to provide vindication to the victim and to denounce the wrongdoer's behaviour." 282 In Digital Pulse, Heydon JA observed (at 345 [254]) in a passage cited by the Court of Appeal in Amalgamated Television Services Pty Ltd v Marsden (No 2) (2003) 57 NSWLR 338 at 345 [23]: "If exemplary damages are to fulfil their threefold purpose, they must not merely irritate, they must sting. It is the gravity and character of the defendant's conduct which guides the court's discretion as to the proper amount to award by way of exemplary damages. That is why there is "no necessary proportionality" between the amount awarded as compensation for the damage suffered by the plaintiff and the amount of exemplary damages awarded against the defendant… A minimal amount of damage inflicted on a plaintiff may, if the wrongdoing was outrageous, nevertheless require heavy exemplary damages to be visited upon the defendant..." 283 Clearly enough an award of exemplary damages is appropriate to be made as against each of Mohamad Saleh, Hassanien Saleh, Mr Edge and Mr Qureshi. The above described principles merit this approach to damages. A quite extraordinary fraud was committed. Each of these persons have been found to have been complicit in that regard. 284 There is no evidence as to the net worth of any of these persons. For obvious reasons it is extraordinarily difficult to differentiate between persons who are jointly complicit in a major fraud by reason of the different parts which were played by each of them. It being obvious that Mohamad Saleh, Hassanien Saleh and Mr Edge were central participants in the fraud, in my view the principled exercise of the relevant discretion is to order exemplary damages to be paid by each of these persons in the sum of $150,000. 285 Notwithstanding that in some cases [as for example James v Hill], the Court has regarded the reprehensibility of the conduct of a professional as increased by reason of such a person misconducting himself or herself in the course of the practice of his profession, it seems to me that in this particular case the principled exercise of the discretion is also to order that exemplary damages be paid by Mr Qureshi in precisely the same amount. This is simply because in truth there is no way of discerning as between those who participated in the fraud, precisely what part they played at inception of the fraudulent plan or through the execution of that plan. 286 This is not to minimise the seriousness of Mr Qureshi's conduct. He was content to allow his professional standing to be utilised for the purposes of the fraudulent conduct. He stood by whilst the Bank acted upon correspondence sent by him to TDM which was plainly intended by him to be seen by the Bank, and acted upon by it. 287 I proceed in non-exhaustive fashion to note many of the orders which are appropriate, reserving for submissions: i. the precise amount of the judgment to be entered against the tenth defendant; ii. the precise amount of the appropriate judgment to be entered against the first, third, fifth and eleventh defendants. [The short minutes of order will need to embrace each parameter of relevance.] 288 The orders which are appropriate include the following: i. a declaration that that the plaintiff has at all times been the beneficial owner of the $94,426 held in Hassanien Saleh's bank account number [ ]6876 conducted with the fourth defendant [ANZ Bank] being part of the funds stolen from the plaintiff traced into the hands of the fourth defendant. ii. an order that the fourth defendant pay to the plaintiff the sum of $94,426 held in Hassanien Saleh's bank account number [ ]6876 conducted with the fourth defendant [ANZ Bank] plus interest (if any) on those funds which has accrued since the date the funds were frozen. iii. a declaration that that the plaintiff has at all times been the beneficial owner of the $1,299,934 held in Mohamad Saleh's bank account number [ ]6481 conducted with the fourth defendant [ANZ Bank], being part of the funds stolen from the plaintiff traced into the hands of the fourth defendant. iv. an order that the fourth defendant pay to the plaintiff the sum of $1,299,934 held in Mohamad Saleh's bank account number [ ]6481 conducted with the fourth defendant [ANZ Bank] plus interest (if any) on those funds which has accrued since the date the funds were frozen or recovered from the Arab Bank and placed in a provisions account. v. a declaration that that the plaintiff has always been the beneficial owner of $552,000 held by the sixth defendant after it was credited to account number [ ]5859 managed by Macquarie Mortgages Pty Ltd as agent for the sixth defendant. [This and the following order relates the evidence of the withdrawal from Hassanien Saleh's Arab Bank account [ ]4450 in the sum of $552,000 and the bank cheque made payable to Macquarie Mortgages in the sum of $552,000 – the withdrawal was signed by Hassanien Saleh. Exhibit P30 explains the relationship between Macquarie Mortgages and Perpetual Trustee. The movement of the funds corresponds with the transaction on the flowchart marked as 11b.] vi. an order that the sixth defendant pay to the plaintiff the sum of $552,000. vii. an order that the third defendant pay to the plaintiff the sum of $125,000 plus interest at the prescribed Supreme Court rate. viii. a