Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Baira v RHG Mortgage Corporation Limited [2012] NSWCA 387 Hearing dates: 11 April 2012 Decision date: 03 December 2012 Before: Bathurst CJ at [1]; Basten JA at [207]; Tobias AJA at [367] Decision: A With respect to the proceedings brought by RHG Mortgage Corporation Ltd against Rosa Baira, being matter 2008/285539 in the Common Law Division: (1) Set aside orders 1-8; and orders 13, 17 and 18, to the extent that they order that Rosa Baira pay costs, being orders made in the Common Law Division on 17 June 2011. (2) Order that there be a retrial of the claim by RHG Mortgage Corporation Ltd against Rosa Baira and of the first cross-claim (brought by Rosa Baira). (3) Order the first, second and third respondents to pay the costs of the first appellant (Rosa Baira) in this Court. B With respect to the proceedings brought by RHG Mortgage Corporation Ltd against Rosario Ianni and Domenica Ianni being matter 2008/284857 in the Common Law Division: (1) Set aside orders 1-8; and orders 13, 17 and 18 to the extent that they order that Rosario and Domenica Ianni pay costs, being orders made in the Common Law Division on 17 June 2011. (2) Order that there be a retrial of the claim by RHG Mortgage Corporation Ltd against Rosario and Domenica Ianni and of the first cross-claim (brought by Rosario and Domenica Ianni). (3) Order that the first, second and third respondents pay the costs of the second and third appellants (Rosario and Domenica Ianni) in this Court. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: APPEAL - civil - credibility - trial judge rejected evidence of plaintiffs - plaintiffs sought to challenge credibility findings on appeal - whether findings contrary to compelling inferences or glaringly improbable - whether trial judge failed to use or palpably misused his advantage in hearing the relevant witnesses - whether distinction between challenge to credibility and challenge to inferences from facts admitted or found - discussion of Fox v Percy [2003] HCA 22; 214 CLR 118; Devries v Australian National Railways Commission [1993] HCA 78; 177 CLR 472; Abalos Australian Postal Commission [1990] HCA 97; 171 CLR 167 CONTRACT - capacity - mental disability - borrower alleged incapacity at the time of contract formation - whether trial judge considered allegations - whether retrial should be ordered CONTRACT - harsh or unjust - third-party guarantors became primary borrowers under loan restructuring - borrowers denied meeting with mortgage broker - whether borrowers aware of change of status - whether borrowers obtained benefit as members of family engaged in loan restructuring - Australian Securities and Investments Commission Act 2001 (Cth), ss 12CA and 12CB; Trade Practices Act 1974 (Cth), s 51AC; Contracts Review Act 1980 (NSW) Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth), ss 12CA, 12CB Contracts Review Act 1980 (NSW), ss 7, 9 Trade Practices Act 1974 (Cth), s 51AC Cases Cited: Abalos v Australian Postal Commission [1990] HCA 97; 171 CLR 167 Brunskill v Sovereign Marine and General Insurance Co Limited [1985] HCA 61; 59 ALJR 842; 62 ALR 53 Commercial Bank of Australia v Amadio [1983] HCA 14; 151 CLR 447 Coulton v Holcombe [1986] HCA 33; 162 CLR 1 Davey v Challenger Managed Investments Ltd [2003] NSWCA 172 Davis v Veigel [2011] NSWCA 170 Devries v Australian National Railways Commission [1993] HCA 78; 177 CLR 472 Fox v Percy [2003] HCA 22; 214 CLR 118 Kowalczuk v Accom Finance Pty Ltd [2008] NSWCA 343; 77 NSWLR 205 McCartney & Ors v Orica Investments Pty Ltd & Ors [2011] NSWCA 337 Perpetual Trustee Company Ltd v Khoshaba [2006] NSWCA 41; 14 BPR 26,639 Pettitt v Dunkley [1971] 1 NSWLR 376 RHG Mortgage Corp Ltd v Baira; RHG Mortgage Corp Ltd v Ianni [2011] NSWSC 520 RHG Mortgage Corporation Ltd v Rosa (aka Rosa Fioavanti) Baira; RHG Mortgage Corporation Ltd v Rosario Ianni [2011] NSWSC 580 Shimokawa v Lewis [2009] NSWCA 266 State Rail Authority (NSW) v Earthline Constructions Pty Limited (in liq) [1999] HCA 3; 160 ALR 588 Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389; 15 BPR 29,699 Warren v Coombes (1979) 142 CLR 531 Xu v Jinhong Design & Constructions Pty Ltd [2011] NSWCA 277 Category: Principal judgment Parties: Rosa Baira (First Appellant) Rosario Ianni (Second Appellant) Domenica Ianni (Third Appellant) RHG Mortgage Corporation Limited (First Respondent) Australian Business & Mortgage Finance Solutions Pty Ltd (Second Respondent) Peter Famularo (Third Respondent) Sandra Ianni (Fourth Respondent) Representation: Counsel: Mr G C Lindsay SC/Mr P G Bolster (First Appellant) Mr B Coles QC/Mr P Newton (First Respondent) Third and Fourth respondents self-represented Solicitors: Frank Legal (Appellants) Kemp Strang (First Respondent) Second and Third Respondents Self represented Downeys Lawyers (Fourth Respondent) File Number(s): CA 2008/284857 Decision under appeal Jurisdiction: 9111 Citation: [2011] NSWSC 520; [2011] NSWSC 580 Before: Grove AJ File Number(s): SC: 2008/285539 and 2008/284857 HEADNOTE [This headnote is not to be read as part of the judgment] Joe and Sandra Ianni (Mr and Mrs Ianni junior) owned residential properties in Castle Hill, Milsons Point and Pyrmont. They also operated a number of businesses through Jencon Australia Pty Ltd (Jencon). St George Bank held mortgages over all three residential properties, to secure borrowings by Joe, Sandra and Jencon. Sandra's mother, Rosa Baira, owned a residential property in Marrickville. Joe's parents, Rosario and Domenica Ianni (Mr and Mrs Ianni senior), owned a residential property in Drummoyne. To assist Mr and Mrs Ianni junior and Jencon, Mrs Baira and Mr and Mrs Ianni senior had provided third party guarantees to St George Bank, secured by mortgages over their respective properties. In 2005, Mrs Baira and Mr and Mrs Ianni senior granted RHG Mortgage Corporation Ltd (RHG) mortgages over their respective properties, as principal borrowers. Peter Famularo, the principal of Australian Business & Mortgage Finance Solutions Pty Ltd, prepared their RHG loan applications. The moneys advanced under the RHG loans were applied to secure the release of the St George Bank mortgages over the Pyrmont, Marrickville and Drummoyne properties. The Pyrmont property was then used as security to finance the purchase by Mr and Mrs Ianni junior of a property in Dural. Mr Famularo prepared their loan application. As a consequence of default in the payment of the loans secured by their mortgages, RHG commenced proceedings against Mrs Baira and Mr and Mrs Ianni senior seeking orders for possession of their respective properties. In their defences, Mrs Baira and Mr and Mrs Ianni senior pleaded that the contracts were unjust pursuant to s 7 of the Contracts Review Act 1980 (NSW), and that RHG knew or ought to have known that the documents were executed under the influence of Mr Ianni junior. Among a number of cross-claims, Mrs Baira and Mr and Mrs Ianni senior cross-claimed against Mr Famularo. Mrs Baira and Mr and Mrs Ianni senior alleged that they had never met Mr Famularo. There was also an issue as to the provenance of a sham contract of sale for the Dural property, in which the details for Mr and Mrs Ianni junior as purchasers had been replaced with those of Mr and Mrs Ianni senior. Similarly, questions arose in relation to a "Snapshot of Account" for the mortgage account that Mr and Mrs Ianni junior held with St George Bank, which appeared to suggest that Mr and Mrs Ianni senior were the account holders. Finally, there was evidence that Mrs Ianni senior had been incapable of managing her affairs. On 3 June 2011 Grove AJ found in favour of RHG. In particular, he disbelieved the evidence of Mrs Baira and Mr and Mrs Ianni senior that they had not met with Mr Famularo. His Honour made orders for possession of the Marrickville and Drummoyne properties and dismissed the cross-claims against Mr Famularo. Mrs Baira and Mr and Mrs Ianni senior appealed to this Court. The issues for determination on appeal were whether: (i) this Court should interfere with the trial judge's credit findings; (ii) if so, whether Mr and Mrs Ianni senior's appeal should be allowed, and (iii) Mrs Baira's appeal should be allowed. The Court held, allowing the appeals: In relation to (i) (per Bathurst CJ) 1. Findings of a trial judge based on credit can only be overturned if the appellate court is satisfied that the findings are glaringly improbable or contrary to compelling inferences, or if it can be shown that the judge has palpably misused his advantage or acted on facts which were inconsistent with the evidence or glaringly improbable: [173] Fox v Percy [2003] HCA 22; 214 CLR 118; Devries v Australian National Railways Commission [1993] HCA 78; 177 CLR 472; Abalos v Australian Postal Commission [1990] HCA 47; 171 CLR 167 referred to. 2. If it can be shown that in reaching his conclusion the primary judge failed to deal in a satisfactory way with substantial evidence necessary to be dealt with before the relevant finding could be made, an appellate court on a rehearing is entitled to order a retrial: [175] Fox v Percy [2003] HCA 22; 214 CLR 118; State Rail Authority (NSW) v Earthline Constructions Pty Ltd (in liq) [1999] HCA 3; 160 ALR 588 applied. 3. Before reaching his conclusion on credit, the primary judge should have considered that the sham contract demonstrated that Mr Famularo was aware that Mr and Mrs Ianni senior's loan was obtained to facilitate the purchase of the Dural property, and that he knew that Mr and Mrs Ianni senior were not purchasing that property. Mr Famularo's denial of knowledge of these matters was glaringly improbable: [178]-[180] 4. The submission of the snapshot of account to RHG incorrectly suggested that it was Mr and Mrs Ianni senior's debt that was being refinanced and that $500,000 was to be used to purchase a property. The document demonstrated the improvident nature of the transaction, as the exposure of Mr and Mrs Ianni senior was increased and they changed from guarantors to principal borrowers: [184] (per Basten JA) 5. The trial judge did not address a number of critical factors, including the implausibility of Mr and Mrs Ianni senior's RHG application and information that was missing from Mr Famularo's notes. While the trial judge was not required to explain every aspect of conflicting evidence, even on a critical issue, a failure to advert to a significant number of material issues and, without explanation, to reach conclusions which are apparently inconsistent with objectively determined circumstances, requires that the Court intervene with respect to Mr and Mrs Ianni senior's claim against Mr Famularo: [272]-[286] 6. The trial judge's reasoning for rejecting the evidence of Mrs Baira and accepting Mr Famularo's evidence that he met her were unsatisfactory. It was undertaken prior to the necessary analysis of Mr Famularo's evidence, and was made without adequate findings as to whether Mrs Baira had provided false information in support of her loan application. Further, Mr Famularo's file note of the meeting was inherently implausible: [315]-[317], [321], [328]-[329] (per Tobias AJA, dissenting) 7. In a case like the present where the issue is essentially one of credit, as opposed to where the appellate court is invited to draw inferences from facts admitted or found by the trial judge, the question is whether, in his or her credit findings, the trial judge has failed to use or palpably misused his or her advantage in hearing the relevant witnesses: [494]-[507] Devries v Australian National Railways Commission [1993] HCA 78; 177 CLR 472; Abalos v Australian Postal Commission [1990] HCA 97; 171 CLR 167; Brunskill v Sovereign Marine and General Insurance Co Ltd [1985] HCA 61; 59 ALJR 842; Shimokawa v Lewis [2009] NSWCA 266; Davis v Veigel [2011] NSWCA 170; Xu v Jinhong Design & Constructions Pty Ltd [2011] NSWCA 277; McCartney v Orica Investments Pty Ltd [2011] NSWCA 337 discussed; Fox v Percy [2003] HCA 22; 214 CLR 118; Warren v Coombes [1979] HCA 9; 142 CLR 531 distinguished. 8. As it was never suggested to Mr Famularo that he was party to the creation of the sham contract document, it is not glaringly improbable or contrary to compelling inferences that he did not appreciate that it related to the Dural property: [554] 9. The inference cannot be drawn that, as Mr Famularo provided the sham contract to RHG, his credit was destroyed. There was no direct evidence as to his purpose in providing the document to RHG. There was also other evidence, such as the file notes, which supported the credibility of Mr Famularo on the issue of whether he met with the appellants: [554]-[555] In relation to (ii) (per Bathurst CJ) 10. There were some matters which supported the conclusion of the trial judge independent of the assessment of the credit of Mr Ianni senior and Mr Famularo. However, those matters do not overcome the difficulties in approach of the trial judge. The orders of the primary judge in the Ianni proceedings should be set aside and a new trial of the proceedings and Mr and Mrs Ianni senior's cross claim should be ordered: [189]-[196] (per Basten JA) 11. The trial judge did not consider Mrs Ianni senior's claims under the Contracts Review Act 1980 (NSW), or those based on unconscionability. The judgment in respect of her claim should be set aside on this ground: [244] 12. The orders for possession in relation to Mr and Mrs Ianni senior's property should be set aside because RHG had information indicating that the application was either flawed or fraudulent, and because RHG overrode its own lending guidelines: [290]-[303] (per Tobias AJA, dissenting) 13. It was open to the trial judge to find that Mr and Mrs Ianni senior were aware that they would be principal borrowers and not merely guarantors in relation to the loan from RHG: [544]-[545] 14. The argument that Mr Famularo provided the Snapshot of Account to RHG to demonstrate Mr Ianni senior's ability to meet loan repayments must be rejected as not being the subject of any cross-examination of Mr Famularo to that effect: [553] 15. It was open to the trial judge to find that all of the transactions were part of consensual family arrangements and that the reality was that the documents that were signed were for the benefit of the general family prosperity: [546]-[547] In relation to (iii) (per Bathurst CJ) 16. Dealt with in isolation from the Ianni proceedings, the primary judge's findings in relation to Mrs Baira's claim were not glaringly improbable or contrary to compelling inferences and did not demonstrate that his Honour had misused his advantage in seeing and observing the witnesses in question. However, as the cases of Mr and Mrs Ianni senior and Mrs Baira were heard together and the evidence in one was evidence in the other, it was incumbent on the primary judge to consider the Ianni transaction in evaluating the credit of Mr Famularo both in respect of that transaction and the transaction concerning Mrs Baira. His Honour failed to do this: [201]-[205] (per Basten JA) 17. The orders for possession in relation to Mrs Baira's property should be set aside because of the material respects in which the findings regarding unconscionability and unjustness were affected by the impugned findings in relation to the meeting with Mr Famularo. In addition, the trial judge did not give adequate consideration to Mrs Baira's change from guarantor to primary debtor. The trial judge did not sufficiently consider whether RHG knew, or ought to have known, that Mrs Baira did not have the capacity to make the payments: [365] (per Tobias AJA, dissenting) 18. It was open to the trial judge to find that Mr Famularo's notes of the meeting with Mrs Baira were genuine. At trial, it was not contended that they were fabricated by Mr Famularo, and he was not cross-examined to that effect. Their detailed content suggests that they are authentic: [422] 19. It was open to the trial judge to find that Mrs Baira was aware that she would be a principal borrower and not merely guarantor in relation to the loan from RHG: [544]-[545] 20. It was open to the trial judge to find that all of the transactions were part of consensual family arrangements and the reality was that the documents that were signed were for the benefit of the general family prosperity: [546]-[547] Judgment 1BATHURST CJ: I have had the benefit of reading in draft form the judgments of Basten JA and Tobias AJA in these matters. 2I have reached the same conclusion as Basten JA. These are my reasons for doing so. Background to the proceedings (a) Mrs Rosa Baira 3The appellant, Rosa Baira ("Mrs Baira"), entered into a loan agreement dated 28 February 2006, pursuant to which the first respondent to each appeal, RHG Mortgage Corporation ("RHG"), then called RAMS Mortgage Corporation Limited (RAMS), advanced the sum of $650,000. At the time of entering into the loan agreement, described as a "RAMS Self-Employed Pre-Pack Home Loan", Mrs Baira executed an authority for the funds to be used to pay out an existing mortgage to St George Bank Limited. The disbursement authority contained the following remark: "Please call Peter Famularo on xxxx xxx xxx or xxxx-xxxx should you have any queries in relation to this matter. Note this loan to be Fully drawn to pay St George Bank. The loan is associated with Joe and Sandra Ianni and must settle simultaneously." 4Mrs Baira was the registered proprietor of property xx xxxx Road, Marrickville ("the Marrickville property"). As part of the transaction an existing mortgage over that property to St George Bank Limited ("St George") was discharged and RHG took a registered mortgage over it. The St George loan which was discharged was granted to that bank as part of ongoing assistance provided by Mrs Baira to her daughter, Ms Sandra Ianni, the fourth respondent in the proceedings, and her husband, Mr Joe Ianni. Tobias AJA has set out in detail the history of such assistance in pars [381]-[395] and [399]-[400] of his judgment and for present purposes the nature of the assistance given and the evidence surrounding it may be summarised as follows: (a) In 1992 Mr Joe and Ms Sandra Ianni obtained a loan from Advance Bank Limited (which subsequently merged with St George) in the sum of $155,000 to assist with the purchase and fit-out of a coffee shop known as Café Galleria. Pursuant to the loan offer, Mrs Baira was to enter into a personal guarantee and give a mortgage over the Marrickville property to secure the advance. Mrs Baira accepted the loan offer and on 26 May 1992 executed an all monies guarantee in respect thereof. Her signature on each of the guarantee and mortgage was witnessed by a Mr Ross, a Marrickville solicitor. Mr Ross, in acting for Mrs Baira, prepared a deed between her and Joe and Sandra Ianni, which gave her substantial control over the conduct of the business the subject of the loan. Early in her cross-examination Mrs Baira acknowledged that she was prepared to assist Joe and Sandra Ianni and mortgage her property on the basis her liability was $155,000. She said she understood what a guarantee was, saying: "A guarantee is, I help my children, which I did for whatever amount and you have to pay it off. If they fail to pay, I will have to pay." And: "If I haven't got the money, of course they take the house and they going to sell the house for me to pay." In relation to the 1992 guarantee she said she was not prepared to pay much because "I didn't have that much money. And plus I think they only required 100 or 150 [thousand], and that's what I was prepared for and that's that [sic] I did." She acknowledged she knew she was signing the facility offer as a guarantor and that she was aware that her home was at risk. She denied that she was ever aware that the amount of her liability subsequently increased. She acknowledged she had a lot of help from Mr Graham Ross, her solicitor at the time, and he explained to her the nature of a mortgage and a guarantee. (b) In June 1994 a further advance for $112,000 was made for the purpose of the refurbishment of the Café Galleria. The advance was approved by a letter from Advance Bank addressed to Joe and Sandra Ianni dated 24 June 1994. The letter enclosed a term sheet and general conditions and contained a request that the documents be signed by both Joe and Sandra Ianni and Mrs Baira as guarantor. They were so signed. The first page of the term sheet stated the loan amount to be $112,000. Notwithstanding this Mrs Baira insisted that she continued to believe that the limit of her guarantee was $155,000. The trial judge rejected this evidence. In cross-examination Mrs Baira denied any knowledge of the increase in the facility, although she acknowledged she signed the letter of offer of increase. It was put to her and she agreed that she knew that from 1992 to 2006 Joe and Sandra Ianni were borrowing more and more money, but she denied that she appreciated that that increased her exposure or that the reason she entered into the RHG loan in 2006 was that she needed to get out. (c) In 1998 Jencon Australia Pty Limited ("Jencon"), a company controlled by Joe and Sandra Ianni, made an application to St George for an advance of $450,000. The funding was sought to fit out a café which became known as Fiorianis and to restructure existing liabilities. A loan of $400,000 and an overdraft facility of $30,000 were approved conditional upon Joe and Sandra Ianni and Mrs Baira executing guarantees, Mrs Baira's liability being limited to the proceeds of sale of the Marrickville property. Mrs Baira executed the guarantee and her signature was witnessed by Mr Ross. On 11 September 1998 Mr Ross signed a certificate stating "I advised the guarantor before any of the documents were signed". Mrs Baira in cross-examination denied any knowledge of the advance. She acknowledged she might have signed the offer document but said she trusted her daughter completely and she signed without reading it. She said she probably would have been capable of reading it but she did not do so. Mrs Baira also said that she was not aware that the guarantee at that time was limited to the proceeds of sale of the Marrickville property. She said she did not remember seeing the letter of offer which contained this provision. She denied having any recollection of seeing Mr Ross at that time. It is not clear from the material whether or not the Advance Bank loan was repaid or the 1992 guarantee discharged. However, no subsequent guarantee ever appears to have been executed by Mrs Baira guaranteeing the obligations of Joe and Sandra Ianni, as distinct from Jencon to St George. (d) In May 2000 St George agreed to increase the Jencon overdraft facility from $30,000 to $100,000. Mrs Baira signed a declaration that she had received independent legal advice concerning the loan and security documents surrounding the increase in the overdraft facility. The declaration was witnessed by an accountant, Mr Lo Surdo. No independent certificate of advice was provided. Mrs Baira denied any knowledge of this transaction or signing a declaration before Mr Lo Surdo. She said she had never met Mr Lo Surdo. She said she might have signed the document because she had complete trust in her daughter and son-in-law. (e) On 20 June 2002 Mrs Baira signed a declaration to the effect that she was the third party mortgagor and guarantor named in certain loan documents and security documents between Jencon Australia Pty Limited and St George and that she had received independent legal advice regarding the loan and security documents. It is not clear from the evidence before the primary judge what was the cause of that declaration being signed. The declaration was witnessed by Mr Lo Surdo. Mrs Baira again denied signing this declaration before Mr Lo Surdo. She stated: "But this is not my signature. And I did not go to see Mr Lo Surdo and I never met him and don't know who he is". She was taken to another part of the document where her signature appeared, sworn on 30th June 2002 and witnessed by Mr Lo Surdo. She acknowledged that looked like her signature but said she did not sign it in front of Mr Lo Surdo. She said that if she signed it she signed it at her house in front of her daughter and sent it back. She reiterated that she had never met Mr Lo Surdo. (f) Towards the end of 2002 St George offered to increase the Jencon facilities to a total limit of $963,000. Mrs Baira signed a copy of the letter of offer. On an unspecified date, Sandra and Joe Ianni and Mrs Baira signed an acknowledgement that they had obtained legal advice in relation to their exposure under that facility offer. The acknowledgement in its original form included the words "we have obtained independent financial and legal advice". The words "independent financial and" were deleted from the signed form. Mrs Baira denied she knew anything about this loan, although she acknowledged she signed the letter of offer. She maintained she believed her guarantee was limited to the initial $155,000. (g) In November 2003 the Jencon overdraft facility was increased from $230,000 to $270,000 on a temporary basis up to 31 December 2003. Mrs Baira signed an acknowledgement in respect of that increase to the following effect: "We have been given the opportunity to obtain independent financial and legal advice in relation to our exposure as a result of the facility being amended but do not consider this necessary." The acknowledgement was also signed by Mr Joe and Ms Sandra Ianni. Mr Lo Surdo witnessed Mrs Baira's signature. Mrs Baira agreed her signature appeared on the acknowledgement but said that she had no recollection of signing it. She said she did not read the document. (h) On 2 September 2004 St George offered to increase the total facility limit to $1,059,000. On 11 November 2004 Mrs Baira signed an acknowledgement that a Mr Calvitto, solicitor, had given advice to her and her co-sureties, Mr Joe and Ms Sandra Ianni. Mrs Baira said she did not read the acknowledgement. However, she acknowledged she was taken to see Mr Calvitto by her son-in-law and daughter. Her evidence of the discussion she had with him was to the following effect: "My daughter coming to me and she ask me that the bank, they were doing something at the shop, I don't recall what, and the bank want to notified me to the change. They never ask me they borrow money from the house. I was never told they borrow more money. When I went to see Mr Calvitto - excuse me a second - my daughter and my son-in-law took me there. My son-in-law and Mr Calvitto, they had a discussion between them two about business. Mr Calvitto ask my son-in-law, 'Well, I believe Mr Ianni you have a shop in Darling Harbour' and he said 'Yes'. He goes, 'How many years you been there?' And my son-in-law answer, I don't know how many years. He goes, 'When are you intend to cash it?' The conversation, it was mostly between my son-in-law and Mr Calvitto. Then he says, after they finished talking, Mr Calvitto ask my son-in-law, my daughter, to leave the room and he took me to a small office. On the way he says to me, 'Why did you do it?' And I said, 'What do you mean?' He says, 'Why did you sign? Is anyone force you to do it?' And I said, 'No, the contrary'. I said, 'I been a guarantor', I said, 'from the first time for the sum of $155,000'. I said, 'Through the years they have been doing good'. No-one ever notified me that I was in danger. He look at me and he says, 'If that's the case, sign here'. I did not know what I was signing." She stated, however, that Mr Calvitto did not read or explain the document to her. She said: "Mr Calvitto did not explain. He was more interested if he could do other things for me but the loan, it was brief. He only wanted to know if someone make me do it. I couldn't understand the question. I said, 'What do you mean?' 'I then make you sign', he said. My answer was no. ... He said 'You aware that if they fail to pay you have to pay' and I said 'Yes'. I said, 'But I have no reason to believe that they can't pay'. So he had the opportunity, because I did express myself. So he replaced it in this case 'sign here', I put a sign - a few signatures and that was the end." In later cross-examination she expanded on these answers giving this evidence: "Q: And at that time he said to you that 'you understand if they don't pay you'll have to pay'? A. ... At the time he said [Mr Calvitto] to me, 'Why did you do it?' That's was his exact words. I didn't understood him and I said, 'What do you mean?' He said, 'do you know if they fail to pay you will have to pay' and my answer to him was 'Yes, I do'. ... But I said 'No-One gave me an indication that I have to be worried'. I said, 'They doing well; they have so many properties. Why they need mine?' Because mine compared to the one that they had, it is nothing." The evidence is significant. Mrs Baira acknowledged that Mr Calvitto told her that if Joe and Sandra Ianni failed to pay she would have to and her response was she had no reason to believe they could not pay. It is difficult to accept that in those circumstances Mr Calvitto did not tell her the full extent of her liability. Mr Calvitto in his evidence said he explained the legal nature and significance of the documents to Mrs Baira. He said he dictated a file note after the conference. He said he discussed the total exposure of $2.1 million in the presence of Mrs Baira and Mr Joe and Ms Sandra Ianni. Mr Calvitto said he was concerned to make sure that Mrs Baira had not been forced into the guarantee but denied saying "Did he [Joe] force you to sign it" and "Did Joe pressure you to sign the guarantee". Mr Calvitto said he did not recall speaking alone with Mrs Baira. He was cross-examined as to the explanation he gave and gave evidence to the following effect: "Q. You asked her, 'Are you aware that if he doesn't pay you'll be responsible'? A. Yeah; probably said something else too. Q. You didn't read any documents to her, did you? A. I read some documents to her, some parts of the documents. Q. What did you explain to her then, sir? A. That this seemed to be that the business was borrowing another $300,000, that there seemed to be all of these properties exposed, which seemed to be a total of, on their value at the time, a couple of million, and knowing what happens when businesses go wrong they go really wrong, that she was going to lose her house if things went really wrong. Q. That's not true, can I suggest to you, sir? A. That's what I said, that she will lose her house if things go wrong. Q. Your file note records nothing of the kind, does it, sir? A. I said to her she will lose her house, because I could see how big this exposure was and then, of course, you haven't asked me yet, but I volunteered to them 'Have you been to a financial advisor? Do you have a plan?' And I used the phrase a five-year plan or a 10-year plan or a 15-year plan, and they were a bit shocked when I said it. Q. Sir, can I suggest to you, with the greatest respect, that if you had told Mrs Baira that she risked losing her house that you would have recorded it in this certificate? A. I said to her that she would lose her house." Mrs Baira denied that Mr Calvitto told her that she should see a financial adviser or that she signed a mortgage before him. The primary judge found Mr Calvitto to be an independent and honest witness. (i) In May 2005 a further offer extending the facility was made. A copy of that offer of extension was signed by Mrs Baira on 18 May 2005. The offer contained the comment: "We recommend that you get legal and financial advice before entering into this facility agreement." Mr Baira acknowledged that the signature on the letter of offer appeared to be hers but denied any recollection of signing the document and said that if she did sign it she did not read it. (j) On 15 August 2005 St George offered to increase the Jencon facility to a total of $1,177,488. A copy of the letter of offer was signed by Mrs Baira on 15 September 2005. The letter of offer contained a recommendation in similar terms to the May offer. Mr Baira again acknowledged that her signature appeared on the letter of offer but denied any recollection of signing it or of the transaction envisaged in the offer. (k) On 30 September 2005 St George offered to substantially restructure the Jencon facility. The offer involved a reduction of the limit of the facility to $536,000, described in the letter of offer as an overall reduction of $624,000. As part of that arrangement the bank agreed to discharge a mortgage it held over the property Unit xx/xx xxxx Street, Pyrmont. The offer contained the following condition: "The Banks panel solicitors are to obtain certificates of independent legal financial advice for Rosa Baira covering her liability under this Facility Agreement amendment. These certificates are to outline that the Guarantor Rosa Baira has been advised of the increased liability assumed by her in relation to the release of the proposed security below and that Rosa Baira agrees with the release of the security as detailed below." The firm Egisto Solicitors provided the following certificate on 12 October 2005: "We confirm that Ms Rosa Baira attended our office on 12 October 2005, when we explained to her the nature of her proposed guarantee and the increased liability which she will assume by her [sic] in relation to the release of the proposed securities mentioned in the facility offer. Having had the nature of a guarantee explained to her and the possible consequences of a default by the bank's customers, she confirmed to the writer that she understood the nature of her guarantee. She also confirmed that she was familiar with the business of the borrower, she had confidence in its success and that she was content to execute the guarantee. The conference was conducted in the absence of the borrower or any other person." Mrs Baira denied she knew anything about this transaction although she again acknowledged she signed the letter of offer. She said that the certificate was a lie. A Mr Forster of Egisto solicitors gave evidence to the following effect: "Well, she introduced herself, obviously, and I said, 'Well, you've come in connection with this guarantee?' 'Yes.' And I said, 'You realise what a guarantee is, don't you?' And she said, 'Yes; and I'm in a hurry.' She's always in a hurry. And I said, 'Well, it means if the borrower doesn't pay, you have to pay. You are accepting a responsibility for the debt.' She said, 'Yes, I'm aware of that.' And she made some remark to the effect that she does this often. I then said, 'You are aware, of course, of the amount that you're guaranteeing?' 'Yes, I am.' And then she emphasised again that she was in a hurry, she doesn't have much time, and she said, 'Les knows all about this.' And I said, 'Well, you understand - is there anything you want to talk about in this guarantee? Is there anything you feel the need to discuss?' And she said, 'No, I've just got to get back to the restaurant." In cross-examination Mr Forster described the person he saw as a slim young woman who could have been in her forties. When it was put to him that Mrs Baira was in her sixties and that she was not slim, he attributed this to a bad memory. Mr Forster acknowledged that he did not give Mrs Baira any advice on the release of the securities and the effect that would have on the guarantee. 5I have set out these matters in some detail because the assistance that had been provided by Mrs Baira in the past to her daughter and son-in-law and the rejection of her evidence surrounding the circumstances of those transactions was a significant factor in the conclusion of the trial judge that her evidence should be rejected. In rejecting Mrs Baira's evidence, the trial judge found that her denial of ever meeting the third respondent (Mr Famularo) and her assertion of lack of knowledge of the loan application to RHG and of the nature of the commitment she entered into with that company should not be accepted. 6The loan agreement entered into by Mrs Baira which is the subject of these proceedings was arranged by the second respondent Australian Business and Mortgage Finance Solutions Pty Ltd (ABMFS) and its principal Mr Famularo. Mr Famularo, in an affidavit sworn on 11 November 2009, deposed that he had a meeting with Mrs Baira on 2 December 2005, of which he took notes and from which he prepared the application for a loan. The notes are produced in full in the judgment of Tobias AJA. However, it should be noted that the notes are headed "Meeting Baira re SGB re finance". According to his evidence, that meeting followed a meeting he held with Mr Joseph and Ms Sandra Ianni on 1 December 2005. Mr Famularo also produced his diary for 2 December 2005, which made reference to an appointment "Baira R. SGB re finance". 7In his affidavit Mr Famularo stated that during the meeting a discussion (in Italian) to the following effect took place: "Mrs Baira: I have been guarantor for my son-in-law Joe Ianni and Sandra Ianni since about 1995 for various loans from St George. They have a business and sometimes they need to borrow money. I think they owe about $3 million at the moment. Mr Famularo: What are the amounts of these other loans that you have guaranteed? Mrs Baira: I cannot recall the exact amounts. Joe and Sandra manage the finances. I do know that the St George mortgage secured at least $1,300,000. St George bank had registered a mortgage over my home for the full sale value of the property and I want to reduce the liability on my home that's why we need to refinance my share of the liability. Mr Famularo: I wouldn't think that St George Bank would be agreeable to refinancing and releasing the Marrickville property for only $650,000 given your property is security for other company loans and Ianni loans for which you are jointly liable for. Mrs Baira: Don't worry. Joe and I will negotiate with St George Bank so that the Marrickville property is released for only $650,000." And: "Mr Famularo: Are you working at the moment or have you retired? Mrs Baira: Yes I am working even though I am 62. I work for Joe and Sandra in the Darling Harbour business. It's an Italian Restaurant called Fioriani. I consult on the menu. I have worked there for a long time and helped my children purchase the business in the early 1990's. I have another son who also works there. Mr Famularo: So it is a family business? Mrs Baira: Yes. My son is not successful in business and so he works for the family business. He also has a medical condition and has found it hard to find employment. That's why I feel I need to assist Joe and Sandra with financing the family business. At the end of the day, I work for my children and I want to help them wherever I can. Everything I have including my home will one day be theirs. Mr Famularo: Will you be able to manage paying the loan yourself? Mrs Baira: Yes, it would be fine. My income ranges from $140,000 - $150,000 per year. I have never had a problem repaying the loans I have had with St George previously. I am always paying them on time ... you will see from the statements that I have never had difficulties managing my loans. Mr Famularo: We will need to obtain statements from you for the purpose of confirming this. Mrs Baira: No problem, I will get them for you. Once the loan amount is reduced, the repayments would be even easier given the lower interest rate. Mr Famularo: Do you own any other real estate besides your Marrickville home? Mrs Baira: No. The Marrickville property is the only property I have. I also own a car, furniture and have some savings with Westpac. Mr Famularo: How much is the car, furniture and savings worth? Mrs Baira: The car is worth about $15,000 and I have about $5000 held with Westpac which is my savings. The furniture is worth about $50,000." And: "Mr Famularo: You should obtain legal and financial advice regarding your RAMS loan obligation to ensure you understand the ramifications of entering into a loan. Mrs Baira: I would prefer not to obtain legal or financial advice again due to the cost and because the loans already existed for many years. Mr Famularo: You should obtain the advice again regardless. Mrs Baira: I can have Mr. Angelo LoSurdo confirm that I have previously received advice as Mr. LoSurdo himself has signed statutory declarations for me." 8Mrs Baira denied that any of those conversations took place. 9If Mr Famularo's evidence (which is reflected in his notes) is to be accepted, it would indicate a number of matters: (a) Mrs Baira was aware that the then current liability to St George was over $1.3 million. (b) She would be involved in negotiations with St George to release her property for $650,000. (c) She had an income of approximately $145,000 per year and would have no problem meeting her obligations under the loan and she had met her obligations to St George up to that time. (d) She had made a conscious decision not to obtain legal advice. 10The evidence would thus demonstrate that Mrs Baira was aware of the nature of the transaction she was entering into, gave information to Mr Famularo to enable him to complete the application and expressly declined the suggestion to get independent financial and legal advice. 11As I indicated Mr Famularo took notes of the meeting. The trial judge found that these notes were entirely consistent with Mr Famularo's account of the meeting. However, with respect to the primary judge, this is not entirely correct. At the very least there were matters of significance in the notes which were not referred to in his account of the conversation which he said occurred. In particular: (a) Mr Famularo's account of the conversation makes no reference to Joe and Sandra Ianni expanding into childcare and the overseas property investments and that Mrs Baira was not comfortable with that. There is no suggestion anywhere in the evidence that Joe and Sandra Ianni were diversifying in this manner. (b) There is no reference in the conversation deposed to that Mrs Baira did not want her new husband to know of the refinancing as he had his own children and was not business minded. (c) More significantly, there is no mention in Mr Famularo's account of the conversation deposed to that Joe and Sandra Ianni paid cash to Mrs Baira and that tax returns were not available due to it being a cash business. This is something that could well cast doubt on the veracity of the information being supplied or at least the security of Mrs Baira's income, coupled with her potential liability for unpaid tax. No reference is made to these matters in the account of the conversation deposed. Mr Famularo was cross-examined on this issue. He said that Mrs Baira told him that the money came from her own business and some from payments from Jencon. He said he did not understand that the whole of the $150,000 was received from Joe and Sandra Ianni. It was put to him that Mrs Baira never referred to the $140,000 to $150,000 and he denied it. (d) The statement in the notes to leave the loans if RAMS (RHG) could not refinance is inconsistent with the statement said to have been made by Mrs Baira in the conversation, "Don't worry Joe and I will negotiate with St George Bank so the Marrickville property is released for $650,000". (e) There was no reference in the conversation deposed to that Mrs Baira said she would speak to either Deborah Brown of Phillips Fox or Mr Lo Surdo of Five Dock to obtain legal or financial advice or that it was in her interests that the business continued smoothly. Although the note does refer to a comment by Mrs Baira that independent advice would add to the cost of the transaction, what is said in the note under this heading to some extent is inconsistent with what Mr Famularo deposed Mrs Baira told him, namely "I would prefer not to obtain legal or financial advice again due to the cost and because the loans already existed for many years". 12Importantly, there is nothing in the conversation or the notes to suggest any reason why the liability of Mrs Baira changed from one of guarantor to that of a principal debtor. This was disadvantageous to Mrs Baira. Her liability up to the time of the transaction was as guarantor but limited to the proceeds of sale of the Marrickville property. Although subsequent to the transaction the liability at least in relation to the principal sum was limited to $650,000 (approximately 79 percent of the estimate of the value of the property) this was at the cost of the loss of the right to subrogation and contribution from co-guarantors. Further, it should be noted that the statement by Mrs Baira that she never had any problem repaying the loans she had with St George previously ignores the fact that her only previous liability to St George was a guarantee, which had never been called on. 13There was some, albeit limited cross-examination of Mr Famularo on these issues. It was suggested to him that the proposal to split the loans emanated from Joe and Sandra Ianni and he denied this. He acknowledged that they had told him that Mrs Baira had guaranteed the St George debt. However, he said it was Mrs Baira who suggested that the loans be split. 14In cross-examination Mr Famularo was asked why Mrs Baira was nominated as principal borrower rather than a guarantor. He said it was because she requested this change as she needed to move her property away from St George. He stated he regarded this as being for her benefit as she was better off as a mortgagor for a loan of $650,000 compared with a liability under a guarantee of $1.3 million. 15Mr Famularo was also challenged about the statement in his affidavit to the effect that Mrs Baira should see a solicitor. He affirmed he gave this advice and said Mrs Baira said did not want to see any more solicitors because she had seen a string of solicitors and that she had seen a solicitor a week or two before. This is somewhat different to what was recorded in his note and his account of the conversation in his affidavit. 16Mr Famularo stated that on approximately 9 December 2005 he mailed the completed loan application form to Mrs Baira at her home. The letter so far as relevant was in the following terms: "I refer to the above matter and our meeting of Friday 2nd December in which we discussed the refinance of your St George Bank loan (which you advise is in the names of Joe and Sandra Ianni) and is presently secured over your property in Marrickville to St George Bank. We have now prepared the attached loan application in accordance with information provided by you. You should peruse the RAMS Application and if correct, then sign where indicated and return same to us at the earliest possible in order that we may lodge the Rams application. Please advise us immediately if there are any changes to be made." A copy of the letter was tendered. Mrs Baira denied she received it. 17The loan application stated that Mrs Baira was self employed at Fiorianis, in the service industry. It requested a 30 year loan of $650,000 with an interest only period of five years. It estimated the value of the Marrickville property at $850,000 although another part of the application contained an estimate of $900,000. It also stated that there was an existing liability to St George Bank in the sum of $1,246,480. The application contained two comments by Mr Famularo, the first to the following effect: "This property is held as security by St George Bank for the attached loan. The loan is now being split. Please see application in the name of Joe and Sandra Ianni which will also be used to repay the St George Bank at the same time." 18The loan application stated Mrs Baira's income for the last financial year was $145,000 and for the preceding financial year $140,000. A signature purporting to be that of Mrs Baira appears on the loan application together with a declaration to the following effect: "I declare that the credit to be provided to me by RAMS Mortgage Corporation Limited and/or RAMS Mortgage Securities Pty Ltd is to be applied wholly or predominantly for business or investment purposes (or for both purposes)." 