Supreme Court New South Wales Medium Neutral Citation: Capital Access Australia Pty Limited v Hraiki and Anor [2011] NSWSC 109 Hearing dates: 23 November 2010, 24 November 2010, 25 November 2010 and 26 November 2010 Decision date: 04 March 2011 Jurisdiction: Common Law Before: Schmidt J Decision: Subject to any submissions as to costs, the parties should bring in short minutes, which appear to me should provide: 1. Judgment for the Plaintiff for possession of the land comprised in Folio Identifier 11/218470 situated at and known as 127 Mimosa Road, Greenacre in the sate of New South Wales, (hereinafter referred to as "the land"). 2. I grant the Plaintiff leave to issue a writ of possession of the land forthwith. 3. Judgment for the Plaintiff against the Defendants in the sum of $311,102.50, plus interest, charges and expenses calculated in accordance with the loan agreement to today, the date of judgment. 4. Pursuant to s 101 Civil Procedure Act 2005 the defendants are to pay interest on that amount from the date of judgment to be calculated daily in accordance with the provisions for the payment of interest under the loan agreement, on so much money as is from time to time unpaid. 5. The Defendants are to pay the Plaintiff's costs of the proceedings. Catchwords: MORTGAGES - mortgages and charges generally - remedies of the mortgagor - orders sought for possession - whether defendants authorised a third party to obtain the loan - authority established - whether defendants signed the loan documents - allegation of fraud or forgery - whether signatures were forged - whether loan was obtained with defendants' knowledge - whether defendants were bound by documents which they did not sign - Contracts Review Act 1980 (NSW) - whether contract unjust EVIDENCE - witnesses - credibility CONTRACTS - general contractual principles - parties - authority - estoppel - ratification Legislation Cited: Civil Procedure Act 2005 Contracts Review Act 1980 (NSW) Evidence Act 1995 Real Property Act 1900 Cases Cited: Jones v Dunkel (1959) 101 CLR 298 Klement v Pencoal Limited [2000] QCA 152 Leybourne v Permanent Custodians Ltd [2010] NSWCA 78 Perpetual Trustee Company Limited v El-Bayeh [2010] NSWSC 1487 Perpetual Trustees Victoria Limited v English [2010] NSWCA 32 Rowe v BR Nominees Pty Ltd [1964] VR 477 Ruthol Pty Ltd v Mills [2003] NSWCA 56 Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52, (2004) 219 CLR 165 Category: Principal judgment Parties: Plaintiff - Capital Access Australia Pty Ltd ACN 086 984 885 First Defendant - Ishac Hraiki Second Defendant - Denise Chalita Hraiki Third Defendant - Adam Ly Representation: Counsel: Plaintiff - Mr M Young First and Second Defendants - Mr F Salama Solicitors: Plaintiff - Bransgroves First and Second Defendants - Inner West Legal Solicitors File Number(s): 2008/283806 Judgment 1By amended statement of claim filed in March 2009 the plaintiff, Capital Access Australia Pty Limited ('Capital'), seeks judgment for possession of land situated at Greenacre; leave to issue a writ of possession; together with judgment against the first and second defendants, Ishak Hraiki and Denise Chalita Hraiki, in the sum of $311,102.50, plus interest, charges and expenses calculated in accordance with an agreement and mortgage. 2The relief claimed against the third defendant, Adam Thanh Ly, was not pursued. 3The proceedings concern a written loan agreement dated 26 October 2007, under which the plaintiff claims that it loaned Mr and Mrs Hraiki $242,000, the bulk of which was paid into an account in the name of S Hraiki. The loan was secured by a mortgage given over their home at Greenacre. Mr and Mrs Hraiki deny that it was they who executed the loan agreement or the mortgage and dispute that they knew of, consented to, adopted, or agreed to be bound by the terms of either the agreement or the mortgage. Their case is that they are the victims of a fraud; their signatures were forged, without their knowledge or consent and that the money was paid into the account of their nephew, Shadi Hraiki, who received it for the benefit of their other nephew, Sam Hraiki. Mr and Mrs Hraiki advance this case even though they provided Capital with a statutory declaration in 2008 by which they withdrew an allegation earlier made by Mr Hraiki, that their signatures had been forged. They now say that the declaration and earlier advice to that effect given to Capital by Mr Hraiki were false. 4While the loan application said that the purpose of the loan was for renovations to the property, there is no question that the loan money came into the hands of Sam Hraiki, who used it in his business, which eventually failed. It was not repaid. Sam Hraiki denies forging his aunt and uncle's signatures on the loan, mortgage and other documents, or using their home as security for the loan without their knowledge or consent. 5The plaintiff's case is that even if their signatures on the documents were forged, which is in issue, as a matter of law Mr and Mrs Hraiki are bound by the loan and mortgage documents. The issues 6The parties agreed that the issues requiring the Court's determination were: "1. Did the Defendants sign and execute the Loan Agreement? 2. Did the Defendants sign and execute the Mortgage? 3. Did the Defendants sign and execute other loan and security documents associated with the Loan Agreement and the Mortgage? 4. Were the signatures of the Defendants on the Loan Agreement a forgery? 5. Were the signatures of the Defendants on the Mortgage a forgery? 6. Were the signatures of the Defendants on all the other loan and security documents associated with the Loan Agreement and the Mortgage a forgery? 7. Does the Mortgage secure anything? (a) If yes, what? (b) If not, why? 8. Is the Loan Agreement binding on the Defendants? 9. Did the Defendants derive any benefit from the funds advanced by the Plaintiff? 10. What is the effect of the Statutory Declaration? 11. Does the latter conduct of the Defendants in signing and executing the Statutory Declaration constitute adoption or ratification of the Loan Agreement and Mortgage? 12. Is the purported letter from the Defendants to the Plaintiff dated 3 June 2008 purporting to attach a cheque for $26,000.00 in favour of the Plaintiff's a forgery? (a) If yes, what is the effect of the letter? (b) If not, does the letter constitute adoption or ratification of the Loan Agreement and Mortgage? 13. If the Loan Agreement and/or Mortgage have been forged, whether that fact in the circumstances of this case prevents a latter adoption and/or ratification? 14. Whether the First Defendant had a telephone conversation with Steven Giustozzi on 26 October 2007 in which the First Defendant approved the advance? 15. In the event that one or both of the First and Second Defendants did not execute the Loan Agreement but that the conversation on 26 October 2007 is found to have occurred, whether either or both of those Defendants are estopped from denying that they entered into the Loan Agreement by reason of that conversation and the Plaintiff's reliance on it? 16. In the event that one or both of the First and Second Defendants did not execute the Loan Agreement, whether such other person or persons who did execute the Loan Agreement did so as agent for either or both of the First and Second Defendants? 17. In the event that one or both of the First and Second Defendants did not execute the Loan Agreement, the extent to which the mortgage remains enforceable due to indefeasibility under section 42 of the Real Property Act 1900 (NSW)? 18. Whether the Loan Agreement should be set aside under the Contracts Review Act 1980 (NSW) in relation to such of the First and Second Defendants as are found to have executed it?" Credit 7Few of the factual circumstances were agreed between the parties. Even the witnesses called in the defendants' case, including the defendants themselves, gave contradictory evidence as to what had transpired. The result was that the credit of numerous witnesses was in issue. It is convenient to deal with that matter at the outset. The plaintiff's witnesses 8Mr Kolotas, a finance broker trading at the time of the loan in the short term funding area, gave evidence as to his dealings with Mr and Mrs Hraiki and Sam Hraiki. His evidence was that he had been approached by Sam Hraiki, a well known business acquaintance, for whom he had a lot of respect and who he described as then having regarded like a son. Sam Hraiki told him of his aunt's ill health and his uncle's work as a taxi driver. He was told that a loan was needed to assist his aunt and uncle finish off renovations to their home. He dealt with Sam Hraiki and did not meet Mr and Mrs Hraiki until May 2008, after he learned that the loan he had arranged was in default. He did not speak to them until then. His evidence was that neither of them told him of any fraud in relation to the signing of the loan documentation. He was left understanding that there would shortly be a refinance arranged. 9He was later approached directly by Mr Hraiki and met with he and Mrs Hraiki at a McDonalds. On his evidence, his advice, which both Mr and Mrs Hraiki deny, was that they could not ignore the legal documentation they had been served and that if they could not trust or rely on Sam Hraiki, they should obtain independent advice. They had already then spoken to a solicitor. Mr Kolotas could not remember that he was even then told of any fraud. Both Mr and Mrs Hraiki deny his account of these meetings. They both claim that they discussed the fraud at the second meetings. Mrs Hraiki claimed that she told him about the fraud at their first meeting, although Mr Hraiki denied this. 10Having carefully considered the competing evidence, I am satisfied that Mr Kolotas' evidence must be preferred over that of Mr and Mrs Hraiki, in the case of conflict. He said that he had tried to help Mr and Mrs Hraiki, understanding they had borrowed the money. Mr Kolotas had no interest himself in any of the matters here in issue. He gave his evidence frankly. I can see no basis on which it could sensibly be rejected. There is simply no basis on which it might reasonably be supposed that Mr Kolotas willingly became involved in covering up a fraud. He had nothing to gain thereby. That Sam Hraiki would have been content to have revealed to Mr Kolotas that the loan and mortgage documents were forged, as was implicit in Mrs Hraiki's evidence, is unlikely. While Mr and Mrs Hraiki's close personal relationship with Sam Hraiki on their evidence provided them with a reason for assisting him to conceal the fraud, that Mr Kolotas was involved in that exercise, rather than helping them to deal with the default, as was his evidence, is not plausible. 11Mr Giustozzi, employed by Capital as a senior loan consultant, gave evidence about various conversations with Mr and Mrs Hraiki in 2007 and 2008, including when he heard Mr Anthony Logozzo, Capital's credit manager, speak to Mr Hraiki by telephone in January 2008. The timing and content of the conversations were in issue. I have concluded that in the case of conflict, his evidence must be preferred. 12Mr Logozzo was not called. There is no issue that there were conversations between he and Mr Hraiki, but their contents are in dispute. A Jones v Dunkel (1959) 101 CLR 298 submission was also made in relation to the failure to call Mr Logozzo. The explanation for his absence was that while Mr Logozzo had sworn an affidavit in the proceedings, he was away on a long arranged overseas holiday at the time of the hearing. When that became known, Mr Giustozzi swore a further affidavit deposing to the conversation he had heard. It was argued that Mr Giustozzi's evidence as to this conversation was but recent invention and that it should not be preferred over that of Mr Hraiki. 13I am unable to accept this submission. It was clearly intended to call direct evidence from Mr Logozzo about the details of the conversation which he had with Mr Hraiki. There was a change of solicitors and when it came to be appreciated that he would not be available to be called at the hearing, an affidavit was sworn by Mr Giustozzi, as to what he had heard. It seemed to me that Mr Giustozzi was a credible witness. He made appropriate concessions in cross examination and his evidence, at least in part, including in relation to Mr Logozzo's conversation with Mr Hraiki, was corroborated by Mr and Mrs Hraiki. 14Mr Giustozzi explained that he worked closely together with Mr Logozzo and that they were in the same office when he heard the conversation in question. Mr Logozzo was using a speakerphone, that being a practice which they adopted when a loan went into default. At other times, if they were in the same office speaking to clients, a speaker phone was also used. Mr Giustozzi explained that when he had initially spoken to Mr Hraiki, the loan was not regarded as being in default. While Mr and Mrs Hraiki were then in breach of the loan agreement, Capital would initially try to sort it out in discussion with the client. He was then pursuing a payment which was in arrears and was seeking an explanation from the client as to whether the payment had been made, or would be made. Mr Giustozzi explained that once that was discussed with the client and payment was not made, the loan would then be regarded as being in default and the lawyers notified to commence proceedings. 15Mr Giustozzi also made a contemporaneous record which supported his account, as did other evidence of the steps later taken by Capital. The letter which Mr Giustozzi wrote on 17 January 2008 also supported his recollection of the earlier conversations which he had had with Mr and Mrs Hraiki. The statutory declaration later provided by Mr and Mrs Hraiki to Capital, to which it will be necessary to return, also supported his account. 16There were also conflicts between the evidence given by Mr Woods, employed by Capital's solicitors, Gadens, and that given by Mr Hraiki. Mr Woods' evidence was in part supported by contemporaneous file notes and other documents. I am also satisfied that in the case of conflict his evidence must be preferred. 