declaration that the sum of $2,160,683.17 transferred from the Arab Bank to the plaintiff was money the plaintiff always owned and had a beneficial interest in and the plaintiff now properly holds an unencumbered legal and beneficial interest in those funds. [These matters were dealt with in Mr McCoy's affidavit of 1 November 2005. What was involved were two transactions or two recoveries by the Arab Bank in respect of the accounts in question. These are matters dealt with in the flowchart at 11 and 11a. On 23 June 2005 of the Arab Bank had transferred $2,150,000 to the CBA being $1.66 million from Hassanien Saleh's account and $490,000 from Fatima Saleh's account. After the initial moneys were recovered offshore there was a residual amount recovered by a transfer from the Arab Bank of $10,683.17 to the CBA [being $603.17 from Hassanien Saleh's account and $10,080 from Fatima Saleh's account]. ix. a declaration that the plaintiff always owned a beneficial interest in and now properly holds an unencumbered legal and beneficial interest in the following funds: a) $92,300.97 held in CBA account number [ ]6804 conducted by the plaintiff in the name of the twelfth defendant; b) $12,004.96 held in CBA account number [ ]571 conducted by the plaintiff in the name of the thirteenth defendant; c) $93,142.14 held in CBA account number [ ]9880 conducted by the plaintiff in the name of the fifth defendant; d) $92,767 held in CBA account number [ ]6784 conducted by the plaintiff in the name of the thirteenth defendant; e) $95,356.45 held in CBA account number [ ]6979 conducted by the plaintiff in the name of the fourteenth defendant; f) $91,710.22 held in CBA account number [ 7907 conducted by the plaintiff in the name of the sixteenth defendant [All of these funds were received by the Commonwealth Bank from the Arab Bank account. The flowchart identifies these transactions as numbers 3, 4, 6, 8, 9 and 10. All are dealt with in Mr Barry Watson's affidavits.] x. a declaration that that the plaintiff has always been the beneficial owner of $230,000 held by the eighth defendant in account number [ ]26700. [This concerns the withdrawal from the ANZ account [ ]8556 and deposit into a Cameron Price NAB account in the sum of $230,000. That deposit was made by Mohamad Saleh with the signature on the docket. The matter is dealt with in Mr Barry Watson's affidavit of 23 June 2006 at [8]-[9] and [11]. The flowchart reference is transaction 16. The relevant sequence in the movement of the funds was transaction 16 [whereby $1.2 million was deposited into ANZ account [ ]8556] from Mohamad Saleh, then transaction 17 to Cameron Price and then flowchart 18 to Quaid Real Estate.] xi. an order that the eighth defendant pay to the plaintiff the sum of $230,000 held in account number [ ]6700 plus interest (if any) on those funds which has accrued since the date the funds were frozen. xii. a declaration that that the plaintiff has always been the beneficial owner of $970,000 held in bank account number [ ]2423 in the name of "J Biady & Associates Pty Ltd in trust for William Edge and the Commonwealth Bank of Australia". [This again refers to the $1.2 million transaction is at flowchart reference 16. Here one had a withdrawal from Mohamad Saleh's ANZ account [ ]5648 at the Hurstville branch by card entry and deposit into the ANZ account [ ]8556 in the sum of $1.2 million. Then there was a withdrawal from the ANZ account [ ]8556 and a deposit into the Biady and Associates NAB account [ ]8052 in the sum of $970,000 – the ANZ deposit slip was signed by Mohamad Saleh.] xiii. an order, varying the orders made on 23 September 2005, and requiring J Biady & Associates Pty Limited to take any and all steps required to transfer to the plaintiff the balance of the moneys held in account number [ ]2423 in the name of "J Biady & Associates Pty Ltd in trust for William Edge and the Commonwealth Bank of Australia". xiv. Exemplary damages of $150,000 as against each of the first, third, fifth and tenth defendants. Identifying the critical misleading documents provided to the Bank 289 Reference was made earlier in the judgment to the efficient approach being to identify the critical misleading documents provided to the Bank in a table at the end of the reasons. I proceed accordingly to list those documents and references to certain of the evidence in respect of them: Date Document Evidence Ref 11/4/04 Front page of Contract for sale of business – 2004 edition for $17 million sale of TDM to Edge Budai (14/6/06) – OB21, pg 117 [but provided on 25/5/05] 4/5/04 to 3/5/05 Forged St George Bank Statements for the period 4 May 2004 to 3 May 2005 Budai (14/6/06) – OB32, pg 216-227 [but provided on 1/6/05] 30/6/04 Financial Statements for TDM for the year ended 30 June 2004 Budai (14/6/06) – OB2, pg 2-15 [but provided on 13/5/05] 30/6/04 Taxation return for Edge for year ended 30 June 2004 Budai (14/6/06) – OB4, pg 38 [but provided on 13/5/05] 28/2/05 TDM Bas form for the period 1 to 28 February 2005 Smith (9/6/06) – LMS1, pg 7-9 [but provided on 1/6/05] 31/3/05 Financial Statements for TDM for 9 months ended 31 March 2005 Budai (14/6/06) – OB2, pg 16-29 [but provided on 13/5/05] 31/3/05 Aged Payables for TDM as at 31 March 2005 Budai (14/6/06) – OB2, pg 30 [but provided on 13/5/05] 31/3/05 TDM Bas form for