19Mr Famularo gave evidence that on 19 January 2006 he had a conversation with Mr Lo Surdo whom he described as "the Accountant for Joe and Sandra Ianni and formally the defendant (Mrs Baira)". Mr Famularo asserted that he stated to Mr Lo Surdo that he understood he had previously given advice to Rosa Baira on the ramifications of entering into a loan and asked whether he had witnessed Mrs Baira signing a statutory declaration that confirmed she had received independent advice. Mr Famularo said that Mr Lo Surdo responded as follows: "Angelo: Yes. I have given advice to Rosa and have also provided financial information to St George previously to facilitate the establishment and ongoing review of the various Baira, Ianni, Jencon loans. I understand Baira wants to reduce the liability on her home and that St George have a mortgage over her property for the entirety of the value of the Marrickville property." And "Angelo: Yes I did. I recall she signed it [the statutory declaration] prior to her drawing down a further $1,300,000 facility from St George. I recall her saying that she received independent legal advice with regards to loans she had secured to St George Bank for Joe and Sandra Ianni and Jencon Australia." 20Mr Famularo produced no note of this conversation. Mr Lo Surdo was not called to give evidence. 21Mr Famularo was cross-examined on the reason for speaking with Mr Lo Surdo. He said he was seeking to clarify whether Mrs Baira had indeed gone to see some solicitors. He said he did so because he was concerned that the RAMS loan was a third party loan. He said he had advised RAMS of this fact. 22Mr Famularo acknowledged that he had a similar conversation with Mr Lo Surdo concerning Mr Rosario and Mrs Domenica Ianni and that he received exactly the same response, namely, "I've also provided financial information to St George to facilitate the establishment and on-going review of the Ianni and Jencon loans". 23Ultimately it was put to Mr Famularo that the meeting of 2 December 2005 never occurred and he denied it. 24Mrs Baira denied she saw Mr Famularo, asserting that she had never met him. She denied that she gave him the information on the loan application, saying in relation to the estimate of income contained in it that she was "a pensioner, a partial pensioner". She denied she received the letter of 9 December 2005. 25Mrs Baira did acknowledge she signed the loan application. She said it was brought to her by her daughter and she signed it without reading it. She pointed out that she did not have the capacity to make the loan repayments set out in the document. She denied that she wanted to enter the loan because it was necessary to separate the liability she had to St George from the liability she shared with Joe and Sandra Ianni and Jencon. She said she did not know she was asking for a loan but believed that she remained a guarantor. She said the loan application documents were only in her home for half an hour and Sandra Ianni pointed to where she should sign and then took the documents away. The submissions made by Mrs Baira at trial 26The submissions made on behalf of Mrs Baira at the trial of the proceedings concentrated primarily on her claim for relief under the Contracts Review Act 1980. She submitted that various aspects of her loan application were false and that it had not been suggested otherwise in her cross-examination. In that regard three matters were identified. The details of her banking (ie. that she banked with Westpac Banking Corporation), her car ownership and her statement of income. 27In addition, Baira submitted that RHG was on notice of a number of facts on receiving her loan application: * That the file was "unusual" as it was paying out a loan for which Baira was not the account holder, but for which she previously provided security as third party guarantor, despite which RHG recorded "no third party mortgage issues in the final approval"; * That Mrs Baira had not submitted any documentation to support her ability to repay the loan or her alleged income of $145,000 p.a; * That the mortgage payments were to be deducted from an account in Joe and Sandra Ianni's names; * That no solicitor was nominated for Mrs Baira in the application forms (note that Mrs Baira signed a form stating she did not want or need legal advice); * That the agent through which the loan was sought was also acting for Joe and Sandra Ianni, arguably creating a conflict of interest; * That it was Sandra Ianni, who stood to gain from the loan, who had witnessed Mrs Baira's signature on the mortgage; * That the loan occurred in a context where Mr Rosario and Mrs Domenica Ianni had also mortgaged their home to RHG to allow Joe and Sandra to reduce their indebtedness to St George. That application had proceeded as though Rosario and Domenica were principal borrowers with St George; * That the postal address provided by Joe and Sandra in their contemporaneous loan application listed their postal address as the property that was to have been purchased by Rosario and Domenica Ianni with their RHG loan; * That Joe and Sandra Ianni were not guarantors or co borrowers in relation to Baira's RHG loan, despite having been liable for the full amount to St George which was to be discharged by Baira's loan; * That Baira was assuming principal liability through the loan, to discharge a loan for which she had previously only been a guarantor. This was emphasised by counsel for Mrs Baira in oral submissions. 28In this context it was submitted on behalf of Mrs Baira that these matters should have alerted RHG to this being an unusual transaction and that failure to contact Mrs Baira directly in these circumstances to ensure her informed consent, or to ensure she had received independent legal advice, gave rise to relevant injustice in "the circumstances relating to the contract at the time it was made"(see Contracts Review Act 1980 s 9(1)). 29Baira also alleged that RHG's lending guidelines were deficient in a number of ways, specifically as to: * How an application for a 30 year loan on behalf of a 60 year old woman ought to be assessed "in terms of her advancing years"; * The failure to give any "meaningful regard to serviceability" of Baira's loan (in contrast to the extensive consideration given to the contemporaneous loan application by Joe and Sandra Ianni, as evidenced in the status tracking documents). It was submitted that the Baira loan was simply considered as part of Joe and Sandra's loan; * How to deal with the possible conflict in the Baira loan, where the same broker was also applying for a loan on behalf of Sandra and Joe Ianni, both loans having the purpose of paying out Sandra and Joe's liability; * The failure to require income tax returns; * How to address the changed position at the time of settlement, by which time St George was releasing its security for $797,600.00, of which Baira was contributing $640,870.50, significantly changing the 50/50 split in responsibility envisaged by the original loan applications to RHG. It was submitted that RHG had no information suggesting Mrs Baira consented to this change to the loan. 30These matters were said to raise the question of the public interest under s 9(1) of the Contracts Review Act as well as unfairness in all the circumstances of the case. 31Similar matters were relied on in relation to Mrs Baira's claim based on unconscionability. 32It is unnecessary for present purposes to set out the whole of RHG's submissions in response. However, RHG did submit that if Mrs Baira procured the loan by knowingly supplying false information, this precluded relief under the Contracts Review Act. 33The submissions made by Mrs Baira that she neither participated in the making of the loan application, nor provided the information contained therein, depended directly upon the acceptance of her evidence, in preference to that of Mr Famularo, as to whether the meeting and conversation of 2 December 2005 deposed to by Mr Famularo took place. If Mrs Baira was to be believed as to her knowledge of the loan application, then it could well be concluded that the loan was unjust within the meaning of s 9 of the Contracts Review Act or was entered into in circumstances which rendered it unconscionable. Whether that would lead to the relief sought against RHG would depend on the acceptance or otherwise of the submissions made by Mrs Baira as to the conduct of RHG: see Tonto Home Loans Australia Pty Limited v Tavares [2011] NSWCA 389 at [264]-[272]. 34On the other hand, if Mr Famularo's version of his discussions with Mrs Baira is accepted, it would follow that the material contained in the loan application on which RHG relied, whether false or otherwise, was supplied by Mrs Baira. Whilst it would not necessarily follow that relief would inevitably be refused, having regard to the criticisms of RHG's conduct, which stands independently of the rejection of Mrs Baira's evidence and the fact that on any view this was an improvident loan, it does provide a powerful reason why relief should be refused. The reasoning of the primary judge 35Early in his reasons the primary judge noted that Mrs Baira repeatedly contended that her understanding was that she had guaranteed $155,000 and no more. He stated that he had concluded her testimony generally was uncreditworthy and her assertion that she had never met Mr Famularo was quite incredible. 36The primary judge then reviewed the transactions to which I have referred above, by which Mrs Baira provided assistance to Joe and Sandra Ianni and to Jencon. In relation to the initial transaction he concluded that the entry by Mrs Baira into the deed of 1 May 1992 (see par [4](a) above) was inconsistent with her claim that she was simply signing documents presented to her by her daughter, being ignorant of their content. 37In relation to the June 1994 transaction, his Honour noted that the figure of the amount advanced was in prominent display. 38In relation to the transaction in August 1998 (see par [4](c) above) the primary judge noted that contrary to Mrs Baira's claim that she simply signed documents for the bank as presented to her by her daughter, the deed was signed and witnessed by Mr Ross, who gave a certificate stating he advised the guarantor before any of the documents were signed. 39So far as the May 2000 transaction was concerned (see par [4](d) above) his Honour noted that the document which Mrs Baira claimed not to have seen was relatively concise and in his view it was difficult to believe that she would have asked her neighbour to witness it if, as she claimed, she had no appreciation of its significance. 40In relation to the documents witnessed by Mr Lo Surdo, his Honour noted that the unstated implication of Mrs Baira's evidence that she had never met him must be that he was consciously claiming to witness a signature when he had not done so. He stated (at [41]): "This allegation by Baira puts Mr Lo Surdo into the long line of people, mostly professionals, who for no apparent advantage to themselves, were alleged by her to be prepared to act deceptively in relation to her obligations. I do not accept Baira's evidence." 41In relation to 2 September 2004 transaction (see par [4](h) above) the primary judge referred to the file note of Mr Calvitto to the effect that he had no doubt that Mrs Baira knew exactly what she was doing. The primary judge stated that he agreed with that conclusion. He also noted that Mr Calvitto's statement of account given to Mrs Baira after the consultation referred to advice given regarding the renewal with St George Bank, with securities including her own Marrickville property, with a total exposure of $2.1 million and with current servicing at about $20,000 per month. The primary judge concluded that this was an emphatic method of ensuring that Mrs Baira was appraised of exactly what was involved. 42In relation to the increase in the St George facility to $1,177,488 in 2005 (see par [4](j) above) his Honour noted that the total limit appeared on the first page of the letter of offer in bold type and that even a casual glance at that figure would catch the eye. 43So far as the reduction in the St George facility offered on 30 September 2005 (see par [4](k) above), the primary judge referred to the evidence of Mr Forster confirming that he had explained the transaction to Mrs Baira. The primary judge referred to the fact that the description Mr Forster gave of the person seen by him did not match Mrs Baira. He attributed this to Mr Forster's "somewhat muddled memory and descriptive powers". The primary judge stated, however, that there was no muddle in the precise report of the consultation made to the bank on the day it occurred and rejected the contention that some sort of substitution had taken place. 44The primary judge then turned to the conflicting evidence of Mrs Baira and Mr Famularo as to the meeting which took place on 2 December 2005. The primary judge described Mrs Baira's denial that that meeting took place as "a falsity and I would assess it as a brazen attempt to avoid the consequences of her own actions". In that regard he referred to the fact that Mr Famularo's diary had a co-ordinate entry for the appointment but he stated, more significantly, there were "pages of handwritten notes of the meeting which are entirely consistent with his version of the meeting". He stated that if there was no such meeting, it implied that Mr Famularo had invented the content and that no allegation of fraud of any kind appeared in the pleadings. He pointed to the fact that the notes contained personal details about Mrs Baira, including her driver's licence, Medicare and passport numbers, together with expiry details. 45The primary judge found that no credible proposition was advanced as to why Famularo would act dishonestly in brokering these loans. In that context he found there was no defect in the terms of execution of the loan and mortgage documentation. 46It should be noted that the primary judge reached this conclusion without any evaluation of the cross-examination of Mr Famularo and without making reference to the matters to which I have referred in pars [11] and [12] above. Equally it must be emphasised that his Honour did not base his adverse conclusions on the credibility of Mrs Baira solely on his rejection of her evidence that the 2 December 2005 meeting did not take place. This is apparent from par [60] of his judgment which provided as follows: "[60] For a particular reason to which I now turn, I find Baira's testimony is unworthy of credit. That particularity is not to set aside the adverse effect on Baira's credit of the contradiction between her behaviour and her execution of documentation against her unlikely proposition that for years and years she signed many documents in blithesome ignorance of what she was doing." 47The primary judge then proceeded to deal with the claim under the Contracts Review Act 1980. 48The primary judge concluded that Baira had "serially signed loan and facility agreements over years culminating in the documents which are central to the claim". He found that she had had appropriate advice tendered to her, that she was capable of acting astutely in her own interests and that she would not have signed documentation without knowing what she was signing. The primary judge found that Mrs Baira had received advice from solicitors in previous transactions, knew the implication of her involvement in the financial structure and was aware that the security given by her extended beyond the $155,000 guarantee she had initially executed many years previously. The primary judge also found that no term of the loan or the mortgage was intrinsically unjust. He found that RHG did not apply any pressure on her to enter into the loan and did not engage in any discreditable tactics. In that context he noted that the documentation presented by the lender included a warning to seek legal and financial advice. The primary judge found there was no unusual difference in inequality of bargaining power and that it was relevant that Mrs Baira had previously entered into other significant commitments with St George Bank. He found that whether Mrs Baira was "unreasonably handicapped in complying with the terms" of the loan depended on whether she had told Mr Famularo the truth about her income and whether she was content to rely on cash flow from Joe and Sandra Ianni. At least by implication his Honour concluded that she was content to do so. The trial judge further found that the RHG loan was beneficial to Mrs Baira because it reduced her liability as compared with the guarantee she had provided on the St George facilities. 49In this context the primary judge concluded that, to the extent Mrs Baira relied on the Contracts Review Act in resisting RHG's claim, the defence failed. 50So far as the claim based on unconscionability was concerned the primary judge concluded that based on the "facts" conveyed by Mrs Baira to Mr Famularo and eventually passed on to the lender, there was no reason that RHG should have appreciated that Baira was in a position of "special disadvantage". The primary judge also found there was no other factor that should have alerted RHG to Baira being in a position of special disadvantage. This appears to be the only consideration by the primary judge of this defence. 51In dealing with the cross-claims brought by Mrs Baira against Mr Famularo and his company, AMBFS, the primary judge made it clear that he accepted Mr Famularo as a witness of truth. In this context he made the following comments: "[92] In short, the claims against AMBFS and Famularo must fail if his evidence is believed. I have accepted it. Nothing will be served by chronicling the various misrepresentations asserted in the pleading to have been made by Famularo whom I find made no such misrepresentations. I accept his evidence that his function as a broker was to find a potentially willing lender and to assemble and forward the documentation required by that lender. He was not, as between himself and the would-be borrower, an investigator of the truth of the information conveyed to him by that would-be borrower. [93] At the risk of repetition, in so far as it was pleaded that Famularo (and AMBFS) acted on the instructions of Joe and Sandra in putting forward the loan application by Baira, I reject that contention. That contention basically requires acceptance of Baira's testimony that she had never met Famularo which contention I reject." 52Before dealing with Mrs Baira's appeal, it is convenient to deal with the background to, and the claim made by, Mr Rosario Ianni and Mrs Domenica Ianni, the second and third appellants and the primary judge's findings in respect of the claims brought by RHG against them. (b) Mr Rosario and Ms Domenica Ianni ("the Iannis") 53The Iannis first provided financial assistance to Joe and Sandra Ianni in 2000 when they guaranteed an advance of $550,000 from St George, a loan made to enable Joe and Sandra Ianni to purchase an investment property, Unit xx/xx xxxx Street, Pyrmont. The guarantee was secured by a mortgage over the Ianni property, xx xxxx Street, Drummoyne ("the Drummoyne property"). The Iannis' signature on the offer of loan was witnessed by a Mr Gialamas. The Iannis also signed a declaration stating they had received independent legal advice regarding the loan and security documents and after receiving that advice had freely and voluntarily signed the mortgage over the Drummoyne property, the deed of guarantee and an acknowledgement. Mr Rosario Ianni's signature on each of the declaration, the mortgage and the deed of guarantee was witnessed by a solicitor, Mr Egisto, whilst Mrs Domenica Ianni's signature on the same documents was witnessed by another solicitor, a Mr Previte. The guarantee was limited to the market value of the Drummoyne property. It should be noted that in contrast to Mrs Baira, the Ianni guarantee did not guarantee the liability of Jencon but only the liabilities of Joe and Sandra Ianni to St George. 54Mr Ianni said that he believed that he and his wife were guaranteeing a loan to Joe Ianni in the sum of $100,000 but denied that he understood the guarantee extended to the value of the Thompson Street property or that he and his wife had granted a mortgage to secure their obligations under the guarantee. 55In cross-examination on this loan Mr Ianni reiterated that he was asked to guarantee a loan of $100,000. He said he was asked to do so by his son and a man from the bank. He acknowledged he saw Mr Egisto but said he only saw him for ten minutes. He said papers were put in front of him to sign. He said he had to go and move his car because it was in a no standing place and he left his wife to sign her papers. He said no one explained anything to him. Subsequently he said Mr Egisto explained a few little things but it was always because of $100,000. He said if he knew the guarantee was not limited to $100,000 he would not have signed it. 56Mr Ianni said he knew from his dealings with the Commonwealth Bank, which had advanced him funds to purchase his home, that the significance of a mortgage was that if he did not pay the bank would sell the house and take the money from the proceeds. He denied, however, that he knew he was executing a mortgage when he gave the guarantee in 2000. He stated that if this had been indicated to him by Mr Egisto he would not have signed the document. 57Subsequently in his cross-examination he acknowledged he gave the title deeds to his son to give to St George Bank but insisted it was only in respect of the $100,000. 58Mr Egisto gave evidence. He said that he was "pretty sure" that he had explained the legal effect and significance of the mortgage and guarantee to the Iannis, otherwise he would not have signed and initialled the document. He said he would not have allowed Mr Ianni to sign the documents if he was unsure that he understood them. Mr Egisto acknowledged that he had no independent recollection of the transaction but stated that having regard to his usual practice he would have explained the document to Mr Ianni. The primary judge stated that he preferred the evidence of Mr Egisto to that of Mr Ianni. 59Mr Previte gave evidence stating that in accordance with his usual practice he would have explained the effect of the St George documents to Mrs Ianni. 60Prior to dealing with the loan to RHG the subject of these proceedings, it is necessary to say something about the background to the loan application. As Tobias AJA has pointed out (at [458]), on 19 August 2005 Joe and Sandra Ianni entered into a contract to purchase a property, xx xxxx Avenue, Dural, (the Dural property) for the sum of $2,223,500. Mr Famularo was aware of this as he had completed a loan application for the National Australia Bank on behalf of Joe and Sandra Ianni seeking an advance of $3,500,000, $2,400,000 thereof to complete the purchase, $490,000 to repay St George and a line of credit of $610,000. 61The loan application made by the Iannis to RHG, which was forwarded to that company by Mr Famularo, contained a copy of a first page of a contract for the same property also dated 19 August 2005 but showing the Iannis as purchasers (their names being inserted by hand) and the purchase price (also handwritten) as $500,000. The page of the contract in question contained a handwritten note "not security". 62I referred earlier to the restructure of the Jencon facilities on 30 September 2005 (see par [4](k) above). Around the same time Joe and Sandra Ianni sought a discharge of the St George mortgage over the Drummoyne property owned by the Iannis. By letter dated 29 September the bank agreed to discharge the mortgage in consideration of the payment of $484,927 with accrued interest. Although little seems to have been made of it in the proceedings it is of significance that the Ianni guarantees were able to be released for significantly less than the amounts subsequently borrowed from RHG. 63There was also forwarded to RHG with the loan application a document on St George letterhead described as a "Snapshot of Account", which purported to be a statement of the indebtedness of the Iannis under an executive housing loan. The amount said to be outstanding was $486,035.16. The "Snapshot of Account" was addressed to the Iannis at their Drummoyne address. It detailed loan repayments from 21 October 2004 until 22 August 2005. A similar document was produced addressed to Mr Joe and Ms Sandra Ianni at their Pyrmont address showing identical payments but noting that the payees in respect of each of the payments were Joe and Sandra Ianni. 64In this context it must be remembered that the loan application made by the Iannis to RHG stated that the purpose of the loan was to purchase a property for $500,000 and to refinance an existing loan of $490,000. A compelling inference which arises is that the documents were supplied to RHG as evidence verifying the purpose of the loan. 65The evidence of Mr Famularo was that he had a conversation with Joe Ianni who introduced himself as the brother of Anthony Ianni, stating he (Joe Ianni) wished to refinance loans he had with St George bank secured over the Drummoyne property. Mr Famularo said he arranged an appointment on 14 September 2005 and said he would like to meet the Iannis personally to discuss the loan arrangement and that he would require them to complete a loan application. 66There are a number of matters to note about this conversation. First, on 30 August 2005 Mr Famularo had completed a loan application on behalf of Mr Joe and Ms Sandra Ianni in respect of the Dural property. There would seem very little reason in those circumstances for Mr Joe Ianni to introduce himself in the manner suggested. 67Second, there seemed little reason for Mr Famularo to ask to speak to the Iannis when he did not know the nature of what was proposed. 68Third, in the conversation deposed to by Mr Famularo, Joe Ianni referred to the fact that his loans were secured over his parents' property. There was no suggestion that what was being refinanced was a loan to the Iannis. 69Mr Famularo stated that he met the Iannis on 14 September 2005. He identified the meeting by reference to a diary entry on 14 September 2005 which stated "Ianni deal". In an affidavit sworn by him in the proceedings he deposed to the following conversations: "Rosario: I have a number of loans which both my wife and I have secured for Joe and Sandra Ianni including a loan for $486,000. We may have also given guarantees for a company by the name of Jencon Australia Pty Ltd but I know that these loans are all secured over my Drummoyne property. These loans had been in existence for many years. Peter: What are the amounts of these other loans that you have guaranteed? Rosario: I cannot recall the exact amounts guaranteed. Joe and Sandra manage the finances. I simply want to reduce the liability on my home that's why we need to refinance my share of the liability. I also wanted to borrow funds to assist with the purchase of another property if possible. This will allow me and my wife to live closer to our son Joe." And: "Peter: Are you both working at the moment or have you retired? Rosario: I am working. I work for Joe and Sandra in the Darling Harbour business. It's an Italian Restaurant called Fioriani. Both Domenica and I are silent investors in the business. I have worked there for a long time and helped my children purchase the business in the early 1990's. I have another three sons who also work there. Domenica: That is right. We have worked there for a long time and helped Joe and Sandra purchase the business in the early 1990's as well as helped them purchase a property in Pyrmont in 2000. Peter: So the Restaurant is a family business. Rosario: It is. Our three other sons are also employed at the Restaurant. This business supports our children and their families. If I can help my children and their families I will and have previously offered my home to St George Bank as security to help them get ahead in life. Peter: Are you confident that you can repay the loan should RAMS approve your application and lend you the money? Rosario: Yes, it would be fine. Our income ranges from $85,000-$95,000 per year. I have never had a problem repaying the loans I have had with St George since the 1990's and have always made the payments in a timely manner. You can see for yourself that we have always had the ability to repay our loans. Peter: We will need to obtain bank statements from you for the purpose of confirming this. Rosario: No problem, I have them with me. Peter: Do you own any other real estate besides your Drummoyne home? Rosario: No. The Drummoyne property is the only property we have. Peter: Do you have other assets? Rosario: Well, I have substantial cash reserves. Peter: What is the approximate value of the cash reserves? Rosario: I cannot recall the current value but over $100,000.00." And: "Peter: You should obtain legal and financial advice in relation to the proposed RAMS loan. Rosario: We have previously obtained legal or financial advice on a number of occasions with regards to our St George Bank loan obligations and would prefer not to have to obtain it again. Peter: You should obtain the advice again regardless. Rosario: I can have Mr. Angelo LoSurdo confirm that we have previously received advice with respect to our St George Bank loans." 70Mr Famularo stated that he took notes of the meeting. A typescript to the note is set out in par [446] of the judgment of Tobias AJA. It should be noted the notes were dated 14/9/09 not 2005. The notes commenced as follows: "14/9/09 9 AM - Ianni ROSARIO) xx xxxx ST - Ianni DOMENICA) DRUMMOYNE - Joe IANNI - Son" Mr Famularo also produced what he said was an extract from his diary for September 2005. By contrast to Mrs Baira's case, the actual diary entry was not produced. The diary entry records an entry on a date stated to be 14: "9 Ianni deal refinance / SGB" Under that there is a notation which is illegible. However, Mr Famularo acknowledged that the diary entry did not say that he (Mr Famularo) had a meeting with the Iannis. 71Following the meeting Mr Famularo said he completed a loan application on behalf of the Iannis. The loan application named the applicants as the Iannis. It stated they were self-employed and investors in Fiorianis. It named Mr Lo Surdo as their accountant, something which did not appear in the file note. Ms Ianni's income was stated as $85,000 and Mrs Ianni's at $90,000 broadly consistent with what appeared in Mr Famularo's note. As I have indicated the purpose of the loan was said to be $500,000 to purchase a property and $490,000 for refinancing. The amount of the loan requested was $1 million. Ultimately approval was given to a loan for $910,000. The stated purpose in the loan approval being $490,000 for refinancing and $420,000 for "equity release". 72As Tobias AJA has pointed out (at [483]) Mr Famularo was supplied with a water rate notice which indicated that the Iannis were receiving a pensioner rebate. This was hardly consistent with the statement of income disclosed in the loan application. The water rate notice was not sent to RHG although the Council rate notice which did not contain the same indication was. In cross-examination Mr Famularo stated he did not observe the pensioner rebate recorded on the water rate notice. 73As part of the transaction the Iannis signed three documents relating to the granting of the loan. The first of these was a document headed "Borrowers Acknowledgement (no legal or financial advice obtained by borrower)". That document contained an acknowledgement by the Iannis that RAMS (RHG) had recommended they obtain legal and financial advice, that they had decided not to do so and that they acknowledged there were significant risks in not obtaining such advice. The acknowledgement also stated that the Ianni had read and understood the document provided by RAMS. 74Somewhat inconsistently, each of the Iannis also signed a document stating that they had received independent legal advice relating to the loan and the security documents. The declarations were witnessed by a solicitor, Mr Wennerbom, who was, at that time, a lawyer from Lands Legal. Mr Wennerbom gave evidence that by reference to a timesheet he saw the Iannis for 54 minutes on 11 October 2005. He stated that he explained the mortgage documents. 75In addition, the Iannis each signed a statutory declaration stating that they had borrowed $910,000 and could repay that amount without hardship. The declaration was witnessed by Mr Wennerbom. 76In cross-examination Mr Wennerbom stated he did not send a letter confirming the explanation although he agreed it would have been prudent to do so. He said he explained the documents by way of an overview and then explained each individual document and had a "signing ceremony". He was cross-examined as to the apparent inconsistency between the two documents to which I have referred and said the acknowledgement was signed because he did not provide financial advice. Mr Wennerbom said that he had done liquor licensing work for Joe Ianni in the past but he had never met Mr Famularo before this occasion. He said the meeting had taken place in English. 77It was put to Mr Wennerbom that he simply indicated to the Iannis where they should sign the documents. He denied this. 78The primary judge described Mr Wennerbom as a firm and credible witness stating it was plain he was independent of Joe and Sandra Ianni. He described the cross-examination as involving forensic excursions which did not affect his view. 79One difficulty with Mr Wennerbom's evidence was that at no stage did he give evidence as to what he told the Iannis during the course of the conversation in which he gave the explanation. 80Mr Rosario Ianni denied meeting Mr Famularo or providing the information in the loan application. In an affidavit sworn on 23 February 2010 he stated that he was an aged pensioner whose only assets apart from his home were term deposits of $24,000 and $30,000 and a small parcel of shares in IAG Limited. I have set out his evidence concerning the 2000 guarantees earlier in this judgment. In relation to the RHG loan, he said that Mr Joe Ianni told him he had found another bank, RAMS, that would make a loan at cheaper interest and asked him to sign a guarantee. He said he was taken to a solicitor to sign documents for the loan. He said that the documents were not explained to him, the meeting lasting about ten minutes. In that affidavit he also said that Mrs Ianni could neither read nor write English but understood a little and spoke even less. 81In an affidavit sworn on 13 October 2009, Mr Ianni also stated that neither he nor his wife ever had a loan account with St George Bank as appeared on the Snapshot of Account document. He stated that the loan application was incorrect in the following respects: "As at September 2006: * I was working as a self-employed investor; * I had not operated a business for 15 years; * I did not operate a shop at 197 Harbourside Darling Harbour; * I was not working in the Restaurant / Food Industry with a taxable income of $85,000.00 per annum. * Although he had previously done tax returns for me, Angelo Losurdo did not at the time do any accounting work or tax work for neither [sic] myself nor my wife; * I had not instructed Phillips Fox Lawyers in relation to an application for loan or the purchase of any property and no one at Phillips Fox at the time was acting on my behalf; * I was not intending to purchase a property and had no reason to apply for a loan of $500,000 to purchase a property; * I did not want to borrow $1 million. * I had no intention of providing my property at Drummoyne as security for any loan from RAMS home loans. * I did not have a share in a business at darling Harbour; * I did not owe $426035.00 to St George Bank." 82Mr Ianni denied that it was explained to him that the documents that he and his wife were signing contained an acknowledgement that they were borrowing $910,000, that they were mortgaging their property to secure that amount and that RHG had advised they should seek legal and financial advice but they had declined to do so. 83In cross-examination Mr Ianni repeated his denial that he and his wife met with Mr Famularo on 14 September 2005. He said he got information from his son that interest rates were low and that Joe Ianni asked him to go and see a solicitor. He stated that all he knew was that he was signing something about the $100,000 to get a lower interest rate and to change banks. He said he did not see the figure of $910,000 on the document he was asked to sign. He stated there was no point in him borrowing money because he was living on the money that he had. He said he would not be borrowing that kind of money. He was cross-examined on the declaration he signed on 11 October 2005 and acknowledged that he could read a figure of $910,000 which appeared on it, but said it was not explained to him at the time and as he had made no application for a loan there was no reason for him to look at it. 84He stated that the day he signed the document before Mr Wennerbom his car was parked in a place where it could not stay for very long. He stated that he quickly went upstairs to the solicitor's office and signed the document. It was pointed out to him that this was the same explanation he gave in relation to the execution of the 2000 documents but he insisted that that was what occurred. He denied that Mr Wennerbom explained to him that he was borrowing $910,000. 85Mr Ianni prevaricated somewhat on the question of whether his signature appeared on some of the documents in issue but ultimately seemed to concede that he did sign the documents in question. 86Mr Ianni was cross-examined on his ability to understand English. It was put to him that at the time he swore an affidavit of 16 October 2008 it was read to him in English by his solicitor, a Mr Niles, and he did not need the aid of an interpreter. He stated he signed the affidavit after it was interpreted to him. Mr Niles was called to give evidence. He said that he read each paragraph of the affidavit in question to Mr Ianni in English who stated he understood them. He said that on reflection he did not read or explain each document attached to the affidavit to Mr Ianni. However, he said that he explained the gist of each document. It should be noted that in relation to two of the other affidavits sworn by Mr Ianni, Mr Niles had an interpreter present when the affidavits were sworn. 87It should be noted that although it was put to Mr Ianni that he met Mr Famularo on 14 September 2005 the following matters were not suggested to him. (a) That he supplied the information in the loan application to Mr Famularo. (b) That the information in the loan application, particularly in relation to his statement of income and the reason for the loan, namely to purchase a property, were in fact correct. (c) That the statement of assets and liabilities and income contained in his affidavits were false. (d) That he supplied the sham contract and Snapshot of Account to Mr Famularo. 88I have summarised the evidence in chief of Mr Famularo above. In cross-examination he acknowledged he completed a late application to the National Australia Bank to enable Joe and Sandra Ianni to purchase the Dural property. He acknowledged that it was more likely than not that the first page of the contract was supplied to the National Australia Bank in connection with Joe and Sandra Ianni's loan application. He acknowledged that the contract for purchase was due to settle on 14 October 2005 and the reason the RHG loan was required to be settled on that day was because it was the date of settlement of the Dural purchase of Joe and Sandra Ianni. 89Mr Famularo was cross-examined on the Snapshot of Account document, first by counsel for Mr and Mrs Ianni. He stated that he obtained the document from Mr Ianni but acknowledged that the bundle of documents presented to the Court only contained a snapshot in the name of Mr Joe and Ms Sandra Ianni. It was put to him and he denied, that he knew that the account was in the name of Joe and Sandra Ianni. He then acknowledged that he had been advised of that fact on 30 August and said that on 14 September he could not confirm the identity of the accountholder. Subsequently he stated that the practice of St George was to supply to each of the borrower and the guarantor a snapshot of the account. 90Counsel for the Iannis also cross-examined Mr Famularo on the sham contract that indicated the Iannis were purchasing the Dural property. He acknowledged it was sent to RHG and at the time he knew that Joe and Sandra Ianni were purchasing a property at the same address. He said he attached the contract of sale because he was familiar with RHG's requirements. He denied that on 14 September 2005 he was aware that the Iannis were not purchasing the Dural property. 91So far as the statement of income of the Iannis contained in the loan documents was concerned, Mr Famularo said that he asked for verification and was told that that was not available. He denied that that was untrue. 92It was put to Mr Famularo and he denied, that he did not speak to the Iannis but only to Mr Joe Ianni. He also denied that the Iannis gave him no instructions, that he completed the application knowing they were not purchasing the property at Dural and that he knew that the St George account to be paid out was in the name of Joe and Sandra Ianni. He also denied that he knew or had no regard to whether it was true that the Iannis were self-employed. He denied his diary note was a fabrication. He acknowledged, however, that he knew that any capacity of the Iannis to repay was dependent on Mr Joe Iannis' ability to run what was described as the family business. 93Mr Famularo also denied that he did not tell the Iannis that they should obtain financial advice. He also rejected the proposition that he never met with Mr Lo Surdo. 94Counsel for Mrs Baira also cross-examined Mr Famularo on the sham contract. The cross-examination was to the following effect: "Q. If you would have a look at that copy of exhibit C1 ... Exhibit C1, for the record, is Joe and Sandra's purchase and the other document, which is already in evidence, at page 380, is something else, isn't it? A. Yes, it is. Q. That's not a purchase at all, is it? A. I don't know. Q. It is a sham document, isn't it, sir? A. I don't know. Q. See, you knew, sir, because you had arranged for the National Australia Bank to fund Joe and Sandra Ianni's purchase of x xxxx; you knew that the document at page 380 was a sham? A. I did not. GEORGE: Again, I would say there is no allegation of fraud in the first cross-claim by Mrs Baira. BOLSTER: No, there isn't. GEORGE: The rules require there to be, in cases of fraud specifically, particulars of any allegation made. I will take your Honour to them. HIS HONOUR: Yes. What are you alleging please, Mr Bolster? BOLSTER: I want to know, sir - perhaps if I could put it this way. Q. You had both contracts at the time you made the application in the Ianni matter, correct, sir? A Yes. Q And you would have the court find that you were careful in the documents that you provide to RAMS in this case? A. Yes. Q. And that you were careful in respect of ensuring that a document that went forward in support of an application for finance was true and correct? A Sir, how can I confirm that? Q. Sir, you proceeded with an application to the NAB for the purchase of x xxx xxx, correct? A. Yes. Q. And at the same time proceeded with an application for finance for exactly the same property on behalf of Mr and Mrs Ianni. Correct? A. I did not check the details, the specific details, on that contract. Q. So your explanation is that you did not check the two contracts? A. I didn't compare them, that's correct. Q. So you were not careful, can I suggest, in what you put forward to RAMS in support of the supposed loan for Mr and Mrs Ianni? A. That's incorrect. I don't compare different customers files between them. Q. Well, sir, this was the Ianni's refinance, wasn't it? A. That document was included in the Ianni refinance, yes. Q. And there were two loans that formed the part of the Ianni refinance? A. There were two loans, yes. Q. And the NAB loan required security over the Pyrmont property. Correct? A. That is correct. Q. And the effect of the RAMS loan was to release that very security. Correct? A. Sorry, the effect of the RAMS loan? Q. To Mr and Mrs Ianni was to release Pyrmont? A. I don't know what effect that - that loan would have had because the facility was cross-collateralised over two properties, that being Drummoyne and Pyrmont. Those arrangements they needed to discuss with their own solicitor. I didn't know the arrangements prior to the RAMS refinance. Q. What was being offered as security for the Iannis to the NAB was Pyrmont and the new property at Dural? A. Yes, on the basis that that loan was to be paid out as well. Q. Pyrmont had to be released by St George? A. Yes, on the basis that the $486,000 loan, or whatever it was, was repaid. Q. This was one refinance, wasn't it? A. No. They had independent solicitors acting for them. Q. But you, sir, put forward to RAMS the purchase of that property, xxxx xxxx, Dural, as a basis for the loan to the Iannis? GEORGE: Your Honour, no such allegation is pleaded, and I take your Honour to 15(5) which is a separate requirement, UCPR 15(5), and I can't find anywhere in my friend's cross-claim that this is one of the particulars of negligence that he relied upon, and 15(5) requires the cross-claimant to set out what those particulars are." 95In cross-examination by counsel for Mrs Baira, Mr Famularo affirmed that he did not give particular attention to the water rate notice. 96An affidavit of Mrs Ianni was read. She said she was unable to write and read English, although she could write her name in English and understand a little. She stated that in the five years prior to swearing her affidavit (12 November 2008) she had been totally dependent on her husband to do the housework and take care of her. 97Mrs Ianni was unable to be cross-examined. Very little weight can be placed on her evidence in those circumstances. 98Mrs Ianni's general practitioner gave evidence by affidavit sworn 8 September 2010. He deposed that Mrs Ianni "had very little comprehension due to her mental health" and that between the years 2000 and 2010 he had seen a rapid deterioration in Mrs Ianni's health and that she was no longer able to manage her affairs. (c) Mr Joe and Ms Sandra Ianni 99For completion it is necessary to refer to the evidence of Joe and Sandra Ianni. 100In his affidavit evidence, Mr Joe Ianni stated that he was introduced to Mr Famularo by his brother, Anthony Ianni. He stated that he told Mr Famularo that he had found a property at Dural that he wanted to purchase and that the purchase price was $2,223,500. He stated that he told Mr Famularo that he required $1.1 million from St George Bank. He said that Mr Famularo enquired whether he had any other security, to which he responded that he had a unit at Pyrmont worth about $1 million, a liquor licence worth about $800,000 and that his parents had provided a guarantee to St George for $100,000. He said that in early August Mr Famularo telephoned him and said he had a loan in two parts, the first part being with NAB and the second with RHG, for a full amount of $3.3 million. He said that thereafter he saw Mr Rosario Ianni and asked him to guarantee the RHG loan in an amount of $100,000. 