17There were various phone records in evidence, as well as email communications, which identified times in Adelaide and Sydney, respectively, when calls were made or emails sent. Certain Vodafone records of Mr Hraiki's mobile phone number were claimed to cast doubt on evidence from Mr Woods, for example, that he had made a phone call to Mr Hraiki on 25 October 2007 from a landline, advising him that the mortgage documents were ready to be collected. Mr Woods kept a contemporaneous note of this conversation. It followed an email from Mr Giustozzi telling him to contact Mr Hraiki the next day and a later email from Mr Kolotas advising that Sam Hraiki should be called, because Mr Hraiki was working. It was argued that it would be concluded that it was Sam Hraiki, not Mr Hraiki, to whom Mr Woods spoke. Mr Woods' evidence was that he called Mr Hraiki from a landline. 18I am satisfied that Mr Woods' evidence must be accepted. As the plaintiff submitted, that the Vodafone records purported to show all calls received on Mr Hraiki's number, rather than those received from other Vodaphone numbers, for example, was not apparent, especially when other records in relation to Mr Giustozzi's calls on his Optus account are considered. The Optus record shows that Mr Giustozzi made a call to Mr Hraiki's number on 25 October, but the Vodafone record does not show that such a call was received. Nor does the Vodafone record show that any calls at all were received by Mr Hraiki from any landline. 19What is not in doubt is that Mr Woods made arrangements for the documents to be collected from Gadens and they were. Mr Woods believed that it was Mr Hraiki to whom he spoke on his mobile when he made that arrangement. He remembered he spoke to a man with an accent, who identified himself as Ishac Hraiki. Mr Hraiki speaks with a noticeable accent and Sam Hraiki does not. Mr Giustozzi also believed that it was Mr Hraiki to whom he spoke. Mr Hraiki denied both conversations. I have come to the conclusion that Mr Woods and Mr Logozzo's evidence must be preferred. 20Mr Casemore gave evidence about a valuation which he had prepared of Mr and Mrs Hraiki's home, which was provided to Capital in October 2007. The valuation referred to Ishac Hraiki as the client and that it had been requested by Sam Hraiki. Mr Casemore remembered meeting three people at the house, two men and a woman. The instructions from the mortgage broker who had ordered the valuation, had originally been to contact Sam Hraiki. At the time of the hearing Mr Casemore was not confident of identifying the three people who he had met at the house at Greenacre that day. He believed that he met with the owners, who showed him the property and explained the works being undertaken there, although he did not ask them for identification. An appointment had earlier been made for his inspection. The valuation which Mr Casemore prepared did not contain photos of the inside of the house, only external shots, but it did include a floor plan. 21Mr Hraiki confirmed that at the time he was renovating the property. Both he and Mrs Hraiki gave evidence of a valuer coming to the house, but denied that a valuation had been undertaken, or that they had authorised it. I am unable to prefer Mr and Mrs Hraiki's evidence over that of Mr Casemore. I accept that he undertook an inspection at their house, in order to value the property, as was his evidence and that he met Mr and Mrs Hraiki there for that purpose. The defendants and their witnesses 22As Mr and Mrs Hraiki's counsel was forced to acknowledge, there were serious difficulties with the evidence which Mr and Mrs Hraiki gave, when one tried 'to put the pieces together in any fashion which supports the case which they are advancing'. It was also submitted that there was not one witness called on behalf of the defendants who could be believed in all respects. It was argued, nevertheless, that all evidence which they gave favourable to the plaintiff, should be rejected, as should evidence which conflicted with that of Mr and Mrs Hraiki. I cannot accept that submission. 23Mr and Mrs Hraiki's credibility was challenged by the plaintiff. The credit of Mr Sam Hraiki, Mr Shadi Hraiki, Ms Rita Aoun, the sister of Sam and Shadi Hraiki, Mr Vo and to a limited extent Mr Ly, were all put in issue by the defendants. Sam Hraiki, Shadi Hraiki, Mr Ly and Mr El-Khadem were each given certificates under s 128 of the Evidence Act 1995 in relation to part of their evidence. Ms Aoun sought, but was refused such a certificate. 24Unravelling the tangled web which the evidence presented, particularly that called by the defendants, was not easy. In approaching that task consideration had to be given to a number of matters, including Mrs Hraiki's long term ill health, her limited command of English and the fact that she gave instructions to her solicitor, Mr Secivanovic, as to the preparation of her affidavit in Arabic. The affidavit was then settled by Mr Secivanovic preparing the affidavit in English and then translating it for Mrs Hraiki into Arabic. Mrs Hraiki also gave her oral evidence with the assistance of an interpreter. From her answers given in cross examination it was apparent that Mrs Hraiki understood much that she was asked about, answering questions in English from time to time, but largely she preferred to have the questions asked of her translated and she also mostly answered them in Arabic. Mrs Hraiki also reads English poorly and had various documents, including her affidavit, translated into Arabic while giving her evidence. 25That being so, it cannot be doubted that Mrs Hraiki was given a fair opportunity to put forward her case through the evidence which she herself gave. For reasons which will become apparent, I finally came to the view that Mrs Hraiki did not give all of her evidence in a way which strict adherence to the truth would have required. Nor did Mr Hraiki. 26When first giving his evidence, Mr Hraiki was emotionally affected, but had overcome that difficulty by the following day. Mr Hraiki had a better command of English than Mrs Hraiki. While at one point it was suggested that he would also be assisted by use of an interpreter, he did not finally take that assistance. Mr Hraiki works as a taxi driver. He can speak and understand English with little apparent difficulty. He can read English, albeit he was troubled at the time of giving his evidence, with problems with his eyes. There was no suggestion that at the time of the events in question or when he prepared his affidavits, that he had any difficulty reading. To the contrary, his evidence was that he had read his affidavits many times. He also said when cross examined that he could understand them, but later claimed that there were aspects of his affidavits which he did not understand. That evidence was difficult to credit. 27It was later submitted for the defendants that Mr Hraiki would be accepted as having been confused when giving his evidence, particularly when giving evidence that he had never before seen documents to which he was taken, even though they were annexed to his affidavits and he had there given evidence about them. 28At certain points during the cross examination there was clearly an element of confusion. It appeared initially that Mr Hraiki may not have recognised that the Court bundle to which he was being taken included a copy of the documents annexed to his affidavit, which he had dealt with in the affidavit. He also appeared confused as to whether he had received one or two letters from Capital, when clearly there was only one. Finally, I came to the view that Mr Hraiki's evidence suffered from similar difficulties to that of Mrs Hraiki, although to a more significant degree. There came times when I formed the impression that Mr Hraiki was not giving truthful evidence, but was rather giving whatever answers he then believed would advance the defendants' case. His apparent confusion appeared finally to stem from a difficulty in keeping his story straight, given that the evidence which he was giving was not entirely truthful. 29It followed that Mr and Mrs Hraiki's evidence had to be approached with great caution, particularly when it conflicted with that of other witnesses, including witnesses called in their own case. In cross examination, Mr and Mrs Hraiki contradicted each other in a number of ways, as well as contradicting evidence which they had earlier given in their affidavits. While in their affidavits they contradicted various evidence given by the plaintiff's witnesses, in cross examination they gave evidence which corroborated aspects of that evidence. 30This explains why I could not accept the submission that I should accept Mr and Mrs Hraiki's evidence and that part of the evidence of the other witnesses which supported their case and that I should reject those parts which contradicted Mr and Mrs Hraiki's evidence. 31The experts' opinions generally supported Mr and Mrs Hraiki's denials that they had signed any of the documents in question, other than the letter of 3 June 2008 sent by Mr Kolotas. Capital's case was that even if they had not themselves signed those documents, Mr and Mrs Hraiki were aware of and had consented to the loan which Sam Hraiki had obtained from Capital on the security of their home. Further, by their conduct Mr and Mrs Hraiki were, in any event, bound by the transaction. 32For their part, as well as claiming that their signatures on all relevant documents, including the 3 June letter, had been forged, Mr and Mrs Hraiki each denied any knowledge of the loan or of Capital, prior to January 2008, when it began pursuing them for repayment of the loan. Mr Hraiki at one point informed Capital that the documents had not been signed by them and even though he later withdrew that advice, his evidence was finally that what he then told Capital was inaccurate. 33Despite the expert evidence which supports Mr and Mrs Hraiki's claims that their signatures on the loan and mortgage documents were forged, for reasons which I will explain, I am unable to accept Mr and Mrs Hraiki's evidence that they were not aware of Capital or the loan before January 2008, or that the loan was obtained without their knowledge or consent. In short, their conduct when first contacted by Capital, as well as other steps which they later took, were not consistent with any such lack of knowledge. To the contrary, it suggested both knowledge of and consent to the use of their home as security for the loan, they being aware that the money was being obtained for use by Sam Hraiki in his business. 34Sam Hraiki's evidence also had to be approached with real caution. He is in custody facing charges concerning the falsification of documents. He, like other of the defendants' witnesses, were subpoenaed to give evidence by Mr and Mrs Hraiki. They were given leave to cross examine him as to parts of his evidence, as the result of rulings made under s 38 of the Evidence Act . It was his evidence that they had consented to their home being used as security for the loan; that they had signed the mortgage and loan documents and that he had not forged them, but that he had not told them enough about his difficulties. 35After an adjournment overnight, when Sam Hraiki was in cross examination, he gave evidence that: "Q. Mr Hraiki, do you remember when you left court yesterday afternoon you had a few words to Mr Mark Secivanovic, the solicitor for your aunt and uncle? A. Yes, at the lifts, yes. Q. And you said in a whispering voice to him some words, didn't you? A. Yes, I did. Q. And you said to him, "Tell the fat bitch to stop shaking her head. I tried to help her"? A. No, not those words. Q. What do you say you said to him? A. I said: Why did the so and so, why was she upset with me? Q. But you said, "I tried to help her", didn't you? A. No, I did not. I did not say that." 36Evidence was then called from Mr and Mrs Hraiki's solicitor, Mr Secivanovic. His evidence was: "Q. Did Mr Sam Hraiki approach you yesterday afternoon after leaving court? A. Yes, he did. Q. And did he have a brief conversation with you? A. Yes. He called me over and asked me for a second, yes. Q. And did he speak to you in a whispering voice? A. Yes. Q. And what did he say to you? A. "Tell that fat bitch to stop shaking her head. I've tried to help them". No, sorry, "Tell them I've tried to help them". Q. After you had that conversation you then came and reported that to Mr Salama and myself? A. Correct." 37I am satisfied that Mr Secivanovic's evidence must be preferred. It is consistent with the view I have formed of the evidence which Sam Hraiki gave the previous day and subsequently, namely, that the evidence was not entirely truthful. To that point he had given some evidence which contradicted that given by his aunt and uncle, particularly in relation to the execution of the loan and mortgage documents, which he claimed they had signed. Other parts of his evidence, however, supported their case. In my view Sam Hraiki tailored his answers in part to support his aunt and uncle's case, as he told Mr Secivanovic he had done, albeit being careful to deny involvement in the forgery of their signatures. 38The result was that it was not a simple matter of preferring Mr and Mrs Hraiki's evidence when it conflicted with that of Sam Hraiki. In resolving where the truth lay, I have had considerable regard to the evidence as to how Mr and Mrs Hraiki conducted themselves at particular times. That seems to me a more reliable indicator of what Mr and Mrs Hraiki knew of the Capital loan, than either their own evidence, or that of Sam Hraiki. Light was shed on this both by documents and evidence given by other witnesses. 39This led me to the conclusion that even if they did not themselves sign the loan and mortgage documents, Sam Hraiki was at least being truthful when he gave evidence that Mr and Mrs Hraiki were always aware that their home was being used to secure the loan which he obtained from Capital. 40In the case of the two solicitors, Mr Ly and Mr Vo, I can see no reason why their evidence should not be accepted. Mr Ly gave evidence which contradicted that of Sam Hraiki. It was partly corroborated by Mr and Mrs Hraiki. Clearly his evidence was contrary to his self interest. 41As to Mr Vo, I cannot see any basis upon which his evidence could be rejected in preference to that of Mr and Mrs Hraiki. In cross examination Mr Hraiki agreed that Sam Hraiki referred him to Macquarie lawyers, where Mr Vo then worked, when the Sheriff came, but denied that he and Mrs Hraiki had instructed Mr Vo to act for them. He claimed that he spoke to Mr Vo, who said he could contact him in a few minutes and when he phoned again he said ' adjourned to 6 June'. Mr Vo's evidence that he was instructed to act for Mr and Mrs Hraiki and took certain steps on their behalf, including writing to Capital, but that he later ceased to act and did not appear for them in these proceedings, must also be accepted in preference to that of Mr and Mrs Hraiki. 