the period 1 to 31 March 2005 Smith (9/6/06) – LMS1, pg 10-12 [but provided on 1/6/05] 31/3/05 Aged Receivables for TDM as at 31 March 2005 Budai (14/6/06) – OB2, pg 31 [but provided on 13/5/05] 30/4/05 Aged Receivables [Summary] as at 30 April 2005 Budai (14/6/06) – OB9, pg 56A [but provided on 17/5/05] 30/4/05 Aged Payables [Summary] as at 30 April 2005 Budai (14/6/06) – OB9, pg 57 [but provided on 17/5/05] 30/4/05 TDM Bas form for the period 1 to 30 April 2005 [but identified to Smith as the BAS form for March 2005] Smith (9/6/06) – LMS1, pg 4-6 [but provided on 1/6/05] 30/4/05 TDM Bas form for the period 1 to 30 April 2005 Smith (9/6/06) – LMS1, pg 13-15 [but provided on 1/6/05] 13/5/05 Statement of Assets and Liabilities of W Edge as at 13 May 2005 Budai (14/6/06) – OB4, pg 37 Letter from Qureshi to TDM confirming: 16/5/05 · Accountant for TDM Budai (14/6/06) – OB9, pg 58 [but provided on 17/5/05] · He handles TDM's BAS forms and GST payments; · TDM's GST commitments are currently up to date 17/5/05 TDM budgeted cash flows for 12 months to 31 May 2006 Budai (14/6/06) – OB9, pg 54-55 [date provided] 17/5/05 Handwritten Trading Analysis for TDM showing receivables balances and payments for the period May 2004 to April 2005 Budai (14/6/06) – OB9, pg 56 19/5/05 approx Facsimile from "Mo" to Morris and Budai detailing TDM debtor information from May 2004 to April 2005 Budai (14/6/06) – OB16, pg 100 Letter from Qureshi to TDM confirming: 20/5/05 · TDM's 2004 accounts are correct Budai (14/6/06) – OB17, pg 101-102 · TDM's debtors as at 30 June 2004 and for the 10 months to 30 April 2005 were as per the schedule attached to the letter · There was a one off event in the June 2004 quarter when several customers paid their accounts in 60 rather than 30 days 31/5/05 TDM Aged Receivables [Summary] as at 31 May 2005 Smith (9/6/06) – LMS1, pg 3 [but provided on 1/6/05] 31/5/05 TDM Receivables Reconciliation [Detail] as at 31 May 2005 Smith (9/6/06) – LMS2, pg 26-28 [but provided on 1/6/05] Letter from Qureshi to TDM confirming: 3/6/05 · The purchaser of TDM plans to utilise the services of an experienced accountant who will be responsible for the efficient management of various accounting issues; Placek (14/6/06) – WRP 10, pg 110-111; Cook (9/6/05) – Annexure "B" · In terms of the difference between the July and October debtors, the details in TDM's debtor ledger is correct; · Qureshi will reconcile the year end accounts with the ledger details to ensure the accounts for the 2005 financial year properly reflect the details in TDM's ledger 3/6/05 TDM Receivables reconciliation [Detail] as at 3 June 2005 Placek (14/6/06) – WRP 11, pg 112-115 Short minutes of order 290 The parties are to bring in short minutes of order on which occasion: i. the matters reserved [in paragraph 287] for submission may be argued; ii. any issues with respect to the proposed orders [as for example suggested duplication/double counting] may be argued; iii. costs may be argued. Corrigenda – 28 August 2007 1. Redacting of parts of banking account numbers on internet version. 2. Removal of paragraph 264 pursuant to addendum toJudgment of 28 August 2007. Addendum to Judgment – 28 August 2007 The Court's attention has been drawn to a matter which is appropriate to be corrected under the 'slip rule' : Rule 36.7 of the Uniform Civil Procedure Rules 2005. I refer here to paragraph 264 of the judgment delivered today. As the transcript [at 1682.53-1683.5] records leading counsel for the Bank in closing the Bank's case in reply observed that the Bank had not read the document behind tab 35 of the affidavits folder and sought for that material to be returned to the bar table. That request was immediately actioned so that the material was no longer before the Court. This was the evidence of Ms Planic. In fact to the best of my recollection I have never read that evidence. The mistake which crept into the judgment [in the form of paragraph 264] appears to have occurred when some sections of the judgment were taken from the Bank's dramatis personae [MFI P 6]. The whole of what appears in the judgment at paragraph 264 was simply copied verbatim from that dramatis [as is apparent from page 9 of the dramatis]. In all of the circumstances what occurred may fairly be described as a clerical mistake or error arising from an accidental slip or omission in the judgment. In that circumstance the principled exercise of the discretion is to correct the mistake or error. Making that correction does not alter the substance of the reasons nor interfere with any finding. Even prior to the advent of rule 36.17 it was clear that prior to final orders being handed down the court may correct typographic errors and further may correct obvious inaccuracies as long as the substance of the reasons is not altered and no finding is interfered with. If authority for this proposition be required it is to be found in Todorovic v Moussa (2001) 53 NSWLR 463 at [46]-[48] per Beazley JA, with whose judgment Powell JA agreed and Sperling J substantially agreed. I therefore order that the judgment be corrected by the removal of the heading to paragraph 264 and by the removal of paragraph 264 itself. 28/08/2007 - Addition of Corrigenda after paragraph 290 - Paragraph(s) Various 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.