101Mr Joe Ianni said that he attended on Mr Famularo to sign various documents for RHG but he could not recall precisely what they were. He said Mr Famularo told him he was arranging for his parents to see a solicitor to sign the guarantee documents. Mr Joe Ianni said he was subsequently told by Mr Famularo that the solicitor was Mr Wennerbom and that he should arrange to take his parents to see him. He said he took his parents to see Mr Wennerbom, that the discussion which took place occurred in English and that Mr Wennerbom did not explain the documents but simply pointed to a spot on the page and said "sign here". 102In relation to the loan to Mrs Baira, Mr Joe Ianni said that he telephoned Mr Famularo and said St George was giving him a hard time and he wanted to refinance all his facilities. He said he needed about $1 million. He said that subsequently Mr Famularo informed him that he had a loan approved from RAMS. He said Mr Famularo told him that there would be two loans, one for $650,000 and one for $480,000 and that his mother would need to guarantee the loan up to $150,000. He said that on the next day Mr Famularo came to his home, where some documents were signed and that Mr Famularo also gave some documents to Sandra Ianni and told her that Mrs Baira would need to sign them. 103Mr Joe Ianni denied that either Mr and Mrs Ianni or Mrs Baira worked at Fiorianis or received any salary or other remuneration from either Jencon or Jencon Australia Pty Limited. 104Mr Joe Ianni was called to give evidence by counsel for Ms Sandra Ianni. In cross-examination he denied any knowledge of the sham contract or the Snapshot of Account document. In relation to the statement of taxable income in the loan application signed by Mr and Mrs Ianni, he was asked these questions and gave these answers: "Q. You say that given that you say that neither your father or your mother had any involvement in the business or worked in the business? A. No, they did not. Q. Are you able to explain to the court how this taxable income of $90,000 ended up in this application? A. I don't know how it ended up in here." 105It was not put to Mr Joe Ianni that the statement of Mr and Mrs Ianni that they did not work in the business or his statement to that effect was false. Similarly in relation to Mrs Baira, he said that to his knowledge she had no income and it was not put to him that that was incorrect. 106In cross-examination by counsel for Mr Famularo, it was put to him that Mr Famularo did not say to him in August 2005 that the loan would be in two parts, pointing out that on his evidence, the conversation with Mr Famularo took place prior to any loan application being made. It was put to him that he made the appointment for his parents to meet with Mr Wennerbom, not Mr Famularo. Later in his cross-examination he said he saw a loan agreement with RAMS in his own name for $900,000. In this context he gave the following evidence: "Q. You know about the $900,000 loan? A. Yes. Q. Involving your parents? A. Yes. Q. Was settled in about October 2005? A. It was settled on October 14, when I settled on the property in Dural. Q. And this is a loan that you thought was in your name? A. That's correct. Q. And even though your parents had signed the documents they did in front of Mr Wennerbom? A. Yes. Q. By the way, when they were there signing these documents, did you have a look at all what these documents were? A. No, I did not. ... Q. Where was the last time you saw this loan agreement with your name on it for $900,000? A. At the business premises at Darling Harbour. Q. And in whose possession was this document? A. Whose possession? Q. Yes, when you last saw it? A. Peter Famularo. Q. So you would tell his Honour you signed a RAMS loan document with your name on it, and your wife's name? A. That's right. Q. For some $900,000? A. That's right. Q. And in your name was printed on it? A. Yes, I saw my name, yes. Q. Printed? A. Yes. Q. Yes; not handwritten, printed? A. Yes, printed, yes. Q. Printed. And which had a RAMS logo on it? A. It had an agreement, yes, RAMS facility agreement, yes. Q. And you remember seeing the figure some of $900,000 - odd? A. Yes." 107Mr Joe Ianni also stated that after settlement he received loan statements from RAMS for the $900,000 loan in the name of his parents, which he thought were the result of a clerical error so he continued to pay. 108He also asserted to the extent that Mr Wennerbom stated that he had explained the loan documents to his parents, Mr Wennerbom was lying. 109It was also put to Mr Ianni that he attended on Mr Famularo with his parents which he denied. 110In her evidence in chief in the proceedings brought by Mrs Baira, Ms Sandra Ianni stated she recalled her mother agreeing to guarantee a loan to Advance Bank to assist in the acquisition of the restaurant in 1992. She said she did not know how much the loan was for or the extent of her mother's guarantee. 111Mrs Sandra Ianni stated that she recalled Mr Famularo visiting the Dural property in respect of loans. She said she never filled out any of the loan forms and that Mr Famularo did it for her. She stated that when she saw loan statements in her mother's name Mr Joe Ianni told her it was a clerical error. She said that on one occasion she had to pretend to be her mother when she needed to change payment arrangements. This involved signing a document notifying RHG that the loan statements were to be sent to the Dural property. She said she did this at the request of Mr Famularo. It was put to her that she did it to defraud RHG but she denied this. 112Ms Sandra Ianni swore affidavits to similar effect in the Ianni proceedings. She did not give any evidence as to the circumstances which led to the Iannis signing a guarantee in 2000 or entering the loan agreement with RAMS in 2005. 113Ms Sandra Ianni also gave evidence that neither the Iannis nor Mrs Baira received any income or other benefits from the business carried out by the Jencon companies. 114In cross-examination she agreed she obtained Mrs Baira's signature on a number of documents over the years. She said she could not recall what they were. She said she told Mrs Baira on some occasions that we (Joe and Sandra Ianni) were increasing the overdraft or renovating, but that her explanations were very vague. She said generally she got Mrs Baira to sign documents and then took them away to have them witnessed. 115The primary judge made no adverse finding in regard to Mrs Sandra Ianni's credit. The Iannis' case at trial 116The primary submission made by the Iannis at trial was that they did not attend a meeting with Mr Famularo and did not supply him with the information stated in the loan application. They said they simply signed documents which they were asked to sign by Mr Joe Ianni and did not appreciate they were entering into a loan for $910,000 over the security of their property. They submitted that the application in their names to RHG was based on false information. They relied particularly on the sham contract and Snapshot of Account document, to submit that they were misled in entering into the transaction. These submissions depended in large part on their being accepted over Mr Famularo. 117The balance of their submissions may be summarised as follows: * It was reasonable to infer that the bank statements sent to RHG, which were referred to when assessing their loan application, were in the name of Joe and Sandra Ianni, as those were the bank statements received by Mr Famularo (this refers to the same account in relation to which the Snapshot of Account issue arises). On that basis RHG was on notice that the "account being refinanced" was in the names of Joe and Sandra Ianni. * Given RHG's guidelines "it is almost unbelievable that [it] did not seek tax returns, assessments and financial statement to verify the bare statements of income set out in the application" particularly as the self certification statement did not identify a trading name or ABN that would have supported their statement that they were self employed. On this basis the Iannis argued that there "was an absence of any proper credit assessment". * RHG gave no regard to the serviceability of the loan. * RHG failed to comply with its own guidelines. It should be noted that there was a disagreement about which guidelines applied to the loan. In relation to the undisputed guidelines (version 10.5) the following failures were said to have occurred: (a) A self employed borrower was defined by RHG as someone with an ABN. The Iannis provided no ABN on their finalised loan application, but had provided one (Jencon's) on a previous version of the loan application, which was then amended after RHG enquired and found they were not directors of Jencon. Further, without an ABN they were not entitled to a low doc loan; (b) The maximum loan size for one residential property security was $750,000, with loans greater to be referred to a lender's mortgage insurer for underwriting approval, whereas the Iannis were loaned $910,000 on the security of their Drummoyne property; (c) The guidelines provide that if exposure is greater than $750,000 full income evidence was required, but no such documents were obtained by RHG. * The effect of the RHG loan was that the Iannis went from being third party guarantors of a loan with an outstanding balance of approximately $490,000.00 to being personally liable for a loan of $910,000.00, which was being used to reduce indebtedness of Joe and Sandra Ianni. * The Iannis received no benefit from the RHG loan. It was not to refinance a previous loan of theirs. As to having previously provided guarantees to St George, they were volunteers in relation to those guarantees. * RHG must have known that the Iannis were not purchasing the Property at Dural, because RHG attended settlement. RHG was therefore on notice that the loan was being applied for a reason inconsistent with the purpose stated on the application (purchase by the Iannis of a property). 118These matters were submitted to be relevant to both the Contracts Review Act defence and to establishing that RHG was, or ought to have been, aware of the Iannis lack of capacity to repay the loan and thus had acted unconscionably, in particular through "asset lending". The finding of the trial judge 119The trial judge found against the Iannis. His conclusions were principally based on what might be described as the extremely adverse credibility findings he made against Mr Ianni. He found that Mr Ianni had lied about meeting with Mr Famularo and this led him to the following conclusion: "[107] In somewhat parallel to the denial by Baira, a matter of particular import in relation to the evidence of Rosario is his denial that he ever met Famularo. That he and Baira make similar denials does not add strength to the contention of either. I have already dealt with the sheer incredibility of Baira's assertion. Again, there are handwritten notes by Famularo of his meeting with Rosario and Domenica which fortify his evidence that he did have the meeting and his testimony was coordinate with what he said he was told. I reject the claims that there had been no meeting with Famularo. A lie of this magnitude about a critical fact not only diminishes credibility generally but extinguishes it where it is contradicted by evidence, particularly that of Famularo." 120The importance of the trial judge's credit finding, both in relation to the Iannis and Mrs Baira, is demonstrated from the following concluding paragraphs of his judgment: "[147] Baira, Rosario and Domenica were not induced to offer their properties to come to the aid of a perceptibly risky enterprise nor to one, examination of which, would have revealed the seeds of failure. The mortgagors were content to use their properties in circumstances where all the appearances of prosperity existed and this appearance was affirmed by the apparent ability for commitments to be met. As noted in the account which Mr Calvitto prepared for the advice which he gave, the service requirement of loans was in the vicinity of $20,000 per month and this seemed to be able to be met and, so far as the evidence which the defendants were prepared to tender demonstrated, continued to be able to be met until the business just evaporated. [148] While there is a veritable avalanche of documents, the outcome is inevitable in the light of the lack of credibility of Baira and Rosario as witnesses. It was accurate for counsel to submit that, whenever inconvenient truths were presented, the defendants denied them and made scandalous allegations against third parties. The defendants signed documents of obvious financial import and there is no reason to find other than that they intended their signatures be relied upon." 121In relation to the nature of the loan by RHG and the factual matters said to be raised in support of the defences under the Contracts Review Act and Consumer Credit Code, as well as the unconscionability defence, the trial judge made the following findings: * The loan was a low doc loan, which does not require income tax returns; * On 14 and 16 September 2005 Rosario and Domenica signed RAMS Borrower Self Certification - Income and Affordability forms and that they affirmed the correctness of the information entered into; * The sham contract was a "mysterious document" but "did not operate so as to effect one way or another the transaction into which Rosario and Domenica entered with RHG Mortgage"; * The Iannis received legal advice from Mr Wennerbom in relation to execution of the mortgage. Mr Wennerbom was independent of Joe and Sandra Ianni in respect of his advice to the Iannis, despite doing liquor licensing work for Fioranis restaurant; * In relation to the original loan to St George Bank (in 2000) the Iannis received legal advice from Mr Egisto. The trial judge rejected the contention that Mr Egisto simply witnessed signatures; * The Iannis supplied the information on their loan application to Famularo at a meeting with him; * That Famularo may not have acted in accordance with his broker obligations to RHG (and/or the applicable RHG guidelines) by filling in the information in the Borrower Self Certification forms and may have also breached his obligation to RHG by failing to check what he was told. However, this did not affect the relief sought by the Iannis, as Famularo had no obligation to them to investigate the truth of their representations. * The "Snapshot of Account" was likely a genuine bank product sent to the Iannis as guarantors, was not "sinister" and had no determinative relevance; * The fact that Famularo physically entered the supplied details onto the loan application forms, when there were guidelines cautioning against doing so, did not corrupt the transaction; * There was nothing inherently unjust in the terms of the loan; * No "conduct or requirement of RHG Mortgage which could be categorised as unconscionable" was identified and that RHG responded appropriately to the application and assessed it properly on the information supplied; * The "checklist approach" to the Contracts Review Act adopted by the Iannis was inappropriate and did not establish injustice. 122The trial judge concluded that the agreement and mortgage were not unjust and that the other defences based upon statute were not sustained. 123In relation to the assertions of unconscionability by RHG, ABMFS and Famularo in the Ianni's cross claim, the trial judge found that: * The role of the broker (ABMFS and Famularo) was to receive information, assemble the documentation and forward it. It did not include a duty to investigate. * That Famularo did not notice the pensioner rates receipt and that "obviously no one else 'further up' the line did as it could reasonably be predicted that identification of Rosario as a pensioner would have led to refusal of the loan". Finding by the trial judge in relation to the income of the Iannis and Mrs Baira 124The primary judge found that the significant income represented by both Mrs Baira and the Iannis to Mr Famularo "if true, must have been derived somehow or other from the cash flows emanating from the restaurant" and that as the appellants had chosen to adopt a minimalist stance, reliance must be placed on the documentation which "on its face is regular and untainted". He also noted that while the defendants did not get a proprietary interest from the loans, the documents were signed for the benefit of what the primary judge described as "general family prosperity". The grounds of appeal 125A joint Notice of Appeal was filed by Mr and Mrs Ianni and Mrs Baira. The grounds of appeal were as follows: "1 The trial judge failed to discharge his judicial function in that he failed to address the primary cases sought to be made by the appellants at the trial. 2 The trial judge erred in: a. finding that the third respondent ('Mr Famularo') was a witness of credit; and, b. relying upon his evidence to make a finding of credit adverse to the appellants. 3 The trial judge erred in rejecting the evidence of the appellants that they never met, nor had any direct dealing with, Mr Famularo and the second respondent ('AMBFS') 4 The trial judge erred in failing to give any, or any adequate reasons, for accepting the evidence of Mr Famularo and rejecting the evidence of the appellants. 5 The trial judge erred in the case of the first appellant ('Rosa Baira') in finding that on or about 12 October 2005 she met, and received proper and competent legal advice from, Mr Frederick Forster, a solicitor employed by Egisto Solicitors of Five Dock, in the terms of a certificate dated 12 October 2005 and addressed to the St George Bank. 6 The trial judge erred in the case of the second and third appellants in failing to address the evidence of Dr Cameron to the effect that the third appellant was incapable of understanding the nature and effect of the loan transaction even if the documents were explained to her." 126The orders sought by each appellant was that the appeal be allowed and there be a retrial. The submissions of Mrs Baira 127The appellants initially filed joint written submissions. Ultimately the Iannis did not seek to be heard on the appeal, their solicitors having ceased to act for them some days before the commencement of the hearing. In these circumstances it was agreed that they would rely on the written submissions and such argument put by senior counsel for Mrs Baira as was relevant to their case. It was also agreed that if they wished to put on supplementary submissions they could do so within 14 days of the hearing's conclusion. Submissions on behalf of the Iannis were filed on 10 May 2012, in which they adopted the submissions, both oral and written, of Mrs Baira. 128The appellants summarised their submissions in the following manner: "a. At the highest level of abstraction, WHETHER the primary judge failed to address the primary case sought to be made by the Appellants respectively at trial and, accordingly, failed to discharge his judicial function and thus failed to do justice to the issues posed by the Appellants' cases (Ground 1). b. WHETHER the primary judge's findings as to the credit of principal witnesses (in particular, the third respondent 'Mr Famularo'; the first appellant, 'Mrs Baira'; and the second appellant, 'Mr Rosario Ianni'); and consequential findings of fact, were flawed (Grounds 2, 3, 4, 5 and 6). c. WHETHER the primary judge erred in failing to give any or any adequate reasons in support of his orders (Ground 4)." 129Notwithstanding this summary the primary thrust of the appellants' submissions was to attack the findings of the primary judge so far as they were based on the respective credit of the appellants and Mr Famularo. The appellants submitted that when the evidence was objectively and fairly examined, it was apparent that the primary judge neither appreciated nor adequately addressed fundamental deficiencies in the evidence of Mr Famularo and that when these deficiencies were brought to account, Mr Famularo's evidence ceased to provide the foundation for the conclusion of the primary judge that Mrs Baira and the Iannis were lying when they said they had not met with him. 130In this context the appellants unsurprisingly relied on the sham contract and the Snapshot of Account document. They submitted that the credit of Mr Famularo was undermined by the fact that he permitted the loan to go forward on two pretexts which were false, namely, that the Iannis were purchasing the Dural property and that they were principal borrowers with St George. They submitted that it was never suggested to Mr Ianni that the purpose of the RHG loan was to acquire the Dural property and to discharge an existing primary obligation to St George. It was also submitted that it was not put to Mr Ianni that he misled Mr Famularo as to the purpose of the loan. In these circumstances the appellant submitted that the primary judge proceeded on the implicit assumption that Mr Ianni was aware of the true position so far as the Dural property and St George loan were concerned, but was content to proceed on a false basis and to deceive Mr Famularo in order to obtain the loan. 131In relation to the loan to Mrs Baira, reliance was additionally placed on a statement made by Mr Famularo to a Mr Matthew Anderson of RAMS (RHG) which was recorded in a file note of Mr Anderson on 17 January 2006 to the following effect: "This file is a little unusual, in the fact that we are paying out a loan that the applicant is not an account holder of. We have been advised that the loan being paid out is however secured by this property and was written as a third party security by the broker himself whilst he was a business banking manager at St George. Therefore it is appropriate to treat this deal as a refinance." There was no evidence that Mr Famularo had any involvement in writing the loan. His evidence was that his first contact with Mrs Baira was on 2 December 2005. In his affidavit of 11 November 2009 he stated he had never previously met her. Further, the first loan offer made by St George on 3 August 1998 was signed by a Mr Gialamas. 132It should be noted that Mr Famularo denied that he told Mr Anderson that the loan being refinanced was written by him, saying that what he conveyed to Mr Anderson was that he worked at the loan centre where the loan was written. Mr Famularo denied he gave this information to reassure Mr Anderson. 133The appellants also emphasised the consistency in the respective denials by the Iannis and Mrs Baira that they did not meet Mr Famularo and the fact that each of the Iannis and Mrs Baira stated that they were informed by Joe and Sandra Ianni that the reason for changing banks from St George to RHG was to obtain a better interest rate. 134Mrs Baira separately appealed against the finding of the primary judge that Mr Forster had advised her. She pointed out that Mr Forster's evidence suggested that it was not Mrs Baira whom he had met on that day and that in any event he had expressly affirmed that he did not advise on the release of the securities, contrary to what was stated in the certificate from Egisto Solicitors (see par [4](k) above). She submitted that the primary judge was wrong to state that Mr Forster's memory and descriptive powers were muddled. 135Mrs Baira submitted that the primary judge failed to appreciate that the advice which was required in relation to the October 2005 transaction (see par [4](k) above) was that the release of the security over the Drummoyne property owned by the Iannis and the Pyrmont property had the effect of substantially weakening her position as third party guarantor. She also submitted that it was unusual that Mr Forster did not witness her execution of the revised documentation if he gave the advice. She pointed out that her signature was purportedly witnessed by Mr Anthony Ianni and his denial that he signed the document was unchallenged. 136The Iannis also submitted that the primary judge erred in failing to find that having regard to the evidence of Dr Cameron, Mrs Ianni was incapable of understanding the documents which she executed. 137Finally, in relation to Ground 1 of the Notice of Appeal, the appellants submitted that even if the primary judge's findings on the credit issue were correct, there remained a basis for relief under the Contracts Review Act which the primary judge failed to consider. They pointed out that the loans were substantial thirty year loans to elderly persons on unverified income statements. They submitted that contrary to the finding of the trial judge, Mrs Baira was worse off as a result of the transaction as were the Iannis. In relation to Mrs Baira the following additional submissions were put: "a. She was a 64 year old widow seeking to borrow $650,000 repayable over 30 years who had not submitted any documentation to support the stated ability to repay the proposed loan (ie a net business income before tax of $145,000). b. The application was not submitted as a no-doc application bur rather appears to have been submitted with no particular product type in mind, although it did attach a 'RAMS LowDoc Certification Form' loan. c. No solicitor had been nominated for Mrs Baira in the application forms. d. The $1,250,000 liability of Joe and Sandra to St George was being split into 2 loans that would settle at the same time and would together discharge Joe and Sandra's indebtedness to St George. e. Mr Famularo was acting on behalf of Joe and Sandra Ianni, who were, on the face of their loan application, the principal debtors to the St George Bank. f. Rosario and Domenica had previously become borrowers vis a vis RAMS and mortgaged their home to RAMS in order to allow Joe and Sandra to further reduce other indebtedness on their part to St George even though that application proceeded on the basis that they were principal debtors to St George and not, as was in fact the case, mere guarantors. g. Joe and Sandra's loan application stated that their postal address was the property, which was to have been bought by Joe's parents with the settlement proceeds of the October loan. h. The loan being applied for was 'unusual' in that the stated purpose of the Baira loan was pay out a loan from St George in respect of which Mrs Baira, as applicant, was not the borrower. Despite this, in approving the loan Mr Anderson concluded, incorrectly, that there were 'no third party mortgage issues'. i. Mr Famularo had apparently written the third party security whereby Mrs Baira purportedly guaranteed the obligations of Joe and Sandra to St George; although he denied this in his affidavit evidence. This was apparently what satisfied Mr Anderson to take no further action, but again, Mr Anderson was, without explanation, not called. j. Joe and Sandra, the principal borrowers under the previous St George loan were to be neither co-borrowers nor guarantors with Mrs Baira in respect of the proposed RAMS loan. In other words although Joe and Sandra were liable for all of the debt to St George, they would have no exposure to RAMS for the loan applied for in the name of Mrs Baira. k. The practical effect of any loan would be to transform Mrs Baira, who was at that point in time merely a third party guarantor, into a principal borrower in circumstances where the principal borrowers under the St George loan, namely Joe and Sandra, would not have any liability as either a principal, guarantor, surety, or otherwise to RAMS in respect of the amount of the notional borrowing by Mrs Baira. l. Mrs Baira's evidence was that she did not sign the direction to pay, and clearly, the signature on that document was significantly different to her signature as it appeared in any of a number of places." The submissions of the Iannis 138As previously stated, the Iannis adopted both the written and oral submissions of Mrs Baira. 139In their written submissions they pointed to the evidence of Joe Ianni that he instructed Mr Famularo in July 2005 to refinance the debt owed to St George and to obtain further loans for the purchase of the Dural property. They referred to Mr Joe Ianni's affidavit evidence that Mr Famularo could only do this by way of brokering two loans, $2.4 million from the National Australia Bank and $1 million from RHG. 140The Iannis submitted that the primary judge's findings of credit failed to take into account, weigh up or appreciate how key documents fitted into the factual matrix. They submitted that this resulted in aspects of the credit findings being glaringly improbable, or disclosing that the primary judge palpably misused the advantage he gained from hearing the witnesses at trial. 141The Iannis submitted they were entitled to a retrial because the primary judge's out of hand dismissal of the sham Dural contract and the Snapshot of Account document and failure to address a glaring defect in the date of Famularo's file note undermined his credit findings. They submitted that this case was one where there had not been a determination of their case upon a consideration of the real strength of the body of evidence it presented (see State Rail Authority (NSW) v Earthline Constructions Pty Limited (in liq) [1999] HCA 3; (1999) 160 ALR 588 at [64]). They submitted that the reasons for seeking a retrial included that the primary judge would need to assess the demeanour of witnesses whilst being cognisant of the role and importance of the sham Dural contract, Snapshot of Account and the fact that the file note said to record a meeting between Mr Famularo and the Iannis was in fact dated 14 September 2009. 142As regards this last point, the Iannis submitted that the file note was unreliable having regard to the fact it was dated September 2009. It should, however, be noted as acknowledged in their submissions that no point was taken as to this matter during the course of the trial. In particular it was not suggested to Mr Famularo that he fabricated the note for the purpose of litigation. 143In relation to the sham contract, the Iannis submitted that the primary judge did not appreciate its importance in securing finance from RHG. They also submitted that a consideration of the contract suggested that Mr Famularo may have been involved in its creation, or that at least Mr Famularo was aware at the time of preparing the Iannis' application that Joe and Sandra Ianni were the real purchasers of the Dural property. 144The Iannis submitted that the primary judge's conclusion that the sham contract did not operate so as to effect one way or another the transaction entered into was overstated, given the contract's utility in disclosing a purpose to the RHG loan. 145The Iannis also made submissions by reference to the handwriting on the sham Dural contract that an inference could be drawn that Mr Famularo was involved in its preparation. This submission can be discounted as that proposition was not put to Mr Famularo during the course of the trial. Mr and Mrs Ianni, however, also relied on the fact that it was Mr Famularo who submitted the sham contract to RHG along with the Snapshot of Account. 146In relation to the Snapshot of Account, the Iannis submitted that the primary judge failed to appreciate the importance of this document in obtaining the loan. They noted that whilst Mr Famularo forwarded the Snapshot of Account in the name of Joe and Sandra Ianni to the National Australia Bank, he only forwarded the Snapshot of Account in respect of the Iannis to RHG. They also submitted that the Snapshot of Account document was a sham. However, this ignored the unchallenged evidence of Mr Famularo as to the practice of St George. The submissions of RHG 147RHG submitted that the evidence established that at the time the transactions were entered into, Rosario Ianni was capable of understanding English. Reliance was placed in particular on the evidence of Mr Niles to the effect that he obtained instructions in English from Mr Ianni on certain of the loan documents and for the purpose of preparing affidavits in the proceedings. 148RHG further submitted that for the purpose of a claim under the Contracts Review Act, any findings of primary fact are to be reviewed in accordance with the usual constraints on an appellate court in undertaking such a process. It submitted that the determination of whether or not a contract was unjust is an evaluative process based on the primary facts as found. It submitted that a review of the judgment of the primary judge revealed that he had performed that function and that the reasons for his conclusion were adequately set out in accordance with the principles in Pettitt v Dunkley [1971] 1 NSWLR 376 and the cases which followed it. 149In relation to Mrs Baira, RHG submitted that it was evident that the purpose of the transaction was to limit her exposure, as had been suggested to her sometime earlier by Mr Calvitto. In relation to the Iannis, particular reliance was placed on the evidence of Mr Wennerbom, accepted by the primary judge, to the effect that he explained the loan documents to the Iannis and was satisfied that they understood them. It submitted that to the extent they were not explained, the Iannis had an opportunity to seek such an explanation. 150So far as the credit findings of the primary judge were concerned, it was submitted that they were not glaringly improbable or contrary to compelling inferences. RHG submitted that the evidence of the appellants was contradicted by contemporaneous documents; not only the evidence of Mr Famularo but the evidence of the various solicitors who advised Mrs Baira and the Iannis. It submitted that the evidence was insufficient for the primary judge to make any finding on the sham contract issue. Further, it submitted that the primary judge was correct in stating that Mr Famularo had no reason to act dishonestly in brokering the relevant loans. 151Orally, senior counsel for RHG submitted that Mr Famularo's notes were corroborated by other evidence. In relation to Mrs Baira he referred in particular to the statement "Mrs Baira needs to separate business affairs" which he submitted was consistent with the advice given to her by Mr Calvitto. He submitted that the details of assets and liabilities and the Medicare and Passport numbers could only have come from Mrs Baira as could the statement that her income was between $140,000 and $150,000 per annum. In relation to the latter matter, he said that the proposition that Fiorianis Restaurant was profitable at the time was not challenged. He also submitted that the statement in the notes that Mrs Baira had another son working in the business was a matter peculiarly within the knowledge of Mrs Baira. 152Senior counsel for RHG made a similar submission in respect of Mr Famularo's meeting with the Iannis, relying in particular on the statement in the note that the Iannis were investors and that their income was between $85,000 and $95,000 per annum. 153So far as the Snapshot of Account document was concerned, senior counsel for RHG pointed to the evidence of Mr Famularo, to the effect that St George supplied such documents both to the principal debtors and to the guarantors and submitted that that evidence was unchallenged. 154So far as the challenge by Mrs Baira to the findings concerning a meeting with Mr Forster, RHG submitted the finding was based on undisputed and contemporaneous documents and revealed no error. 155In relation to the challenge by the Iannis to the capacity of Mrs Domenica Ianni to understand the documents, RHG pointed out that Dr Cameron's affidavit did not address Mrs Ianni's capacity at the time of entry into the transaction. Reliance was also placed on the evidence of Mr Wennerbom. The submissions of Mr Famularo 156Mr Famularo's submissions were broadly similar to those of RHG. He submitted that to the extent that the challenge was based on the credibility findings of the primary judge, the findings were not glaringly improbable. In particular he drew attention to the fact that each of the Iannis signed a statutory declaration before Mr Wennerbom to the effect that they borrowed $910,000 and could repay without hardship. He also stated that his evidence that he received the sham contract and Snapshot of Account document from Mr Ianni was unchallenged. The latter submission ignores the fact that it was put to him that the meeting at which the documents were said to have been handed over did not take place. The supplementary submissions 157In supplementary submissions made in response to an invitation by the Court, Mrs Baira, whilst accepting that she bore the burden of establishing the orders under appeal were affected by error, submitted there were eight reasons why the reasons of the primary judge revealed such error. She emphasised that it was not necessary for this purpose to establish that findings as to the comparative creditworthiness of the appellants and Mr Famularo must be made to the converse of those made by the primary judge. 158RHG in reply dealt with each of these matters and submitted that the appellants had failed to make out that the findings were glaringly improbable or contrary to compelling inferences. 159The first of the matters relied upon by Mrs Baira was that the primary judge did not appreciate that the loan application made on behalf of the Iannis was fraudulent. In this regard Mrs Baira reiterated the submissions made in respect of the sham contract and Snapshot of Account. 160In response RHG submitted first, that the loan application was genuine pointing to the fact that it was the Iannis' case that they consented to the debt they had guaranteed being refinanced so as to obtain a better rate of interest. It submitted that the sham contract was irrelevant to Mrs Baira's claim, that it was not put to Mr Famularo that he prepared the first page of the sham contract and that the sham contract was only used at the trial to attack Mr Famularo's credit. RHG submitted that in these circumstances the primary judge did not need to make any detailed findings concerning the document. So far as the Snapshot of Account was concerned, it referred again to the uncontested evidence of Mr Famularo that it was the practice of St George to issue such documents to guarantors. 161The second and third propositions put by Mrs Baira were aligned to the first. She submitted that the primary judge did not appreciate the impact which the sham documents had on the credit of Mr Famularo. In response, RHG repeated its submissions in relation to the first proposition, submitted that the primary judge did consider the sham contract and submitted that his conclusion that he could not make anything of it was justified on the evidence. In relation to the Snapshot of Account, it pointed to the fact that the judge concluded, consistent with the evidence of Mr Famularo, that it was a genuine product of St George. 162The fourth proposition put by Mrs Baira was that the primary judge failed to consider the commercially disadvantageous character of the transaction to her and the Iannis. In response RHG submitted that each of Mrs Baira and the Iannis consented to the refinance, Mrs Baira to reduce her exposure and the Iannis to obtain a better interest rate. 163The fifth proposition was that the trial judge failed to appreciate that the core reason advice was required from Mr Forster was that the securities to which she might have recourse, had her guarantee been called upon, had been released. In response RHG pointed to the letter to St George from Egisto Solicitors which stated that this advice had been given. 164The sixth proposition put by Mrs Baira was that the primary judge failed to consider that in respect of the RHG transaction she received no legal advice, nor were the documents explained to her. RHG submitted that the case was conducted on this basis and there was no need for the primary judge to specifically refer to these issues. 165The seventh proposition was that the primary judge did not address the fact that an internal loan record of RHG described the loan as unusual but commercially acceptable to RHG because of an explanation given by Mr Famularo, an explanation Mr Famularo denied. RHG submitted that it was not necessary that the primary judge consider every integer bearing upon findings of fact and so it was not necessary to deal with this submission. Further, it submitted that the proposition did not appear to relate to any of the grounds of appeal. 166The eighth proposition put by Mrs Baira was that, having resolved to accept the evidence of Mr Famularo, the primary judge closed his eyes to the case the appellants sought to make. RHG submitted that the judgment of the primary judge indicated that he had dealt adequately with all of the defences and cross-claims. 167Mr Famularo also filed supplementary submissions. In those submissions he again emphasised the fact that the Iannis had attended upon Mr Wennerbom for the purpose of signing the documentation relating to the RHG loan. He submitted that the evidence established that the Iannis' guarantee encompassed the total indebtedness of Joe and Sandra Ianni to the St George Bank, which the evidence established was in the region of $3 million and the Drummoyne property was security for that debt. 168In response to the submissions from the Iannis relating to his file note being dated 14 September 2009, Mr Famularo submitted that the evidence established that he had two meetings with the Iannis, one on 14 September 2005 and the other on 16 September 2005 when they corrected part of the income declaration. It should be noted that Mr Famularo's diary does not record any such meeting on 16 September 2005 and there appears to be no note of that meeting. 169Further, Mr Famularo submitted that he was not cross-examined to the effect that he fabricated the sham contract, the Snapshot of Account document or the file note. Whilst this is correct, as I have indicated above (par [89]) it was put to him that the contract was a sham and that he knew that the account the subject of the Snapshot of Account document was not in the name of the Iannis. In relation to the latter matter his evidence was that he could not confirm that, he received two sets of documents. 170Mr Famularo also submitted that issues regarding the authenticity of the file note and Snapshot of Account and front page of the contract involved issues which were not raised at the trial and which could have been explored had they been raised. In those circumstances he submitted that the matter should not be permitted to be raised on appeal: Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 at 7-8. Disposal (a) THE IANNIS 171I have summarised the findings of the primary judge above. In essence, he found that the Iannis had provided the information on the loan application to Mr Famularo at the meeting of 14 September 2005, had signed the loan application being aware of its contents, had the transaction explained to them by Mr Wennerbom and had signed a declaration the effect of which was that they knew of the amount of the loan and had the capacity to repay it. As I have pointed out in par [125] above, the trial judge did not make any express finding as to whether the information in the loan application was correct but was prepared to place reliance on it because of what he described as the "minimalist stance" adopted by the Iannis. He said the documents were signed for the benefit of what he described as "general family prosperity" (see pars [120] and [124] above). He stated, whilst acknowledging the matter was not explained in these terms, that Fiorianis was literally turning over millions of dollars and making huge profits and that the Iannis were aware that Joe and Sandra Ianni were flourishing. He found that in those circumstances they were prepared to give the guarantee in 2000 and enter into the transaction with RHG in 2005. As I pointed out earlier, the critical feature of the credibility finding against Mr Ianni was his denial of meeting Mr Famularo (see par [119] above). 172The conclusion of the primary judge was based squarely on his assessment of the credit of Mr Famularo and Mr Ianni. So much is clear from par [107] of his judgment to which I have referred above (see par [119]) and in the following paragraphs of his judgment: "[104] Rosario claimed to be restricted in the understanding of English and requested to give evidence through an interpreter. He did so. He has been in Australia since 1954. He worked in a factory for five years, then as a fisherman for 18 months and then for about 33 years as a painter and docker for the Department of Defence at Garden Island Naval Dockyard. He said he worked in a gang of Italians but I find it hard to credit that for 33 years part of the operations of an Australian naval establishment was conducted in Italian to the extent that Rosario did not achieve fluency in English. While it can be appreciated that a witness may be more comfortable speaking in his first language, Rosario's contention of his limited ability to communicate in English contained a measure of deceit. It was revealed that his own solicitor in these proceedings had read him the lengthy affidavits to which he deposed and that solicitor explained the nature and the effect of relevant documents to him in English and received an appropriate acknowledgement that Rosario understood. This false claim to limited language ability operated to diminish Rosario's credibility. [105] I am, of course, conscious of recognised risks in founding judgment on an assessment of demeanour but that awareness does not require that an artificial blindness be adopted. Demeanour is but one of the reasons for my reservations about the testimony of Rosario. The submission that he was hardly a shrinking violet but a strong, wily and capable man was entirely compatible with my own assessment and I would accept that submission. His capacity to protect himself (and his wife) was demonstrated by his refusal when Joe and Sandra on the very first time sought assistance in the purchase of Galleria. This would have involved Joe and Sandra leaving their respective employments and Rosario declined to make available Drummoyne as a security for a bank loan. As earlier described, Joe and Sandra then went to Baira who was willing to accede to their request." 173In these circumstances, in considering the appeal it is critical to bear in mind the restraints on an appellate court in reviewing findings of a trial judge based on credit; restraints which have been repeatedly emphasised by the High Court in recent years. Such findings can only be overturned if the appellate court is satisfied that the findings are glaringly improbable or contrary to compelling inferences: Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at [28]-[29], or if it can be shown that the judge has palpably misused his advantage or acted on facts which were inconsistent with the evidence or glaringly improbable: Devries v Australian National Railways Commission [1993] HCA 78; (1993) 177 CLR 472 at 479; Abalos v Australian Postal Commission [1990] HCA 47; (1990) 171 CLR 167 at 178-179. Further, as was pointed out in Abalos supra, where a trial judge has made a finding of fact contrary to the evidence of a witness but has made no reference to that evidence, an appellate court cannot act on the evidence to reverse the finding unless satisfied that any advantage enjoyed by the trial judge by reason of his having seen and heard the witnesses could not be sufficient to explain or justify the trial judge's conclusions: Abalos supra at 178; Fox v Percy supra at [65]. 