42On balance I came to the view that Shadi Hraiki's evidence must be accepted. His evidence was largely uncontroversial on matters relevant to issues which fall to me to decide. While I accept that there was reason to have doubts about aspects of Ms Aoun's evidence, finally I was not convinced that the evidence which she gave on relevant matters was untruthful. I have concluded that nothing finally turns on evidence about which I am uncertain, for reasons which will become apparent. 43Mr El-Khadem gave evidence as to how he came to witness Mr Hraiki's signature on the statutory declaration. There is no reason for his evidence to be doubted. The defendants did not execute the loan agreement or the mortgage documents 44The plaintiff accepted that the loan agreement was the crucial document. In my view the evidence does not leave open the conclusion that this document, or the other mortgage documents in issue, were executed by either Mr or Mrs Hraiki. Not only do they deny having done so, the expert evidence supports them and Mr Ly and Ms Aoun both gave evidence that they did not witness their signatures on the documents, where their signatures purportedly appear. I have concluded that their denials must be accepted. 45Mr Ly, who signed various documents attesting that he had witnessed Mr and Mrs Hraiki's signatures, gave evidence that when Sam Hraiki provided him with various documents, including the loan agreement, they had already been signed. He had never met Mr and Mrs Hraiki and had not witnessed their signatures. There is every reason for accepting Mr Ly's evidence. It accords with that of Mr and Mrs Hraiki and the views of the experts. Ms Aoun's evidence was that her signature as a witness had also been forged. That, too, supports Mr and Mrs Hraiki's evidence. I can see no reason for rejecting their evidence. 46The parties' experts Ms Novotney and Mr Anderson each examined Mr and Mrs Hraiki's signatures on 10 documents and provided reports and a joint report as to their findings. They were not required for cross examination. While expressed in somewhat different language, the two experts largely agreed. The effect of this evidence may be summarised as: The offer letter Mr Anderson - it is more likely that Mr Hraiki's signature was not genuine, than genuine and strongly likely that Mrs Hraiki's signature was not genuine Ms Novotney - there is no evidence to suggest that either signature is genuine The mortgage, the loan agreement and other documents Mr Anderson - it is strongly likely that Mr Hraiki's signatures on these documents are not genuine and very strongly likely that Mrs Hraiki's signatures are not genuine Ms Novotney - there is no evidence that any of the signatures are genuine The letter to Capital of 3 June 2008 Mr Anderson - there is strong support for the hypothesis that the signatures are genuine, but it is equally likely that they were a cut and paste manipulation. Ms Novotney - there is prima facie evidence that they are genuine but cut and paste is not ruled out 47The experts also considered the possibility that the signatures may have been deliberately written in an attempt to later disavow them. The plaintiff's expert, Mr Anderson, was of the view that in Mr Hraiki's case, it was not possible to rule this out, but that there was little evidence to support this contention and in Mrs Hraiki's case, the signatures appeared to be written, with a higher degree of skill than Mrs Hraiki possessed. The defendant's expert, Ms Novotney was of the view that it would have been difficult for Mr Hraiki to produce one or several of the questioned signatures, and even more difficult to produce so many. In Mrs Hraiki's case, it would not have been a difficult task to produce one or several such signatures, but more difficult to produce so many. 48Mr and Mrs Hraiki accuse Sam Hraiki of having forged their signatures on all of the documents, without their knowledge. Sam Hraiki denies this. His evidence was not only that the loan was taken out with his aunt and uncle's agreement, in order that he could use the money for his business purposes, but that they themselves executed the loan and mortgage documents. He also denied having ever seen the 3 June letter, or having forged his aunt and uncle's signature on that document. 49I have come to the view that the only genuine signatures are those on the letter of 3 June. It is possible that they were a cut and paste manipulation, but that seems to me unlikely to have been the case, given the circumstances in which this letter was provided to Capital by Mr Kolotas, to which I will return. While Mr and Mrs Hraiki's evidence that they did not sign the other documents must be accepted, I am not satisfied that they did not sign this letter. 50It is unnecessary to decide who forged the other signatures. The evidence certainly points to Sam Hraiki, but nothing turns on that in these proceedings. How did The loan and the default come about? 51It will be necessary to revisit aspects of this evidence, but in broad outline, how the loan and the default came about was as follows. 52Mr and Mrs Hraiki's evidence was that they purchased their home in 2006, with borrowings of $270,000 from Perpetual Trustee Company Limited ('Perpetual'). This loan was organised by their nephew Shadi Hraiki, who completed relevant documentation for them and on whom they had relied completely. He had acted similarly for them in respect of their previous home. Shadi Hraiki also acted for Mr and Mrs Hraiki when the Perpetual loan was refinanced in 2008, with borrowings obtained from Westpac. There was no suggestion that Sam Hraiki was involved in these transactions. An endeavour to refinance the Capital loan after it went into default, with Mr Kolotas' assistance, came to nothing. 53At this time Shadi Hraiki was working as a loan referrer with certain lenders. He was not a mortgage broker and he was not then in business with his brother. His evidence was that it was Mr Hraiki who approached him about refinancing the Perpetual loan and that he had referred the application on to his sister, Ms Aoun, for referral to Westpac. For his part, Mr Hraiki claimed that it was Shadi Hraiki's idea that the Perpetual loan should be refinanced, in order to reduce the interest rate. 54Ms Aoun was then a mortgage broker working in her own business, Designer Home Loans. She confirmed that this refinance was organised for her aunt and uncle by her brother Shadi. The loan application he had prepared was one which she had accepted from him and had put in through her pipeline to Westpac. She did not discuss the application with Mr and Mrs Hraiki. She also confirmed that she had later received advice from Westpac that a loan in respect of the Greenacre property had been approved unconditionally, but could not recall the date of this transaction. She could not recall whether the loan proceeded, but other evidence established that it did, in 2008. 55Documents in evidence show that it was in October 2007 that Capital was approached by email received from a broker, Shane Porter of ACS Mortgages Pty Ltd (ACS), about a short term loan. ACS had been approached by Mr Kolotas, who had been instructed by Sam Hraiki on behalf of Mr and Mrs Hraiki. Mr Kolotas' evidence was that he always took instructions from Sam Hraiki, who was then a director of Lendwide Finance Pty Ltd. Mr Kolotas said that it was not always the case that he dealt with the actual borrowers direct and that he had no reason to doubt what he was told by Sam Hraiki. While he was aware that mortgage fraud was quite common, he had no reason in this case to be concerned, or to doubt the authenticity of documents provided. He dealt with Sam Hraiki, who was long known to him and with the Hraiki's solicitor, Mr Ly, who he understood dealt with the collection and signing of the mortgage documents. 56Sam Hraiki's evidence was that he acted as Mr and Mrs Hraiki's mortgage broker in relation to the Capital borrowing. His uncle allowed him to borrow the money against his house, in order that he could use those funds for his own benefit. He then had a massive cash flow problem and that was why he had approached his uncle to allow him to borrow funds against his property. Mr and Mrs Hraiki denied this. 57In his cross examination, Sam Hraiki said that he did not speak to both his aunt and uncle about his borrowings, he only really spoke to his uncle. His aunt and uncle had loaned him 'numerous amounts of funds on numerous occasions' and in 2007 they had loaned him money on a few occasions. This was not consistent with Mrs Hraiki's evidence. Sam Hraiki did not recall conversations with his aunt about a $60,000 and a $20,000 borrowing in 2007, loans which she agreed he had approached her about and in which she was involved in arranging. He also said that his uncle trusted him and he 'pretty much had a free reign'. 58Sam Hraiki also claimed that he could not recall much of his discussions with Mr Kolotas, at the time he was involved in a number of transactions. He did not deal with Capital or ACS himself and did not know Mr Giustozzi or Mr Logozzo, or Mr Porter or Mr Charlton of ACS. 59Sam Hraiki also said that in relation to the Capital transaction he always acted with his aunt and uncle's authority. They trusted him very much and consented to his use of their house as security. He did not recall exactly what he had used the loan money for, or even how he received it. He went bankrupt in mid-2008, when his businesses failed and so the loan was not repaid. 60There is no question that in relation to the Capital loan, initially various documents were provided to Capital, including payout advice from Resimac Pty Ltd, a 2007 rates notice and copies of Mr and Mrs Hraiki's drivers' licenses and passports. Sam Hraiki's evidence was that he was given these documents by his aunt and uncle. He denied obtaining them from his brother Shadi. 61Shadi Hraiki's evidence was that his uncle provided him with copies of identification documents for he and Mrs Hraiki for the Westpac loan. Given the time of the Westpac transaction in 2008, it does not appear that Shadi Hraiki can have been the source of the identification documents earlier provided by Sam Hraiki to Capital in October 2007. 62An indicative letter of offer for a loan of $333,000 or 75% of the loan value, and other documents were sent by Capital to ACS on 23 October 2007. The security proposed was a second registered mortgage over the Greenacre property. Conditions imposed required the defendants to confirm acceptance of the offer and to provide various declarations and personal information. 63The signatures on the executed offer letter which Capital received on 24 October were said to be witnessed by Ms Aoun. Her evidence was that she had not witnessed these signatures, that the writing was not hers, that she did not assist her aunt and uncle with any loans in 2007 and did not witness their signatures on any documents. Nor did she recall discussing any loans with them. Sam Hraiki's evidence was that the signature looked like his sister's. He denied having himself written the signatures on that document and others, but agreed that he had filled out an application form, as his aunt and uncle's broker. 64The valuation prepared by Mr Casemore for the sum of $470,000 was provided to Capital by ACS on 26 October 2007. An amended indicative offer for $242,500 was then provided and Capital's solicitors, Gadens, were instructed to prepare a loan agreement, mortgage and caveat. The defendants were required to collect the documents, providing their identification. A file note of a conversation which Mr Woods had with Mr Hraiki on 25 October, on his mobile number, about the collection of the mortgage documents was in evidence. Mr Hraiki denied having such a conversation. Mr Woods' evidence was that the documents were left for Mr and Mrs Hraiki to collect. He described the procedure adopted by Gadens for such collections, which required that identification be provided, in order for the documents to be collected. Mr Woods did not know who had signed for the documents. The Gadens record was not in evidence. While this was denied by Mr Hraiki, it is clearly possible that it was he who collected the documents. He worked as a taxi driver. The evidence does not suggest that anything prevented him from going to Gadens' office to collect them. 65There was also evidence that Mr Woods advised Mr Giustozzi that Mr Ly had certified that the copies of Mr and Mrs Hraiki's passports and drivers' licenses were correct copies of the originals which he had sighted. Capital accepted this certification. The certification was incorrect. Mr Ly had not sighted the originals as he had certified. He never spoke to either Mr or Mrs Hraiki. 66It was argued for Mr and Mrs Hraiki that it should be found that Sam Hraiki had collected the documents from Gadens. The evidence simply does not provide a basis for such a finding, despite Mr Ly's evidence that when he met with Sam Hraiki, the loan and mortgage documents had already been signed. Sam Hraiki told him that the loan was needed urgently and that he hoped that Mr Ly could do him a favour, because his aunt and uncle were unable to meet with him. He agreed and signed the documents even though he had not witnessed the signatures. He had done Mr Hraiki a similar favour on an earlier occasion, which Sam Hraiki claimed not to recollect. There is no reason for Mr Ly's evidence to be doubted. 67Mr Ly returned the documents to Gadens. On Mr and Mrs Hraiki's evidence they did not instruct Mr Ly and had never met him. That was confirmed by Mr Ly. He received his instructions from Sam Hraiki. 68When Mr Ly returned the executed documents to Gadens on 26 October 2007 he met with Mr Woods. Mr Woods' evidence was that Mr Ly also provided him with a direction to pay, which was not signed, but which he said he had received from Mr and Mrs Hraiki. 