174Further, quite apart from a limitation on the review of findings based on credit there are a number of matters which lend objective support to the conclusion reached by the trial judge. First, there is no issue that the Iannis agreed to provide a guarantee secured over the Drummoyne property in 2000. The issue was whether the guarantee was limited to $100,000. Second, in relation to that transaction there was evidence from Mr Egisto and Mr Previte that they explained the documentation to Mr and Mrs Ianni respectively. Third, Mr Ianni acknowledged that he agreed to guarantee the RHG loan, albeit up to a limit of $100,000. Fourth, there is the evidence of Mr Wennerbom that he explained the documentation to the Iannis. Fifth, there is the declaration they signed acknowledging that they had borrowed $910,000 and could repay without hardship. 175However, if it can be shown that in reaching his conclusion the primary judge failed to deal in a satisfactory way with the substantial amount of evidence necessary to be dealt with before the relevant finding against the Iannis could be made, an appellate court on a rehearing is entitled to order a retrial: Fox v Percy supra [104]; State Rail Authority NSW v Earthline Constructions Pty Limited supra at [60], [90], [94]. This is because in such a situation there has not been a determination of the case upon a consideration of the real strength of the body of evidence presented. 176In that context the sham contract is relevant. The primary judge dismissed its significance in the following terms: "[118] This activity was connected, inter alia, with the purchase of Dural by Joe and Sandra for a price of approximately $2.2m. Obviously it was necessary to have the funds available in order to achieve settlement and I am unwilling to draw any sinister inference from the fact that Famularo sought urgency in order to meet the requirements of scheduled completion of the Dural purchase. A document has emerged, from whence is not revealed, purporting to be the first page of a contract for the purchase of Dural by Rosario and Domenica for $500,000. The copy has written on it, for whatever it is meant to convey, "not security". A fax imprint suggests that it is page 18 of a 20 page dispatch from 'unknown'. I am unable to make anything of this mysterious document other than to conclude that, whatever its provenance, it did not operate so as to effect one way or another the transaction into which Rosario and Domenica entered with RHG Mortgage." 177With the greatest respect to the primary judge, I do not consider that the document can be dismissed so readily. First, whatever its provenance, the evidence was unequivocal that it was forwarded by Mr Famularo to RHG (see par [61]) above. The purpose was self-evident. The loan application stated that part of the purpose of the loan was to purchase a property for $500,000, the contract price referred to in the sham contract. In these circumstances, it was a compelling inference that the contract was supplied in support of the loan application. Further, the Application Submission Checklist completed by Mr Famularo in connection with the application has a tick alongside the box "Copy of Contract of Sale (required for purchase/sale of property only)". 178The contract was submitted to RHG in circumstances where Mr Famularo had submitted a loan application to the National Australia Bank for $3.5 million on behalf of Mr Joe and Ms Sandra Ianni some two weeks prior to the RHG application. As I pointed out above (par [88]) Mr Famularo acknowledged that Mr Joe and Ms Sandra Ianni's contract for the Dural property was due to settle on 14 October 2005 and that this was the reason the RHG loan was also required to be settled on that day. It follows, Mr Famularo was at least aware that the Iannis' RHG loan was obtained to facilitate that purchase. 179Thus, it was at least a compelling inference that the words "no security" were placed on the sham contract to make it clear that the Dural property was not available as security for the RHG loan. The reason was self-evident, namely, it was security for the National Bank loan to the actual purchasers. 180It was put to Mr Famularo and he denied that he knew the contract was a sham (see pars [92] and [94] above). In the circumstances which I have outlined, his denial of knowledge of the fact that the contract was a sham was glaringly improbable as was his denial of the fact that he knew that the Iannis were not purchasing that property at Dural. At the very least these matters should have been considered by the primary judge prior to reaching his conclusion on credit. 181I have set out the evidence of the conversation which Mr Famularo deposed to having with the Iannis on 14 September 2005 in par [69] above. That makes reference to Mr Ianni saying that he wanted to borrow funds to assist with the purchase of another property if possible. Further, the handwritten diary note contains the following words: "but needs only $486K Purchase $500K ↑ ??? lives with son - sell current ??? surplus" 182That note does not, in my opinion, detract from the inference to which I have referred above, namely, that Mr Famularo was aware that the Iannis were not purchasing the Dural property. It can readily be inferred that Mr Famularo was aware the funds obtained from the RHG loan were to be used to facilitate the completion of the Dural transaction by Mr Joe and Ms Sandra Ianni. The note and the alleged conversation concerning a desire to purchase a property also needs to be considered in light of Mr Ianni's unchallenged evidence that he was not intending to purchase a property and as I have pointed out, Mr Famularo's knowledge that the loan was to settle on the same day as Joe and Sandra Iannis' purchase of the Dural property. In my view a compelling inference can be drawn that Mr Famularo was aware that none of the funds would be used by the Iannis to purchase a property in their names, much less the Dural property being purchased by their children. 183The other document was the Snapshot of Account document which the primary judge dismissed, describing it as a "'red herring' which has not determinative relevance". Mr Famularo gave varying evidence of his knowledge of the identity of the principal debtor on the account, ultimately saying he could not confirm such identity (see par [89] above). This evidence was not taken into account by primary judge in his assessment of the credibility of Mr Famularo. 184I do not place the same significance on the Snapshot of Account document as on the sham contract. In particular, it was open to the primary judge to find that the document was one which emanated from St George, having regard to the unchallenged evidence of Mr Famularo that it was the practice of St George to send such documents to guarantors. However, the inclusion of the document in the RHG loan application did suggest that it was the Iannis' own debt which was being refinanced, something which was incorrect, as was the assertion that $500,000 was to be used to purchase a property. Further, what is of significance at the very least is that the Snapshot of Account demonstrates the improvident nature of the transaction. Prior to it taking place the Iannis could be released from their guarantee for the sum of some $490,000. Subsequent to the transaction the Iannis were principal debtors for $910,000 having received no benefit from the transaction. 185In summary these matters compel the following conclusions: (a) That Mr Famularo was aware that the Iannis were not purchasing the Dural property. (b) That the statement in the loan application that one of the purposes of the loan was the purchase of a property of $500,000 coupled with the inclusion of the sham contract meant that the loan application was misleading to the knowledge of Mr Famularo. (c) That the loan application was further misleading, in that it inferred that the Iannis were principal debtors in the sum of $490,000 to St George whereas in fact they were guarantors. (d) That a loan application made in these circumstances resulted in a transaction which was grossly improvident to the Iannis. 186These are matters which in my opinion the primary judge should have taken into account in his assessment of the credit of Mr Famularo. 187There are a number of other matters which should be noted in this context. As I have pointed out in par [87] above, Mr Ianni was not cross-examined on a number of important matters. In particular the affidavit sworn by him in the proceedings contained the express denial that he received $85,000 per annum from the restaurant business. The primary judge, notwithstanding that evidence and the other matters referred to in par [87] simply inferred that the material in the loan application was supplied by the Iannis and was correct, the Iannis having taken as what he described as a minimalist approach. In my opinion he was not entitled to reach that conclusion without considering the uncontested evidence to which I have referred. 188In these circumstances the primary judge failed in my opinion to consider a significant portion of the evidence in reaching his conclusion on credit. The issue is whether these matters are of sufficient significance to warrant a new trial. 189As I have indicated, there were a number of matters which supported the conclusion of the trial judge independent of his assessment of the evidence of Mr Ianni and Mr Famularo. The first of these is Mr Famularo's notes of the meeting. However, there are two things which should be noted. First, as Mr Famularo acknowledged, the extract from his diary for the day in question does not refer to a meeting with the Iannis. Second, the note itself does not expressly refer to it being a meeting with the Iannis. I have set out the opening words of the note above (see par [70]). Whilst the note refers to the Iannis, it does not expressly state that the meeting was with them. Although that is an inference which may well be available, it does not seem to me to be sufficient to overcome the difficulty which arises from the fact that the primary judge did not take into account the evidence to which I have referred in assessing Mr Famularo's credit. 190In this context the note may be contrasted with the position in respect of Mrs Baira. In his diary for 2 December 2005 Mr Famularo records an appointment with Mrs Baira on that day, whilst his diary note of the meeting commences: "Baira / Ianni 2/12/05 meeting Baira re SGB re finance" 191I should indicate that I have placed no weight on the fact that Mr Famularo's note in relation to the Iannis was dated 14 September 2009. That was a matter not raised in the Court below and Mr Famularo was not cross-examined on it. In those circumstances it cannot be raised in this appeal. 192Of more significance is the evidence of Mr Wennerbom and the statutory declarations made by the Iannis. There is no reason to doubt the primary judge's finding that Mr Wennerbom was telling the truth when he said he explained the documentation to the Iannis. However, apart from indicating he explained the document, his evidence did not extend to indicating what he said by way of explanation, or what either Mr or Mrs Ianni said to indicate they understood what they were being told. Further, Mr Wennerbom did not explain the loan application, containing details of the money said to be earned by the Iannis, or the purpose of the loan. In these circumstances I do not think that this evidence overcomes the difficulties of the approach of the trial judge to which I have referred. 193The other matters relied on by the primary judge were the fact that Mr Ianni's contention of his limited ability to speak English contained "a measure of deceit". However, the fact that a person has been in Australia for a considerable period of time (58 years), being employed first as a factory worker, then a fisherman and then a painter and docker, does not necessarily lead to an inference that that person has sufficient command of English to understand commercial documents. Further, with the greatest respect to the trial judge, he somewhat misstated the evidence of Mr Niles. As I have pointed out (par [86]) Mr Niles said that he read each paragraph of Mr Ianni's affidavit of 11 October 2008 to him and he (Mr Ianni) said he understood this. He said he explained the gist of the attached documents to him rather than reading each of the documents or explaining them in detail. He also said that on other occasions when he witnessed Mr Ianni's signature on affidavits, he had an interpreter present. This evidence does not seem to me to overcome the difficulties in the approach of the trial judge. 194The other matter to which the primary judge referred was that the terms of the original guarantee and mortgage were explained to Mr and Mrs Ianni by Mr Egisto and Mr Previte respectively. Mr Ianni accepted that he entered into a guarantee at that time and that he gave security over his property in respect thereof. His evidence was he believed the guarantee to be limited to $100,000. Whether he is accepted on that evidence or not, the difficulties in respect of the 2005 transaction remain. 195In these circumstances the orders made by the primary judge in respect of the Ianni proceedings should be set aside and a new trial ordered. 196It follows that there should be a retrial of the first cross-claim by Mr and Mrs Ianni against RHG, ABMFS and Mr Famularo. 197In reaching this conclusion I have not taken into account the evidence of Joe and Sandra Ianni, which was broadly supportive of the case made by the Iannis. It does not seem to me that the fact that the primary judge did not refer to this evidence means that he did not take it into account in reaching his conclusions. 198I should add that were I of the view that the appeal based on the credit issues should be rejected, I would have rejected the other grounds of appeal. The effect of the factual findings of the primary judge was that the Iannis entered into the transaction knowing and appreciating its effect and that they supplied the information in the loan application in respect of which the advance was made. Having regard to these matters it was open to the primary judge to conclude that the contract was not unjust within the meaning of the Contracts Review Act, nor unconscionable. 199Further so far as Ground 6 of the Notice of Appeal is concerned, the evidence of Dr Cameron was insufficient to found a contention that Mrs Ianni did not have the capacity to understand the document she signed in September 2005. I agree with what has been said by Tobias AJA on this issue. (b) MRS BAIRA 200The primary judge accepted the evidence of Mr Famularo in preference to that of Mrs Baira. As I indicated above (par [10]) the effect of that finding was that Mrs Baira was aware of the nature of the transaction, gave the information to enable the loan application to be completed and expressly declined to seek independent advice. 201Dealt with in isolation from the Ianni proceedings, it does not seem to me that the primary judge's findings were either glaringly improbable or contrary to compelling inferences. Nor did they demonstrate that he had misused his advantage in seeing and observing the witnesses in question. Put shortly, Mr Famularo's note expressly refers to a meeting with Mrs Baira on 2 December 2005 and the fact that that meeting occurred is consistent with his diary entry of that day. Further, Mr Famularo provided a copy of a letter of 9 December 2005 confirming the meeting of 2 December 2005 and enclosing the loan application. Although Mrs Baira denied the meeting or receipt of the letter, at least absent the evidence relating to the Ianni proceedings, it was open to the primary judge to reject those denials. That is presumably why counsel for Mrs Baira on the appeal focused on the sham contract and Snapshot of Account document. 202In addition, the financial involvement of Mrs Baira with Joe and Sandra Ianni extended well beyond that of the Iannis. She was involved in guaranteeing advances made to Joe and Sandra Ianni and to their company, Jencon, since 1992 and had been advised on the effect of such documents on a number of occasions, the most recent being the advice given by Mr Forster (see par [4](a)-[4](k) above). With the exception of the finding in relation to the advice given by Mr Forster, the fact that Mrs Baira had received this advice was not challenged. In relation to Mr Forster the finding of the primary judge that Mr Forster in fact saw Mrs Baira and gave the explanation set out in his letter of 12 October 2005, does not seem to me to be glaringly improbable. 203I have set out in pars [11]-[15] above discrepancies between Mr Famularo's notes and his oral evidence of the conversation which took place with Mrs Baira, as well as the other matters which may cast doubt on the evidence of Mr Famularo. Further, on its face, it seems unlikely that Mrs Baira would state that she would be involved in negotiations with St George and, having regard to her evidence as to her financial position, that she would state she had an income of $145,000. Further, although the transaction she entered into was by no means as improvident as that of the Iannis, it was of doubtful benefit to her. Her position changed from that of a guarantor of Jencon up to the value of her house (estimated between $850,000 and $900,000) to being a principal debtor in the sum of $650,000 such sum secured over her property. Although the dollar figure of her potential liability was less as a result of the transaction, Mrs Baira came under an immediate obligation to pay both the ultimate principal sum and the interest instalments and lost what rights of subrogation and contribution she previously had as a guarantor. None of this was explained to her. 204However, these matters in my view would not be sufficient for this Court to set aside the orders of the primary judge and to order a retrial having regard to the restraints on appellate review to which I have referred. 205Notwithstanding the view I have taken in relation to the case of Mrs Baira considered in isolation, in circumstances where it was ordered that the two cases be heard together and the evidence in one be evidence in the other, it seems to me it was incumbent on the primary judge to consider the Ianni transaction in evaluating the credit of Mr Famularo both in respect of that transaction and of the transaction concerning Mrs Baira. The primary judge failed to do this and in my opinion this led to him reaching his conclusion without regard to a significant body of evidence which was clearly relevant to the credit of Mr Famularo, a matter central to his finding in the claim made against Mrs Baira. In these circumstances I am of the view that there should also be a retrial both of the RHG claim against Mrs Baira and of the first cross-claim by Mrs Baira against RHG, ABMFS and Mr Famularo. 206For these reasons I agree with the orders proposed by Basten JA. 207BASTEN JA: Jencon Australia Pty Ltd ("Jencon") was the principal corporate vehicle through which Mr Guiseppe Ianni (known as Joe Ianni) and his wife Mrs Sandra Ianni operated a café restaurant business in Darling Harbour, Sydney. Until at least the end of 2005, the business was ostensibly successful and generated significant profits for the company. Despite that, it appears to have operated with the benefit of loans and credit facilities which, in August 2005, exceeded $1 million. 208Mr and Mrs Ianni then owned properties at Castle Hill, Milsons Point and Pyrmont. They financed their business and property purchases through St George Bank Ltd. The total value of the properties and the outstanding loans was at that time about equal, in an amount a little over $3 million. The Bank held various securities, including a fixed and floating charge over the assets of Jencon and mortgages over the three properties. In addition, the Bank was the beneficiary of third party guarantees from Sandra Ianni's mother, Mrs Rosa Baira, secured by a mortgage over her Marrickville property. The bank also held a third party guarantee from Mr Rosario Ianni and his wife Mrs Domenica Ianni (Mr and Mrs Ianni senior), the parents of Joe Ianni, secured over their Drummoyne property. 209In about July 2005 Mr and Mrs Ianni junior decided to purchase a house at Dural for a little over $2.2 million. In order to obtain the funds, they engaged in a major restructuring of the outstanding debts of Jencon and themselves, apparently to extract larger borrowings against the equity in their own properties and, particularly, the properties owned by their respective parents. The restructuring involved two stages, the first having three elements. The first element was to remove from the securities in favour of St George Bank both their property at Pyrmont and the property owned by Mr and Mrs Ianni senior at Drummoyne. The result was that the remaining securities held by St George Bank were the Castle Hill and Milsons Point properties owned by Mr and Mrs Ianni junior and the third party guarantee and mortgage secured over Mrs Baira's property at Marrickville. The Bank was willing to accept that arrangement on the basis of a reduction in the amount owing to it from a little over $3 million to a little over $2 million. 210The second element was a loan to Mr and Mrs Ianni junior to purchase the Dural property, with additional financial accommodation provided by the National Australia Bank Ltd ("NAB") involving a total of $3.5 million, secured by mortgages over both the Dural and the Pyrmont properties, the latter having been released by St George. 211The third element of the restructuring involved Mr and Mrs Ianni senior 'borrowing' $910,000 from RHG Mortgage Corporation Ltd ("RHG"), formerly known as RAMS Home Loans Pty Ltd, in exchange for a mortgage over their Drummoyne property. The total indebtedness then amounted to $6.5 million, in round figures. However, Jencon and Mr and Mrs Ianni junior nominally had primary responsibility for only $5.6 million. 212Stage two occurred on 14 March 2006. It involved a further reduction of approximately $550,000 in the liability to the St George Bank, in exchange for which St George released the third party mortgage over the property of Mrs Baira. That arrangement was financed by a 'loan' to Mrs Baira from RHG in an amount of $650,000. On the basis that the beneficiaries of all loans were Mr and Mrs Ianni junior, either directly or through Jencon, their total liabilities were then $6.56 million. 213The Jencon business had apparently declined sharply by 2008 and Jencon and Mr and Mrs Ianni junior were unable to meet the obligations under the loans and, relevantly for present purposes, RHG sought possession of the homes of the parents, namely the Marrickville property owned by Mrs Baira and the Drummoyne property owned by Mr and Mrs Ianni senior. Mr Joe Ianni was declared bankrupt. 214On 3 June 2011 Grove AJ gave judgment in favour of RHG against Mrs Baira in an amount in excess of $846,000 and ordered that she give RHG possession of the land at Marrickville. In respect of the proceedings against Mr and Mrs Ianni senior, he gave judgment under the loan in favour of RHG in an amount in excess of $1.2 million and ordered that they give RHG possession of the land at Drummoyne. 215The appeals to this Court are brought by Mrs Baira and Mr and Mrs Ianni senior, respectively, although they are listed as first, second and third appellant in one notice of appeal. That course was probably inappropriate and in any event it is necessary to consider their circumstances separately. In each case, the appeals should be allowed with costs. Relevant legal principles 216The phenomenon of elderly parents with unencumbered homes guaranteeing business engaged in by their offspring is not novel. As Handley JA noted in Davey v Challenger Managed Investments Ltd [2003] NSWCA 172, the courts only see the cases where the businesses have failed and lenders seek possession under mortgages, without knowing "how many business ventures financed by parents in this way are successful for the benefit of the community and all concerned": at [24]. Handley JA further commented that the law did not treat "age and pensioner status" as disabling parents from assisting their offspring in this way. The implication of these statements is, presumably, that the courts should not be unduly ready to relieve parents of what turn out to be improvident agreements. It does not follow, however, that elderly parents are therefore without the protection of the law in respect of transactions believed, at least by the offspring, to be beneficial to their interests, regardless of the fact that they may thereby be putting at risk the sole family asset. 217The law provides protection with respect to family transactions where, for example, an offspring misrepresents his or her business circumstances or otherwise uses undue influence to obtain a benefit of a guarantee secured by way of mortgage from his or her parents, in circumstances where the credit provider is on notice: see, eg, Commercial Bank of Australia v Amadio [1983] HCA 14; 151 CLR 447 at 464 (Mason J). Credit providers anxious to avoid such risks will generally require that a party obtaining no apparent benefit from the financial accommodation (a "third party guarantor") should obtain independent financial and legal advice before entering into the transaction. In particular, both Mrs Baira and Mr and Mrs Ianni senior relied by way of defence and cross-claim on alleged unconscionability under the Australian Securities and Investments Commission Act 2001 (Cth), ss 12CA and 12CB, the Trade Practices Act 1974 (Cth), s 51AC and the Contracts Review Act 1980 (NSW). In each case, what was in fact merely a contingent liability under a guarantee was treated by RHG as an extant liability of the proposed borrowers which each sought to refinance, thereby acquiring, for the first time, a primary liability which they had no capacity to service. 218A further common consideration, which has become of critical significance in relation to many lending arrangements over recent years is the insertion of various intermediaries between the lender and the borrower. In the present case, as is not uncommon, the application for finance was made through a broker, being a corporate entity acting through its principal, Mr Peter Famularo. Mr Famularo was accused of misconduct which led to a cross-claim against his business and against him personally. However, the broker being the agent for the prospective borrower, a defence to an action by the lender will require separate consideration as to whether the lender has acted unconscientiously in processing the application: see, eg, Perpetual Trustee Company Ltd v Khoshaba [2006] NSWCA 41; 14 BPR 26,639; Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389; 15 BPR 29,699. 219In the present case, much weight was placed upon the allegations of both Mrs Baira and Mr and Mrs Ianni senior that they had had no dealings with Mr Famularo and that he had acted on instructions of Mr Joe Ianni. It was undoubtedly Mr Joe Ianni who introduced Mr Famularo to his parents and to his mother-in-law, if any meeting occurred. It is also accepted that, if a meeting did occur with his own parents, he was present. However, the finding of the trial judge that the meetings did take place caused serious problems for other aspects of the appellants' respective cases, not merely by constituting a general blight on their credibility, but substantively in assessing precisely what information was provided by them to Mr Famularo and what was not. 220Regardless of Mr Famularo's role, it was arguable that the objective circumstances of the financial arrangements gave rise to a case of unconscionability on the part of the lender. However, his Honour found that each of the parents entered into his or her respective transactions with RHG secure in their beliefs that the businesses were sound and that the cash flow they produced would be sufficient to service the loans without undue risk of default. Further, the primary judge did not accept the characterisation of the parents as third party guarantors because they obtained a "benefit" as part of a family, all members of which benefited from the success of Jencon's business. 221There are self-evident dangers in such an analysis. First, as with spouses or other domestic partnerships, the fact that both partners will benefit from a successful financial arrangement does not necessarily mean that one is entitled to use the proprietary interests of the other without full disclosure of the risk being undertaken and the nature of the proposed transaction. Secondly, there is a significant difference between the benefit of knowing that one is assisting one's offspring to prosper through the use of one's own property and enjoying a share in that prosperity. Thirdly, to have confidence in a seemingly successful business without knowledge of the full extent of its indebtedness, costs and revenue is not to make an informed judgment but to rely on others who may have misrepresented the true position. Fourthly, it is one thing to assume that the parents obtained some indirect benefit from accepting primary liabilities in respect of loans from which they obtained no direct financial reward; it is another to assume that they could, by some unidentified transaction, obtain the funds from Jencon to meet their obligations. 222Legal obligations, including by way of payment of taxation, do not appear to have been at the forefront of the minds of any of the parties to these family transactions. Nevertheless, if they were not interested in the legal position in respect of repayments, the lender should have been. To the extent that RHG was told that the parents received income from the businesses sufficient to meet the repayments, either by way of dividends or director's fees, that information was false. If the information had been supplied by the parents directly, their right to complain about the reliance placed on such false information by the lender would have been limited. However, if the information emanated from Mr Joe Ianni, the situation might have been quite different. On one view the knowledge of Mr Famularo, not being the agent of the lender, was not critical with respect to the relief available from obligations to the lender, but it was critical with respect to relief available against him. 223These legal issues were, in effect, sidestepped once the trial judge was satisfied that the meetings between the parents and Mr Famularo occurred. The parents, having said that they did not occur, were unable to give evidence as to what was said at the meetings. Accordingly, the focus of the appeal was a challenge to the finding that the meetings occurred. 224This challenge gave rise to a separate legal question as to the principles to be applied in assessing such findings of fact. They were characterised by RHG as "credibility" findings which could only be reviewed if glaringly improbable or inconsistent with incontrovertible facts. Such language, however, contains an element of hyperbole designed to discourage review of credibility findings made by a trial judge and affirm the primacy of the oral hearing. More importantly, such language does not find ready application in all circumstances. For example, Mr Famularo's notes of his conversation with Mrs Baira recorded that she had a savings account in an amount of $5,000 with Westpac and that she owned a car worth $15,000. Three "incontrovertible facts" were that she did not have an account with Westpac, did all her banking with the Commonwealth Bank and did not own a car. Those objective facts do not assist, however, in determining which witness was telling the truth. The possibilities were: (a) there was a meeting, but Mrs Baira did not tell Mr Famularo these facts, nor did anyone else; (b) there was a meeting, at which Mrs Baira did not provide these facts, but her son-in-law did; (c) there was no meeting, but her son-in-law had provided these facts to Mr Famularo; (d) there was no meeting, but Mrs Baira had provided the information, via her son-in-law; (e) there was no meeting and no such information was supplied to Mr Famularo by anyone. Knowing the falsity of the statements included in the loan application does not assist in determining which possibility is correct. 225Rather, it is often the case that resolution of conflicting evidence may involve consideration of misunderstandings, misperceptions and misrecording as often as lies, and will require a more nuanced approach than that addressed above. The complaint in the present case was that the trial judge, on the hypothesis that there was a meeting, needed to confront the fact that there were six aspects of the loan application which, according to Mrs Baira, were false and some at least of which were objectively false. Secondly, the trial judge needed to take into account the fact that Mr Famularo had a financial interest in the success of the applications and, further, Mr Famularo knew from his previous employment with St George Bank what was likely to be required to persuade it to release a security under a transaction approved while he was an employee of the Bank. He also knew what information the proposed lender would require to accept the new loan application. Thirdly, the trial judge needed to consider whether the information that Mr Famularo did have, namely a water bill indicating that Mr and Mrs Ianni senior were pensioners, should have alerted him to the inconsistency between the alleged income they obtained from the business and their entitlement to pensions. Fourthly, there were the two documents included with the loan application lodged on behalf of Mr and Mrs Ianni senior which were treated by the trial judge as "mysterious". If the provision of those documents was misleading and known to be such, it must have affected his Honour's assessment of Mr Famularo's credibility. Finally, if there were doubts about Mr Famularo's credibility, the trial judge should have given consideration to the possibility that, although he disbelieved Mrs Baira and Mr Ianni senior with respect to their evidence that they did not know what was being proposed or what they had signed, they were nevertheless telling the truth when they said they did not meet Mr Famularo. 226In this context, the cross-examination of Mr Famularo at trial was a matter of some importance, especially in relation to the two "mysterious" documents. Each document was likely to provide information highly material to a lender. As the lender did not call evidence to the contrary, the proper inference was that the documents were relied upon. Describing them as "mysterious" passed over important issues as to their significance in the proceedings. It is therefore necessary to consider the documents themselves and how they were addressed in the course of the proceedings. The "fake" contract 227It will be recalled that the first step in the refinancing arrangements involved the removal from the St George securities of the Pyrmont property of Joe and Sandra Ianni and the Drummoyne property of Mr and Mrs Ianni senior. That required that the total debt to the St George Bank be reduced by approximately $1 million. Of that sum, $910,000 was obtained from RHG on the security of the Drummoyne property. At the time of the loan from RHG, Mr and Mrs Ianni senior owed no money on the property: it was merely security for the debts of Mr and Mrs Ianni junior. The refinance involved payment to St George Bank of approximately $900,000. They became "primary borrowers" in respect of that loan. 228Two documents accompanied the loan application. One document was the front page of a contract for sale of land which was in fact a copy of the contract with Joe and Sandra Ianni, with two changes to the handwritten details. One change deleted the name and address of the purchaser and replaced those details with the name and address of Mr and Mrs Ianni senior. The second deleted the price ($2,223,500) and replaced it with a price of $500,000. The address of the property, the details of the vendors and the solicitors for each party were unchanged. The document was undoubtedly a "fake", as described by Mr Joe Ianni in his evidence: Tcpt, 10/05/11, p 533(17). The contract date was given as 19 August 2005 (as on the real contract) and completion date as the 56th day thereafter (as on the real contract). Settlement was therefore due on 14 October 2005. Mr Famularo lodged the loan application with RHG on 14 September 2005, noting on the fax coversheet the need to settle on 14 October 2005 and requested advice "at earliest possible". 229The significance of the document was diminished in the eyes of the trial judge because it had handwritten at the bottom of the page "not security". That statement was undoubtedly true, although if Mr Famularo had written those words, he should have known not only that it was not security for the loan application to Mr and Mrs Ianni senior, but that it was a false document. Taken at face value, it implied that Mr and Mrs Ianni senior were borrowing on their own account to purchase a second property and were therefore not third party guarantors providing security for the benefit of others. Snapshot of account 230The other document which was annexed to the loan application which was objectively misleading was a document entitled "snapshot of account" being, purportedly, a snapshot of an account in the name of Mr and Mrs Ianni senior held by St George Bank. It showed regular loan repayments on what was described as "Executive Housing Loan", operated by way of overdraft, between the dates 21 October 2004 and 22 August 2005. It would objectively have suggested to a prospective lender that Mr and Mrs Ianni senior had had the capacity to make regular monthly loan repayments in amounts of over $4,000 for the preceding 11 months. In fact, the loan account was one of two held at St George in the name of Joe and Sandra Ianni. An identical document (bearing the same account number) in their names was also in evidence. The trial judge saw nothing "sinister" in the use of this document with the loan application: at [126]. However, objectively speaking, and in the absence of any evidence from the lender to the contrary, it should be inferred that the document was misleading in a highly material respect, namely the financial capacity of Mr and Mrs Ianni senior to make regular repayments, albeit on a loan account which was, by August 2005, approximately half the amount of the loan sought from RHG. Mr Famularo's evidence 231Before recounting the evidence of Mr Famularo, it is necessary to refer to aspects of the pleadings in respect of Mr and Mrs Ianni senior, as the cross-examination of Mr Famularo by counsel for Mrs Baira was interrupted on occasion with complaints that fraud was being implied and fraud had not been pleaded. (Why that imposed a limitation on cross-examination as to credit was not explored.) In any event, the further amended statement of cross-claim filed on behalf of Mr and Mrs Ianni alleged that the loan application was made by Mr Famularo without their authority, knowledge, consent or instructions: paragraph 16. Further, they specifically denied having instructed Mr Famularo that they had any role in the Jencon business and that they intended purchasing a property for $500,000. It was alleged that Mr Famularo "knew or otherwise ought to have known that information in the ... loan application was false or otherwise acted in wilful and reckless disregard as to the accuracy of the information in the [RHG] loan application": paragraph 17A. It was also pleaded that Mr Famularo knew or ought reasonably to have known that the moneys were to be paid for the benefit of Joe and Sandra Ianni or Jencon: paragraph 20(e) and (m). The pleading thus alleged that the loan application was false to the knowledge of Mr Famularo, as well as being made without authority. That should have been sufficient to warrant cross-examination as to his credit (as well as his state of knowledge) in respect of all aspects of the loan application. 232It will be necessary to deal separately with the application made on behalf of Mrs Baira in January 2006. However, there were allegations of falsity in respect of the loan application and, in relation to Mr Famularo, that he acted recklessly in making the representations solely on the information supplied by Joe and Sandra Ianni and without the knowledge or authority of Mrs Baira: amended first cross-claim, paragraphs 12-14 and 16. 233Mr Famularo was cross-examined first by counsel for Mr and Mrs Ianni senior (Mr Woods) who established the financial interest of the broker in successful loan applications. He acknowledged that he was introduced to Mr Joe Ianni by Mr Ianni's brother and that his first conversations in relation to the various loan refinancing deals concerned the loan application to NAB to finance the purchase of the Dural property: Tcpt, pp 336 (10) and 358-359. He established that Mr Famularo had had at least three meetings with Mr Joe Ianni prior to 14 September 2005 and "many" telephone conversations: p 361 (5)-(10). He agreed that the urgency of the loan application to RHG reflected the instructions of Mr Joe Ianni and not Mr and Mrs Ianni senior: p 362 (20). In relation to the snapshot of account, Mr Famularo was pressed on the point that he knew or should have known that the account was that of Joe and Sandra Ianni, that he did not produce a copy of an account in the name of Mr and Mrs Ianni senior from his records and that the account in the name of Joe and Sandra Ianni had been produced to him by Mr Joe Ianni. 234He was cross-examined in relation to the contract for sale and agreed that as at 14 September 2005 he knew that Joe and Sandra Ianni had contracted to purchase the property at the address shown on the front page of the contract: p 369. Although he could not be certain, he agreed that he would have sent a copy of the front page of the contract with the application to the NAB: p 370 (25). He was pressed on the fact that his affidavit had made no mention of the many conversations he had with Joe Ianni prior to 14 September nor any reference to the application made to NAB on or about 30 August 2005: p 370 (27)-(35). It was put to him that he knew as at 14 October 2005 that Mr and Mrs Ianni senior were not purchasing a property at Dural and that he knew that because he had lodged the NAB application for Joe and Sandra Ianni: pp 378-379. He denied both propositions, which denials would appear on their face, taken in context, to raise an issue as to his credibility which needed to be addressed. Again surprisingly, he claimed that it was "false" to suggest that he had intimate knowledge from his experience of what would be required to gain acceptance of a loan application and what factors RHG would look at when considering a loan application: p 380 (26)-(39). He was, perhaps, considering the implications of the question, but the denials again appear to require comment. At p 381 the following, amongst a number of propositions were put to him: "Q. I suggest to you that the information that you have placed on this loan application that you knew to be false, firstly, are the following. 1, that it was a refinance of a loan account of Rosario and Domenica Ianni? I suggest to you that you put that on there knowing that to be false? A. It was a fact, sir. Q. I suggest to you that you completed this application knowing that they were not purchasing any property at Dural? A. That's false. Q. I suggest to you that you completed this application knowing that the account name which was to be paid out by the RAMS finance was in fact in the name of Joe and Sandra Ianni? A. That's false." 235Each of these answers was either inconsistent with earlier answers or with the documents to which Mr Famularo had been taken. They were central to his credibility in respect of aspects of the loan application to RHG which were objectively significant. As will be seen, they were not addressed by the trial judge. 236Mr Famularo was then cross-examined by counsel for Mrs Baira. He was also cross-examined in relation to the fake contract document relevant to Mr and Mrs Ianni. He put to the witness that he knew that the document was a sham, which the witness denied: p 394 (20)-(25). There was objection taken because Mrs Baira had not alleged fraud, which apparently concerned the trial judge, although there can have been no doubt that Mr Famularo's credit was an issue in relation to Mrs Baira's proceedings, there being a dispute as to whether he ever met Mrs Baira. In any event, the cross-examination continued, establishing he had the Dural contract at the time he made the application on behalf of Mr and Mrs Ianni senior, in the following terms: "Q. And at the same time proceeded with an application for finance for exactly the same property on behalf of Mr and Mrs Ianni. Correct? A. I did not check the details, the specific details, on that contract. ... Q. So you were not careful, can I suggest, in what you put forward to RAMS in support of the supposed loan for Mr and Mrs Ianni? A. That's incorrect. I don't compare different customer's files between them." 237When it was suggested to Mr Famularo that he put forward to RHG the purchase of the Dural property as a basis for the loan to Mr and Mrs Ianni senior, objection was taken by counsel because fraud had not been pleaded by Mrs Baira. The issue had, nevertheless, been clearly exposed without the last question being answered. 238In answer to questions from Ms Sandra Ianni's lawyer, he denied that he compared the two contracts of sale in respect of the property at Dural stating "that was a matter for their solicitors to have a look at": p 435 (45). He further denied that as a prudent and careful mortgage broker he should have taken that step: pp 435-436. He also denied anything to arouse suspicion in respect of the two identical bank statements, one in the name of Joe and Sandra Ianni and the other in the name of Mr and Mrs Ianni senior: p 436 (7)-(15). 239On an objective consideration of the circumstances, it would be probable that the fake contract of sale was created either by Mr Joe Ianni or by Mr Famularo. Mr Joe Ianni was asked by counsel for Mr and Mrs Ianni senior if he knew how the names of Mr and Mrs Ianni senior ended up on the fake contract document and he stated: "No I don't": p 533 (25). Mr Joe Ianni was cross-examined by counsel for Mr Famularo, but it was not put to him that he made the changes to the front page of the fake contract. Mr and Mrs Ianni senior: claim against the broker 240In their cross-claim against Mr Famularo, Mr and Mrs Ianni senior alleged that he had submitted the loan application to RHG without their authority, knowledge or consent, containing information they had not supplied and which was untrue and in circumstances where he knew or ought to have known that the information was false and otherwise acted in wilful disregard as to the accuracy of the information supplied; that he knew or ought to have known that the moneys obtained from RHG would be paid to or for the benefit of Joe and Sandra Ianni and Jencon and that because of their age, mental ability, understanding of English and education, and the fact that they had placed their trust in their son, they were unable to protect their own interests. They further pleaded that Mr Famularo knew or could have ascertained by reasonable inquiry that they would not be able to make the repayments under the loan without substantial hardship. Finally, they alleged that Mr Famularo owed a duty to act in the interests of Mr and Mrs Ianni senior, to ensure that the information contained in the application was accurate and that they understood the true nature and effect of the proposed loan application, in respect of which obligations he was in breach. 241Given the nature of the allegations, Mrs Domenica Ianni's lack of involvement in the proceedings was significant. At an early stage in the hearing, the trial judge inquired if Mrs Ianni had a tutor and was assured that she had: Tcpt, p 112 (5)-(10). (The tutor was not identified.) Although she was in Court and was sworn, it soon became apparent that she was not able to give evidence and an attempted cross-examination was abandoned: Tcpt, p 171-172. 242Her general practitioner, Dr Quentin Cameron, swore an affidavit on 8 September 2010. Dr Cameron had treated Mrs Ianni since about 1993. He expressed the opinion that she had deteriorated rapidly between 2002 and 2010 and was incapable of looking after herself or managing her affairs: par 8. Dr Cameron also gave evidence that Mrs Ianni was unable to read or communicate with him in English and had suffered from "numerous health conditions including poor vision, heart condition, diabetes and of significant concern ... from clinical depression since about 1976". Dr Cameron was not cross-examined. 243In 2005 Mrs Ianni would have been 67 years of age. She stated in her affidavit: "I left school in Italy at the age of 8 years. From about age 10 I was trained in hand craft in a convent in Italy. I had very little education having left school aged 8 and had no education in English. I am unable to write and read English. However, I can write my name in English and can understand a little English. Since arriving in Australia in 1960, I worked for about 1 year in a convent and then looked after my children. I have suffered depression in the last 35 years and have been in and out of hospital for treatment for my depression. In the last 5 years, I been totally dependant on my husband Rosario to attend to the housework and take care of me." 244The trial judge dealt with her circumstances cursorily. With respect to capacity, he stated that "the overall evidence does not suggest other than that she joined in the arrangements alongside her husband Rosario intentionally": at [103]. Although his Honour set out Mr Ianni's background at [104], he made no comparable assessment of Mrs Ianni. He did not identify "the arrangements" to which he referred. She had given evidence (affidavit par 7) that she understood from Mr Ianni senior that they would be guarantors for a bank loan taken by Mr Joe Ianni with St George Bank. She understood the amount of the loan to be $100,000-$120,000. That presumably referred to the loan taken out by Joe and Sandra Ianni in June 2000, although the amount was $550,000. It was secured over Joe and Sandra Ianni's Pyrmont property and a guarantee was secured over the home of Mr and Mrs Ianni senior. To say that she "joined in the arrangements intentionally" is to reject any suggestion that she lacked capacity, but it says little about her state of understanding or knowledge at the time of the 2005 transactions. It did not come to grips with the allegations pleaded on her behalf. At no stage did the trial judge give separate consideration to the claims of Mrs Domenica Ianni under the Contracts Review Act, or those based on unconscionability. The judgment in respect of her claim should be set aside on this ground. 245The trial judge continued: "In the course of what became a stream of mortgage backed guarantees it is notable that they were seen separately by the solicitors Mr Egisto and Mr Previte." 246The intention of this statement is unclear. Mr and Mrs Ianni senior were not involved in a "stream" of guarantees: they appear to have executed one guarantee, in July 2000 in respect of the loan for the purchase of the Pyrmont property. It is true that their signatures were each witnessed by a solicitor, P J Egisto (in the case of Mr Ianni) and another solicitor, Philip Previte (in the case of Mrs Ianni). Neither solicitor had any recollection of the events in question, but each gave evidence, in the case of Mr Previte with the assistance of the trial judge (Tcpt, p 518 (45)), that they would not have signed the relevant parts of the documents without giving the explanations referred to in the document. 247Although his Honour did not refer to it, the 2000 loan was described as an "executive housing loan" provided for the purpose of allowing Joe and Sandra Ianni to purchase the Pyrmont unit as a residential investment property for $580,000. The discounted value accepted for the purpose of security meant that additional security was required. The bank was satisfied that Joe and Sandra Ianni would be able to service the loan repayments. Without referring to any of that background, the trial judge stated at [110]: "It is of interest to note a relatively unusual special condition that the guarantor's [sic] liability was to be limited to the value of Drummoyne. I do not think it likely that the Bank included this provision without some negotiation and it contributes towards a conclusion that [Mr] Rosario [Ianni] had significant capacity to act in protection of his (and Domenica's) interests." 248It is true that Mr Previte, in cross-examination by counsel for Mr Famularo, testing as to whether specific aspects of the arrangement were explained to Mrs Domenica Ianni (whose signature he had witnessed), referred to the limitation on liability and noted (Tcpt, p 519 (45)): "Banks are reticent of changing bank guarantees. They never do it. And that would have stuck out like anything to me and it would have been explained." 249If that were the evidence his Honour relied upon as warranting the conclusion that Mr Ianni senior must have negotiated the special condition, it involved speculation and should not have been used against Mr Rosario Ianni unless it had been put to him in cross-examination. That did not happen. The cross-examination was entirely devoted, in relation to the 2000 transaction, to the explanations given by the solicitors. The finding was therefore not available. 250After noting that Mr Joe Ianni had not been able to obtain assistance from his parents when setting up the Darling Harbour restaurant in 1992, but was able to do so in 2000, the trial judge noted that a question arose as to "what caused the change in the attitude and willingness of Rosario and Domenica?": at [106]. Two points may be made in respect of that question. First, neither Mr Rosario Ianni nor his wife gave any evidence as to that matter. Accepting that such questions could not have been put to his wife at the trial, they could have been put to him: they were not. As a result, the answer was again speculation. Secondly, if any inference were to be derived from the objective facts, it might have been that on the earlier occasion Mr Joe Ianni had sought a guarantee in respect of a new business he was starting whereas, in relation to the 2000 loan, he was purchasing a residential investment property and the guarantee was in relation to a housing loan. 251The answer given by the trial judge was as follows: "The matter was not explored in those terms but, as already recounted, Galleria was said to have made a lot of money and Fioranis was literally turning over millions of dollars and making huge trading profits. It would be quite unreal not to infer that in a broad way Rosario and Domenica were aware that Joe and Sandra's business was flourishing. That provides a likely answer to the question." 252Apart from the difficulties noted above, this speculation was inconsistent with the material made available to the Bank in 2000, in support of Joe and Sandra Ianni's housing loan application. The business was described in the following term by a bank officer recommending acceptance of the loan application: "In 1992 the Café had an annual turnover of $225K which steadily increased to $592K by 1997. The significant renovation of 'Harbourside Shopping Centre' in 1998 ... and the relocation of our client's business to a prominent waterfront position together with the successful application of a liquor licence have combined to increase turnover significantly to $1.6M for the 11 months to 31/05/00." 253If Mr and Mrs Ianni senior had been told anything by their son, truthfully, it would no doubt have been along the lines set out above. They would also have been told, presumably, that their son did not have the spare cash by way of savings to pay for a 10% deposit on the house and needed to borrow 95% of the purchase price from St George Bank. Mr Joe Ianni would also have been aware that he and his wife had insufficient equity to secure the required loan. 254Accordingly, the finding involved impermissible speculation, because it was not put to Mr Ianni senior, nor, it should be added, to his son Mr Joe Ianni. 255From this discussion, the trial judge moved immediately to a consideration of the alleged meeting with Mr Famularo in September 2005: at [107]. Although the dealings in July 2000 had no direct relevance to this question, the assessment of Mr Rosario Ianni clearly coloured his Honour's assessment as to whether or not the meeting with Mr Famularo ever took place. 256The early dealings were also relevant to a cross-claim brought by Mr and Mrs Ianni senior against Joe and Sandra Ianni. That claim was dismissed and the dismissal was not challenged on appeal, however, his Honour found at [143]: "In particular it is alleged that a false representation was made that Rosario and Domenica were guaranteeing only $100,000. There is no evidence that either Joe or Sandra made any such representation to them." 257That statement was patently erroneous. In his affidavit of 23 February 2010 at paragraph 24, Mr Ianni senior stated: "In or about 2000, my son Joe Ianni ... requested me to be the guarantor for a loan that he was taking with the St George Bank for the sum of about $100,000 to purchase a property in Pyremont [sic], I recall signing some documents relating to that loan." 258He reiterated the statement in his evidence in chief: Tcpt, p 117 (22). The cross-examination on that topic appeared to accept the correctness of that evidence: Tcpt, pp 118 (1)-(34), 119 (24) and (45), 120 (21)-(26). 259The evidence was also supported by Mr Joe Ianni in cross-examination by counsel for Mr and Mrs Ianni senior at Tcpt, pp 521 - 523: "Q. Mr Ianni, in 2000 you made application to St George Bank for a loan to purchase what's been described as the Pyrmont property? A. That's correct. Q. That is a unit at Pyrmont? A. That's correct. Q. And in respect of the purchase of that property, at some stage you asked your father for a guarantee? A. That's correct. Q. To assist with a guarantee? A. That's correct. Q. What did you say to your father? A. The property was - the purchase price was $630,000 and we were to, myself and Sandra Ianni were to, borrow $550,000. And based on the valuation of the Pyrmont property and the Castle Hill property at that time, there was a $45,000 shortfall. So the bank required an extra - that $45,000 shortfall, which Chris Gialamis was the manager at the time, and so requested a guarantee. Q. And what did you say to your father? A. That we required the $45,000 shortfall for the guarantee. Q. What did he say to you? A. He was prepared to do it. Q. You said there was a shortfall in the security to provided by Castle Hill and Pyrmont? A. That's right. Q. Castle Hill was the family home where you were living at the time? A. That's right, yes. ... Q. And that had already been mortgaged to the St George Bank? A. That is correct. Q. Did you tell your father that it had already been mortgaged to the St George Bank? A. Yes. ... Q. And did you ever tell him that the Pyrmont property was securing business loans? A. No, I did not. Q. You see, you said that there was a shortfall of $45,000? A. That's correct. Q. My suggestion to you is that you asked your father for a guarantee of up to $100,000? A. It was up to $100,000 but it was documented by Chris Gialamis as a $45,000 shortfall." 260Mr Joe Ianni and Mr Ianni senior could each have been disbelieved in particular respects or generally. However, there was objective evidence to suggest that the extra security for the purchase of the Pyrmont property was sought by the Bank because of a shortfall between the value of the Pyrmont property itself and the amount of the loan. It might have been thought entirely plausible that Mr Ianni senior understood that the reason for the guarantee (if not the limit of liability) was the shortfall in security. In any event, to say that there was "no evidence" for the proposition that Mr Joe Ianni had made such a representation to his father required a categorical rejection of the evidence noted above, which did not occur. 261The background to the 2005 financial arrangements has been noted above. Mr Famularo was introduced to Mr Joe Ianni by his brother Mr Anthony Ianni. The purpose of the introduction was to obtain the necessary financial accommodation to allow Mr and Mrs Ianni junior to purchase the Dural property. On 23 November 2009, Mr Famularo swore an affidavit detailing his dealings in respect of Mr and Mrs Ianni senior. On 11 November 2009 he swore a separate affidavit in the proceedings between RHG and Mrs Baira dealing with his relationship with her, but making no reference to his earlier dealings with Mr and Mrs Ianni senior. In his affidavit concerning Mr and Mrs Ianni senior, he set out a conversation with Mr Joe Ianni, which commenced: "Joe: I Peter, it's Joe Ianni, Anthony Ianni's brother. Peter: Hi Joe, how are you? Joe: I'm well. I'm calling to make an appointment to see you to discuss the refinance of loans I have with St George Bank, which are secured by my parent's property at Drummoyne." 262The clear inference from that conversation, for which no date was given but which must have been shortly prior to 14 September 2005, is that this was the first contact between Mr Joe Ianni and Mr Famularo. That would have been a false assumption. As noted above, Mr and Mrs Ianni junior had decided to purchase the property in Dural in July 2005 and had signed a contract for a price in excess of $2.2 million on 19 August 2005. In mid-August 2005 their indebtedness to St George Bank under their executive housing loan was approximately $1.25 million. Clearly they would not have been able to settle the Dural property without further financial accommodation. That accommodation was arranged by Mr Famularo. 263The first relevant documentary evidence of the relationship was a loan application dated 30 August 2005 prepared by Mr Famularo for submission to NAB. The loan request was in an amount of $3.5 million. An amount of $2.4 million was said to be for the purchase of Dural; $490,000 was repayment to St George and $610,000 was to be by way of a line of credit. In mid-August 2005 Mr and Mrs Ianni junior held two accounts with St George Bank, each described as "executive housing loan". One, identified by its last three numbers, 631, was an overdraft account limited to approximately $490,000 and which had been operated at or about its limit for approximately a year. 264By letter dated 31 August 2005 St George Bank noted the payout figure on account 631 and also noted that it would require a larger amount, namely $624,000, to release the Pyrmont security and the reduction of all Jencon and Joe and Sandra Ianni accounts with St George Bank to within their formal limits at the time of settlement. 265The application to NAB, completed by Mr Famularo, included details of the assets and liabilities of Mr and Mrs Ianni junior, details of their account 631 at St George Bank and the amount then owing. It may be inferred that the application was not filed in ignorance of the requirements of St George for release of the Pyrmont property. The NAB application also included details of the price and address of the Dural property sought to be purchased by Mr and Mrs Ianni junior. 266In these circumstances, the inference from Mr Famularo's affidavit that Mr Joe Ianni rang him out of the blue within a few days of the NAB loan application seeking to discuss the refinancing of "loans I have with St George Bank" secured by his parents' property was glaringly improbable. Further, the proposition that Mr Famularo, 15 days after applying to NAB for a loan to allow Mr and Mrs Ianni junior to purchase a property at an identified address in Dural, did not notice that he was affixing to a loan application to RHG a copy of the same loan contract, but with the variations in purchaser and price noted above, must also be characterised as "glaringly improbable". In cross-examination he agreed that he had had at least three meetings with Mr Joe Ianni prior to September 14 and many telephone conversations with him prior to that date: Tcpt, p 361 (5)-(10). He agreed that he had seen the contract of purchase for Dural when the NAB application was made: Tcpt, p 392 (25). Having been taken through the two documents in some detail, he refused to acknowledge that the document in the name of Mr and Mrs Ianni senior was a "sham" document, saying "I don't know": Tcpt, p 394 (15)-(25). Nevertheless, he agreed that he had "both contracts" at the time he made the application to RHG in the name of Mr and Mrs Ianni senior. 267He was also cross-examined in relation to the application made to RHG in the name of Mr and Mrs Ianni senior and dated 14 September 2005. (Although the date was alongside the signatures, the dates themselves appear to have been inserted by Mr Famularo, as was the rest of the detail handwritten on the application form.) He was questioned as to the description of Mr Rosario Ianni as "self-employed - investor - Fioranis" with the contact details being those of Mr Joe Ianni and his address as the address of Fioranis. The application form identified his taxable income as $85,000. His accountant was said to be Mr Angelo Lo Surdo, who was the accountant for Jencon. A mobile number was included which was that of Mr Joe Ianni, and the preferable contact method was identified as "mobile". The solicitors were detailed as Phillips Fox (Deborah Brown) who was the solicitor for Mr Joe Ianni. Similar details were filled out for Mrs Domenica Ianni, although her taxable income was said to be $90,000. Under the section for details of 'security properties' the Drummoyne home of Mr and Mrs Ianni senior was listed with an estimated value of $1.5 million with a "valuer contact" identified as "Mr Ianni", with Mr Joe Ianni's telephone numbers. Included with the papers for the preparation of the application, which was for a loan of $1 million, was a water bill for the Drummoyne property indicating a "pensioner rebate". The periods during which Mr and Mrs Ianni senior were said to have each been "self-employed investors" in Fioranis were 15 years and three months in each case. They had in fact had no direct or indirect interest in Fioranis before 2000 and even then that description would have been inaccurate. 268Much of the content of this loan application was sheer fantasy. The statements of income of Mr and Mrs Ianni senior were false: they were pensioners. Mrs Ianni was uneducated, with little English, no relevant work skills and, on any view, in a poor state of health by 2005. Mr Famularo was cross-examined as to whether he noticed the "pensioner rebate" on the water bill and said that he did not: Tcpt, p 396 (25)-(35). He asserted that he had been told that the Drummoyne property secured the St George Bank loan by both Mr Rosario Ianni and Mr Joe Ianni on the 14 September 2005: Tcpt, p 375 (10). He was cross-examined as to whether he seriously believed that Mrs Domenica Ianni was earning $90,000 per year as a self-employed investor (Tcpt, p 372 (40)) and stated: "I might say six-odd years ago she was a different person than what she is today, and she didn't make that statement, but her husband said this was their income and signed that self-certification document." 269He was asked whether he sought tax returns from either Mr or Mrs Ianni senior and said that he had been told they were "not available". It was pointed out to him that he had made no such statement in his affidavit and it was suggested that he was "making that up now", which he denied: Tcpt, pp 371-372. He was further asked if he sought an ABN number and responded that he did not "because it's not always you need an ABN number": Tcpt, p 373(30). 270In the course of giving the last answer, he referred to a "first application" which he explained in the following terms (Tcpt, p 373(5)): "The self-certification dated 14 September, that they were directors of Gencom [sic] Australia; hence, the inclusion of the ABN of Gencom Australia. Whilst RAMS was conducting their own underwriting of the loan, they called me on or around the 16th and told that Mr and Mrs Ianni were not directors of Gencom Australia and to remove those details from the certification and get it resigned. That's why there is another certification dated the 16th. I was not privy to any of those details; I was being guided by RAMS and what the customer told me." 271None of this evidence was discussed by the trial judge, beyond accepting Mr Famularo's evidence at face value. He stated at [107]: "In somewhat parallel to the denial by [Mrs] Baira, a matter of particular import in relation to the evidence of Rosario [Ianni] is his denial that he ever met [Mr] Famularo. That he and [Mrs] Baira make similar denials does not add strength to the contention of either. I have already dealt with the sheer incredibility of [Mrs] Baira's assertion. Again, there are handwritten notes by [Mr] Famularo of his meeting with Rosario and Domenica [Ianni] which fortify his evidence that he did have the meeting and his testimony was coordinate with what he said he was told. I reject the claims that there had been no meeting with [Mr] Famularo. A lie of this magnitude about a critical fact not only diminishes credibility generally but extinguishes it where it is contradicted by evidence, particularly that of [Mr] Famularo." 272There are a number of difficulties with this passage. First, the fact that Mr Rosario Ianni and Mrs Rosa Baira made similar denials would add significant credibility to each, unless there was a finding of collaboration for the purposes of concocting evidence. Not only was there no such finding, there could not have been: such a proposition was put to neither in cross-examination. 273Secondly, the "sheer incredibility" of the evidence, identified by reference to Mrs Baira's assertion, will be dealt with below in considering her proceedings. However, there are factors which count against such a strong assessment, to which reference was not made. One consideration was that the transaction should properly be understood as one element in a major reconstruction of the indebtedness of Mr and Mrs Ianni junior. It was not to the benefit of their parents; indeed, it was significantly to their detriment. That was because, from the position of being guarantors covering a shortfall in the security for a housing loan, they had become borrowers with primary responsibility for a large debt which they could not possibly service, with no collateral securities and with no rights of recoupment from primary borrowers. 274Thirdly, and in support and extension of the last proposition, careful attention to the content of the handwritten notes would require further findings of fact and elaboration on the conclusion reached. That Mr Famularo's testimony "was coordinate with what he said he was told" is of little weight one way or the other. The question is whether what he recorded as what he had been told at the meeting significantly strengthened the proposition that Mr and Mrs Ianni senior were present. The contents of the note are set out by Tobias AJA at [446] below and need not be repeated. Suffice it to say that nothing recorded as information supplied at the meeting was information which could not have been supplied by Mr Joe Ianni. That this was in fact all part of Mr Joe Ianni's restructuring operation is supported by the fax coversheet forwarding the loan application to RHG on 14 September 2005, with the note: "Loan application for Mr and Mrs Ianni $1,000,000. N.B. To settle 14/10/05 Please advise at earliest possible." 275The date was, as Mr Famularo knew from the NAB application, the settlement date on the purchase by Mr and Mrs Ianni junior of the Dural property. 276The typed version of the note, set out by Tobias AJA, omits some of the uncertainty which attends the hand written notes on various lines. For example, the possibility that the parents could live with Mr Joe Ianni, sell their current home and have a surplus, do not necessarily apply separately to the alleged need for "only $486K" or the line headed "Purchase $500K" as appeared from the printed version. 277It is most unlikely that Mr or Mrs Ianni senior identified Deborah Brown of Phillips Fox as their solicitor, as she was a person with whom Mr Joe Ianni had had contact in the past, and not they. The fact that only an abbreviated name was recorded by Mr Famularo suggested that he knew the contact already, from his recent dealings with Mr Joe Ianni. There was also inconsistency between the apparent proposition that the parents were investors only in the family business, but each received income on an annual basis from Jencon. 278It may also be noted that the diary note upon which such reliance was placed has three parts to it, all apparently occurring on 14 September 2005 (although dated 2009). The first was simply identified by the date and time "9AM" with a list of the three names "Ianni Rosario, Ianni Domenica and Joe Ianni - Son". In the original, although not in the typed version, the names of the parents are linked by closing brackets against which their address is given. There is no reference to there being a "meeting", nor is there reference to either of them saying anything. By contrast, the second item on the list under that date commences "Met with Losurdo who confirmed ...". The third item starts "I called Domenica & Rosario @ Home". The fact that there was a meeting was not self-evident from the diary note. 279In his affidavit of 13 October 2009, Mr Rosario Ianni did not deny there had been a meeting with Mr Famularo, presumably because, at that stage, there was no suggestion that he had ever met Mr Famularo. That evidence was only provided by Mr Famularo in his affidavit of 23 November 2009. However, Mr Ianni senior had been shown certain documents, including the loan application. He denied that he had at any time instructed Mr Famularo to make a loan application "for the sum of $1,000,000 or for any amount" (par 9); noted that neither he nor his wife had ever had a loan account with St George Bank, let alone the account 631 and had "absolutely no idea how my name or my wife's name and our address appears" in the box of the document headed "Snapshot of Account": par 13. He denied at any time instructing Mr Famularo or his firm to make any loan application to RHG. He then stated that as at September 2006 (presumably meaning September 2005) (at par 15): * I was not working as a self-employed investor; * I had not operated a business for 15 years; * I did not operate a shop at 197 Harbourside Darling Harbour; * I was not working in the Restaurant/Food Industry with a taxable income of $85,000.00 per annum; * Although he had previously done tax returns for me, Angelo Losurdo did not at the time do any accounting work or tax work for neither myself nor my wife; * I had not instructed Phillips Fox Lawyers in relation to an application for loan or the purchase of any property and no one at Phillips Fox at the time was acting on my behalf; * I was not intending to purchase a property and had no reason to apply for a loan of $500,000 to purchase a property; * I did not want to borrow $1 million; * I had no intention of providing my property at Drummoyne as security for any loan from RAMS home loans; * I did not have a share in a business at darling Harbour; * I did not owe $426035.00 to St George Bank. Further, I had not informed Mr [Famularo] of any of the matters set out above. 280There were further denials in respect of other matters including that he had been self-employed for 15 years 3 months: par 18. 281Mr Joe Ianni also denied emphatically in his evidence that he had ever attended a meeting with his parents and Mr Famularo: Tcpt, p 544 (5)-(15). His Honour may have disbelieved that evidence, but he did not say so. 282A further matter, which was not the subject of cross-examination, was Mr Famularo's entry of the telephone numbers for Mr Joe Ianni on the loan application, when his diary note indicated that he had the correct home telephone number for Mr and Mrs Ianni senior and used it himself to confirm that they lived at that address. Nevertheless, even without explanation, it supports the inference, if support be needed, that the loan application in the name of Mr and Mrs Ianni senior was an aspect of their son's remorseless commitment to obtaining the maximum value available from the properties which he owned with his wife and those which were owned by his parents and his wife's parents. That Mr Joe Ianni adopted such an attitude in relation to the properties was poignantly revealed in his cross-examination where he accepted that he did not have the cash to purchase the Dural property, but stated "I had equity. Yes, I did": Tcpt, p 541 (20). 283There is a final factor which casts significant doubt on Mr Famularo's account, which again was a matter not addressed by the trial judge. It is not the contents of the diary note, but that which is missing. Thus, the diary note made no mention of the provision by Mr and Mrs Ianni senior of the details of his driver's licence, her Medicare card, the rates notice for the Drummoyne property, or the Sydney Water bill, all of which were contained on the application form. It was only in Mr Famularo's affidavit that it was stated that this material was provided by Mr and Mrs Ianni senior "at the meeting on 14th September 2005". 284Mr Famularo's affidavit stated that Mr Rosario Ianni had stated to him: "I work for Joe and Sandra in the Darling Harbour business. It's an Italian Restaurant called Fioriani. ... I have worked there for a long time and helped my children purchase the business in the early 1990's." 285That statement was also included in the affidavit dealing with Mrs Baira: it was partly true with respect to her, but was false in that Mr Rosario Ianni had expressly declined to provide assistance to purchase the business in the 1990s and had only provided a guarantee and security for the Pyrmont property in 2000. There was no support for that statement in the diary note. 286It should be accepted that no challenge was made to the validity of the diary note at the trial, on the basis that it was a fabrication in 2009. Accordingly, that matter must be put to one side. Rather, the focus of the cross-examination of Mr Famularo on behalf of Mr and Mrs Ianni senior was as to the discrepancies between the information contained in the loan application and the objective facts and Mr Famularo's knowledge of those facts. In particular, it was directly suggested that he did not at any time speak with either Mr Rosario Ianni or Mrs Domenica Ianni, but obtained all the information from Mr Joe Ianni: Tcpt, p 380 (15)-(25). The trial judge was not obliged to reject his denials, but in reaching a conclusion was required to consider material circumstances relevant to the case for Mr and Mrs Ianni senior. A number of critical factors, recounted above, were not addressed. While it may be accepted that a trial judge is not required to explain in his or her reasons every aspect of conflicting evidence, even on a critical issue, a failure to advert to a significant number of material issues and, without explanation, to reach conclusions which are apparently inconsistent with objectively determined circumstances, requires that the Court intervene with respect to the claim against Mr Famularo. 287It was one thing for the trial judge to disbelieve the evidence given by Mr Rosario Ianni; it was another entirely to find that he told what could only have been deliberate fabrications at a meeting with a complete stranger in order to provide a basis for a viable loan application, the proceeds of which were entirely for the benefit of his son's business and to finance his son's new home. No findings were made that he acted in this way: no such findings could have been made because no such possibility was put to him in cross-examination. 288Finally in this context, it is necessary to take account of the trial judge's assessment of Mr Rosario Ianni. He accepted the submission that he was "hardly a shrinking violet but a strong, wily and capable man" and that "[h]is capacity to protect himself (and his wife) was demonstrated by his refusal when Joe and Sandra on the very first time sought assistance in the purchase of Galleria". The fact that he had provided support in the limited way noted above in 2000 is hardly consistent with a sudden willingness to enter upon fabrications which included not only his own income but that of his wife who was, by all accounts, an invalid dependent upon him for care and support. The likelihood of him being party to the exercise in fantasy attributed to him was unexplained and improbable. 289If such findings were to be made, they needed to be justified. The relevant findings were neither made nor justified: they cannot be assumed as implicit in the findings made by the trial judge because they are glaringly improbable, not only by reference to the documentary material, but also by reference to other findings which his Honour made and in the absence of relevant cross-examination. The judgment dismissing the claims by Mr and Mrs Ianni senior against Mr Famularo and his company should be set aside. Mr and Mrs Ianni senior: defence to RHG proceeding 290By way of defence to the claim for possession by RHG, Mr and Mrs Ianni senior pleaded that the mortgage and loan agreement were unjust, pursuant to s 7 of the Contracts Review Act, and that the documents were executed under the influence of Mr Joe Ianni, a fact of which RHG was aware, or was wilful and reckless in its disregard of the fact or ought reasonably to have been aware of the undue influence: defence, par 2(c). The circumstances were more fully pleaded in the cross-claim. In particular, reliance was placed on the fact that RHG was aware that the application was false in a material respect. RHG undertook two steps itself in considering the loan application. The first was to make an inquiry of the Credit Reference Association of Australia to see if there were adverse reports in respect of the proposed borrowers. That check apparently revealed that the borrowers were not directors of Jencon, which caused an officer of RHG to raise a query with Mr Famularo. That, according to Mr Famularo, led to a further "self-certification" as to the applicants' income which was executed on 16 September 2005. That step was apparently treated as a form of technicality and the document was re-executed on the basis that the prospective borrowers were "self-employed", but otherwise unchanged. It was then accepted by RHG without comment. No further inquiry was made as to the source of their incomes, nor were tax returns requested. 291The bill from Sydney Water with respect to the proposed security showed a "pensioner rebate". If RHG had the bill available to it as part of its own required information, it thus had objective information indicating that Mr and Mrs Ianni senior were either not self-employed business people with significant incomes or were fraudulent with respect to their claim for pensioner status. The possibility of there being a mistake was not reasonably available: the loan application disclosed that they had been in the business for more than 15 years and that their interest in the business was worth $1 million. The source of the "interest" was not queried. Although the water bill was included in Mr and Mrs Ianni senior's application, Mr Famularo was not certain that it was provided to RHG: Tcpt, p 396(30). The water bill appeared as part of the faxed application tendered in evidence. However, not all of the documents bore the same fax header details, some were out of order, and some did not bear the same pagination as the rest of the exhibit to the affidavit. It did not appear in the copy of the application produced by RHG. It was therefore critical for the trial judge to determine if RHG did have the bill. No finding was made, one way or the other. 292Secondly, the purpose of the loan was said to be to purchase a property for $500,000 and to refinance outstanding loans in an amount of $490,000. The sham sale contract was designed to provide support for the former loan purpose, although the fact that the property was not to be used as security must have indicated to RHG that it was otherwise committed. 293The loan application also disclosed that the applicants had lived at their address for 35 years, a fact which could readily have been confirmed by a Land and Property Information search. It might reasonably have been inferred from that information that they were probably 50 years old or of a greater age. If their income derived from employment, it was most unlikely that they would be able to meet repayments of the proposed loan (which were in excess of $75,000 per annum) for any significant period and certainly not for the term of the loan, which was 30 years. 294The true circumstances in which the loan was given could have been ascertained by a telephone call. The loan application required that telephone numbers of each applicant be recorded. The home number of Mr and Mrs Ianni senior was incorrect (being the number of Joe and Sandra Ianni). Mr Famularo had the correct number, noted on his diary note, which he used to comply with "identification requirements". RHG was on notice that the application contained false information, yet did not check directly with the proposed borrowers. 295The second check that RHG undertook was to obtain a valuation of the security. RHG required a 70% loan/value ratio (LVR). Thus, when the valuation was obtained, the officer handling the application at RHG emailed Mr Famularo in the following terms: "Hi Peter, Please advise if max loan of $910,000 is acceptable as val has come in at $1.3M. Alternatively incoem [sic] and A&L can be provided to apply for $1M. Comparable sales evidence must be provided to go back to the valuer about the val amount." 296The possibility that either the information contained in the application as to income or as to the total of assets and liabilities could be manipulated to justify a higher loan was inconsistent with RHG seeking to verify the correctness of the information supplied. When Mr Famularo responded that a loan of $910,000 would be acceptable, complying with the 70% condition imposed by RHG on the value of the security, the loan was approved. 297The approval document further indicated: "LVR is outside of RAMS guidelines. Maximum LVR for Self-certified - Low Doc loans up to $1,000,000 for METRO NSW (Non-Vacant Land) is 65%. (Requested LVR is 70%). Overriding comments: Loan manually assessed by GE [the insurer]." 298There was also a further annotation: "Maximum loan amount for Self-Certification Equity Release where LVR > 65% is $250,000 with no stated use for funds. Overriding comments: Held." 299These notations suggest that the (sham) purchase of a property for $500,000 was identified by RHG either as "no stated use" or as an "equity release". In either event, the amount assigned to this purpose was $420,000 and thus outside the guidelines. Rather than make inquiries as to the circumstances of the proposed lending, RHG simply overrode its own guidelines. No one was called from RHG to explain the reason for this course being taken. Further, the document identified the value of the Drummoyne property as $1.5 million to which was added an amount by way of an asset identified as "Deposit Paid valued at $50,000.00" being the figure taken from the false sale contract as the amount already paid in respect of the Dural property. Not only did RHG not check the authenticity of the contract, but they simply accepted the value of the "asset". 300Further, RHG did not check the amount payable to St George Bank to release the security. In fact, the net proceeds of the loan, being an amount of almost $900,000, were wholly paid to St George. 301One inference available from this material was that RHG was not merely content to lend on the value of the security, but was willing to manipulate its own guidelines if necessary. As held by this Court in Khoshaba at [82], that is a factor entitled to significant weight in determining the unjustness of the contract. As further noted by Spigelman CJ in Khoshaba, the fact that the guidelines were designed to protect the lender not the borrower, did not mean that they were not entitled to be given significant weight in the determination of unjustness: at [79]-[80]. The approach adopted by Spigelman CJ in Khoshaba has received subsequent endorsement by this Court in Kowalczuk v Accom Finance Pty Ltd [2008] NSWCA 343; 77 NSWLR 205 at [102] and [117] (Campbell JA, Hodgson and McColl JJA agreeing) and in Tonto Home Loans at [259] (Allsop P, Bathurst CJ and Campbell JA agreeing). 302As Mr Famularo was at pains to assert, it was not his job to check the veracity of his clients, nor the accuracy of the information they provided. RHG did not suggest otherwise and, in the absence of evidence to the contrary, may be found to accept that description of the broker's role. Accordingly, for the Contracts Review Act to serve its purpose of protecting persons not well able to look after themselves, the fact that a lender is on notice of misinformation and deception is a factor to be taken into account in determining whether relief should be granted under the Act. The situation is only exacerbated by the lender's apparent expectation that the broker will not check the veracity of the information supplied, but may manipulate it to achieve the desired result. Because of the factual findings made as between the borrowers and Mr Famularo, these issues were simply not addressed by the trial judge. 303At least in some circumstances where a lender has provided money to refinance an outstanding debt, the amount of which is not in dispute, equity may require that relief be refused in respect of the impugned transaction to the extent of the refinancing. Whether that principle would apply in the present case and what amount should be treated as having been refinanced by RHG are matters which should not be resolved for the first time in this Court. Accordingly, the appropriate relief in respect of RHG is to set aside the judgment below and direct that there be a retrial. Mrs Baira: claim against the broker 304In considering Mrs Baira's claim against the broker and its principal, Mr Famularo, in the light of the matters discussed above, it is convenient to note first some aspects of the evidence given by Mrs Baira, who was cross-examined at length by counsel for Mr Famularo. The subject matter of the cross-examination ranged across a large number of documents signed by Mrs Baira, the first being a guarantee for a loan of $155,000 signed in January 1992. At that stage Mrs Baira (formerly Mrs Fioravanti) obtained advice from a solicitor recommended by her husband, to assist her daughter Sandra Ianni and her son-in-law, Joe Ianni, purchase a café in Darling Harbour. At that time, both Joe and Sandra Ianni executed a deed, dated 1 May 1992, drafted by Mrs Baira's solicitor, giving her a right of access to the business and its accounts and entitling her to take possession of the business in the event of default by Mr and Mrs Ianni junior. The original loan was provided by the Advance Bank, which provided further financial accommodation in June 1994. Subsequent facilities were provided by the St George Bank, which took over Advance Bank in 1997. 305For the purposes of cross-examination, a bundle of some 59 documents were prepared, extending to more than 300 pages. It concluded with the mortgage in favour of RHG executed on 12 April 2006. In respect of all the documentation up to the 2006 refinancing, Mrs Baira executed documents as a guarantor of the debts of Mr and Mrs Ianni junior and Jencon. Many of the places for signature were headed "Acknowledgement by Guarantor"; some were declarations that she had received independent legal advice. Other documents included letters of offer which she was invited to sign, and did. The flavour of the cross-examination may be gleaned from some examples. The first concerned a document addressed to her son-in-law headed "Offer of Facility" which was signed by Sandra and Joe Ianni as directors of Jencon and as guarantors and counter-signed by Mrs Baira as guarantor on 31 May 2000. (It was document 25 in the bundle and was presented approximately halfway through the cross-examination by counsel for Mr Famularo, which took the better part of a day.) She was shown the letter and said she did not remember seeing the letter. The cross-examination continued: "Q. So you wouldn't have signed the letter - I withdraw that. You didn't sign any part of the letter, as you recall sitting here in the witness box today? A. WITNESS: I don't remember. Q. Well, at page 160 is your signature? A. WITNESS: Yes. Q. And that's dated 31 May 2000? A. WITNESS: Yes. I don't remember signing it, though. It appears to be my signature, but I do not remember when I did it or where. Q. So this is a bit like the events of 1998, is that the case, that you have got no recollection today of signing the letter? A. WITNESS: Correct. Q. You know the implications today, though, of having signed the letter, don't you? A. WITNESS: Well, yes. Q. Are you telling the Court that you didn't read anything on this page? A. WITNESS: No. Q. Can you give any explanation as to why then you signed the letter or might have signed? A. WITNESS: I might sign - like I said yesterday, I trusted completely my daughter and my son-in-law. Q. This has, with respect, taken trust to a whole new level. It's got now to the stage, I suggest to you, of you being prepared to sign anything if they requested you to do so; would you agree with that? A. WITNESS: No, because if anyone would have come to me and would have said to me that I was signing my life away, of course the answer is no. Q. You weren't quite signing your life away, you were signing your house away? A. WITNESS: Well, is the same thing, isn't it." 306The letter of offer was addressed to Joe Ianni as Secretary, Jencon. It referred to "recent discussions" and "our current relationship". It stated that the bank was "pleased to offer the facilities described on the attached details sheets to the borrower". A condition of the facilities was the provision of certain securities, including the guarantee and indemnity of Mrs Baira "limited to the amount of the sale proceeds of" her home, and also included the registered mortgage over her home. These were described as "existing security". Three two page documents attached to the letter (after the page on which the guarantors were required to sign) were headed "Overdraft Facility (New Facility)", "Bank Guarantee/Performance Bond Facility (Existing Facility)" and "Fixed Rate Loan (Existing Facility)". In each case, a credit limit was identified. These were, respectively, $100,000, $30,000 and $382,118.98. She was taken to each document and asked whether she saw what the terms of the letter or the new facility being offered to Jencon were: she said she did not remember seeing it: p 245 (45). She was asked: "Q. But the numbers are sticking out there like sore thumbs? Do you understand that phrase? The numbers are there on the page, in other words? A. WITNESS: Yes. Q. Now, the bank on this occasion wanted to get some declarations from you? A. (Witness nods). Q. And they required you to go and see either a Justice of the Peace or a solicitor. And you did that on 31 May 2000; do you remember doing that? A. WITNESS: I remember going to a friend of mine, being a Justice of the Peace, to sign a document which my daughter said that the bank need my signature because some facilities for the shop. Q. And you've given some evidence in an affidavit about that, and that is Mr Naticcka? A. WITNESS: He did not me no evidence. Simple, he's witnessed my signature. ... Q. Why did you think the bank wanted you to go and see Mr Naticcka? A. WITNESS: I explained to you why. A request from my daughter and my son-in-law. Q. Well, it's not as simple as that, is it? It's not every day the bank was asking you to go and do something? This was an unusual event? A. WITNESS: And why the bank didn't asked me to go to them if that was the case. Q. They wanted you to go and see somebody independent; and you knew that, didn't you? A. WITNESS: No, I didn't. Because I had never received a letter of any kind that I needed to go and see independent advice. I always depend on my kids. I trust them. ... HIS HONOUR: Q. Are you saying, Mrs Baira, that when you signed the declaration, you didn't care whether or not what you were declaring was true or not? A. WITNESS: I didn't declare anything. I was told to sign this document in front of either solicitor or a JP .... Q. And you didn't care what was in the document, you just signed it? A. WITNESS: Yes, did I care. It's not that I don't care, I trust." 