69Sam Hraiki's evidence was that he did not know whether Mr Ly had ever met with his aunt and uncle. Mr Ly was acting on a number of transactions for him at the time and he could recall meeting with him, but he could not recall providing the mortgage and loan documents to Mr Ly, or even whether he had them in his possession when he met with Mr Ly at a coffee shop in the city. He did remember visiting his uncle's house a number of times, in order to make this transaction work. He insisted that the documents had been signed by Mr and Mrs Hraiki. He said that he had spent weeks on the transaction. He denied, however, that he had himself signed the documents. 70Mr Kolotas was instructed by Sam Hraiki that the loan moneys were to be paid into an account of S Hraiki. That information was provided to Capital by ACS. Mr Kolotas did not know that the account belonged to Shadi Hraiki. Mr Kolotas did not deal with Shadi Hraiki, although he remembered receiving one document from him, faxed on Sam's behalf, from their parent's home. ' 71Mr Giustozzi's evidence was that because the nominated account provided was not in the name of the borrowers, he telephoned Mr Hraiki on the mobile number provided in the loan documentation. Mr Hraiki also denies this conversation, but Mr Giustozzi's evidence was that Mr Hraiki identified himself and then confirmed that he was content for the money to be paid into the account nominated. Telephone records in evidence support Mr Giustozzi's evidence that he made a call to Mr Hraiki's mobile number that day, as I earlier outlined. Mr Giustozzi accepted that he could not be certain that it was Mr Hraiki to whom he spoke, but there is no question that the number called was his mobile number. Mr Giustozzi remembered speaking to a man who spoke with an accent. He believed it was the same person to whom he later spoke in January 2008. The transaction then proceeded. 72Shadi Hraiki confirmed that the money was paid into his account, on his evidence without his prior knowledge. He recollected that it was a transaction between his brother Sam and his uncle, in which he had no involvement. His involvement arose when his brother phoned him and told him that there was a settlement going into his account. He had not authorised such a payment being made, but accepted what he was told. His brother had made other such payments into his account in the past. He then withdrew the money and gave it to his brother. He did not discuss the transaction with his uncle at the time. 73Sam Hraiki's evidence was that he knew his brother's account details because they had business dealings with each other in the past and had been in business together in 2001/02. He had used his account on a number of other occasions and on this occasion, had arranged for Capital to pay the money into his brother's account. He could give no explanation for why he had done so. 74The interest payment due on 26 December 2007 was not paid. Mr Giustozzi's evidence was that he spoke to Mr Hraiki on 14 and 15 January 2008 and to Mrs Hraiki on 17 January. His evidence of those conversations was: 14 January 2008 I said: "Is that Ishac?" He said: "Yes." I said: "This is Steven Giustozzi from Capital Access Australia, how are you?" He said: "Ok thank you." I said: "The interest due on your loan is overdue, it was due on 26 December, can you rectify this?" He said: "I will speak to my nephew and can you call me tomorrow?" I said: "Yes I'll speak to you tomorrow." 15 January 2008 "I said: "Hello Ishac," He said: "Hello." I said: "Hello this is Steven Giustozzi from Capital Access, did you speak to your nephew?" He said: "Yes and I will be depositing $10,000 into your account tomorrow." I said: "That would be great." 17 January 2008 "I said: "Hello is Ishac available?" She said: "No. This is his wife." I said: "It's Steven Giustozzi from Capital Access Australia, Mrs Hraiki." She said: "Ishac left his phone at home." I said: "Can you please get him to call Steven Giustozzi from Capital Access." She said: " Yes ." 75Mr Giustozzi kept contemporaneous records of making these calls, which were in evidence. His evidence was disputed. What was not in dispute was the letter which he wrote on 17 January to Mr and Mrs Hraiki. The letter was written by Mr Giustozzi, but signed by his uncle Anthony; a director of Capital. It provided: "We refer to our telephone conversation of Monday 14 January 2008 and Tuesday 15 January 2008 and confirm that you were to make a partial payment of $10,000 by close of business on Wednesday 16 January 2008, we did not receive this payment. By way of Caveat registered in the Lands Titles Registration Office and number AD525718 dated 26 th of October 2007 ("the Mortgage") you the abovenamed Ishac Hraiki and Denise Chalita Hraiki in consideration of certain advances and accommodation being granted to you at your request by Capital Access Australia Pty Ltd ("the mortgagee") and for the better securing to the Mortgagee the repayment of the said accommodation at the time and times and in the manner agreed in writing between you and the Mortgagee did mortgage to the Mortgagee all your estate and interest as the registered proprietor of the Certificates of Title Register Book Folio: 11/218470. On 26 th of December, 2007 you were required to pay interest to the Mortgagee in the amount of ten thousand nine hundred and twelve dollars and fifty cents ($10,912.50). You have not made the said payment to the date to this Notice to the Mortgagee ("the default") By way of this letter notice is given that by reason of the default you are liable to pay to the Mortgagee the sum of Two hundred and forty two thousand, five hundred dollars ($242,500.00) plus default interest due as at 26 th of December 2007 in the amount of Twenty one thousand eight hundred and twenty five dollars ($21,825.00) for a total due of two hundred and sixty four thousand three hundred and twenty five dollars ($264,325.00) ("the sum"). You are hereby given one (1) month from the date of the service of this Notice on you to pay to the Mortgagee the sum failing which the Mortgagee will, under the terms of the Deed of Priority, notify your first mortgagee to commence proceedings jointly to exercise its power of sale contained in the First Mortgage." 76Mr and Mrs Hraiki's affidavit evidence was that the first time they had ever heard of Capital was when they received its letter of 17 January 2008. Mr Hraiki denied he had ever promised any payment of $10,000. That evidence was not plausible. Mr Hraiki departed from it in cross examination, in ways to which I will return later. 77The letter refers to conversations on 14 and 15 January. Mr and Mrs Hraiki's version was that they only spoke to Capital after receiving the letters. Given the terms of the letter and Mr Giustozzi's evidence, that cannot be accepted. Mrs Hraiki's affidavit evidence was that when she spoke to Mr Logozzo, their conversation was: "He said: "This is Anthony from Capital Access, is Ishac there please?" I said: "This is his wife Denise, he has left his phone at home." He said: "Could you please make sure that he calls me back today otherwise, I will have no choice but to put your house on the market for sale." I said: "I will let him know." 78It can readily be seen that if Mr and Ms Hraiki truly had no knowledge of either Capital or the loan when they received Capital's letter, that Mrs Hraiki's response to a serious threat that their home was to be sold for reasons explained in the 17 January letter, seems entirely unlikely. 79On Mr Hraiki's affidavit evidence, when he received the Capital letter he immediately telephoned Sam Hraiki, who told him that the letter was a mistake and had been sent to him by accident. He gave him the letter and it was only later that he spoke to someone from Capital. His account of his conversation was that: "He said: " I am Anthony from Capital Access Australia, can I speak to Ishac please." I said: "This is Ishac." He said: "Your loan is in arrears, and you need to do something about it." I said: "I need to speak to my nephew, I'll call you back." 80Mr Hraiki claims that he then spoke to his nephew Sam, who said that he would sort it out. That account also seems entirely unlikely, given the terms of the letter, recording that Mr Hraiki had already promised to pay $10,000. 81It was suggested in the submissions advanced for Mr and Mrs Hraiki that because the letter was signed by Mr Anthony Giustozzi, there might have been some confusion on Mr Hraiki's part, as to who he spoke to, Anthony Giustozzi or Anthony Logozzo. There was also an Anthony Kolotas, which could have caused further confusion. I do not accept that submission. The evidence does not suggest any involvement on Anthony Giustozzi's part in any conversation with Mr Hraiki. 82Mr Hraiki claimed that he was telephoned again by Capital and said: "Please, I have been unable to contact Sam. Give me a couple of days to get hold of him and find out what is going on." He said: "OK." 83Mr Hraiki claimed that he then unsuccessfully tried to speak to his nephew Sam. He also spoke to Shadi and Rita, asking them to have Sam contact him urgently. He had still not spoken to Sam, but did not tell them about Capital. 84When Mr Giustozzi wrote to Mr and Mrs Hraiki on 17 January, he referred to his earlier conversations, the borrowings, mortgage and the default. They were given one month to pay what was outstanding, failing which Capital proposed to commence proceedings. Mr Hraiki claimed in his affidavit that it was a couple of days later, when Mrs Hraiki was contacted he immediately returned the call. He had still not spoken to Sam Hraiki and advised Mr Logozzo that: "I don't know anything about this loan. My nephew says he knows all about it and it's a mistake. My wife and I did not sign any documents with your company." He said: "I will have to report this to the fraud squad." 85On Mr Hraiki's evidence it was within minutes of that conversation that Sam Hraiki telephoned him and told him: He said: "Uncle, what have you done? I've just received a telephone call from Capital Access saying what you told them." I said: "I just told them the truth." He said: I'm coming straight over to your place." 86About half an hour later Sam Hraiki came to his home and said: "Uncle, me and my solicitors are gone." I said: "Bad luck. You did it, you fix it." He said: "Can't you tell Anthony that you were upset and that there was no fraud? I'll sort everything out. I've sold my property at Helensburgh and I'll be able to fix it quickly." 87That this is an implausible sequence of events can readily be seen. It was one from which Mr and Mrs Hraiki departed in some respects in cross examination. Contemporaneous documents which Mr Guistozzi kept, as well as the 17 January letter suggest that his account of the timing of these events is accurate. His evidence was that it was on 22 January that Mr Logozzo telephoned Mr Hraiki, after he and Mr Giustozzi had discussed the position of the loan, the promised $10,000 not having been received. On Mr Giustozzi's evidence, the conversation he heard take place on speaker phone was to the following effect: "Anthony: 'Hi this is Anthony from Capital Access. Is Ishac available?" Ishac: "Yes. This is Ishac." Anthony: "Your loan is in default." Ishac: "My loan? I do not know anything about this loan. It is not my loan. There must have been a fraud." Anthony: "If there has been a fraud we are going to call the fraud squad. Are you sure that you know nothing about the loan?" Ishac: "No. I don't know anything about it. It is my nephew." 88Later on 22 January, Mr Hraiki spoke again to Mr Logozzo, after he had met with Sam Hraiki. Again, on Mr Giustozzi's evidence, their conversation was: "Ishac: "I lied when I spoke to you earlier. I was upset. There wasn't fraud. It is my loan, it is all ok. There is no need to call the police." Anthony: "How do I know if you are lying now?" Ishac: "I was very upset. I am telling the truth." Anthony: "If you are telling the truth, you will need to prove that to me by sending me a stat dec which confirms that the loan is yours. The stat dec will have to be from you and your wife. You also need to pay the arrears on the loan." Ishac: "Ok. I'm sorry. I'm sorry about before. I will send you the stat dec and the money." 89On Mr Hraiki's account, he said: "Anthony, what I told you today was wrong. I was upset, my wife is very sick. Please forget what I told you." He said: "Are you telling me the truth this time?" I said: "Yes. I'm very sorry about before, I am under a lot of stress." He said: "I will need you to fix up the arrears as soon as possible." 90Capital sought advice from Gadens. On 29 January, Mr Woods wrote to Mr Ly, advising: "We refer to the above matter and your attendance at our office on 26 October 2007. One of the Borrowers (Mr Ishac Hraiki) has made an allegation on 22 January 2008 to the Lendor that he and his wife knew nothing of the loan from the Lender and did not sign any documents to that effect. If the Borrower is raising an allegation of fraud we have no alternative but to hand this matter (and all information collected) to the police. Please confirm with your client that this is a fraud loan and revert to us no later than close of business Wednesday 30 January 2008. We will also be notifying the first mortgagee on the title Perpetual Trustee Company Limited (Resimac Limited) of the suspected fraud." 91Mr Woods' evidence was that in response he received a telephone call from Mr Ly, who advised that the Hraikis would be recanting any claim of fraud and would provide a statutory declaration. A file note of 30 January confirms this conversation. Mr Woods conveyed this advice to Mr Giustozzi. The view taken was that if such a document was provided, that would be the end of the matter. 92Mr Ly's evidence was that he was very surprised to have received Gadens' letter. He tried to speak to 'the brokers', but his phone calls were not taken. Who Mr Ly meant by this, was not entirely clear. Presumably it was Sam Hraiki. He could not recollect the detail of his conversation with Mr Woods. 93On 1 February, Mr Kolotas provided Capital with a statutory declaration written by Sam Hraiki and executed by both Mr and Mrs Hraiki. It provided that: "I acknowledge that the mortgage documentation in relation to the loan advance from Capital Access Australia to I & D Hraiki was signed by myself and my wife in front of our solicitor at the time who was Adam Ly of Ly Lawyers. The accusations I made to Anthony of Capital Access Australia were incorrect and were made out of frustration and anger. I then called Anthony later that afternoon and acknowledged that fact." 94Sam Hraiki's evidence was that he was approached by his uncle after the loan went into default and that his uncle asked him to fix it. He could not recall details of their conversations, but that was what he tried to do, by meeting the repayments and seeking refinance. He could not recall which companies or banks that he then dealt with, but said he assured his uncle many times that he would fix the problem. Initially, Sam Hraiki could not recall a conversation in which his uncle told him that he had informed a Capital employee that he had not signed any documents, that the loan was a fraud and that he had got he and his solicitor into trouble. 