307Later, she was asked to go to a document headed "Acknowledgement by Guarantors", which were signed by her and her signature witnessed by her daughter, on the third page of the document, which page did not itself carry a heading. She agreed the signature was hers but could not recall why and how she came to sign the document: p 252 (35)-(50). According to the cross-examiner, the document was signed in 2002, described by the cross-examiner as "eight years ago". If, which is unclear, it was an acknowledgement in respect of a facility offer which constituted the previous 12 pages in the bundles, it was probably signed in December 2002. The cross-examiner proceeded: "Q. You indicated that you were aware that you signed the offer document, but you don't remember being required by the Bank to sign the acknowledgement document? A. WITNESS: I don't know what you mean. Like I said before, lots of the documents sending to my place. I did sign as a request from the bank, but I was never aware what I was signing. Q. There weren't lots, with respect? A. WITNESS: It was lots through the years. I remember they were sending lots. Q. They weren't coming every day? A. WITNESS: Not every day. Q. They were coming perhaps twice a year, sometimes more often? A. WITNESS: I don't remember. Q. And that put you on enquiry, didn't it? Made you think, well, what's going on here - certainly in 1998 - so that you wanted to limit any exposure you had to St George Bank? A. WITNESS: I don't know what you mean. Q. Because these letters from the bank were coming, as you say, often, that put you on - that sent a warning to you, didn't it? A. WITNESS: Not really. Q. But you didn't know what Joe and Sandra were doing, that you had a liability to the bank? A. WITNESS: No. Q. And you wanted to limit that liability? A. WITNESS: No. Q. And you were prepared to sacrifice your house? A. (Witness shakes head). Q. But you didn't want to have any personal liability after that? A. (Witness shakes head). Q. And you probably also didn't think that Joe and Sandra's business would fail, did you? A. WITNESS: Well, nothing is certain these days. I have no - like I said, no one ever, ever send me any letter to warn me that they were in trouble. I never interfere in their business. I saw they were doing well. That's all I knew." 308She was taken to a document which seemed to be dated 16 March 2004, a proposition she accepted, although that was the date on which Mr Joe Ianni signed it. The document from the bank was dated 18 November 2003. There is no date against the signature of Mrs Baira. "Q. According to your evidence you have [had?] been living with Mr Baira for about 12 years since then [sic] and your English might have been expected to have improved because you have been speaking English at home? A. WITNESS: Yes. Q. I want to suggest to you you could read everything on this page with no difficulty at all? A. WITNESS: But I did not read it. Q. So you didn't read the words 'Acknowledgement by guarantor?' A. WITNESS: No. Q. Is that what you're saying? A. WITNESS: Exactly. Q. That's just not believable, Mrs Baira, I suggest to you? A. WITNESS: Well I'm sorry. My own explanation: I have been too naive and I trust too much." 309It was also put to her that by 17 May 2005, the St George Bank offered a further bank guarantee of $24,000 to Jencon, at a time when the facilities totalled over $1 million. The facility itself involved a limit of $24,000, as set out on page 1 of the "Facility Offer" addressed to "Dear Joe and Sandra". Mrs Baira was required to sign an acknowledgment of "the terms of this facility agreement" on page 6. She was asked if she read the rest of the letter of offer, to which she said "No": p 265 (8). She agreed that she had signed it but not read it: p 266 (10). The cross-examination continued: "Q. ...[Y]ou had to be asking yourself and or Sandra what was this about? A. WITNESS: I did more than once. Q. Andy they said to you, or Sandra said to you 'it's about your guarantee'; that's right, isn't it? A. WITNESS: Not, not on those words. She would have said, 'Mum, I don't really know myself. Something that the bank wants you to know'. She was not even aware of what it was, most of the time. Q. And that informed you that the bank warranted [wanted?] you to know that Gencom [Jencon] was borrowing more money? A. WITNESS: I never thought it that way. Q. And that affected you as a guarantor? A. WITNESS: I never thought it that way. Q. And had you to know, or the bank wanted you to know, because if Gencom failed or Sandra and Joe failed to make repayments, you were at risk because [you] were the guarantor? A. WITNESS: I did not know." 310A reading of the transcript of the evidence reveals a number of features. First, Mrs Baira willingly acknowledged her signature on documents even when she could not remember signing them. Secondly, although she denied knowing the identity of some of the persons before whom she appeared to have signed, in other cases she acknowledged that she knew them and had signed before them. Given that the cross-examination covered a period of some 14 years, commencing 19 years before the trial and concluding some five years before the trial, and noting her own acknowledged lack of recollection of some matters, it would appear that some of her expressed denials were probably better understood as denials of recollection. The cross-examiner was in almost all cases content with a denial and did not inquire whether it was possible that a particular event had occurred but that she did not remember it. 311Mrs Baira's evidence was also to be considered in the context of her personal history and circumstances. She was born in April 1944 and was thus 67 at the time of the trial. Her place of birth was identified in her affidavit as "Colabria Reggio, Italy". She left school at the age of 10 and learnt to be a dressmaker. That appears to have been her occupation in Australia from 1969 to 1991, although part-time whilst she was bringing up her children. The Marrickville home, which was unencumbered in 1983 when her husband died, was her only asset and she stated that she had "never owned a business nor borrowed money in my name alone". The only money she had borrowed, she stated, was jointly with her late husband. She denied ever receiving any income from the Jencon business at Darling Harbour. It was not suggested to her in cross-examination that she had received any share of the business, by way of salary or profit. 312It was undoubtedly open to the trial judge to find that she had a greater knowledge about the size and indebtedness of the business and the fact that the full value of her property was at risk than she was willing to acknowledge. However, the primary judge went further in his conclusions. Thus at [55] his Honour stated: "On 15 September 2005 [Mrs] Baira signed (as guarantor) a new facilities offer from St George increasing the overdraft availability to $350,000. On the first page of the document in bold type is a total limit (appearing below an itemised list) of $1,177,148. Even a casual glance at this figure would catch the eye." 313It is true that the figure is there and that, to a person who was shown or had read the first page of the document, it was clearly visible. The relevance of that depends on a rejection of Mrs Baira's evidence that she signed where she was directed to and did not read or see the first page. As noted above, her signature appeared on only one page, namely page 8. Further, it appeared under an acknowledgment in the following terms: "The terms of this facility agreement are acknowledged by each guarantor". 314The offer contained on the first page of the document was an increase of $120,000 on an existing overdraft facility. The "existing facilities" were separately identified under six separate and individual headings. It is by no means clear that Mrs Baira's guarantee extended to each of the relevant facilities. Mrs Baira was not asked in cross-examination anything about her understanding of those elements of the letter. Had she been, one might have expected her also to be asked about the letter from the bank of 30 September 2005 which showed a total facility limit of $536,000. She might also have been asked, before such an inference was drawn against her, as to whether she was ever shown the bank's letter of 3 September 2004 which listed four facilities totalling $116,000, noting that each facility was secured by a number of documents, including Mrs Baira's "unlimited guarantee and indemnity", supported by the mortgage over her property, which was "[t]o be released from these borrowings". If, in truth, Mrs Baira had understood the structure and extent of her liabilities to St George Bank in 2005, it would have been remarkable. 315The trial judge also appears to have accepted the evidence of Mr Forster, a solicitor who was said to have explained the nature of a guarantee to Mrs Baira on 12 October 2005, although when asked to describe her was unable to do so. His Honour rejected the proposition that he had seen a different woman on 12 October 2005. However, the force of the cross-examination was not to that effect, nor was that suggested. Rather, it cast doubt upon Mr Forster's actual memory of what he had said on the occasion and what she had said to him. Importantly, his Honour accepted Mr Forster's evidence that Mrs Baira had told him that she was "familiar with the business of the borrower (presumably Fioranis) and had confidence in its success": at [57]. That, his Honour said, "resonates of [sic] [Mrs] Baira's testimony that she had told Mr Calvitto [on an entirely separate occasion] that Joe and Sandra were doing well": at [57]. That may have described her belief, but it was the basis of that belief which needed to be explored. More generally, his Honour summed up his findings with respect to Mrs Baira in the following paragraphs: "[60] For a particular reason to which I now turn, I find that [Mrs] Baira's testimony is unworthy of credit. That particularity is not to set aside the adverse effect on [Mrs] Baira's credit of the contradiction between her behaviour and her execution of documentation against her unlikely proposition that for years and years she signed many documents in blithesome ignorance of what she was doing. [61] The loan to [Mrs] Baira from RHG Mortgage was brokered by [Mr] Famularo. He had a meeting with her on 2 December 2005. [Mrs] Baira not only denied that meeting but denied she had ever met [Mr] Famularo. This denial was a falsity and I would assess it as a brazen attempt to avoid the consequences of her own actions. [62] [Mr] Famularo's diary has a coordinate entry for the appointment but more significantly there are pages of hand written notes of the meeting which are entirely consistent with his version of the meeting. If, as [Mrs] Baira now asserts, there was no such meeting, it is implied that [Mr] Famularo has invented the content of it as recorded in the notes. I note in passing that no allegation of fraud of any kind appears in the pleadings. The notes contain personal detail about [Mrs] Baira including driver's licence, Medicare and passport numbers together with expiry details. [Mr] Famularo noted that he asked for tax returns but was told that these were 'not available'. He noted a comment emanating from [Mrs] Baira during the interview referring to 'cash business'." 316This reasoning is unsatisfactory. It appears to involve the following propositions: (1) Mr Famularo is to be believed when he stated that he had had a meeting with Mrs Baira on 2 December 2005. (2) It follows that Mrs Baira's denial of the meeting was a falsity. (3) Not only was it a falsity, but "a brazen attempt" to avoid the consequences of her own actions. (4) Her testimony generally was therefore unworthy of credit. (5) That conclusion confirmed the adverse effect of "the contradiction between her behaviour and execution of documentation" and her allegation of "blithesome [sic] ignorance of what she was doing". 317The first step in the reasoning required an analysis of Mr Famularo's evidence which had not yet been undertaken. Further, the analysis placed significant weight on his diary note of the meeting which could have been challenged without any allegation of fraud. As already noted, so far as the pleading was concerned, it stated that he acted without authority. The reason why the contents of the note were largely neutral in assessing that issue is that the information contained would readily have been obtained by Mrs Baira's daughter or son-in-law from her, a possibility which was not explored by the evidence on either side. Secondly, the denial of the meeting, if untrue, caused Mrs Baira some difficulties because she was unable to explain, except as a consequence of her absence, where Mr Famularo obtained the false information contained in the loan application. The inference to be drawn from the file note was that Mrs Baira provided false information in support of her loan application. That was not put to her, nor did the trial judge make any finding as to whether she did or not. In the absence of relevant cross-examination and acceptance or rejection of her evidence on that point, a critical aspect of the fact-finding was omitted. 318It is possible that Mrs Baira made a bad impression in the witness box. Perhaps it is to be inferred that she did, although the trial judge appears to have accepted there might be different explanations for the way in which she gave her evidence, although he was not inclined to credit her with the more favourable interpretation, thus his Honour stated at [51]: "In about May 2005, St George Bank was again offering further facility and once again [Mrs] Baira signed an acknowledgement as guarantor. Her signature was witnessed by a Cathy Macri who [Mrs] Baira denied knowing. Apparently she may have been an employee of the accountant, Mr Lo Surdo, another person [Mrs] Baira claims never to have met. If [Mrs] Baira is to be believed, Ms Macri is yet another stranger to her prepared to act at the very least improperly in relation to documentation signed by her. It was not [Mrs] Baira's contention that she went to Mr Lo Surdo's office and signed a document but was unaware of the name of the person who witnessed her signature. She simply denied knowledge of Ms Macri." 319The trial judge rejected Mrs Baira's evidence wherever it was "inconsistent with what appears in the documentation": at [64]. A possible exception was allowed in respect of two letters which "in any event were not operative in consummating the transaction". The significance of those exceptions for Mrs Baira's credit and the significance of that large part of her evidence which the trial judge must have accepted, were not explored. 320It remains to consider the significant weight given by the trial judge to the contents of Mr Famularo's handwritten notes. The heading of the note is "Baira/Ianni". The second line is as follows: "2/12/05 Meeting Baira re SGB refinance." 321As a statement of what was recounted at the meeting, the contents of the note are inherently implausible. The contents have been set out in full by Tobias AJA at [421]. The first 10 lines could have been obtained from Mr Joe Ianni, but the detail is most improbably sourced from Mrs Baira. The next three lines read: "- wants to separate Business Affairs - Joe & Sandra expanding into childcare & overseas property investments & she is not comfortable." 322Having read Mrs Baira's affidavits and evidence, there is no suggestion of any such thought process therein: nothing was put to her along these lines. The suggestion that these remarks came from her, without being put to her in cross-examination, should not have been accepted. After reference to her remarriage, the note continued: "- Does not wish her new husband to be aware of this refinance as he has own children & not business minded." 323The proposition contained in this statement is somewhat inconsistent with the fact that she was seeking to protect her home and equity. Why her husband would not have been pleased with that idea is unclear. 324The next line stated that "Joe lanni to Provide Statements Re SGB Loan $1,350". Even the meaning of this statement is obscure and most unlikely to have come from Mrs Baira. The next line states that the "Max loan on Marrickville to be $650K. in N. OF 'ROSA BAIRA'". This would be at least a curious way for her to give instructions. There followed the details as to her furniture, motor vehicle and bank account which were concededly false. Her personal details were correct and obtained from a driving licence, Medicare card and passport. The statements with respect to employment were palpably false. Again, it is highly improbable bearing in mind the contents of her affidavit and her evidence in Court that she would have said any such things. The statement "Income $140 - 150K per A. without much effort" is again an improbable statement for her to make. Generally her evidence revealed a degree of trust, combined with ignorance of the Jencon business (whether "blithesome" or otherwise) but the suggestion that she would create palpable falsehoods in order to obtain some indirect benefit for the business by removing her home from the security for it, at a cost of $650,000, is so strange as not to be acceptable without explanation. None was forthcoming. 325The note states that Mr Famularo advised Mrs Baira to obtain further legal and financial advice and "she said she would speak with either Deborah Brown of Phillips Fox or Mr Lou Serio of Five Dock". There was no skerrick of evidence that Mrs Baira had ever heard of Ms Brown of Phillips Fox. She was, however, a solicitor with whom Mr Joe Ianni had had dealings. 326The statement that her other son "is also employed By the Fioriani Businesses at D. Harbour" was also untrue. He was a mechanic. 327There were aspects of the cross-examination of Mr Famularo which were undoubtedly deficient, from the perspective of the case being run by the borrowers. However, there was a respect in which the cross-examination of Mrs Baira and Mr Ianni senior was also deficient. The trial judge referred to the fact that both made "similar denials" of having met Mr Famularo, but stated that such denials did "not add strength to the contention of either": at [107]. He also referred to "the sheer incredibility of [Mrs] Baira's assertion". 328There are three reasons for rejecting that analysis. First, as noted above, it might well be thought that the suggestion that some of the information contained in the diary note came from Mrs Baira herself was implausible. Secondly, the moving party behind the series of transactions involving Mrs Baira and Mr and Mrs Ianni senior was almost certainly Mr Joe Ianni and, probably to a lesser extent, his wife. Thus, there is an alternative explanation as to the source of the information contained in the diary note, other than concoction by Mr Famularo acting alone. Thirdly, and significantly for present purposes, it would surely provide significant corroboration of Mrs Baira's claim not to have met Mr Famularo if, as part of the same series of transactions, Mr and Mrs Ianni senior independently gave the same evidence in relation to their borrowing. Of course, the element of corroboration would dissipate if it were shown that the independent sources had in fact confabulated. However, not only was there no finding to that effect, the suggestion was not put to either party in cross-examination. 329There is no doubt that the trial judge formed a poor impression of Mrs Baira's credibility. Nevertheless, for the reasons given above, the assessment of credibility was flawed. The claim against Mr Famularo depended critically upon acceptance of Mrs Baira's claims in respect of the events of 2005-2006. (Her evidence as to earlier periods is less relevant, although it was, of course, capable of demonstrating her level of understanding of the "family business" and her willingness in 2006 to take on a primary liability, secured by her home, to RHG.) 330The most generous inference is that the meeting took place but that not all the material recorded in the note was supplied at the meeting. That, however, was not the finding made by the trial judge. Rather, his finding was that the "pages of hand written notes of the meeting ... are entirely consistent with his version of the meeting": at [62]. His version is not discussed in the judgment, nor are the improbabilities referred to above addressed. 331As noted above, it was not possible to deal with Mr Famularo's credibility without addressing the very real objective issues raised by the "mysterious documents". On one view, there were only two people likely to have created the fake contract. They were Mr Joe Ianni and Mr Famularo. No finding was made in that regard. Mr Joe Ianni denied producing the fake document, and might well have been disbelieved. More importantly, Mr Famularo's denials that he had appreciated that the address was the same as that on the contract for which he had just obtained finance through NAB for Joe and Sandra Ianni had an air of ingenuousness which was not consistent with his other evidence. Without explanation, the findings are unpersuasive. It follows that orders 5, 6, 7 and 8, relating to Mrs Baira's cross-claim against Mr Famularo and his company, Australian Mortgage and Business Finance Solutions Pty Ltd, should be set aside. Because it is not possible for this Court to resolve the issues of credibility, the first amended cross-claim must be the subject of a retrial. RHG v Mrs Baira 332There remains a question as to whether RHG was entitled to possession of the Marrickville property, as a result of the judgment in its favour in an amount a little under $850,000. 333On 16 January 2006 Mr Famularo completed and submitted a loan application to RHG, seeking a loan in an amount of $650,000, with interest only payments for five years and a term of 30 years. The most significant asset listed in the part for "Statement of Assets" was the Marrickville property valued at $850,000. 334Consistently with a "Broker Summary/Note" on the front page, under the statement of liabilities, there was reference to the property being security held by St George Bank. The note stated: "Please see application in the name of Joe and Sandra Ianni which will also be used to repay St George Bank at the SAME TIME." 335Under the heading "Security Property" there was again reference to the Marrickville house with an estimated value of $900,000 and, in the line "Person to contact for access to property" Mr Famularo had written "Joe Ianni". A mobile telephone number was noted, which was that of Mr Joe Ianni, as noted on his accompanying loan application. The following was noted in the part to declare income: "Primary Income (Self-Employed) Before tax p.a. Income last Financial Year $145,000 Income previous Financial Year $140,000". 336Under the heading "Documents used to support income" there was a tick in the box "Self-Certification Form (Low Doc)". No tax returns were proffered, nor any other independent confirmation of the declared income. 337Under the heading "Settlement Information" there was an indication that the money should be paid by direct debit; no information was supplied as to the name of the solicitor. The item for establishment fees was blank. The application form covered six pages and was signed in two places. The first, half way down the fifth page, on which there was virtually no other information, stated that the credit was to be provided "wholly or predominantly for business or investment purposes (or for both purposes)". On the sixth page, after a page of small print, there was a further signature at the bottom of the page. 338A separate form, not signed by Mrs Baira, headed "Identification Record for a Signatory to an Account" identified an Australian passport and a New South Wales driver licence as the documents sighted. A further page, signed by Mrs Baira identified her by name, restated the amount of the loan, declared that she was "as stated" in her loan application, self-employed and had been employed in her current role for 15 years, and had a current "net business income p.a. before tax" of $145,000". She further declared she could "meet the repayments in accordance with the terms of the loan and will suffer any hardship in doing so". 339A further page authorised the St George Bank to prepare a discharge of mortgage over the Marrickville property and forward it to RHG. Finally, the loan application was accompanied by a rate notice from Marrickville Council for the Marrickville property. According to the unchallenged evidence of Mrs Baira, the loan application was wrong in a number of respects. First, it stated that she had lived at the Marrickville property for 20 years, when in fact, as at 2006, she had lived there for approximately 34 years: affidavit, 20/10/2010, par 24. It also contained the statement that she owned a car worth $15,000, and had a savings account with Westpac containing $5,000. The statement as to income was entirely false, as she was a pensioner with no independent means. 340RHG did not know these particular facts. However, they did know that the loan was being sought for the sole purpose of paying off half of an account in names of Joe and Sandra Ianni, with St George Bank. That fact was noted by Mr Matthew Anderson, the RHG officer who made a note on the relevant file on 17 January 2006. In full the note stated: "This file is a little unusual, in the fact that we are paying out a loan that the applicant is not an account holder of. We have been advised that the loan being paid out is however secured by this property, and was written as a third party security by the broker himself while he was a business banking manager at St George. Therefore it is appropriate to treat this deal as a refinance." 341Mr Famularo denied providing that information, although it can only have been he from whom Mr Anderson obtained such an understanding and Mr Famularo had in fact worked at St George Bank at the relevant time. Nevertheless, it seems entirely beside the point as a basis for providing finance. As Mr Anderson acknowledged, it did not involve a refinancing of any primary liability of the prospective borrower. 342In an application summary, also generated by Mr Anderson, the loan-to-value ratio was noted at 74.29%. Being over 18 years of age, the summary noted that there were no "borrower age issues", despite the fact that Mrs Baira was 61 years of age, as disclosed by the application form. The summary further noted there were "No third party mortgage issues" and that Mrs Baira's ability to commit to the transaction "is within guidelines". As noted above, RHG had no evidence to support that proposition other than the "self certification" statement. Under the heading "Payment History for Existing Mortgages" reference was made to the St George Bank loan in the amount of $1.2 million, with the comment "Ms Rosa Baira - No missing payments on debt(s) being repaid". Not only was that statement false, but RHG knew that Mrs Baira had no liability for the loan in the name of Joe and Sandra Ianni and had no evidence to suggest she was in any way responsible for making repayments. 343The purpose of the loan was said to be within guidelines, although the notation referred to above suggests that Mr Anderson knew that that was not so. 344The information supplied in respect of her employment is difficult to read, but describes the job type as "service", the occupation or industry as "food/catering" and appears to refer to Fioranis Restaurant. However, RHG knew that Fioranis was an asset claimed by Joe and Sandra Ianni in their loan application and that the outgoings on the $1.2 million loan were paid by them and not by Mrs Baira. It also knew that Joe and Sandra Ianni received a gross income of $78,000 a year from Jencon, which employed them. Accordingly, RHG knew, or at least would have known if it turned its mind to it, that Mrs Baira had no history of loan repayments and that, subject to the guarantee for which the house was security, she had an unencumbered property. The fact that the total of her other assets, including furniture at home, totalled $70,000 should reasonably, if RHG had turned its mind to it, have raised a question as to why a person enjoying a reasonably substantial income had no significant assets other than the unencumbered home in which she lived. 345This information was sufficient to cast doubt on the declaration signed by Mrs Baira that the loan was wholly or predominantly for business or investment purposes. RHG knew it was for neither, but refrained from making any inquiry as to how the declaration came to be made in those terms. The same might be said in respect of the declaration that she would not suffer hardship in meeting the repayments in accordance with the terms of the loan and that: "I understand that you have advised me to seek independent legal and financial advice prior to entering into the agreement with you and that I may choose whether or not to accept that advice." In short, RHG neither knew nor cared whether she had in fact received such advice. 346In fact, the repayments at $3,640 per month ($43,680 per annum) were impossible for her to meet on a pension. Clearly she had demonstrated she was not in a position to protect her interests and that the person who prepared the loan application on her behalf was, at best, not reasonably able or willing to protect her interests. The fact that the loan application was linked to the accompanying application from Joe and Sandra Ianni, combined with the fact that Mr Joe Ianni was said to be the person with whom contact must be made to obtain access to the Marrickville property, together with the knowledge that the loan was to go wholly to repayment of the account of Joe and Sandra Ianni should have put RHG on notice that the transaction was entirely for the benefit of third parties who were party to the overall contractual arrangement. That was because there was no suggestion that St George would release the Marrickville property absent repayment of the whole amount of $1.24 million. 347In these circumstances, it is necessary to consider how the trial judge dealt with the issues thus raised. The primary judge dealt with these issues at [73]-[88]. His Honour dealt both with a claim under the Contracts Review Act and a claim of unconscionability pursuant to ss 12CA and 12CB of the Australian Securities and Investments Commission Act and, in the alternative, pursuant to s 51AC(1) of the Trade Practices Act, as then in force. In relation to unconscionability, the conclusions reached by the primary judge turned almost exclusively on the conclusion that the meeting with Mr Famularo in fact occurred and that all the information supplied by him in the loan application was supplied to him by Mrs Baira. Thus, at [87] the primary judge held: "[Mrs] Baira also relied upon an alternative claim for relief based upon unconscionability in that she was in a position of special disability vis a vis RHG Mortgage. Given the 'facts' conveyed by [Mrs] Baira and passed ultimately to the lender I am not satisfied that therein, or for any other reason, it should have been appreciated that [Mrs] Baira was in a position of special disadvantage in relation to the transaction. The source of any deceit was to be found in what [Mrs] Baira told [Mr] Famularo." 348Reopening the issue as to whether the meeting occurred requires that the order dismissing Mrs Baira's first cross-claim must also be set aside. 349Reopening those factual findings has a further consequence. In assessing the unjustness of the contract with RHG, the primary judge relied upon the record contained in Mr Famularo's diary note of the meeting to establish a degree of understanding and knowledge on the part of Mrs Baira. Thus he stated that she had, on 2 December 2005, "showed an accurate understanding of the total loans of Joe and Sandra [Ianni] and the plan to have St George release its security over Marrickville for $650,000". 350His Honour added that Mrs Baira "was able to respond to [Mr] Famularo's scepticism about the willingness of St George Bank to release its security with a firm assurance to him that she and Joe could see to it": [83]. 351Far from treating the contents of the diary note as potential evidence of the unlikelihood of it being a true record of a meeting with Mrs Baira, the primary judge held that because she had taken the stance that no such meeting occurred, he was "comfortable to accept [Mr Famularo's] version of the encounter with her as substantially accurate": [83]. Thus, no assessment was undertaken of the potential implausibility of Mrs Baira being the source of the information contained in the diary notes. Although the inclusion of such material in the diary notes is not a determinative indication that the meeting did not take place, nor is the finding that the meeting took place determinative of Mrs Baira as the source of the all the information in the diary note. 352There are, however, additional and independent reasons for setting aside the findings with respect to Contracts Review Act relief. First, his Honour accepted evidence of "the solicitors" that the legal and practical effect of "the agreements into which she was entering" were explained to her. For reasons noted at [315] above there was real doubt, not adequately addressed by the primary judge, as to whether Mr Forster gave the explanation which was required of him. However, of greater importance to the primary judge was Mr Calvitto's blunt warning that "she will lose her house if things go wrong": at [84]. Accepting that such a warning was given, two critical aspects of that matter were not identified by the primary judge. The first is that it was given on 11 November 2004, more than a year before the dealings with RHG and in a different context. Secondly, the warning related to circumstances where her home was security for a guarantee to St George Bank and not security for her primary liability to RHG. Advice as to the practical effect of a guarantee and the security in support of it would no doubt have taken into account the other securities held in respect of the same debt, the right of recourse given by the deed, the benefits of which she obtained in 1992 and the general law entitlement of recoupment from the primary debtors. An explanation with respect to her position if she entered into the loan agreement with RHG would emphasis quite different considerations, including her primary liability, the fact that she had no income to meet it, the fact that her default would permit no recourse against any other security or person primarily liable and that the deed of 1992 would not protect her. Such advice might also need to include the proposition that, if it had been her intention to enter into that liability in order to distance herself from the business of Jencon, it would be a futility because there was no other source of funds from which she might expect the loan to be repaid. 353Secondly, the primary judge noted that the arrangement with RHG was "perceptively of benefit to [Mrs] Baira" in that, "as a guarantor under the extant St George facilities, she was potentially liable for about double the amount for which she became liable under the RHG mortgage": at [86]. 354The figures underlying that proposition told a different story, in that the judgment against Mrs Baira was in an amount of $846,000 which was a little over two-thirds of the full liability under the St George facilities. More importantly, according to the loan application from Joe and Sandra Ianni to RHG their properties given as security for the St George facility were worth $1.85 million. Accordingly, bearing in mind her deed allowing her recourse against Joe and Sandra Ianni, it might be said that she was at no immediate financial risk as a guarantor of the St George facility. No doubt there were less favourable ways of stating that proposition, but to suggest that the new arrangements with RHG were a "benefit" to Mrs Baira was probably wrong. 355Thirdly, the primary judge stated at [82]: "[Mrs] Baira was capable of acting to protect her own interest as demonstrated by the deed prepared for her by Mr Ross." 356However, that transaction indicated that her solicitor at the time arranged protection for her with respect to her role as guarantor. It may have given her comfort in respect of her on-going role as guarantor, but if so, it was false comfort once she became a primary borrower. 357Fourthly, the primary judge continued: "That she trusted her daughter and son-in-law does not operate to negate or diminish her ability so to act. She has detailed her educational and domestic background and I repeat that lack of formal education does not equate with an absence of financial shrewdness." 358The assessment of facts revealed in this statement are matters about which minds might differ. It is sufficient for present purposes to note that his Honour's assumption of "financial shrewdness" appears to have been based upon two factors: first, there was the deed prepared by a solicitor for her in 1992 and, secondly, there was the information supplied to Mr Famularo at the meeting, which his Honour thought demonstrated shrewdness, understanding and even deceitfulness. Again, reopening the findings in respect of the meeting with Mr Famularo remove a significant support from the conclusions set out above. 359While the lack of a formal education need not demonstrate financial incompetence, it would be a most unusual person who, with no real secondary education, having spent a lifetime as a dressmaker and mother raising children, who had never run a business in her life, whose primary language was not English, was able to obtain even a general understanding of the legal documents involved in the transactions in issue. Taking the RHG loan application merely as an example, a good proportion of the six pages is either blank or has limited entries made by another person, until the "Applicant's Declaration" on page 5 and throughout page 6, where it consists of densely typed information most of which involves the right of RHG to disclose personal information to third parties. It would be intriguing to know whether any of the lawyers involved in the case so far have read that material. The chance that Mrs Baira read it, that if she read it she would have understood it and that she realised what her signature at the bottom of page 6 referred to are cumulatively factors so improbable as to be given no weight. 360Fifthly, the suggestion that "she trusted her daughter and son-in-law" (a factor stated in the past tense) "does not operate to negate or diminish her ability so to act" (a consequence stated in the present tense) is to disregard the possibility of unjustness resulting from undue influence, the change in tense suggesting that a proposition of general application was being stated. 361Finally, his Honour stated at [81]: "Whether the borrower was unreasonably handicapped in complying with the terms, specifically for repayment, depends upon two things peculiar to this transaction. First, whether she told the truth when she informed [Mr] Famularo about her cash income and, second, whether she was content to rely upon a cash flow being made available from Joe and Sandra's business. Money from Joe and Sandra's business had apparently met any obligations in the past and in fact it continued to be the case until the unexplained demise of Fioranis in 2008." 362The first limb of the statement is curious. It was not in dispute that her actual income was not $145,000 per annum. It therefore followed that she would be incapable, from her own resources, of making the repayments. Whether she told Mr Famularo anything about her capacity is not relevant to that point. The second proposition is also curious. It may be true that there was no other source of cash than Jencon's business, which might conceivably meet the payments, but, unless she had some entitlement to such a cash flow, she had no capacity to meet the repayments. There was no evidence that she ever did make a repayment. 363It may have been true that Mrs Baira relied upon Jencon to make payments on her behalf and trusted her son-in-law and daughter to ensure that that would happen. It does not follow that she knew anything about the operation of their business, its capacity to generate income or the risks involved. 364The trial judge appears to have accepted at face value financial statements of Jencon showing gross trading profits in excess of $1 million in 2002 and 2003 and in excess of $2 million in 2004 and 2005. The tax returns of Joe and Sandra Ianni in 2004, revealing gross taxable income of $78,000 each, mean that they were not in a position to meet the payments on the St George Bank facility in their name from their incomes, the annual repayments being almost as high as their combined net incomes. Of course, their tax returns did not reveal the director's fees which they were purportedly paid in the relevant year. More importantly, there is no clear explanation as to why businesses running at such a high level of profit would need to maintain the high level of indebtedness revealed in the evidence. The directors, for reasons which remained obscure, found it necessary to borrow $3.5 million from NAB to fund the purchase of a $2.2 million home. 365It would be sufficient for present purposes to conclude that the orders in favour of RHG should be set aside because of the material respects in which the findings regarding unconscionability and unjustness were affected by the findings in relation to the meeting with Mr Famularo. There is, however, an additional ground, namely that the trial judge did not give adequate consideration to Mrs Baira's very real change in circumstances which flowed from the "refinancing" of St George Bank, resulting in the change from guarantor to primary debtor for Mrs Baira. Nor did his Honour give adequate consideration to the extent to which RHG either knew about the true circumstances and ignored them or, in respect of Mrs Baira's income, should properly have been on notice that she had no proven ability to make repayments, but ignored that potential lack of capacity and the consequences which might flow from it. The discussion as to the legal principles set out above with respect to Mr and Mrs Ianni senior applies equally to Mrs Baira. The judgment in favour of RHG must be set aside and a retrial ordered. Conclusions 366To give effect to the foregoing conclusions, the Court should make the following orders: A With respect to the proceedings brought by RHG Mortgage Corporation Ltd against Rosa Baira, being matter 2008/285539 in the Common Law Division: (1) Set aside orders 1-8; and orders 13, 17 and 18, to the extent that they order that Rosa Baira pay costs, being orders made in the Common Law Division on 17 June 2011. (2) Order that there be a retrial of the claim by RHG Mortgage Corporation Ltd against Rosa Baira and of the first cross-claim (brought by Rosa Baira). (3) Order the first, second and third respondents to pay the costs of the first appellant (Rosa Baira) in this Court. B With respect to the proceedings brought by RHG Mortgage Corporation Ltd against Rosario Ianni and Domenica Ianni being matter 2008/284857 in the Common Law Division: (1) Set aside orders 1-8; and orders 13, 17 and 18 to the extent that they order that Rosario and Domenica Ianni pay costs, being orders made in the Common Law Division on 17 June 2011. (2) Order that there be a retrial of the claim by RHG Mortgage Corporation Ltd against Rosario and Domenica Ianni and of the first cross-claim (brought by Rosario and Domenica Ianni). (3) Order that the first, second and third respondents pay the costs of the second and third appellants (Rosario and Domenica Ianni) in this Court. 367TOBIAS AJA: The first appellant, Rosa Baira, is the registered proprietor of a residential dwelling at xxx xxx Road, Marrickville (the Marrickville property) over the title to which the first respondent, RHG Mortgage Corporation Limited (RHG), has a registered first mortgage securing a loan made by RHG to Mrs Baira in the sum of $650,000. 368The second and third appellants, Rosario and Domenica Ianni, are the registered proprietors of a residential dwelling at xxx xxx Street, Drummoyne (the Drummoyne property) over the title to which RHG has a registered first mortgage securing a loan in the sum of $910,000. 369As a consequence of default with respect to both loans, RHG instituted proceedings against the first appellant on the one hand and the second and third appellants on the other seeking an order for possession of each of the Marrickville and Drummoyne properties together with judgment for the amount due under each of the mortgages. The proceedings were heard by Grove AJ who on 3 June 2011 found in favour of RHG: RHG Mortgage Corp Ltd v Baira; RHG Mortgage Corp Ltd v Ianni [2011] NSWSC 520. Formal orders were made on 17 June 2011: RHG Mortgage Corporation Ltd v Rosa (aka Rosa Fioavanti) Baira; RHG Mortgage Corporation Ltd v Rosario Ianni [2011] NSWSC 580. The appellants now appeal to this Court from those orders. 370Institution of the proceedings by RHG resulted in a series of cross-claims being filed by the first appellant on the one hand and the second and third appellants on the other against various other parties. Those parties then cross-claimed against other parties. The primary judge dismissed all cross-claims. Details of those cross-claims and his Honour's findings in respect of them have not been debated on the appeal. Nevertheless, if the appellants succeed in the appeal, then because the relief they seek is a new trial, it would follow that any such new trial would extend to the cross-claims with the consequence that his Honour's orders dismissing those cross-claims would need to be set aside. 371The parties to the cross-claims relevant to the appeal are the second, third and fourth respondents. The third respondent Peter Famularo is a director of the second respondent. Although the second and third respondents were represented by counsel at the hearing before the primary judge, Mr Famularo appeared for himself on the appeal but was refused leave to appear on behalf of the second respondent who, therefore, did not take any active part in the appeal except to the extent to which both it and Mr Famularo had filed written submissions. In any event, so far as the issues in the appeal are concerned, it is the conduct of Mr Famularo which is in issue. 372The other relevant parties are the fourth respondent, Sandra Ianni, and her husband Guiseppe Ianni known as "Joe". The fourth respondent is the daughter of the first appellant and her husband; Joe, is the son of the second and third appellants. At trial the fourth respondent was represented by counsel but Mr Joe Ianni represented himself. However, the latter was made bankrupt on 4 June 2010 with the result that although he gave evidence before the primary judge, he took no further part in the proceedings. Neither he nor the fourth respondent have taken any part in the appeal which is also why Joe has not been joined as a respondent. 373In order to avoid possible confusion, the primary judge referred to the relevant parties by surname or by forename omitting courtesy titles. Without in any way intending to give offence, I shall do the same. Accordingly, I shall refer to the first appellant as "Baira", the second appellant as "Rosario", the third appellant as "Domenica", the third respondent as "Famularo", and the fourth respondent as "Sandra". I shall also refer to her husband as "Joe". When referring to Baira, Rosario and Domenica without differentiation, I shall refer to them collectively as "the appellants". 374On the hearing of the appeal only Baira was represented by counsel. Domenica and Rosario appeared in person. They had not filed written submissions for inclusion in the Orange Book. However, they were given leave to file written submissions after the conclusion of the hearing, which they did. Those submissions were prepared by a firm of solicitors. 375Although the proceedings were instituted by RHG, the loan applications which gave rise to the mortgages were made to RAMS, the former name of RHG. I shall therefore refer to RHG and RAMS interchangeably. For all intents and purposes, they are the same entity. The major issue between the parties 376It was common ground that on 14 September 2005 Domenica and Rosario signed a loan application to RHG which had been completed by Famularo, a mortgage broker, and which sought a loan of $1 million. On 16 January 2006 Baira signed a loan application to RHG which also had been completed by Famularo. Famularo maintained that he had met with Domenica and Rosario on 14 September 2005 and that the information contained in the loan application was provided to him by Rosario. Domenica and Rosario, although accepting that their signatures were on the loan application, denied any such meeting had taken place or that they had ever met with Famularo who they did not know. 377With respect to Baira, Famularo maintained that he had a meeting with her on 2 December 2005. Like Domenica and Rosario, Baira denied any such meeting or that she had ever met with Famularo or even knew him. The appellants' case at trial was that Famularo's evidence that such meetings had taken place should be rejected and that the denials of Baira, Domenica and Rosario should be accepted. There was, therefore, a stark issue of credit which, for a number of reasons, the primary judge resolved against the appellants and in favour of Famularo. It is his Honour's findings with respect to the credit of Famularo in particular that the appellants now challenge as being flawed. The findings of the primary judge with respect to the history of the involvement of the appellants in the financing activities of Joe and Sandra 378The circumstances out of which the present litigation arises commences, historically, with the acquisition and operation by Sandra and Joe first of a café in the Darling Harbour Complex known as "Café Galleria" (Galleria) and later, a licensed restaurant known as "Fiorianis" (Fiorianis). These businesses were conducted through a number of corporate vehicles known as the Jencon Group of which it appears that Jencon Australia Pty Limited (Jencon) was the main operating entity. 379Each of the businesses were described by Sandra in her evidence (referred to by the primary judge at [67] and which was unchallenged) as being successful from the beginning. The financial statements of Jencon which were tendered in evidence revealed gross trading profits of $1,084,063.19 (2002), $1,482,980.70 (2003), $2,065,244.11 (2004) and $2,006,407.74 (2005). 380At [69] his Honour recorded the following information from Jencon's financial statements which were also not the subject of challenge. In 2003 and 2004 the payment of directors' fees of $156,000 and $147,000 respectively were debited to expenses. Joe and Sandra were the sole directors. In 2004 and 2005, payment of directors' fees was eliminated from the expenses list but, in lieu, there were debits of $600,000 in each year for management fees. During those years expenses for the payment of wages were noted at $470,406 and $480,536. Reference was made to the sum of $600,000 as "wages" but his Honour considered that that description referred to payments in substitution for directors' fees. There were no personal income tax returns of Joe and Sandra tendered which might have identified the distribution of that $600,000. It was nevertheless apparent that the businesses were producing substantial amounts of cash particularly in 2004 and 2005. I shall return to that fact when dealing with the contents of the loan applications. (a) The history of Baira's assistance 381Galleria was purchased by Joe and Sandra in January 1992 with the assistance of a loan from Advance Bank Australia Limited (Advance), which was subsequently acquired by St George Bank Limited (SGB), in the amount of $155,000. A pre-condition to the advance of that loan was that Baira was to enter into an unlimited guarantee in the bank's favour to be secured by an executed mortgage in registrable form over the Marrickville property. His Honour noted at [26] special condition 16 of the loan approval which required certification that Baira had been independently advised as to her financial and legal liability under that guarantee. 382Baira contended in her evidence that her understanding always was that she had guaranteed $155,000 (the amount of the original loan) and no more. However on 26 May 1992 she signed an unlimited guarantee in favour of Advance secured over the Marrickville property. Her signature to the relevant documentation was witnessed by a Marrickville solicitor, Mr Ross. His Honour noted at [27] that whilst giving evidence Baira had constantly protested that no one had explained anything to her apart, apparently, from Mr Ross who, she said, had provided her with a great deal of help. She acknowledged in her affidavit evidence that he had explained the mortgage and guarantee documents to her although she complained that he did not read them to her. She further complained that Mr Ross did not speak Italian but there was no challenge to the primary judge's finding that Baira's command of English, certainly as demonstrated in the witness box, was considerable and that she did not apparently complain to Mr Ross that she could not understand what he was telling her. 383At the time of her receiving advice from Mr Ross, the latter prepared, and Baira, Joe and Sandra entered into, a deed which vested Baira with considerable protections and powers in relation to Galleria. According to the primary judge (at [28]), Baira testified that the deed was designed to inhibit employment of a person (apparently a relative) whom she did not wish to be employed in the business. The deed was not so limited and, given her acknowledgment of Mr Ross' assistance, his Honour was satisfied that she was made aware that she was reserving to herself considerable authority beyond such a limitation. There were provisions in the deed with respect to the use of credit, her right of access to accounting and financial records, an indemnity for breach and a right (on default by Joe and Sandra) to enter, operate or sell the business. 384His Honour then observed (at [29]) that the entry into this deed was not consistent with Baira's claims that she was simply signing documents presented to her by Sandra, being ignorant of their content, or that she was simply being told, and accepted, that they were documents wanted "by the bank". She asserted that she did not know what she was signing, that Sandra did not know what she was asking her to sign and that she, Baira, did not know whether or not Joe knew what was in the documents. His Honour did not accept this evidence. 385In June 1994 Advance was requested by Joe and Sandra to advance them a further sum of $112,000 so they could undertake the refurbishment of Galleria. The loan was approved on condition that Baira was to receive independent legal and financial advice. On 30 June 1994 Baira signed an eight-page document as guarantor, initialling the operative pages. Her signature was witnessed by a friend. His Honour noted (at [30]) that on the first page of the document the loan of $112,000 was specified. It was apparent that this loan was an extension of the original loan of $155,000 but although Baira acknowledged her signature to the documentation, she maintained that she knew nothing about this further extension. His Honour then remarked (at [31]): "Baira claimed handicaps in reading English but, had she looked, the figure (not being $155,000) was in prominent display. I realise that it is now some years since the events under reference but I observe that Baira was able to articulate her stance about various matters when giving evidence in English and at times with considerable force." Again there was no challenge to these findings. 386In July 1998 Joe and Sandra sought a loan in the sum of $450,000 from SGB to enable them to fit out the new café which became Fiorianis, re-finance an existing fixed rate loan and reduce an overdraft balance. Although not referred to by his Honour, the bank's credit assessment form noted the following: "Rosa Fiorovanti [Baira's former married name] is also involved in the Café industry, currently running Mr Pancake's café in Bankstown Square having owned the business with her husband for the past seven years. We would assume that her knowledge of the industry is extensive and she understands the proposed venture and the liability of a guarantor." 387The loan application was approved by SGB on 3 August 1998. It was a condition of the facility that a number of securities be provided including a first mortgage by Baira over the Marrickville property and a Deed of Guarantee and Indemnity executed by her but limited to the sale proceeds of that property. The primary judge noted at [34] that Baira claimed in her affidavit that she was unsure of the signature (Fiorovanti) on the page headed "Guarantor's Acknowledgement" but his Honour was satisfied that it was her signature and that she had executed the Deed of Guarantee and Indemnity in favour of the Bank. Again there was no challenge to these findings. 388On 11 September 1998 Mr Ross, solicitor, provided a certificate verifying that he had provided advice to Baira, that he had explained the Deed of Guarantee and Indemnity and the Bank's Letter of Offer dated 3 August 1998 to her and that the conference had taken 40 minutes. Baira's execution of the relevant documents was witnessed by Mr Ross. The primary judge found (at [35]) that the foregoing was contrary to Baira's claim at trial that she simply signed documents "for the bank" as presented to her by Sandra. 389In May 2000 SGB was requested by Sandra and Joe to increase Jencon's overdraft facility. That application was approved on condition that a statutory declaration was provided by Baira declaring that she had received independent legal advice and that an updated valuation of the Marrickville property confirmed that its value was no less than $415,000. In accordance with those requirements on 31 May 2000 Baira declared that she had received independent legal advice about the increased offer and that she had signed the offer of 24 May 2000 "freely and voluntarily". 390I interpolate at this point that Joe and Sandra owned three properties located at Castle Hill, Milsons Point and Pyrmont all of which were mortgaged to SGB as at August 2005 to secure total borrowings by them and Jencon of $3,050,000. 391In or around 2002 Joe and Sandra (or their corporate vehicle Jencon) entered into a facility agreement with SGB in relation to the extension of their business and the purchase of an investment unit in Milsons Point. The documentary evidence with respect to this loan includes a declaration by Baira made on 20 June 2002 that she was a third party guarantor and that she had received independent legal advice with respect to the loan. The declaration was made before Anthony Lo Surdo, a Justice of the Peace and Joe and Sandra and Jencon's accountant. 392Baira's first husband, Mr Fiorovanti, died in 1983. By June 2002 she had married Mr Baira. SGB became aware of this change of name and required Baira to make a statutory declaration that she was the person referred to as Rosa Fiorovanti in the certificate of title to the Marrickville property and in the Deed of Guarantee and Indemnity that she had executed in 1992. This declaration was also made before Mr Lo Surdo. 393At [41] his Honour remarked that the unstated implication of Baira's evidence was that she had never met Mr Lo Surdo so that he was consciously claiming to witness a signature when he had not done so. He continued: "This allegation by Baira puts Mr Lo Surdo into the long line of people, mostly professionals, who for no apparent advantage to themselves, were alleged by her to be prepared to act deceptively in relation to her obligations. I do not accept Baira's evidence." It was not suggested that these findings were not justified. 394In December 2002 and November 2003 SGB offered further facilities to Jencon, those offers being acknowledged by Baira as guarantor. Then in September 2004 SGB offered a further facility to Jencon in the sum of $300,000 which brought its total facilities to Jencon to $1,059,000. It was a pre-condition of this advance that Baira was to receive independent legal advice about her guarantee and provision of security. At [42] the primary judge noted that the total loan figure of $1,059,000 was endorsed in bold type on a letter which was signed by Baira immediately under a heading, again in bold type, "Acknowledgment by Guarantor". At that time Baira also signed other associated documents which were witnessed by a solicitor, Mr Calvitto, who certified that he had tended the appropriate advice to her. Baira agreed that she met with Mr Calvitto whose office she attended with Joe and Sandra after being referred by a local solicitor, a Mr Serio. At [43] his Honour found that Mr Calvitto was an impressive witness and he regarded his testimony as reliable. He spoke fluent Italian although in conferring with him, Baira did not seem to call upon that facility. His Honour noted that Mr Calvitto was manifestly independent as he had never met Joe, Sandra or Baira previously. It was not submitted that it was not open to his Honour to accept Mr Calvitto's evidence. 395Although Baira denied that Mr Calvitto explained "in detail" any of the documents which she was required to sign, Mr Calvitto certified that he had so explained the legal nature and significance of the documents to her before they were signed. At [45] his Honour referred to the fact that Mr Calvitto had made a file note with respect to this conference. That file note included a suggestion to Joe and Sandra that they should consult a financial planner and consider when they might "cash in". According to his Honour this was a reference to Mr Calvitto's opinion that apparently successful restaurants do not necessarily continue to be so indefinitely. At [46] his Honour observed: "Baira has seized upon the expression about cashing in to elevate it into being a principal focus of the meeting. In support of her defence she has elaborated upon her modest background and lack of formal education. Those circumstances did not prevent her from possessing a capacity to look shrewdly to protecting her own interests. Mr Calvitto recorded that he had no doubt that Baira knew exactly what she was doing. I agree with his conclusion." These findings were also not challenged. 396In oral testimony Baira claimed that she had told Mr Calvitto that she had been a guarantor "from the first time for $150,000", implying, according to his Honour (at [47]), that she was telling him that she understood that to be the limit of her exposure. His Honour did not accept that she ever canvassed that figure with Mr Calvitto as entirely different figures were drawn to her attention. After the consultation an account was addressed and given to her which contained the following description of the legal services rendered: "Advice for your indemnity renewal with St George Bank involving your daughter Sandra, her husband Joe and their company Jencon Australia Pty Limited for their Darling Harbour restaurant Fiorianis with securities including your own Marrickville property in your sole name, three other properties of Joe and Sandra plus their restaurant with total exposure of $2.1m with current servicing at about $20,000 per month." The primary judge considered (at [48]) that this was an emphatic method of ensuring that Baira was apprised of exactly what was involved. 397As it was relevant to the evidence of Famularo, at [49] the primary judge observed that Mr Calvitto's file note of his advice to Baira recorded that she worked in her own restaurant with her second husband which was "not doing well". His Honour remarked that Mr Calvitto had no reason to invent this information and that it would "echo" when the evidence of Famularo was considered. His Honour further noted a volunteered statement claimed by Baira to have been made by her to Mr Calvitto about Joe and Sandra whom she said "through the years they have been doing good". The primary judge considered that upon the assumption that she made such a statement to Mr Calvitto, it revealed a state of mind which would explain why she might not have acted to concern herself about any exposure consequent upon mortgaging her property to SGB. In other words, she was confident that Joe and Sandra's business was doing sufficiently well to ensure that loans in respect of which she had gone guarantor would be repaid in accordance with the bank's requirements. 398On 19 August 2005 Joe and Sandra contracted to buy a property at xxx xxx Avenue, Dural for $2,223,500 (the Dural property). On 30 August 2005 Famularo completed a loan application on behalf of Joe and Sandra to the National Australia Bank (NAB) for the purpose of financing that acquisition. It was shortly thereafter that Domenica and Rosario signed a loan application to RHG. I shall return to the circumstances relating to this application in more detail below. 399In the meantime, on 15 September 2005 Baira signed, as guarantor, a new facility offer from SGB increasing Jencon's overdraft facility to $350,000. On the first page of the document in bold type was a total limit (appearing below an itemised list) of $1,177,148. As his Honour noted at [55], even a casual glance at this figure would catch the eye. This was also relied on by the primary judge in rejecting Baira's insistence that she never guaranteed more than the original $155,000 loan from Advance in 1992. 400By letter dated 30 September 2005 from SGB to Jencon, the former offered an amended facility which involved an overall reduction in Jencon's existing facility of $624,000, in return for the release of the Pyrmont property which was required by NAB to secure the loan with respect to the acquisition of the Dural property. The letter of offer was signed by Baira on 13 October 2005. She did not deny that her signature appeared on that document. A condition of the offer was that Baira should obtain independent legal and financial advice covering her liability under the amended facility. The certificate was to outline that Baira had been advised of the increased liability assumed by her as a result of the release of the bank's security over the Pyrmont property. For this purpose it was alleged that on 12 October 2005 Baira attended upon Mr Frederick Forster, an employed solicitor of Egisto Solicitors. On that date Mr Forster forwarded a letter to SGB in the following terms: "Re: Jencon Australia Pty Ltd Guarantee by Rosa Baira We confirm that Ms Rosa Baira attended our office on 12 October 2005, when we explained to her the nature of her proposed guarantee and the increased liability which she will assume by her in relation to the release of the proposed securities mentioned in the facility offer. Having had the nature of a guarantee explained to her and the possible consequences of a default by the bank's customers, she confirmed to the writer that she understood the nature of her guarantee. She also confirmed that she was familiar with the business of the borrower, she had confidence in its success and that she was content to execute the guarantee. The conference was conducted in the absence of the borrower or any other person." 401The primary judge considered (at [57]) that the reference in the letter to Baira's confidence in the success of Sandra and Joe's business resonated with her "testimony that she had told Mr Calvitto that Joe and Sandra were doing well". However, at [58] he acknowledged that Mr Forster had no detailed recollection of the consultation although his evidence (at Black 1/471G-L) was that when asked by him whether she understood that as a guarantor, if the borrower did not pay, she would have to pay and would be responsible for the debt, she responded that she was aware of that, making some remark to the effect that she "does this often". She also said that she was in hurry and needed to "get back to the restaurant". However, Mr Forster was challenged to describe the person whom he had seen and it was accepted that the description he gave did not fit Baira. In this respect Baira denied that any meeting took place with Mr Forster on 12 October. His Honour noted (at [58]) that no submission was made as to who the person on 12 October might have been who Mr Forster saw if it was not Baira and further noted that an account for a consultation on 12 October was made out to Baira and was paid. 402His Honour then remarked: "[59] The proposition that Baira did not receive the advice tendered on 12 October is, subject to Baira's version, based upon Mr Forster's somewhat muddled memory and descriptive powers. There was however no muddle in the precise report of the consultation made to the Bank on the day it occurred. I reject the contention that some sort of substitution had taken place and I am satisfied of the probability that Baira was the recipient of Mr Forster's advice on 12 October." 403At [60] his Honour said that for a particular reason to which he would then turn (and which related to his acceptance of Famularo's evidence), he found that Baira's testimony was unworthy of credit. However, he noted that that particularity was "not to set aside the adverse effect on Baira's credit of the contradiction between her behaviour and her execution of documentation against her unlikely proposition that for years and years she signed many documents in blithesome ignorance of what she was doing." There was no direct challenge to this finding. It is important because it demonstrates that irrespective of his Honour's ultimate acceptance of Famularo as a credible witness, there were independent (and unchallenged) reasons which supported his adverse finding with respect to Baira's credit. 404The primary judge's conclusions with respect to Baira's history of assisting Joe and Sandra were summed up by him in the following paragraphs of his reasons: "[36] As different facilities or changes to facilities were offered by the Bank. Baira acceded to requests to sign and execute more and more documents. I do not accept that she was merely signing documents at the request of her daughter nor do I accept that she had no idea of the involvement of security over the Marrickville property. ... [38] It will be unnecessarily tedious to chronicle every one of every signature of Baira on a multitude of documents. As she has purported not to have any relevant knowledge of the documents which she has signed, I conclude that her various statements about signatures which she does or does not accept as hers, or about which she expresses doubt, are based upon visual inspection made after this litigation was commenced. There is no evidence of any protest of falsity being made by her before then. [39] To the extent that signatures are queried or disputed, I am satisfied that the probability is that they are genuine signatures of Baira. ... [40] In cases where Baira expresses doubt or denial otherwise, particularly on documents about which she continues to claim to know nothing, I do not accept that where a witness is recorded that all these witnesses have been willing to engage in deception." 405When dealing with Baira's defence to RHG's claim, his Honour accepted a submission that Baira serially signed loan and facility agreements over years culminating in the documents which were central to RHG's claim in the present litigation. He continued: "[75] Baira had appropriate advice tendered to her. As the deed earlier discussed demonstrates, she was capable of acting astutely in her own interest. [76] The defence to the amended statement of claim pleads lengthy facts in answer to the allegation of entry into the mortgage. I do not accept the testimony of Baira in support of the critical alleged facts especially her claim to belief as to the limited extent of exposure on the guarantees which she gave from time to time. Nor do I accept that she was unaware that the security given by her extended beyond the sum involved in the very first guarantee which she gave many years ago. ... From time to time she was given very specific and appropriate advice by solicitors and I do not accept that she simply signed documents without any enquiry or knowledge concerning what she was signing." 406His Honour further observed: "[82] Baira was capable of acting to protect her own interest as demonstrated by the deed prepared for her by Mr Ross. That she trusted her daughter and son-in-law does not operate to negate or diminish her ability so to act. She has detailed her educational and domestic background and I repeat that lack of formal education does not equate with an absence of financial shrewdness. ... [84] I also accept the evidence of the solicitors that the legal and practical effect of the agreements into which she was entering were explained to her. Nothing could have been in plainer language than Mr Calvitto's blunt warning that 'she will lose her house if things go wrong'." 407It is apparent from the foregoing that as a consequence of Baira's long history of signing guarantees and other documents to assist Joe and Sandra in the conduct of their businesses, his Honour did not accept much of Baira's evidence not only with respect to the genuineness of her signatures upon the documents referred to but also her protestations that she simply signed whatever was put in front of her without any knowledge or understanding of what she was doing. 408To the extent to which what I have chronicled above constituted reasons advanced by his Honour in support of his adverse finding as to Baira's credibility, there is no challenge. On the contrary, the whole of the appellant's case on the appeal has centred on his Honour's acceptance of Famularo as a witness of truth. It was contended that if his Honour was in error in accepting Mr Famularo as a credible witness, he would not necessarily have made adverse credit findings against the appellants. On the other hand, the submission implicitly acknowledged that he may still have made such findings. Furthermore in some respects this is a bootstrap argument, but in any event it overlooks his Honour's rejection of Baira's creditworthiness for reasons with respect to which there is no challenge and which are independent of his findings with respect to Famularo's credit. (b) The history of Domenica and Rosario's assistance to Joe and Sandra 409At the time they purchased Galleria in 1992, Joe and Sandra sought assistance for the purpose of that purchase from Domenica and Rosario by requesting that they make the Drummoyne property available as security for a bank loan. They declined. Joe and Sandra then approached Baira who was willing to accede to their request. 410However, Rosario and Domenica changed their minds in 2000 when Joe and Sandra sought an advance from SGB in the sum of $550,000 to enable them to purchase the Pyrmont property. They offered to provide personal guarantees and to mortgage the Drummoyne property as security for those guarantees. On 13 July 2000 Rosario and Domenica signed an acknowledgment that SGB had provided financial accommodation to Joe and Sandra and had done so because Domenica and Rosario had provided security. They further acknowledged that they obtained independent legal and financial advice with respect to the transaction. Having signed the loan documents they also signed a mortgage over the Drummoyne property. Rosario's execution of the mortgage was witnessed by the solicitor Paul Egisto, and Domenica's execution was witnessed by Philip Previte, also a solicitor. Both Domenica and Rosario provided a declaration that each had received independent legal advice about the loan and security and that after receiving that advice they had voluntarily executed the mortgage over the Drummoyne property as well as a Deed of Guarantee and Indemnity. Those declarations were subscribed before the same solicitors. 411However, as the primary judge noted at [110], the Deed of Guarantee and Indemnity provided that the guarantor's liability was limited to the market value of the Drummoyne property. His Honour observed that he did not think it likely that the bank would have accepted this limitation without some negotiation which, he said, contributed towards a conclusion that Rosario had significant capacity to act in protection of his (and Domenica's) interests. This finding was not challenged. His Honour further accepted (at [112]) the evidence of Mr Egisto and Mr Previte that they had discharged their obligations in giving appropriate advice and explanations to Rosario and Domenica. Those securities remained in place in accordance with arrangements within the family group and, as his Honour noted (at [113]), the necessary payments were made to the bank obviously from profits of Joe and Sandra's enterprises so that Rosario and Domenica were not called upon in respect of their guarantees. The primary judge's general observations with respect to Domenica and Rosario 412Domenica appeared in court only briefly as it was obvious that she was presently in poor health and this was confirmed by an affidavit from her general practitioner Dr Cameron. She was not subjected to cross-examination. However, at Black 1/372T-U, Famularo in cross-examination said that "six odd years ago she [Domenica] was a different person than what she is to-day". As his Honour noted, he was not challenged with respect to that remark. 413At [104] his Honour referred to Rosario's claim to be restricted in his understanding of English. In his affidavit sworn 5 September 2008 at paragraph 11, he stated that he had very poor reading or writing skills in English although he was able to understand and speak English "with difficulty". As his Honour noted, he had been in Australia since 1954 and had worked for about 33 years as a painter and docker for the Department of Defence at the Garden Island Naval Dock Yard. Although he said he worked in a gang of Italians his Honour found it hard to credit that for 33 years part of the operations of the Australian Naval Establishment was conducted in Italian to the extent that Rosario did not achieve fluency in English. His Honour continued: "[104] ... While it can be appreciated that a witness may be more comfortable speaking in his first language, Rosario's contention of his limited ability to communicate in English contained a measure of deceit. It was revealed that his own solicitor in these proceedings had read him the lengthy affidavits to which he deposed and that solicitor explained the nature and the effect of relevant documents to him in English and received an appropriate acknowledgement that Rosario understood. This false claim to limited language ability operated to diminish Rosario's credibility." There was no challenge to these findings. 414There was also the evidence of Mr Wennerbom, solicitor, who said that he had a conference with Domenica and Rosario on 11 October 2005 which lasted approximately 54 minutes. He explained the RHG mortgage and associated documents to Rosario and Domenica prior to them executing them and did so in English as he did not speak Italian. At Black 452V-X Mr Wennerbom in cross-examination said that the meeting took place in his firm's boardroom. After four or five minutes of social conversation and introductions, he explained in general terms an overview of the documents and then explained each individual document. There was then a signing ceremony. One of the documents was headed "Borrower's Acknowledgement" which stated that although RAMS recommended they obtain legal and financial advice, they had decided not to retain a solicitor to advise on the implications of entering into the loan agreement. 415 Notwithstanding that acknowledgment, Domenica and Rosario signed another document headed "Declaration by Borrower" in which they acknowledged that they had received independent legal advice regarding the loan and security documents. Mr Wennerbom was cross-examined on the apparent inconsistency between the two documents. He maintained that Domenica and Rosario were given independent legal advice by him but not financial advice. He had no doubt that the meeting took place and that he explained the documents to them and that he had made sure in his own mind that they understood what they were signing and understood the meaning of the documents. He agreed that there was no translation into Italian of what he had said to them and that all conversations were in English. It was not suggested to him that Rosario indicated that he did not understand what he was saying. 416The primary judge commented upon the cross-examination of Mr Wennerbom as follows: "[120] ... Some forensic excursions were travelled when Mr Wennerbom gave evidence. It suffices to state that I accept his record for time charging purposes reveals a time spent giving the advice which he certified as I also accept his explanation that he was giving legal not financial advice which was the reason for what was contended to be a conflict between the borrowers signing a document declining financial and legal advice but in fact receiving legal advice. As I have indicated I consider that Mr Wennerbom was a truthful and accurate witness. [121] Each of Rosario and Domenica made declarations in relation to receiving legal advice regarding the loan and security documents prior to signing them. This was, like the mortgage, a document of a type with which they had previous experience and would have been more than familiar and even if that experience had passed from memory, Mr Wennerbom explained the document to them." Again, these findings were not challenged. The primary judge's findings with respect to the alleged meetings with Famularo 417Although chronologically the alleged meeting between Domenica and Rosario on the one hand and Famularo on the other occurred before the alleged meeting between he and Baira, it is convenient to deal with the latter first. (a) The alleged meeting of 2 December 2005 with Baira 418The loan to Baira from RHG was brokered by Famularo. His evidence was that he had a meeting with her on 2 December 2005. Baira not only denied that meeting but denied that she had ever met Famularo. At [61] his Honour concluded that that denial was false and that he would assess it as "a brazen attempt to avoid the consequences of her own actions". 419At [62] his Honour referred to Famularo's diary for 1 and 2 December 2005. In his affidavit sworn 11 November 2009 at par 18 Famularo deposed that on or around 1 December 2005 at 5pm, Joe and Sandra attended his office to discuss a loan application (presumably to be made by Baira) and in which Famularo informed them that he would need to meet with Baira personally to discuss the loan arrangements with her and that he would require her to complete a loan application. Joe then responded that he would have his mother-in-law contact Famularo to arrange a time for the meeting. There is an entry in his diary for 1 December at 5pm that, on its face, supports Famularo's evidence that he met with Joe and Sandra on that day and at that time. 420Famularo then deposed that on 2 December 2005 he received a telephone call from Baira when arrangements were made to meet at his office at Five Dock. That meeting, he said, took place at 4.30pm on Friday 2 December. Again, there is an entry in Famularo's diary that supports a proposed meeting at 4.30pm on that day. In his affidavit Famularo set out at pars 22 and 24 the conversation he had with Baira at that meeting. That evidence was supported, as his Honour noted at [62], by what Famularo asserted were contemporaneous file notes of the conversation. Those notes covered two and half pages of detailed information. A typewritten version (Famularo's writing is nearly impossible to read) was tendered as an accurate transcription of those notes: Blue 2/942-944. 421As the primary judge relied heavily on these notes I consider it appropriate and convenient to set them out in full: Baira/lanni 2/12/05 Meeting Baira Re SGB Refinance. LVR 1.250.000 900,000 & 850,000 =71% MAR CH But has other SGB Liabs to - Jencon Aust P/L IANNI - Does not know exact Amounts as GIA over Several years -Approx- From 1995. For Purchase of Business activities @ D. Harbour. -Galleria Café & Fiorianni's water Front restaurant. - Fioravanti" - IANNI Partnership - SGB Loans $3m + - wants to separate Business Affairs -Joe & Sandra expanding into childcare & overseas property investments & she is not comfortable. - Husband passed away many years ago & Remmaried "Baira". Previously 'FIORAVANTI". - Does not wish her new busband to be aware of this refinance as he has own children & not business minded. - Joe lanni to Provide Statements Re SGB Loan $1,350 - Max loan on Marrickville to be $650K. in N. OF 'ROSA BAIRA' - Furn $50-$100 k - MV $10-15k A&L's - WBC $5 - D/Lxxx EXP. xx/xx/xx. - xxxxxxx398. - DOB. xx/xx/xx. - (P). xxxx -xxxx. - xx xxxx ROAD MARRICKVILLE NSW. 2204. 20 yrs. - Medicare xxx xxx xxx. - Passport (AUST) Lxxx. EXP. xx/xx/xx. - EMP. BAIRA - FIORAVANTI Catering Jointly with D. Harbour Business. - Worked for many years with Daughter & Son in LAW. Joe. 1990. - Private Parties & Functions - consulting On menu for Fiorianis Business Enjoys work. But wants to cutback. - Income $140 - 150K per A. without much effort Joe & Sandra pay cash - TAX Returns requested But not available due to cash business - I indicated concern that SGB might not release Marrickville due to high LVR & Cross coll with other SGB loans Group had taken. - She Said to leave loans if RAMS could not refinance. LOANS are GIA Joint & Severally & crossed at SGB. - Baira said that she had been advised both Financially & legally with respect to her SGB liabilities. Indeed the GROUP Accountant LOSURDO (Angelo) was aware of the nature of her liabilities.(over the Mar peroperty). LoSurdo had on many occasions provided the Financial Statements For the Group to Support SGB Borrowings secured over various investment properties & the Family houses Including lanni senior - I recommended to Baira to obtain Further legal & Financial advice with regards to her proposed refinance in view of internal transaction. - She Said she would speak with either Deborah Brown of Phillips Fox or Mr Lou Serio of Five Dock - She Said this would add cost to the transaction. - Baira said in her nature to assist children Financially & this was going to be left to them in her will anyway. - Has another Son But has not achieved much in his life and is also employed By the Fioriani Businesses at D. Harbour. - In her interest that business continues smoothly as many families have an interest In the Business including 3 other lanni families. - I indicated concern over possible delays For the Refinance as Xmas was iminent and I did not have all the relevant Docs to lodge with RAMS - She indicated there was no urgency. - Application to be Sent to Baira in due course with all lender requirements - Baira Agreed 422The primary judge noted at [62] that Famularo's affidavit evidence was entirely consistent with what was written in the notes. His Honour then remarked: "If, as Baira now asserts, there was no such meeting, it is implied that Famularo has invented the content of it as recorded in the notes. ..." Although it was submitted on the appeal that the notes were "self serving", it was not contended that Famularo had fabricated them although at trial it was submitted that they were not genuine. It is noteworthy that he was not cross-examined to suggest that he had fabricated the notes after the event or at all. Their detailed content, and particularly some of the more personal details, smacks of authenticity rather than fabrication or invention. That appears to have been his Honour's view and in my opinion it was one which it was open to him to hold. 423At [63] his Honour noted that no credible proposition was advanced as to why Famularo would act dishonestly in brokering either the Baira loan or the Domenica/Rosario loan. At [64] he considered that the existence of the notes and their content were destructive of Baira's stance in denying that the meeting had happened so that "consequently, accumulated to the matters of contradiction to which I have previously referred, lead me to reject her evidence where it is inconsistent with what appears in the documentation." [Emphasis added] The emphasised reference to the matters of contradiction is a reference to the financial history of Baira's association with Joe and Sandra's business and makes the same point as that to which I have referred at [403] and [408] above. 424Famularo then prepared the loan application from the information contained in his notes and which, according to his evidence, Baira signed. At [64] his Honour did not accept her asserted uncertainties and denials that the signatures purporting to be hers on numerous documents were in fact made by her with two exceptions to which I shall make reference below. Famularo then completed the loan application which, so he said, he forwarded to Baira at her home address on or about 9 December 2005. The application purports to be signed by Baira on 16 January 2006 after which it was returned to Famularo's office together with copies of some five documents required by RAMS including Baira's drivers licence, current passport and Medicare card as well as a council rates notice for the Marrickville property and SGB loan statements. Although details of the drivers licence, passport and Medicare card were obtained by Famularo at his meeting with Baira on 2 December 2005 as recorded in his file notes, he had not taken copies of the documents which RAMS then requested. They were provided when the signed loan application was returned. 425Consistently with his file notes Famularo completed the loan application form which included a reference to Baira's income of $145,000 for the previous financial year and $140,000 income for the year prior to that. Further, it stated that Baira had $5,000 with Westpac and that she was self-employed in catering. I mention these matters as they formed, at least in part, the foundation of Baira's challenge to Famularo's credit. (b) The cross-examination of Famularo in relation to the Baira loan application 426At Black 1/397 and 400 Famularo was cross-examined with respect to his meeting on 1 December 2005 with Joe and Sandra relating to the re-financing of their loan facilities with SGB and when they informed Famularo that they were indebted to that bank for approximately $1.25 million. At Black 1/398 he agreed that Joe and Sandra requested him to proceed with the re-financing, that he knew that Baira was guarantor of the SGB loan and that arrangements were discussed for him to meet with Baira as her property was to be part of the re-financing of that loan. 427Famularo was then cross-examined as to his file notes of the 2 December meeting at Black 1/399U-401H. He agreed that on 1 December Joe and Sandra told him about the SGB debt; gave him some bank statements; told him about Fiorianis; informed him that their total loans were in the order of $3 million; and that it was proposed to split the loan from RAMS between Baira, on the one hand, and Sandra and Joe on the other. He agreed that Baira showed him her driver licence, passport and other documents in respect of which he made notes recording her driver licence number and passport details. Some days later he prepared the loan application and on 9 December 2005 sent the entire application by post to Baira. He denied that after he prepared the loan application Joe collected it from him because he, Famularo, wanted Joe to have Baira execute the documentation. It may be noted that Famularo's filecopy of the letter of 9 December 2005 (Blue 1/455) is endorsed "mailed 9/12/05" and initialled. 