95I am entirely unable to accept that this evidence was truthfully given. It was contradicted by both Mr and Mrs Hraiki, but I was also unable to accept their evidence for reasons to which I will return. 96In cross examination, Sam Hraiki said he could not remember details of their conversation. When pressed, his evidence was: "Q. Do you remember your uncle saying to you at some stage that Capital Access had called him and that he had told Capital Access that it was a fraud? A. I do recall that, that's where this statutory declaration comes into play. Q. Do you remember having a conversation with your uncle after you learnt about that allegation? A. I don't recall specific conversations, though. Q. What do you remember about what you discussed with your uncle after he said that? A. In regards to specifics, I don't really remember much. But looking at this statutory declaration, I do recall I did meet with him. This statutory declaration was drafted and he and my aunty did sign it. Q. And the words in the statutory declaration, where did they come from? A. From me. Q. Did you your uncle tell you what he wanted in the statutory declaration, then you put that down in your words, and he signed it, is that what happened? A. They are more my words, obviously. I say at the time I did explain what I was writing. Whether he understood that, I don't know. But they are his signatures. Q. Did he explain to you why he had made the allegation of fraud that he was now signing that statutory declaration? A. I don't recall the exact conversation, no. Q. Were you curious as to why he was doing that? A. There was just a lot going on at the time. So, in regards to specifics and what conversations we had, I can't tell you specifically what was discussed. But I do recall the allegation was made, yes. I do recall the allegation was made. Q. Do you remember him telling you what was going through his mind? A. Absolutely, yes. From that perspective, yes. He was concerned the deal was a fraudulent deal, and, as I said, specifics, I can't recall. But I reiterate the fact that those signatures were not fraudulently signed. Q. Did he say to you: "Sam, did you forge my signature?"? A. I was accused, yes. Q. What did you say to him? A. I can't recall, but I would have denied it." 97Sam Hraiki also remembered that there had been correspondence from Capital and that his uncle had asked him to repay the money. That was what he intended to do and if a number of developments had come to fruition, that was what he would have done. He said: "Q. But do you remember having discussions with him when you would explain to him how you were addressing the loan through your developments? A. I think, as I said earlier, just to summarise my uncle's defence, I wasn't clear about the whole transaction, I should have been a lot more clearer as to where the funds were going and how the funds were going to be acquired, so from my perspective that's where I did fail him. As I said, he did show a lot of trust with me and I think I did misuse that trust. But with regards to the signatures no, I didn't forge any signatures. Q. Do you remember in 2008 keeping him up to date on your attempts to get the loan repaid? A. Once the funds weren't paid on time our relationship did sour, so I didn't really have overly much involvement thereafter." 98Sam Hraiki recalled going to a pharmacy with his uncle to have the statutory declaration witnessed. He claimed in plainly untrue evidence that it was also a post office. He could not recall his aunt signing it there. He did not remember Mr El-Khadem witnessing the document. He thought it was an attendant who was a JP. This evidence was contradicted by both Mr Hraiki and Mr El-Khadem. 99Mr Hraiki's evidence was that he sought his niece Rita's advice before he signed the declaration. She assured him that the money would be repaid and that he should sign. Ms Aoun could remember her uncle calling her while with her brother Sam Hraiki and that they were doing some kind of business, but she did not recall what they had discussed. She did think it highly unlikely that she told her uncle that she had money and was going to 'fix the mess', as was his evidence. 100Mrs Hraiki claimed in her affidavit that she signed the declaration without reading it, or having it read to her. She departed from this account in cross examination. It certainly seems that Mrs Hraiki signed it after Mr El-Kadem had witnessed Mr Hraiki's signature. She explained in her affidavit that she did not believe that she had to inform herself of its contents. She had guests over at the time, and she asked Sam Hraiki: "What is this paper?" He said: "Don't worry Aunty, Uncle knows all about it. It's nothing important." 101Again this evidence seems implausible, given the serious situation which then confronted Mr and Mrs Hraiki. They knew that their signatures on loan documents and a mortgage had been forged; that is what Mr Hraiki had told Capital; the loan had gone into default; it was not being repaid by their nephew, who they knew had used the money. At that point, they were at risk of losing their house, their only asset, at a time when Mrs Hraiki was seriously ill with cancer, and they claim, they wanted to sell the property, in order to travel overseas to seek treatment for her. In these circumstances, that Mrs Hraiki signed the document without even enquiring what it said, seems unlikely. 102Sam Hraiki's evidence in cross examination, however, supported that of Mrs Hraiki. He said: "Q. Do you recall a conversation with your aunty when she signed the statutory declaration in which she said to you: "What is this paper?" You said: "Don't worry, aunty. Uncle knows all about it. It is nothing important"? A. I may have said that, yes. Q. Why did you say that? A. Oh, I can't recall. I cannot recall the specifics but." 103Having in mind what Sam Hraiki told Mr Secivanovic, there seems to be an obvious explanation for this evidence. It seems to me to be a part of what Sam Hraiki had in mind, when he told Mr Secivanovic that he had been trying to assist his aunt and uncle in the evidence which he was giving. 104Mr Hraiki also claims not to have read the statutory declaration, although on his own evidence he told the JP, Mr El-Khadem, who witnessed his signature that he knew what was in it. His affidavit evidence was that: "Neither Sam or Osama read the document to me. At the time of signing the document, I was indifferent about its content and its nature. I did not think that the document was a Statutory Declaration. I was unaware of what a Statutory Declaration was, its effect or nature. I do not recall ever having signed, or having to sign, a document in the form of a Statutory Declaration. If I have, then I have done so not knowing what it was." 105This evidence was also completely implausible. Mr El-Khadem's evidence was that he had signed the document at a time when he was very busy in his pharmacy. He was not a JP. Normally it was his practice when signing such a document to strike out the 'JP', but on this occasion he was busy and overlooked it. His pharmacy was not a post office. Mr Hraiki was with another man, when he asked him to sign the document. He did not read the document and could not recall what state it was in, when he signed the two pages, but he remembered Mr Hraiki signing it in front of him. Mrs Hraiki was not present. He did not witness her signature. 106Mr Woods' evidence was that he received the document by a fax sent from Greenacre News on 31 January. He was not aware who had sent it to him, but it was not Adam Ly. The terms of the declaration confirmed what Mr Hraiki had advised Mr Logozzo earlier by telephone. Capital was given further advice and then regarded the fraud case to be over. When the default was not made good, repayment of the loan was pursued. 107Sam Hraiki's efforts to refinance the loan came to nothing. Capital instructed Gadens to issue default notices. Notices dated 29 February were served. There was no response and in April 2008, Gadens were instructed to commence proceedings. On 23 April, Mr Vo wrote to Gadens, advising that Mr and Mrs Hraiki had obtained a loan from Westpac, but Capital was not repaid. It was at this time that Shadi Hraiki was involved in the refinancing of the Perpetual loan from Westpac. Shadi Hraiki's evidence was that his uncle also approached him for help later, when he received documentation from Capital, demanding payment. His uncle then wanted help refinancing that loan, but they did not discuss what the purpose of the Capital loan had been. By then the total debt was greater than the value of the property and Shadi Hraiki could not provide any further assistance. 108Mr Vo's evidence was that he had received instructions from Sam Hraiki and also from Mr and Mrs Hraiki. Mr and Mrs Hraiki denied this. Sam Hraiki initially denied having asked Mr Vo to act for Mr and Mrs Hraiki. He then said that his relationship with Macquarie Lawyers was that it had acted for him in a number of criminal matters. When pressed, he said that he could not recall, explaining that he had been in custody for 19 months. 109Mr Vo could not remember whether he had ever met Mr and Mrs Hraiki in person. He explained that the Hraiki family was large and that Macquarie Lawyers had acted for a lot of them. He also said that Sam Hraiki had asked him to act for both Capital and Mr and Mrs Hraiki and to prepare a loan agreement, but he had declined and had then ceased acting for Mr and Mrs Hraiki. He had earlier written a letter on their behalf. Beforehand he had spoken to them a few times on the phone. He confirmed that he had appeared in Court for Sam Hraiki, but he had not appeared in this matter. He also denied having advised Mr Hraiki that this matter had been adjourned. 110Mr Vo's evidence must be accepted. The letter which he wrote was certainly consistent with the evidence that a refinance was organised through Westpac, a matter with which Mr and Mrs Hraiki were dealing with Shadi Hraiki. It was also consistent with Mr Kolotas, Sam Hraiki and Shadi Hraiki's evidence, that other steps were unsuccessfully taken to attempt to refinance the Capital loan. 111Mr Kolotas' evidence was that he was then contacted by ACS, who wanted to know why the loan had gone into default. He understood that Mr and Mrs Hraiki were not responding to any of the legal documents served on them. He spoke to Sam Hraiki and a meeting was arranged with Mr and Mrs Hraiki, which took place in May 2008. He explained that his purpose was to advise them of the severity of their situation and that they could not ignore the legal documents they had been served. He did this out of a desire to help them, given that he understood that Mrs Hraiki was in ill health and Mr Hraiki was working long hours in his taxi. 112They then told him that they were depending on Sam Hraiki to resolve the situation and that they had taken the loan in order to assist him with his financial problems. To that time Mr Kolotas had understood that the money had been borrowed for renovations. He learned that the money was to be repaid through Sam selling or developing a couple of deals which he had in the wind. Mr and Mrs Hraiki were distressed and Sam Hraiki remorseful for the position they were in. 113Mr Kolotas denied, however, that he was told at the meeting that they had not signed any of the documents. He was aware that there had been an earlier allegation made by Mr Hraiki, which had come to his attention, he believed from Michael Charlton of ACS, or Sam Hraiki. He had then discussed that allegation with both Mr Charlton and Sam Hraiki, advising that they had to get to the bottom of it and that it had to be resolved. The statutory declaration that Mr Hraiki and Mrs Hraiki later signed was faxed to him, he was not sure by who, and he provided it to ACS. He never himself dealt with Capital. 114Mrs Hraiki's evidence was that they discussed their problems with Mr Kolotas and that she told him that there had been a fraud or stealing. It was Mr Kolotas who said 'he will try to help us and Shadi sell three properties to him to fix our home'. This was inconsistent with both Mr Hraiki's evidence and that of Mr Kolotas. Mr Hraiki denied that fraud had been discussed at this meeting. 115Mr and Mrs Hraiki spoke to Mr Kolotas a second time, on this occasion without Sam Hraiki. Who arranged the meeting was in issue, as was what was discussed. Mr Kolotas said that it was sought by Mr Hraiki. Mr Hraiki claimed that it was Mr Kolotas who approached him to meet. He told them that there had been a fraud and that three properties were to be used to free the property, one of which belonged to Mr Hraiki's brother George. 116It was common ground that Mr and Mrs Hraiki were distressed, concerned that they might lose their home. Mr Kolotas could not recall either of them saying at this meeting that they had not signed any documents. He did advise them to seek independent legal advice about their situation. They told him that Sam Hraiki had promised them that he would fix the problem. He was aware that there had earlier been a refinance with Westpac, secured over the property and he had been instructed by Sam to seek other refinancing, to be secured over properties which did not belong to Mr and Mrs Hraiki, but he finally did not undertake that task. 117Mr Kolotas said that he was later told that he did not need to be involved further, legal proceedings were to be pursued. He spoke to Sam Hraiki, telling him that the situation was disastrous and that his aunt and uncle would lose their home. Sam Hraiki said that he had several irons in the fire and was doing all he could. 118In June 2008, Capital received the letter signed by Mr and Mrs Hraiki, also sent by Mr Kolotas, advising: "I wish to confirm that I am in the process of discharging the loan. Please find attached an initial payment $26,000 as a sign of our good faith. Second payment: Please find attached a Letter of Authority authorising Michael Charlton to discuss and negotiate on our behalf with Perpetual Trustees & Resimac to obtain excess funds incorrectly paid to Resimac at settlement in excess of $100,000. This will provide in excess of $185,000 to be used to discharge of our loan. We understand there is still a short fall in the discharge of our facility with you and in this regard we will also be seeking assistance from my brother who will provide additional security to raise additional funds & discharge loan in full. We sincerely apologise for the delays and inconvenience caused to date and we will do what ever it takes it to amicably resolve this loan. We respectively request your favourable consideration and thank you for your support to date." 119Mr Kolotas' evidence was that he received this letter from Sam Hraiki. Mr and Mrs Hraiki deny signing this letter, although Mr Hraiki's evidence was that there was discussion of his brother's property being used as security. Sam Hraiki denied having ever seen the letter, having drafted it, or having supplied it to Mr Kolotas. He also denied having created the letter using cut and paste, although he said that he was facing criminal charges in which it was alleged that he had created documents which were not authentic. 120A cheque on the account of EQ Pty Ltd for the sum of $26,000, was also hand delivered to Capital's offices in Adelaide by Mr Michael Charlton of ACS, it was said 'as a sign of good faith'. Mr Giustozzi said that ACS and Capital had long had business dealings with each other. The cheque was, nevertheless, dishonoured. While Sam Hraiki denied supplying that cheque and claimed that he could not remember this company, who else could have been the source of the cheque, is not apparent. On Mr Kolotas' evidence he was not involved, other than sending on the letter. The loan was obtained with Mr and Mrs Hraiki's knowledge and consent 121For the defendants, it was urged that the fact of the forgery of their signature on the loan and mortgage documents should be accepted as establishing their case that they had no knowledge of the existence of the loan, before they were approached by Capital in January 2008, after the loan went into default. The plaintiff argued that even if that was the case, it was a part of a deliberate plan to permit Mr and Mrs Hraiki later to deny knowledge of the loan. 122While I have come to the view that Mr and Mrs Hraiki did not execute these documents, I am also satisfied that the evidence does not permit the conclusion that Mr and Mrs Hraiki were not aware that the loan had been obtained by Sam Hraiki, or that their property had been used to secure the loan, as they claimed. In my view of the evidence, they were always aware of the loan which he had taken out from Capital and that they were content for it to be secured by a mortgage over their property. That they were a part of a deliberate plan to create a scenario in which their signatures were forged, so that they could later deny knowledge of the borrowings was not however, a view to which I was able to come on the evidence. 123Mr and Mrs Hraiki repeatedly denied that the loan was obtained from Capital with their knowledge and/or consent. Sam Hraiki denied that their signatures were forged and claimed that they agreed to the use of their house as security for the loan. That they did not sign the loan agreement, mortgage and other documents examined by the experts, other than the letter of 3 June, supports Mr and Mrs Hraiki's case. Despite this, I have come to the view that the evidence does establish that the loan was obtained with their knowledge and consent. Their case is that Sam Hraiki should not be believed as to any of his evidence, other than that which supports them. As I have explained, I am satisfied that Mr and Mrs Hraiki, as well as Sam Hraiki did not give entirely truthful evidence about these matters. 124While Sam Hraiki's evidence clearly has to be approached with caution, nevertheless, I do accept his evidence that Mr and Mrs Hraiki were always aware of the fact that the money he was borrowing from Capital, was to be secured over their home. Sam Hraiki's account was supported by Mr Kolatas' evidence as to what he was told by Mr and Mrs Hraiki. That Sam Hraiki had borrowed money from his aunt and uncle on earlier occasions, including in 2007 was also conceded, despite certain initial denials, especially by Mrs Hraiki. Sam Hraiki's evidence was that in 2007, when he was having cash flow problems in his business, his aunt and uncle also agreed to him borrowing money from Capital, using their house as security, in order to help him further. He denied having forged their signatures on the loan and mortgage documents, having acted without their knowledge, or having committed any fraud, but he accepted that he should have been more frank with them, as to his circumstances. This evidence, I am satisfied, was partly truthful. 125On their own evidence, Mr and Mrs Hraiki regarded and treated Sam Hraiki as their son. They had the utmost confidence in him. They believed him to be a very successful businessman. They had lent him substantial sums before and no doubt still believed in 2007 that he would be able to repay the money he wanted to borrow from Capital, using their home as security for the loan. They continued to believe this, even after they became aware that their signatures on the loan and mortgage documents had been forged and the loan had fallen into default. 126That they did not initially concern themselves with the steps taken in order to give effect to the loan which their house secured, is apparent. They were content to leave everything in Sam Hraiki's hands, assisting him with what he needed by the provision of their identification documents and rates notice, but not concerning themselves about the execution of any documents. It was only when Capital began pursuing them for repayment in January 2008, after the loan went into arrears and when Mr Hraiki had difficulty in reaching Sam Hraiki, that their attitude changed. Initially, they did not deny any knowledge of Capital or the loan. Having received the letter of 17 January and being unable to reach Sam Hraiki, Mr Hraiki revealed to Capital that they had not executed any documents and claimed that they knew nothing at all about the borrowings. I cannot accept that this advice was truthful. Even if it was, they were soon content to mislead Capital, by withdrawing that advice, once they had spoken to their nephew. The forgery of their signatures later assisted them to deny knowledge of the loan, but various other evidence demonstrated that this denial was untruthful. 127That this was so was revealed in a number of ways. 128The loan application was supported by copies of documents including a 2007 rate notice, Mr and Mrs Hraiki's driver's licenses and passports. There was no explanation given by Mr and Mrs Hraiki as to how those documents could have come into Sam Hraiki's possession, other than that he stole them, while visiting their home, or that Shadi gave them to him. Neither was a plausible explanation, particularly when Mr and Mrs Hraiki's conduct is considered. That was consistent with they having given those documents to Sam Hraiki, as was his evidence. Shadi certainly cannot have had the 2007 rate notice when he organised the Perpetual loan in 2006. 129Their later conduct also suggests that it was they who provided him with the documents necessary to establish their identify to Capital, in order to enable the transaction which was secured by their property to proceed. 130Mr Giustozzi and Mr Woods' evidence was that they each spoke to Mr Hraiki in October 2007. Mr Woods about collecting the mortgage documents and Mr Giustozzi confirming payment into Shadi Hraiki's account. Both conversations were consistent with Mr Hraiki having direct knowledge of the loan which was being obtained. Both Mr and Mrs Hraiki having such knowledge also explains their reactions, when contacted by Mr Giustozzi in January 2008 about the default. 131It was not in issue that both Mr and Mrs Hraiki spoke by phone to someone from Capital in January 2008. The evidence established that they initially spoke to Mr Giustozzi. Even on their own accounts, when they first spoke to Capital, after they received the 17 January letter, neither denied any knowledge of the loan or Capital, nor evinced any surprise at being contacted about a loan from Capital. On their own accounts Mrs Hraiki said that she had to speak to her husband and Mr Hraiki that he had to speak to his nephew. Even if the sequence of events occurred as they would have had it in their affidavit evidence, receipt of the letter of 17 January preceding the phone conversations, their responses to Mr Giustozzi were not consistent with a lack of prior knowledge of Capital, or the loan secured over their home. The letter of 17 January itself supports Mr Giustozzi's account, as does the contemporaneous record which he kept as to the steps then taken by Capital. The letter recorded a promise to pay $10,000. That was never denied in any conversation which Mr and Mrs Hraiki had with Mr Giustozzi or Mr Logozzo. 132It seems to me that had they been unaware of the existence of Capital and the loan, Mr and Mrs Hraiki would have behaved quite differently when approached, given their personal circumstances at the time. In cross examination, Mr and Mrs Hraiki's explanations of their reaction and conduct when contacted by Mr Giustozzi, led me to the conclusion that their evidence about these events could simply not be believed. 133On his account, it was only when Sam Hraiki failed to return his calls that Mr Hraiki told Mr Logozzo, that they had not signed any documents. That appears to have been true, but ignored his knowledge of the loan and his earlier promise to pay $10,000. It was information which he soon came to appreciate from Sam Hraiki, would cause him serious problems. Mr and Mrs Hraiki's knowledge of the loan, their relationship with Sam Hraiki and their belief as to his ability to repay the loan, all explain why they were prepared to withdraw that advice. 134Mr Hraiki thus spoke again to Mr Logozzo and withdrew his allegation. When Capital required a statutory declaration to confirm that advice from both Mr and Mrs Hraiki, it was promptly provided. There is no question that it was incorrect in various respects. That it was signed anyway by both Mr and Mrs Hraiki, even though Mrs Hraiki's signature was not witnessed by Mr El-Khadem, was not in issue. 135Mr Hraiki gave evidence that he had sought Ms Aoun's advice about signing the statutory declaration and that she had advised him to do so. Ms Aoun could not recollect this, although she remembered that she had spoken to her uncle about business which he was doing with her brother Sam. It is unnecessary to come to any concluded view about whether that discussion occurred on the basis Mr Hraiki claimed. The fact is that his evidence confirmed that at that stage Mr and Mrs Hraiki were aware that the loan and mortgage documents had been forged; that the loan had fallen into arrears; that they had been reassured by Sam Hraiki that the borrowings would be repaid and their home would not be put at risk. It may well have been the case that Mr Hraiki also consulted his niece, who encouraged them to proceed in the way her brother was urging. That Mr Hraiki claims to have done so, supports the conclusions I have reached, that it was in order to protect his nephew and to give him the opportunity to pay the arrears on the loan which had been taken out with their earlier consent, that Mr and Mrs Hraiki were prepared to withdraw in writing the allegation Mr Hraiki had made to Capital, that their signatures had been forged. That they would have been so supportive, had they had no knowledge at all before being approached by Capital of what Sam Hraiki had done in relation to using their house to secure his borrowings, is difficult to credit. 136Their denials that they did not understand what they were signing or doing, by providing this statutory declaration to Capital, were also simply not credible. 137Despite the assurances which Sam Hraiki then gave them, the loan was not repaid and Capital pursued Mr and Mrs Hraiki further. They then enlisted Mr Kolotas' help. On his evidence, when they met it was not then suggested to him that Mr or Mrs Hraiki were not aware of the loan, or that their signatures had been forged. That evidence must be accepted. It was partly corroborated by Mr Hraiki and is consistent with the view which I have formed that Mr and Mrs Hraiki were always content for their home to be used by their nephew to secure these borrowings. Mrs Hraiki's claim that it was she who told Mr Kolotas at this meeting about the forgery is not credible. That allegation had already been withdrawn by the statutory declaration. This evidence, particularly when considered with Mrs Hraiki's evidence about how shameful this situation was, on her account, so shameful that it was one she was not later prepared to tell her solicitor about when preparing an affidavit in these proceedings, was just unbelievable. 138I am satisfied that on the second occasion Mr Kolotas met with Mr and Mrs Hraiki it was at their request, as was his evidence. They wanted help, when it appeared that the loan could not be repaid and Capital was seeking possession of their home. He advised them to seek legal help. He could not recall them even then alleging that there had been any fraud, even though both Mr and Mrs Hraiki's evidence was that they then discussed Sam Hraiki's alleged fraud with him. That, it seems to me, was unlikely, particularly having in mind the terms of the letter of 3 June 2008, which Mr Kolotas later provided to the plaintiff on their behalf. 139It is my view that Mr and Mrs Hraiki in all likelihood themselves signed this letter. It accorded with what they had told Mr Kolotas at the meeting, at a time when Sam Hraiki was making efforts to repay the loan, as he had promised. They had earlier asked Capital for further time. This was but another way in which this was pursued. 140The upshot of all of the evidence is that I am satisfied that Mr and Mrs Hraiki's resistance of this claim is not based on a truthful account of what they knew and what they did at relevant times, but rather a series of untruths, designed to permit them to resist Capital's pursuit of the borrowings which Sam Hraiki lost in bad business dealings. Their evidence in cross examination particularly explains why I have reached this view. It is necessary to say something more about this part of the evidence, which clearly showed the unreliability of Mr and Mrs Hraiki's evidence and why their account could not be believed. 141For his part, Mr Hraiki denied ever lying to Capital. He claimed that when he first spoke to Mr Giustozzi, he had never heard of Capital, having only dealt with Perpetual. Despite this, he evinced no surprise or concern at being approached by a company of which he had no knowledge, about repayment of a loan which he had not taken out, having received a letter which claimed that he had promised to make a payment of $10,000, a promise he claimed he never made. Instead, he asked for a few days in order to speak to his nephew and tried to contact Sam Hraiki. When asked in cross examination if he then thought that Sam Hraiki was responsible for this loan, he said 'hundred percent'. That response was entirely consistent with earlier knowledge of, and consent to, the loan. 142There is simply no other plausible explanation for his reaction. Certainly Mr Hraiki could not offer one, other than that he wanted initially to speak to Sam about Capital's approach. That was difficult to understand, in the absence of prior knowledge of the loan. 143On their version to that point Sam Hraiki had had nothing to do with Mr and Mrs Hraiki's borrowings. It was Shadi Hraiki who had assisted them. Sam and Shadi Hraiki did not then work together. Mr Hraiki could give no explanation as to why, in those circumstances, he had not approached Shadi Hraiki, who had acted for him on his Perpetual loan and who also later acted on the Westpac refinance. 144At one point in cross examination, Mr Hraiki said it was all the same to him, whether he then spoke to Sam or Shadi, they and his niece were all brokers who helped him when he needed it. Later, however, he said that Sam was 'the boss', they all worked together. That was not the evidence of Sam or Shadi Hraiki, or of Rita Aoun. Even when he did speak to both Shadi and Rita, on his own account when he could not find Sam, Mr Hraiki did not tell either Shadi or Rita about the approach from Capital, or why he was trying to find Sam. He said that he had tried to find Sam 'a million times'. That conduct again underscored Mr Hraiki's knowledge that it was Sam Hraiki who had obtained a loan from Capital, secured over their property, which Capital was pursuing. 145Mr Hraiki claimed in his affidavit that when he spoke to Sam Hraiki about Capital's January 2008 letter, Sam told him that it had been sent to him in error and that he would deal with it. Again, given the terms of the letter, that he would have accepted this, without requiring any explanation at all from Sam Hraiki, about Capital's claim is entirely unlikely, unless he had prior knowledge of the borrowings obtained from Capital. Contrary to his affidavit evidence, in cross examination Mr Hraiki claimed that when he spoke to Mr Logozzo he had not discussed the letter with Sam Hraiki. When pressed, at some points he claimed not to remember the letter, or whether he had received it. He referred to another letter claiming payment of $10,000. He claimed to be uncertain whether the letter annexed to his affidavit was that letter. On the evidence it is clear that Capital only sent one letter in January 2008, as he finally accepted. That was the letter he claimed he had received before he ever spoke to Capital. 146The clear impression which Mr Hraiki gave about these and other matters was that he simply could not keep clear in his mind the untruthful account which he had given in his affidavit and later in his oral evidence as to what had happened. This caused him significant difficulty in cross examination. 147Mr Hraiki explained that he told Mr Logozzo, after he spoke to Mrs Hraiki, that he had never signed any documents, and that Mr Logozzo's response was 'Okay, that's fraud'. Mr Hraiki said that he then believed that it was Sam who had committed the fraud. Even so, he soon withdrew the allegation, he claims after he spoke to Sam Hraiki, who then told him that 'me and my solicitor are gone' making a cutting motion across his throat. His response was 'bad luck'. He claimed that he believed at that point, that he had done the right thing. He soon changed his mind, however, phoning Mr Logozzo to withdrew the allegation, even though he was angry and upset with Sam. 148In cross examination, Sam Hraiki agreed that at the time that Mr Hraiki made an allegation of fraud to Capital, there was still a possibility that he could have repaid the loan, or that it could be refinanced with Westpac. He denied that he had been in collusion with his uncle, who had made the fraud allegation too soon; that they had acted deliberately in not having his aunt and uncle sign the mortgage and loan documents, in order that they could later claim that there had been a fraud. He also denied that he had forged the documents and arranged to have the loan money paid into his brother's account, so that it would not be clear whether he was involved in the transaction. 149I was unable to come to the view that Mr and Mrs Hraiki not signing the loan and mortgage documents was a part of a deliberate plan to evade the repayments of the loan. That the loan was one of which they were aware and consented to, was however apparent. 150Mr Hraiki resisted accepting that one of the accounts which he gave to Mr Logozzo about the execution of the loan and mortgage documents must have been a lie, as it plainly was. He claimed, at one point, that Sam Hraiki spoke to him only 15 minutes after he had advised Mr Logozzo of the fraud. This evidence was also completely implausible. None of the evidence provides any possible explanation for how Sam Hraiki, who his uncle had been unsuccessfully trying to reach for days, could so quickly have learned of Mr Hraiki's conversation with Mr Logozzo. There was no suggestion that they knew each other or that Capital then made contact with anyone other than its solicitor Mr Woods, who did not contact Mr Ly for some days. 151There is no issue that the fraud allegation was withdrawn the same day it was made, when Mr Hraiki telephoned Mr Logozzo again, he claims after speaking to Sam Hraiki. While Mr Hraiki agreed that Sam Hraiki later told him that Capital required something from he and Mrs Hraiki in writing, he denied knowing that what Capital wanted was a written confirmation that there had been no fraud. That evidence was also not credible. Nor was Mrs Hraiki's evidence about her understanding of this document. 152There was no question that Sam Hraiki drafted the statutory declaration, but Mr Hraiki insisted that he didn't read the document and claimed that if he had, he would not have understood it. Mr Hraiki also claimed that he signed the statutory declaration, because his niece Rita had assured him that she had the money from the sale of a property at Helensburgh in her account. Ms Aoun denies this. While Mr Hraiki explained that he cared about what was in the document he signed, he said that he did not read it, because he trusted his niece and nephew. 153I am also unable to accept this evidence. The document is a relatively simple one, withdrawing the allegation Mr Hraiki had made, when he earlier spoke to Mr Logozzo. Mr Hraiki had no difficulty reading or understanding English. The declaration is in handwriting, but it is clearly written. Mr Hraiki said at one point that he had read his own affidavit many times. The statutory declaration was annexed to it and he gave evidence about it in his affidavit, but when taken to the document, he claimed that he had never read it, until he was being cross examined. He also claimed that Sam Hraiki had never told him what was in it, nor did he know what its purpose was. That evidence was patently untrue, if his affidavit evidence and his account of how the statutory declaration came to be created was not false. It confirmed what he had already told Mr Logozzo, albeit adding a reference to Mr Ly. Later, Mr Hraiki claimed that he could not understand what he had said in his affidavit about the declaration. He also said that he had not signed other documents given to him by Sam Hraiki without reading them. He only signed this one, he explained, because he was promised that the debt would be repaid. 154In cross examination, Mr Hraiki had difficulty remembering the second meeting with Mr Kolotas, but denied then discussing having helped Sam Hraiki with his money problems, claiming that they had never helped him and had never told Mr Kolotas that they had done so. Early in cross examination he claimed that it was Mr Kolotas who then mentioned fraud. In his evidence, the next day, he claimed that it was he who told Mr Kolotas at that meeting about never having signed any documents. 155I am simply unable to accept that the evidence which Mr Hraiki gave about these matters was truthful. 156The conclusion that Mr and Mrs Hraiki were always aware of the loan obtained from Capital secured by their home, is also supported by evidence which Mrs Hraiki gave in cross examination, which showed that Mrs Hraiki, too, was prepared not to be entirely truthful in the evidence which she gave. 157In her earlier affidavit evidence, she had said that they had relied on Sam Hraiki in the past, in relation to their financial dealings. In cross examination she claimed that this affidavit was false. On the evidence it was Shadi Hraiki who had advised them about their other loans and Sam Hraiki who dealt with the Capital loan. 158Mrs Hraiki denied at one stage having loaned Sam Hraiki money. Mrs Hraiki finally conceded that to have been the case; on one occasion, it was $20,000 and on another $60,000. Her evidence was that it was she who Sam Hraiki approached on some occasions and that she had then given him money. She also then gave evidence about the circumstances, evidence which Mr Hraiki corroborated. 159Mrs Hraiki also denied that she and her husband were always aware of the Capital loan and had left it to Sam Hraiki to sort out. That, however, is certainly consistent with Mr and Mrs Hraiki having co-operated in the provision of a valuation of their property by Mr Casemore. Even Mrs Hraiki acknowledged that a valuer had come to their home. She explained that they then had lots of visitors and claimed that he left, after her husband told him that they did not need a valuation. Mr Hraiki's evidence was to quite different effect. He also remembered a valuer coming to the house, but he said that he then went around the house with the valuer, and they then gave him coffee. He even said that it was possible that they had discussed the renovations, evidence which corroborated that of Mr Casemore. Mr Hraiki said that the valuer told them that Sam had sent him, but claimed that they told him that a valuation was not needed and that they had not paid for it. Mr Hraiki later claimed that the valuer had remained for only a few minutes and that they did not ask Sam about why the valuation was needed. Mr and Mrs Hraiki's evidence was contradictory and not credible, particularly in the face of the valuation and Mr Casemore's evidence. 160In her affidavit Mrs Hraiki gave no evidence of being involved in any discussion about forged loan and mortgage documents. She could not explain this omission. Her evidence in cross examination was that the first time she had discussed the possibility of a fraud was with her husband, when Mr Giustozzi contacted them. It was her evidence that it was Mr Logozzo, not Mr Hraiki, who raised the suggestion of a fraud and that they first discussed fraud with Sam Hraiki, when they received the correspondence from Capital. She, however, denied herself having ever asked Sam Hraiki why he took out the loan over their property, or why he forged mortgage and loan documents. I am simply unable to believe this evidence, particularly when considered in the light of her and Mr Hraiki's conduct when first contacted by Mr Giustozzi. 161Her explanation that she did not deal with these matters in her affidavit, because she found them shameful and embarrassing, was also unconvincing, having in mind the purpose of these proceedings and given that she herself claimed that she had told Mr Kolotas about the fraud, when they first spoke to him, in 2008, albeit that is evidence which I am unable to accept. 162As to the statutory declaration, Mrs Hraiki claimed in cross examination that she had signed a blank piece of paper. Later she said there was only one or two words written on it. Then that she had signed only one page, not two. That was not her affidavit evidence, where she gave an explanation of why she believed that she did not need to inform herself of the contents of the document she signed. That account is not consistent with the document which she signed having been blank, or nearly so, as she later claimed. 163Nor was Mrs Hraiki's evidence supported by the evidence of Mr Hraiki, Sam Hraiki or Mr El-Khadem. On Mr Hraiki and Sam Hraiki's evidence, the document had already been written out by Sam Hraiki, signed by Mr Hraiki and witnessed by Mr El-Khadem, when Mrs Hraiki signed it. Mr El-Khadem did not witness Mrs Hraiki's signature. Mr Hraiki said that he saw his wife sign the document, but said that she didn't read it, or ask him what was in it. Later he said he thought the document may not have been complete, at that time but denied having discussed Mrs Hraiki's evidence with her. Given the way in which their evidence about this altered, that there had been such a discussion between them, was clearly possible. 164I do not accept Mrs Hraiki's evidence that she forgot to mention to her solicitor when preparing her affidavit that she had signed a blank document. Nor do I accept her claim that she did not know what the document said. Mrs Hraiki acknowledged that she could read some English, but said that she could not understand everything she read. Her belated claim that she had signed a blank document was plainly intended to shelter her from a finding that she had signed a document which she was capable of reading and of which she had an understanding. 165Mrs Hraiki also claimed that she signed the document at this time because she still had a lot of trust in Sam Hraiki, even though she knew that he had forged the loan documents. She finally denied, however, that she knew that by signing the document she was verifying that the accusation of fraud was incorrect. I am also unable to accept this evidence. 166Mrs Hraiki's prior conduct was consistent with knowledge of the borrowings from Capital and a concern that they be repaid by Sam Hraiki, not concern about any fraud. At one point in her cross examination, when asked whether Mr Hraiki told Mr Kolotas at their meeting, 'We trusted him. We wanted to help him because he had big money problems', she said: "A. INTERPRETER: No, when he took out the money and mortgaged the home he asked, Sam asked to wait a little bit or "give me a little bit of time" because he was selling units or unit block. I don't know what it is called. My husband does and Charles knows. Can you interpret that and then I will continue. Charles said that, "Sam is like my son", because he has been working with him for a long time. "But in the last two years he has changed". My husband said, "So, what happened? You know more about him than we do, we don't see him much"." 167Further exploration of this answer was not pursued, in the light of an objection, for which there finally proved to be no foundation in the above answer Mrs Hraiki had earlier given. Clearly her answer was not qualified by words to the effect 'When he had taken out the money we had not initially known until we got the paperwork.' 168Mrs Hraiki then sought to distance herself from what she had let slip in her oral evidence, claiming that in 2007 they had not known about the money. Nevertheless, that her earlier unguarded answer was consistent with knowledge of the loan and mortgage from the outset, must be accepted. 169This is not an exhaustive account of the difficulties with Mr and Mrs Hraiki's evidence. It is unnecessary to give further illustrations of why their own evidence convinced me that Mr and Mrs Hraiki's denials about their knowledge and consent to the loan, before being approached by Capital in 2008 and their understanding of the effect of what they were doing by the later provision of the statutory declaration, must be rejected. Were mr and Mrs Hraiki bound by the documents which they did not sign? 170There was no issue between the parties as to the applicable law, although various submissions were advanced as to the result, in the event of differing potential factual findings. 171The starting point was that the mortgage is an all moneys mortgage, purportedly securing the money loaned by Capital under the loan agreement. The registered mortgage is indefeasible, under s 42 of the Real Property Act 1900, however, Capital accepted that unless Mr and Mrs Hraiki were bound by the loan agreement, the mortgage would be of little assistance to the case it advanced. (See Perpetual Trustees Victoria Limited v English [2010] NSWCA 32 and McCallum J's recent discussion in Perpetual Trustee Company Limited v El-Bayeh [2010] NSWSC 1487 at [144] - [146].) 172Capital pressed its case by way of arguments as to estoppel, ratification and adoption. It also argued that Mr and Mrs Hraiki were not entitled to take advantage of their own wrongs, in order to defeat its claims (see Ruthol Pty Ltd v Mills [2003] NSWCA 56). 173For reasons which I have explained, I am satisfied that the evidence showed that from the outset, the loan was obtained from Capital with the knowledge and consent of Mr and Mrs Hraiki. The evidence has established that while they did not execute the loan agreement or mortgage documents themselves, the loan was obtained by Sam Hraiki, Mr and Mrs Hraiki knowing and consenting to their house being used to secure the loan which he obtained from Capital. It follows that they were bound by the loan agreement, even though they did not themselves sign the various loan and mortgage documents. As Capital argued, the evidence established that Sam acted with their authority when obtaining the loan, even though their signatures on the loan and mortgage documents were forged. 174It follows, as it was further argued for Capital, that the mortgage can attach to those loan moneys. In the circumstances, the loan obtained from Capital cannot have amounted to a fraud and the action taken by Sam Hraiki was capable of ratification by Mr and Mrs Hraiki. (See Rowe v BR Nominees Pty Ltd [1964] VR 477 at 483.) 175Given the conclusions which I have reached on the evidence, for the reasons I have explained, Capital's case on ratification must also be accepted. The evidence does not establish that Mr and Mrs Hraiki authorised Sam Hraiki to forge their signatures. That they turned their minds to this was not established, but that they authorised him to enter into the transaction, binding them to the provision of their house as security for the borrowing obtained, must be accepted. 176Mr Hraiki's later advice to Mr Logozzo that they had not signed the documents and his later withdrawal of that assertion, subsequently confirmed by the statutory declaration which Mr and Mrs Hraiki provided Capital, is but another reason for accepting the case which the plaintiff advanced. This was the result of deliberate decisions made by Mr and Mrs Hraiki, to ratify what they understood Sam Hraiki had earlier done. (See Klement v Pencoal Limited [2000] QCA 152 at [19] - [25]) 177The case advanced for Mr and Mrs Hraiki was that this did not assist the plaintiff, because forgery or fraud could not be ratified, although accepting that a forged document could be adopted, if there was knowledge of the fraud. 178There is no question that at that point they were aware of the forgery. It was they who claimed not to have signed any documents. I have not been able to accept Mr and Mrs Hraiki's evidence that they did not read or understand what the statutory declaration said. That they did not understand that what they were providing to Capital was the written confirmation of Mr Hraiki's earlier withdrawal of the forgery allegation, which Capital had required, simply cannot be credited. 179That being so, there can be no question that what Mr Hraiki told Mr Logozzo and what he and Mrs Hraiki then confirmed in writing and provided to Capital, amounted to such ratification. They were content to withdraw the allegation of forgery, being well aware that they had not themselves signed the loan and mortgage documents. There is no basis upon which it could be concluded that there was at that point any lack of knowledge on their part, about the forgery or the loan secured by the property. That the withdrawal may have been false, cannot assist them. 180The case advanced in estoppel relied on what Mr Hraiki told Mr Giustozzi on 26 October 2007, when he sought confirmation that the loan moneys should be paid into Shadi Hraiki's account. That took place before the money was advanced. Mr Hraiki then failed to inform Capital that he had no knowledge of the loan, that their signatures have been forged, or that the loan was not one which the defendants had authorised. To the contrary, he confirmed that the money should be paid as Sam Hraiki had directed. 181As to Mrs Hraiki, it was submitted that the evidence showed that Mrs Hraiki left Mr Hraiki to deal with these matters. He was her agent for the purpose of their dealings with Capital. That, too, must be accepted, Mrs Hraiki's evidence as to her own later response, when she herself spoke to Mr Giustozzi in January 2008, confirms that this was so. As I have explained, she was then clearly aware of the borrowings obtained by Sam Hraiki secured over the property and was content to have her husband deal with Capital on her behalf. 182Mr Giustozzi's evidence was that when they spoke on 15 January 2008, Mr Hraiki promised payment of $10,000, as the 17 January letter recorded. The loan was for a period of two months, with an option to extend on a month by month basis. The two month period expired on 26 December 2007. As was argued for Capital, the acceptance of the offer of the promised payment amounted to an agreement not to call in the loan by reason of the default, in return for payment of $10,000 for arrears and interest. 183This also provides a basis for concluding that by their own conduct Mr and Mrs Hraiki were estopped from denying that they were bound by the loan (see Klement at [39] - [42]). 184It was also argued that in order for the forged mortgage and loan documents to have been adopted, Mr and Mrs Hraiki would have had to have seen and read them, with the assistance of an interpreter, or have had someone read the documents to them. I am unable to accept that argument. No authority which supported that proposition was referred to. 185In this case, as discussed in Leybourne v Permanent Custodians Ltd [2010] NSWCA 78, the evidence must show that Mr and Mrs Hraiki's conduct amounted to 'clear adoptive acts' (at [132]). The evidence plainly established such acts. 186As to their claimed failure to have read or understood what the statutory declaration provided, it is pertinent to refer to Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52, (2004) 219 CLR 165. It was observed that: [45] It should not be overlooked that to sign a document known and intended to affect legal relations is an act which itself ordinarily conveys a representation to a reasonable reader of the document. The representation is that the person who signs either has read and approved the contents of the document or is willing to take the chance of being bound by those contents, as Latham CJ put it, whatever they might be. That representation is even stronger where the signature appears below a perfectly legible written request to read the document before signing it. 187At [47] it was noted that this is not limited to contractual documents and that: 'Legal instruments of various kinds take their efficacy from signature or execution. Such instruments are often signed by people who have not read and understood all their terms, but who are nevertheless committed to those terms by the act of signature or execution.' 188Given their own evidence, there is no question that Mr and Mrs Hraiki understood what a mortgage was and what it involved. Their property was already mortgaged to Perpetual. They had also had a mortgage on their former house. When contacted in January 2008, they understood that Capital was claiming that they had obtained a loan from it, secured by a mortgage over their home. That came as no surprise. They had already assisted Sam Hraiki in obtaining that loan. Initially, this knowledge was not denied, but later Mr Hraiki denied signing any documents. Mr and Mrs Hraiki later both unequivocally withdrew that allegation in writing, after Mr Hraiki had withdrawn it orally. At the time they unquestionably understood what was required, when taking out a mortgage and the effect of their claim not to have signed the mortgage and loan documents. In 2008, the Perpetual mortgage was refinanced with Westpac. It was only in order to later defend these proceedings that they have claimed that the statutory declaration was false and denied knowledge or approval of the loan. That they also had to see, read and understand the forged documents, in order for their adoption to be effective, may not be accepted. What was required, on the authorities, was knowledge and adoption. On the evidence, both were here present, as the plaintiff submitted. 189That Mr and Mrs Hraiki repeatedly misled Capital, is evident. The withdrawal of the fraud allegation accorded with the fact that the borrowings secured by their house had been obtained by Sam Hraiki with their knowledge and consent, from the outset. Now they seek to rely on the fact that they had not themselves executed the documents, in order to advance a case inconsistent with that reality. They were initially unconcerned with the documentation of the loan. Later they were not in truth concerned that their signatures on documents had been forged. Finally they came to appreciate that their nephew Sam Hraiki had not been frank with them about the difficulties which he faced with his business and what they risked. Given his inability to repay the loan, that they were misled, may be accepted. That Sam Hraiki abused their trust is not, however, a basis on which the plaintiff may be denied the orders to which it is entitled on the case which it has established. The Contracts Review Act claim 190For Capital, it was accepted that if conclusions were reached in its favour in relation to estoppel, adoption or ratification the Act would apply, the original agreement being valid in the case of ratification or estoppel and there being a new agreement on which the Act could operate in the case of adoption. 191There was finally nothing put for the defendants in relation to the Contracts Review Act claim, understandably given the case which they had advanced, that they had known nothing about the transaction. In the face of the conclusions which I have reached as to Mr and Mrs Hraiki's knowledge of and consent to the use of their house as security for the loan Sam Hraiki obtained from the plaintiff, from the outset, findings in their favour under the Contracts Review Act are not available. Their conduct, particularly in relation to the provision of the statutory declaration, notwithstanding Mr Hraiki's advice that the loan and mortgage documents were forged, puts that conclusion beyond question. No case for relief under this Act was established. Orders 192Subject to any submissions as to costs, the parties should bring in short minutes, which appear to me should provide: 1. Judgment for the Plaintiff for possession of the land comprised in Folio Identifier 11/218470 situated at and known as 127 Mimosa Road, Greenacre in the sate of New South Wales, (hereinafter referred to as "the land" ). 2. I grant the Plaintiff leave to issue a writ of possession of the land forthwith. 3. Judgment for the Plaintiff against the Defendants in the sum of $311,102.50, plus interest, charges and expenses calculated in accordance with the loan agreement to today, the date of judgment. 4. Pursuant to s 101 Civil Procedure Act 2005 the defendants are to pay interest on that amount from the date of judgment to be calculated daily in accordance with the provisions for the payment of interest under the loan agreement, on so much money as is from time to time unpaid. 5. The Defendants are to pay the Plaintiff's costs of the proceedings. ********** 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. Decision last updated: 04 May 2011