428In the foregoing context he was shown a "With Compliments" slip (at Blue 3/1348) which was endorsed "Mother-in-law to sign". With respect to this aspect of the matter Famularo was cross-examined at Black 403H-404H in the following exchange: "Q. And the words "Mother-in-Law to sign", can I suggest, refers to you asking either or both of Joe and Sandra to go and have Mrs Baira sign the loan application? A. That's false. Q. That's because you didn't send the loan application to Mrs Baira under the cover of that letter, did you? A. That's false. Q. And by "that letter", you know the letter I mean, it's the one of 9 December 2005? A. Yes, I did. Q. And that's attached to your affidavit. You never sent that letter to Mrs Baira? A. There were two letters, identical, for the two loans. One letter was sent to Joe and Sandra and the other letter was sent to Baira. And this "With compliments" slip was attached to the letter for Baira, because the letters were identical and that's how I distinguished the difference between the two documents. Q. The "With compliments" slip was attached to the letter to Mrs Baira, was it? A. Yes, it was. Q. And was that letter collected by Joe and/or Sandra lanni? A. No, it was not. Q. Well, the letter, if it had that "With compliments" slip, would've been directed to Joe and Sandra, wouldn't it? A. Perhaps not, no. Q. Well, that's a direction to someone other than Mrs Baira to have a mother-in-law sign the document? A. I just indicated there were two virtually identical documents with covering letters and that was attached to-- Q. To one of them? A. To one of them. Q. Is it possible that the letter you say you prepared, or the letters you say that you prepared, one to Joe and Sandra and one to Mrs Baira, were in the one envelope and that this was attached to them and that that envelope was sent to Joe and Sandra? A. No. Q. Because Mrs Baira says she never received your letter; you understand that, don't you? A. Yes. Q. She said she never met you at all at any stage in relation to these transactions? A. That's not true." 429Famularo was then cross-examined in relation to the fact that although he had obtained the tax returns of Sandra and Joe as well as financial details relating to Jencon which he had attached to their loan application to NAB, he did not attach to Baira's loan application to RAMS any of her taxation records; nor did anyone give him any returns for her, propositions with which he agreed. He further agreed that he had no documentation or any proof of the very high income that Domenica and Rosario were said to earn and that the same applied to Baira. 430At Black 1/405-406 he was cross-examined in relation to a query by Mr Mathew Anderson of RAMS to the effect the loan to Baira was unusual as he was apparently troubled by the fact that Baira, who had previously been only a guarantor, was now to be a principal borrower. When asked whether that had concerned him at all until that point of time, he responded "That's how Mrs Baira requested the loan to be drafted". When it was suggested to him that that was not correct, he replied "Yes it is". He further said that Baira indicated that she supported substantial loans at SGB and that she needed to move her property away from that institution. 431He agreed that Sandra and Joe were not guaranteeing Baira's loan and the latter was not guaranteeing Joe and Sandra's loan, this apparently being a reference to the loan from NAB. At Black 1/408, when it was suggested that it was intended that there should be a sharing of liability between Joe and Sandra on the one hand and Baira on the other in respect of the SGB loans, Famularo responded "No, the premise of the loan was to remove the Marrickville [property] to quantify the extent of its exposure because it was up for its full value". In other words, Baira, who had guaranteed Joe and Sandra's loans with SGB to the tune of approximately $1.3 million, albeit limited to the value of her property of $900,000, was exchanging her potential liability for $900,000 for a direct liability to RHG for $650,000. 432It was then put to Famularo at Black 1/409C-D that he had never indicated to Baira that she see a solicitor, a proposition which was inconsistent with Famularo's file note to the effect that he "... recommended to Baira to obtain Further legal & Financial advice with regards to her proposed refinance in view of internal transaction. - She Said she would speak with either Deborah Brown of Phillips Fox or Mr Lou Serio of Five Dock" 433At Black 1/409 Famularo responded to the assertion that he had not indicated to Baira that she should see a solicitor that not only had he done so but that Baira indicated that she did not wish to see any more solicitors because she had seen a string of them. He recalled her saying that she had seen a solicitor a week or two prior. He then said that she had come to his office on an occasion after 2 December when she dropped off her marriage certificate. Again it was asserted that that never occurred which he denied. 434At Black 1/411 Famularo was cross-examined in the following exchange to suggest that the proposed loan application was very much to Baira's disadvantage: Q. So whenever that situation arose, it was even more apparent to you, can I suggest, that Mrs Baira's exposure under this refinance was disadvantageous to her compared to the position of Joe and Sandra? A. No. Mrs Baira had guaranteed substantially more money at St George Bank. This was in her benefit, regardless. Q. It was, was it? A. Regardless of what happened to the loan for Joe and Sandra." 435Finally, the following exchange occurred at Black 1/413: "Q. See, the true position is this, isn't it, that Mrs Baira never came to see you? A. That's false. Q. The information in the file note that records a meeting with her is not of a meeting between you and her? A. That is false. Q. It is, can I suggest, what you were told by Joe in a meeting that you had with him? A. That is false. Q. And that the letter that you say was sent to Mrs Baira was never sent to her at all? A. That again is false. Q. That any letter was a letter that you gave to Joe, in any event? A. That's untrue. Q. And that the loan application documents that you prepared were prepared on the basis of what Joe told you? A. That is false. Q. With Joe giving you particulars of the income of Mrs Baira? A. That is false. Q. And it certainly wasn't Mrs lanni that ever instructed you that she had a business that was a cash only business which returned-- HIS HONOUR: You mean "Mrs Baira". BOLSTER: I am sorry. Q. ---Mrs Baira had a cash only business that was returning $145,000 a year to her? A. That is false. Q. And Mr Lu Surdo never told you that had he given advice to my client, did he? A. That is false." (c) Baira's case at trial 436In dealing with this aspect of the matter I leave to one side the allegations contained in Baira's cross-claims based on her statutory defences under the Contracts Review Act 1980 (NSW) the Australian Securities & Investments Commission Act 2001 (Cth), and the Trade Practices Act 1974 (Cth) as well as her claims of unconscionable conduct on the part of RHG. I also leave to one side the cross-claim of Baira against the second respondent and Famularo based on breaches by the latter of an alleged duty of care to Baira, noting that his Honour observed (at [92]) that that allegation was inconsistent with her case that there had never been any meeting between she and Famularo. As already observed, the case before the primary judge and which is relevant to the appeal relates solely to the issue of Famularo's credit. Apart from the submission that Baira never met Famularo, it was submitted that it was not to Famularo's credit that he permitted the loan application to go forward on two pretexts that were false, or that at the very least he must have doubted, without having taken any steps to verify the position. Those two pretexts related to the statement in the loan application as to Baira's income as well as the statement that she owned a car worth $15,000 and a savings account with Westpac of $5,000. 437In her written submissions at trial Baira submitted that various aspects of the loan application were false. Those aspects are referred to at par 104 of Baira's affidavit sworn 20 October 2010 in which she denied the accuracy of what was recorded in the loan application with respect to her motor vehicle, her accumulated savings and the value of her furniture. She said that she last owned a motor vehicle towards the end of the 1980's; that she did not have savings of $5,000 with Westpac; that she banked with the Commonwealth Bank (although she did not provide evidence of the credit balance of her account with that bank as at the date of her signing of the loan application); and that she anticipated the value of her furniture was much less than $50,000. Apparently she was not cross-examined on these matters. It was then submitted that there was no reason for Baira to lie about the bank with which she dealt or with respect to her ownership of a car. Why would she say, it was submitted, that she was earning $145,000 a year when in fact she was on a pension and that was her only income? Baira then submitted that his Honour would find a number of factual matters in her favour relating to her limited education, her understanding of the English language, her limited work experience as a machinist in a dressmaking factory, that she was never involved in business and had no experience in borrowing money other than to purchase the family home and, finally, had no understanding of commercial matters. 438It was further submitted at trial that Baira never at any stage received any satisfactory understanding of the nature and extent of her liabilities, in the first instance to Advance and later to SGB and, ultimately, to RHG. 439At par 165 of Baira's written submissions at trial it was submitted that RHG was on notice of some twelve matters. It was not submitted that Famularo had knowledge of those matters although he no doubt did. They included, relevantly, the following: * Baira was a 64 year old widow seeking to borrow $650,000 repayable over 30 years; * Famularo was also acting on behalf of Joe and Sandra who were the principal debtors to SGB in the sum of $1, 250,000 and who were also seeking a loan of $650,000 from RHG; * Baira had not submitted any documentation to Famularo to support her ability to repay the proposed loan or which supported the assertion contained in the loan application that her income before tax was $145,000; * No solicitor had been nominated by Baira in the application form; * The $1,250,000 liability of Joe and Sandra to SGB was being split into two loans from RHG, being one to Joe and Sandra for $650,000 and one to Baira for the same amount, in circumstances where both amounts were intended to be used to pay off Joe and Sandra's indebtedness to SGB; * Famularo had apparently written (when employed by SGB) the third party security whereby Baira guaranteed obligations of Joe and Sandra to SGB [Famularo admitted he was working at the bank at the time but denied that he had written this particular loan]; * Joe and Sandra, the principal borrowers under the SGB loan, were neither co-borrowers nor guarantors of the proposed loan by RHG to Baira. In other words, although Joe and Sandra were liable for all of the debt owing to SGB, they had had no exposure to RHG for the loan applied for in the name of Baira; * The practical effect of any loan to Baira would be to transform her from a third party guarantor into a principal borrower in circumstances where the principal borrowers under the SGB loan, Joe and Sandra, would not have any liability as either principal, guarantor, surety or otherwise to RHG in respect of the amount of the notional borrowing by Baira. 440I note that in Baira's original written submissions on the appeal it was submitted that the loan application was fraudulent. This was said to be because its effect both with respect to Rosario and Domenica on the one hand and Baira on the other, was that each, having been third party guarantors in respect of all previous financial transactions with respect to Joe and Sandra, were now for the first time becoming principal borrowers in circumstances where first, they were all pensioners and therefore did not have the ability to repay the relevant loans; secondly, as principal borrowers they lost any right of recourse (which they previously had as guarantors) against Joe and Sandra and the properties (Pyrmont, Milsons Point and Castle Hill) which had secured the SGB facilities; and thirdly, each was exposed to the present proceedings when Joe and Sandra were unable to continue to service the loan repayments to RHG. I shall return to these submissions below. 441Baira's oral submissions to the trial judge had three aspects to them. The first was that his Honour would form the view that Baira was a naïve and trusting mother of Sandra; that essentially the reason for her execution of a string of documents over the course of many years without, in the case of the bulk of those documents, being referred for independent legal advice was to assist her daughter; and that at no stage did she understand that she was imperilled in excess of the amount of the original borrowing. The second related to an attack upon the knowledge of RHG in order to set up Baira's defences to RHG's claim. The third was to attack the credibility of Famularo. 442The attack on Famularo's credit was generally centred upon the submission that his extensive file notes of the meeting of 2 December 2005 were not genuine. Thus it was submitted that: * Famularo failed to consult Mr Lo Surdo, Jencon's accountant, in order to verify that Joe and Sandra were paying cash to Baira in the sum of $140,000 to $150,000 per annum in circumstances where no tax returns were provided [although this may not be surprising if in fact they were receiving a cash income in circumstances where they were also claiming the pension]; * The text of the document did not ring true and that his Honour would form the view, having seen Baira in the witness box, that she was not the sort of person that would express herself in the terms recorded by Famularo in his file notes, particularly as there were significant commercial considerations referred in the notes which did not ring true given the sort of person that Baira purported to be; * Famularo had often met and spoken to Joe who would know details about his mother-in-law that were incorporated into the loan application; * The loan application was prepared with information supplied by Joe and then given to the latter with a "With compliments" slip with the instruction "mother-in-law to sign"; there was no need to do that if the letter of 9 December 2005 forwarding the loan application to Baira was genuine (in her evidence she said she never received it). I would interpolate that given the findings of the primary judge that Baira was not the innocent she purported to be, none of the matters referred to above were capable of supporting a finding that the file notes were not genuine. In particular, the text of the notes did ring true. 443At Black 2/623Q-624J submissions were made with respect to Famularo's veracity based upon a one page document referred to in the submissions as the "sham contract" and which was included by Famularo in the loan application made to RHG on behalf of Domenica and Rosario. On the appeal, considerable reliance was placed upon this document and the manner in which it was dealt with by the primary judge in order to support the submission that his Honour's findings with respect to Famularo's credit were flawed, unsound and unreliable. I shall deal with that matter below in the context of Domenica and Rosario's loan application. It had no direct relevance to Baira's loan application as it was not part of it. 444I have already referred to the primary judge's findings with respect to Baira's credit which it is unnecessary to repeat. In essence, Baira's submissions relating to her own veracity and, in particular, that she had never met Famularo, and which attacked the authenticity of Famularo's file notes of 2 December 2005, were rejected. It will be necessary to refer to parts of the cross-examination of Famularo with respect to a number of these issues to which I shall attend after dealing with the alleged meeting by Famularo with Rosario and Domenica to which I now turn. (d) The alleged meeting of 14 September 2005 with Rosario and Domenica 445I have referred at [409] - [411] above to the limited history of Domenica and Rosario's guarantee of a loan by SGB to Joe and Sandra and to his Honour's findings at [109] - [113] of his reasons with respect thereto. As with the case with Baira, Domenica and Rosario denied that they had ever met with Famularo or even knew who he was. The evidence of Famularo in his affidavit sworn 23 November 2009 was that a meeting took place with Domenica and Rosario in the company of Joe at 9.30am on 14 September 2005. The relevant diary entry of the appointment for that meeting is at Blue 1/492K where there is an entry at 9am which, according to Famularo at Black 1/386X, says "Ianni deal RAMS/ST GEORGE BANK". Famularo conceded (at Black 1/387C) that the diary entry did not actually say that he had a meeting with Rosario and Domenica. That is so in terms though it does indicate an appointment in relation to the "Ianni deal" at 9am on 14 September. 446Famularo's file notes of the meeting are at Blue 4/1351 and an agreed transcription is at Blue 4/1353. The notes reveal a meeting at 9am on "14/9/09" with Rosario, Domenica and Joe. I reproduce the typescript of the notes below: 14/9/09 9AM - IANNI ROSARIO xx xxxx ST - IANNI DOMENICA DRUMMOYNE - Joe IANNI - Son SBG Refinance 1300+/1500 = 87% But needs only $486K ?? live with Son Purchase $500K - Sell current ??/Surplus - FAMILY BUSINESS - Investor only - 4 Sons - Deborah Brown P/Fox - Y 85K each to 95K. Jencon Aust P/L - Refinance - cross coll at SGB with Son Joe Jencon Manager.-.c/Aust P/L ?? Source of Y. 14/9/- Met with LOSURDO who confirmed R& D have SGB loans & have been advised in past Docs to Solicitor For vetting !! Jencon Australia Management Pays loans & Income to R & D IANNI ABN xxx xxx 847. I called Domenica & Rosario @ Home xxxx - xxxx per identification requirements - verified @ this address - OK 447Although in his affidavit evidence Famularo stated that the meeting took place at 9.30am on 14 September, in his diary it is noted as being at 9am and that is consistent with his notes of the meeting. 448It would be fair to say that the notes generally reflect in a shorthand form the conversation which took place between Famularo and Rosario and to a lesser extent Domenica (it was conducted in Italian) deposed to in Famularo's affidavit of 23 November 2009 at pars 20 and 24. Relevantly to the issues in the appeal, the notes state "but needs only $486K" and "Purchase $500K". These entries accord with the evidence of Famularo at par 20 of his affidavit of part of his conversation with Rosario when he attributed to him the following: "I cannot recall the exact amounts guaranteed. Joe and Sandra managed the finances. I simply want to reduce the liability on my home that's why we need to re-finance my share of the liability. I also wanted to borrow funds to assist with the purchase of another property if possible. This will allow me and my wife to live closer to our son Joe." [Emphasis added] 449There is then a reference in the notes to "FAMILY BUSINESS - Investor only". In his evidence at par 24 of his affidavit Famularo deposed that Rosario told him that he and Domenica were silent investors in the Fioriani restaurant business and that it was a "family business". The notes then record "Y 85K each to 95K. Jencon Aust P/L". Again at par 24 Rosario is recorded as stating that "our income ranges from $85,000 - $95,000 per year. I have never had a problem repaying the loans I have had with St George since the 1990's and have always made the payments in a timely manner. You can see for yourself that we have always had the ability of repaying our loans". It was neither directly put to Famularo nor submitted that at this time Famularo was aware that Rosario and Domenica had never been principal debtors but only guarantors. 450Famularo then deposed that he said to Rosario that he would need to obtain bank statements for the purpose of confirming that that was so to which Rosario responded "no problem, I have them with me". At par 25 of his affidavit Famularo stated that he obtained and reviewed the loan statements from SGB although he could no longer locate them on his file. He believed they constituted some 13 pages attached to an affidavit of a Christina Fraser. He was cross-examined in respect of this statement to which I shall refer below. 451At par 32 of his affidavit Famularo stated that at no stage did Domenica and/or Rosario indicate that they were pensioners. 452The loan application was completed by Famularo and signed by Domenica and Rosario on 14 September 2005. Relevantly, it stated that Rosario was "self-employed - investor - 'Fioriani'". It disclosed Rosario's taxable income as $85,000 and that his accountant was Angelo Lo Surdo. It also stated that his solicitor was Deborah Brown of Phillips Fox. 453With respect to Domenica she was stated to be "self-employed INVESTOR" with a taxable income of $90,000. Of some importance was that part of the application that was headed "LOAN PURPOSE". The printed application form had a number of stated purposes of which the first two were "To purchase a property" and the second was "Re-finance the loan(s)". A dollar amount was then required to be inserted. With respect to the first purpose the sum of $500,000 was inserted by Famularo and in relation to the second $490,000. 454There is one aspect of Famularo's file notes that it is convenient to deal with at this point. It will have been noted that Famularo's file notes are dated "14/9/09". In their written submissions filed with leave on 10 May 2012, Rosario and Domenica's solicitors asserted (at par 18) that two issues were raised by them on the appeal. The first was in the following terms: "Whether the primary judge's finding of credit in favour of Mr Famularo and concomitant finding as to the occurrence of a meeting between Rosario and Domenica Ianni and Mr Famularo on 14 September 2005 are unsafe on the basis that the primary judge failed to appreciate the significance of the fact that a key document upon which these findings were made was dated 14 September 2009, not 14 September 2005." The "key document" referred to was Famularo's file notes. 455Paragraphs 29 to 40 of Rosario and Domenica's written submissions were devoted to this issue. It was accepted that the file notes were important to the primary judge's finding as to the occurrence of the 14 September 2005 meeting. The submission was then made that had the primary judge been aware that they were dated 2009 before making his credit finding in favour of Famularo, he would have needed to resolve the inconsistency between the date on the file notes and Famularo's evidence that the meeting took place in 2005. Had he considered the issue he may well have concluded that the notes were created to assist Famularo's defence to Rosario and Domenica's cross-claim against him that he had submitted the loan application to RHG without their authority or consent. 456In paragraph 36 of the written submissions it was conceded that the inconsistency between Famularo's affidavit evidence that the file note was created in 2005 and "the cold fact that it is dated 2009" was never explored in cross-examination at trial. Nor was it referred to in submissions. One possibility is that it was simply overlooked by everyone; the other is that it was accepted at the time that it was a simple error. No case was sought to be made at trial that the file note was created in 2009 or that it was a fabrication. In these circumstances given the serious allegations contained in Domenica and Rosario's written submissions, the issue now raised for the first time requires the leave of the Court for the argument to be advanced. In my opinion that leave should be refused and so much of the written submissions of Domenica and Rosario relating to it should be ignored. I return then to the main narrative. 457There were two aspects of the documentation which related to Domenica and Rosario's loan application which, it was said, were destructive of Famularo's credit. The first, as noted at [443] above, related to the sham contract. The second concerned two pages referred to in the evidence and submissions as the "Snapshot of Account" statements on the letterhead of SGB. It is appropriate to deal with each referring to the nature of the documents, the cross-examination of Famularo thereon, the submission made to the primary judge and to his findings with respect to each. (e) The sham contract issue 458It will be recalled that Sandra and Joe entered into a contract on 19 August 2005 to purchase the property at xx xxxx Avenue, Dural for the sum of $2,223,500. Famularo was aware of this as he completed a loan application to NAB which was signed by Sandra and Joe on 30 August 2005 seeking $3,500,000 comprising $2,400,000 with respect to the purchase of the Dural property, $490,000 to repay SGB and $610,000 as a line of credit, presumably for the businesses. Included with the documents that accompanied the loan application of Domenica and Rosario to RHG was a photocopy of the front page of the contract for purchase of the Dural property which had been altered in handwriting by inserting as the purchasers Rosario Ianni and Domenica Ianni, their address at xx xxxx Street, Drummoyne and changing the price to $500,000 in figures and words. The deposit was also changed to $50,000 and the balance payable on completion to $450,000. Also at the bottom of the single-page document were written the words "NOT SECURITY". 459Famularo was extensively cross-examined with respect to this document. He agreed at Black 1/369J that it was part of a fax of the loan application that he had sent to RHG. He further conceded at Black 1/370M-N that although he was not certain, he expected that he would have sent a copy of the front page of the authentic contract for the purchase of the Dural property to NAB with the loan application for $3,500,000. The cross-examination to which I have referred at Black 1/369G-370N was the extent of the cross-examination of Famularo by counsel for Domenica and Rosario on this issue. Apart from establishing that what had been referred to as the sham contract document had been forwarded to RHG as part of the loan application and that he probably would have sent the authentic front page of the contract for the purchase of Dural property to NAB, nothing further was put to Famularo on behalf of Domenica and Rosario with respect to the issue. 460However, counsel for Baira took up the matter at Black 1/391P-W where Famularo again agreed that he had seen the authentic purchase contract for the Dural property, that it was highly likely that Joe and Sandra gave him a copy as he recalled seeing it and that it had formed the basis of the loan application to NAB. At Black 1/392M-N he agreed that he saw the authentic contract on or around the application date for the NAB loan. He was then shown the front page of the authentic contract and the sham contract front page whereupon the following exchange occurred (at Black 394F-395J): "Q. If you would have a look at that copy of exhibit C1 (Mr Bolster returned to Bar table). Exhibit C1, for the record, is Joe and Sandra's purchase and the other document, which is already in evidence, at page 380, is something else, isn't it? A. Yes, it is. Q. That's not a purchase at all, is it? A. I don't know. Q. It is a sham document, isn't it, sir? A. I don't know. Q. See, you knew, sir, because you had arranged for the National Australia Bank to fund Joe and Sandra Ianni's purchase of x xxxxxxxxx; you knew that the document at page 380 was a sham? A. I did not." ... "Q. You had both contracts at the time you made the application in the Ianni matter, correct, sir? A. Yes. Q. And you would have the court find that you were careful in the documents that you provided to RAMS in this case? A. Yes. Q. And that you were careful in respect of ensuring that a document that went forward in support of an application for finance was true and correct? A. Sir, how can I confirm that? Q. Sir, you proceeded with an application to the NAB for the purchase of x xxxxxxxxx xxxxxx, correct? A. Yes. Q. And at the same time proceeded with an application for finance for exactly the same property on behalf of Mr and Mrs Ianni. Correct? A. I did not check the details, the specific details, on that contract. Q. So your explanation is that you did not check the two contracts? A. I didn't compare them, that's correct. Q. So your explanation is that you did not check the two contracts? A. I didn't compare them, that's correct. Q. So you were not careful, can I suggest, in what you put forward to RAMS in support of the supposed loan for Mr and Mrs Ianni? A. That's incorrect. I don't compare different customers files between them. Q. Well, sir, this was the Ianni's refinance, wasn't it? A. That document was included in the Ianni refinance, yes." 461At Black 1/434J-Q Famularo was cross-examined by counsel for Sandra. He was shown the sham contract and then the following exchange occurred: "Q. And at page 380 you will see a contract for sale for x xxxxxxxxxx xxxxxx Dural? A. Yes. Q. That was not provided to you by Sandra Ianni, was it? A. No. Q. Who provided it to you? A. That was provided at the meeting by Mr Rosario Ianni. Q. You quite sure it was Mr Rosario Ianni? A. As I can recall it." 462The foregoing was the full extent of Famularo's cross-examination with respect to the sham contract document. If his evidence was accepted then it established that first, the document was provided to him at the meeting on 14 September 2005 by Rosario; secondly, he had included it in the loan application made to RHG; and thirdly, he did not check the details in the document and did not compare it with the authentic contract which was in a different file with respect to a different customer or client. Significantly, he was not asked whether any part of the document was in his hand and, in fact, there was no evidence as to who altered the document including who wrote on it the words "NOT SECURITY". It was therefore somewhat mysterious. 463In her written submissions to the primary judge, Baira submitted that the original authentic copy of the front page of the contract for the purchase of the Dural property was the subject of editing by persons presently unknown. It involved deleting the names of Joe and Sandra as purchasers and inserting in their place the names of Joe's parents and changing the purchase price. It was inconceivable, so it was submitted, that Famularo did not know that the document was a sham. A similar written submission was made on behalf of Domenica and Rosario to the effect that Famularo must have known that the document was incorrect. 464In oral submissions, it was submitted on behalf of Domenica and Rosario (at Black 2/623-624) that it "beggared belief" that it would not have occurred to Famularo that the sham contract document related to the same property as was the subject of the NAB loan application and which could only have constituted security in relation to that loan. It was contended that it would be extraordinarily unusual that Rosario and Domenica would be borrowing $650,000 to buy a property at Dural yet RHG would not be taking a mortgage over it. Taken together with the Snapshot of Account issue, it was submitted that there must be a very serious question as to Famularo's credit as his explanations did not deal with the issue. Further if he had any doubt about it, and at the very least he ought to have had such a doubt, he should have made enquiries. The fact that he made no such enquiries was "just unbelievable" and was the "touchstone of [Domenica and Rosario's] credit submission in relation to" Famularo. It will thus be appreciated that at trial, as well as on the appeal as will appear, the major attack on the primary judge's finding that Famularo's evidence should be accepted was based upon the sham contract document and the Snapshot of Account statements. 465The primary judge dealt with the sham contract issue at [118] of his reasons where he said: "... A document has emerged, from whence is not revealed, purporting to be the first page of a contract for the purchase of Dural by Rosario and Domenica for $500,000. The copy has written on it, for whatever it is meant to convey, "not security". A fax imprint suggests that it is p 18 of a 20 page dispatch from "unknown". I am unable to make anything of this mysterious document other than to conclude that, whatever its provenance, it did not operate so as to effect one way or another the transaction into which Rosario and Domenica entered with RHG Mortgage." 466Although not referred to by the primary judge there is a possible link between the sham contract document, the loan application and Famularo's file notes of the meeting of 14 September. As noted at [453], one of the stated purposes of Domenica and Rosario's loan application was the purchase of a property for $500,000. There is also a reference in the file notes to "Purchase $500K". Further, the evidence of Famularo at par 20 of his affidavit of 23 November 2009 was that Rosario had informed him that he wanted to borrow funds to assist with the purchase of another property which would allow him and his wife to live closer to Joe. Of course, the foregoing does not explain the fact that the sham contract document referred to the Dural property being purchased by Sandra and Joe although it explains why the document was marked "NOT SECURITY". The property to which the sham contract document referred was not being offered as security to RHG for the loan for which Domenica and Rosario were seeking approval. In the foregoing circumstances, it is perhaps not surprising that the primary judge referred to the document as "mysterious" as its purpose was not self-evident. Relevantly and significantly, Famularo was not cross-examined to ascertain the purpose of either his receipt of the document from Rosario or its inclusion in the documents sent to RHG. (f) The Snapshot of Account issue 467In evidence were a series of documents on the letterhead of SGB and bearing its logo and which were headed "Snapshot of Account". These statements related to Account No xxxxxx631 which Famularo accepted was an account of Joe and Sandra with SGB. The statements contained a box which, Famularo also accepted, identified the holder of the account. In one set of documents the box correctly identified Joe and Sandra including their address at Pyrmont. The two pages of the Snapshot of Account statements for the period 21 October 04 to 22 August 05 (Blue 3/1254-1255) provided particulars of loan repayments, interest charges and account keeping fees. With respect to the particulars of loan repayments, the statements identified "JOE & SANDRA IANNI" and then the words "LOAN repayme". The word "repayment" was not completed. As at 22 August 2005 the debit balance of the account was $486,035.16. 468There was also in evidence two pages of the Snapshot of Account statements for the same period (at Blue 4/1362-1363) with two changes. The first was that in the box at the top of each statement there was printed the names of Rosario and Domenica and their address at the Drummoyne property. Under the heading "Particulars" the words "loan repayme" had been moved to adjoin the relevant date of the loan repayments and the reference to "JOE AND SANDRA IANNI" (as the payers) had been deleted. 469In the written submissions on behalf of Baira at trial, it was submitted (at par 79) that Joe was deploying his parents and mother-in-law's properties like chess pieces and using the equity in their homes to raise money from RHG that would be used to pay out SGB, and thus enable the release of Pyrmont which was required by NAB as security, together with the Dural property, to fund the acquisition of the latter. Domenica and Rosario could not, so it was contended, be guarantors of that loan if they were to purchase the Dural property in their name - they had to be borrowers. Hence the re-finance had to be predicated on the three parents being principal borrowers under an existing loan in their names from SGB - a matter that was at odds with the truth. 470This was achieved, so it was submitted, by the allegedly false Snapshot of Account statements showing Domenica and Rosario as the account holders of Account No xxxxxx631. It was contended that no such document was produced by SGB in any of the various subpoenas addressed to it in the proceedings. However, none of those subpoenas were in evidence and RHG denied that the relevant statements were the subject of a subpoena. The only place where the statements were found was in the loan application made to RHG on behalf of Domenica and Rosario. I would observe that no one was called from SGB to suggest that the impugned Snapshot of Account statements were shams. 471It was then submitted that as Famularo had stated in his affidavit that at the time he had in his possession the relevant bank statements showing Joe and Sandra as the holders of the subject account, he had failed to give any meaningful or satisfactory explanation of how he came to put forward, in the name of Rosario and Domenica, a document which showed them to be borrowers rather than guarantors of the same account. It was contended that he must have known that the documents were not genuine and that this reflected adversely on his credit. A similar submission was made on behalf of Domenica and Rosario (at Black 2/784K-O). 472Famularo was cross-examined in respect of these documents at Black 1/364G-369E as well as at 379Q-R and 378B. At Black 1/364L-P, in cross-examination on behalf of Domenica and Rosario, he stated that he received the documents from Rosario at the meeting on 14 September. At 1/366T-U it was put to him that as at 14 September 2005 he knew that the relevant account was in the name of Joe and Sandra to which he responded "No I did not." However on the following page he stated that he was advised that the loan of $486,000 was cross-collateralised with the Drummoyne property and he accepted that he was advised that the relevant account was in the name of Joe and Sandra. He stated that he had received two sets of statements, one from Joe and the other from Rosario at the meeting of 14 September. At Black 1/369C-E Famularo accepted that he had sent one set of statements which identified the relevant account as being in the name of Joe and Sandra to NAB and a different one to RHG. 473At Black 1/374M-375R the following exchange then occurred: "Q. In relation to this application you knew that it was for, or you hadn't indicated on the application, that it was for refinance. Correct? A. For the existing St George Bank loan, yes. Q. Well, it was-- A. Refinance. Q. -- for the purchase of a property? A. That's right. Q. That's what you just identified. Correct? A. Yes. Q. In your experience a refinance is the changing of lenders by an account holder of a debt that they owe. Correct? A. Correct. Q. And in respect of this application, the refinance being sought was in respect of account number xxxxxxxxx. Correct? A. That's my understanding, yes. Q. And account number xxxxxxxxx was in the name of Joe and Sandra lanni. Correct? A. Correct. Q. Now if then somebody is, in effect - that being the case, the effect of this application was that Rosario and Domenica were borrowing money, which included $490,000, to pay out the loan account of Joe and Sandra lanni. Correct? A. For me to answer that precisely I would have to say it was communicated to me that the loan was secured by two properties. So both properties, both Pyrmont and Drummoyne secured that loan. That liability needed to be shown on this document as well as the NAB document. Q. Who told you that the loan was secured by both properties? A. Rosario lanni and Joe lanni on the 14th. Q. Now in this application, however, you don't identify that the loan account to be paid out was secured also by Pyrmont, do you? A. Mr lanni doesn't own Pyrmont. Q. No, but wasn't your evidence that you understood the loan account was cross-collateralised and secured by both Drummoyne and Pyrmont and that that needed to be put on the NAB application and the RAMS application? A. The liability, not the asset. Q. The effect of this application though to RAMS was not just to discharge Drummoyne but was also to assist - to effect the discharge of Pyrmont, correct? A. Of the RAMS application? Q. Yes? A. Well, that was a matter for their solicitors to determine what the effect was. The financing, Rosario lanni was jointly and severally liable for the entirety of that loan. The full value of that loan needed to be disclosed here. Q. That was Joe and Sandra's loan though. Correct? A. But Mr Rosario Ianni was liable for that loan. Q. It was Joe and Sandra's loan. Correct? A. The loan statements that were produced to me didn't indicate that. I was provided with two sets of loan statements, so I don't know." 474In the above exchange Famularo agreed that Domenica and Rosario's loan application to RAMS was in part for the re-financing of the existing SGB loan of some $486,000. He explained what he meant by re-financing in the following exchange at Black 1/377J-P: "Q. Now, refinance, if the loan is for the borrowing of money to pay out a debt or a loan account of a third party, it would more properly fit within the classification of equity release rather than refinance, wouldn't it? A. Not necessarily, no. Q. Refinance more particularly relates to a person refinancing their own debt, doesn't it? A. No. The common meaning in the broker terms of the word "refinance" is to move an existing debt from one lender to another lender. There's not necessarily any significance attached as to whose liability that may be, it's the borrowing person's liability - in this case, Mr and Mrs lanni's liability. They were liable to St George Bank, so it fitted within the definition of a "refinance". 475As I understand it, the point sought to be made by Famularo in the above exchange was that it was necessary to provide RHG with the impugned Snapshot of Account statements as Domenica and Rosario, as guarantors, were liable for the loan to which the documents referred in the event that there was a default by the debtors, Joe and Sandra. The cross-examiner returned to the topic at Black 1/377W-378P in the following exchange: "Q. As at 30 August when you completed the loan application to the NAB, you knew that that loan account was in the name of Joe and Sandra Ianni? A. I can only repeat what was said so me at the time, and this liability to St George Bank was a combination of their loan. I was not in a position to determine whose liability that was and for what purposes prior to me becoming involved in this matter. Q. Whose name did you think the account was in? Or did you think it was in both? A. I was provided with two sets of loan statements for the loan-- Q. Did you think -- A. --now-- Q. Sorry, I didn't mean to interrupt you. A. Now, if I can just explain with my history of working 10-odd years with St George Bank, the borrower receives a loan statement and the guarantor receives a loan statement. Q. I suggest that they don't - I withdraw that. COLES: Has the witness finished his answer? WITNESS: Now, having said that, I can only rely on what a borrower tells me is their loan or not their loan. WOODS Q. If a guarantor was to get a statement, it would identify - it would be - I withdraw that. Statements themselves, however, identify the account holder; correct? A. Yes. Q. Okay. Did you think to inform RAMS that there was some ambiguity or difficulty as to who held this account? A. It was not a matter for RAMS." [Emphasis added] 476What is of significance in the above exchange was Famularo's evidence that his experience of working for ten years with SGB was that both the borrower and the guarantor received a loan statement. This evidence was not challenged. Furthermore, there was no evidence to suggest that the Snapshot of Account statements had been "doctored" either by Famularo, Joe or Sandra. It was clearly open to the primary judge to infer that the documents originated with SGB. 477Accordingly the primary judge dealt with the issue in the following terms: "[126] Some focus was directed to the existence of a document from St George Bank in the form of a typical statement labelled "Snapshot of Account", in the name of Rosario and Domenica. By reference to the account number it clearly was a statement in relation to an account of Joe and Sandra. It was not suggested that the statement was not a genuine product of the Bank. The most likely explanation is that, bearing in mind the Bank records would identify Rosario and Domenica as guarantors, some officer of the Bank sent them the "Snapshot" for their information. If it later became attached to some other document I do not regard that as sinister." (g) The challenge with respect to the appellants' income 478At Black 1/370O-P Famularo agreed that he had had many conversations with Joe prior to 14 September 2005. As at that date he had seen income tax returns for Jencon. At Black 1/371O-S as well as at Black 1/382N-T, in response to his agreement that in the case of Rosario and Domenica he had stated that they were self-employed and that Rosario was earning $85,000 per year and Domenica $90,000 per year, he was asked whether he had sought to obtain or to clarify those amounts in any way by obtaining tax returns from either of them. His response was that he had asked for the tax returns but was told that they were not available. It was then pointed out to him that he had not stated in his affidavit evidence that he had requested Domenica and Rosario to provide their tax returns. He accepted (at Black 1/372C-D) that that was so but denied that he was now making it up. At Black 1/370L-M it was put to him that he did not ask for the tax returns, a proposition which he denied. With respect to Domenica, the following exchange occurred at Black 1/372S-U: "Q. And when you saw Mrs Ianni, are you saying to this court that you were comfortable to accept that she was earning $90,000 per year as a self-employed investor? A. I might say six-odd years ago she was a different person than what she is today, and she didn't make that statement, but her husband said this was their income and signed that self-certification document." 479Famularo was also challenged with respect to the statement in the loan application which identified that Rosario and Domenica had an interest in the goodwill of the business worth $1 million. At Black 1/379I he said that that is what they had informed him. At Black 1/379S he said that he understood that they were directors of Jencon and that it was its business in which they had a $1 million share of the goodwill. Even if they were not directors, he said, they could still be shareholders in the company and have an interest in that way. When asked (at 1/380C-G) whether he enquired as to whether they were shareholders he responded that he did not. He denied that he knew they did not have any goodwill in the business and further denied that he knew they were not receiving an income of $85,000 and $90,000 respectively from the business. 480At Black 1/381Y-382F it was put to Famularo that he had no regard to whether or not the information he obtained from Rosario was true or not, to which he responded "That's false". There then followed the following question and answer: "Q. And you made no enquiries as to whether in fact it was the case that Rosario and Domenica were earning the income stated on the application? A. I'm not authorised to make any enquiries in relation to incomes. That's the reason why their accountant's details appear on that application form for RAMS to make whatever enquiries they need to make." This answer was correct as Mr Lo Surdo was identified as Rosario's accountant. 481At Black 1/383N-U Famularo accepted that first, Joe and Sandra had a very complicated financial structure involving companies and other debts; secondly, Joe appeared to be controlling everything; thirdly, he had no real knowledge of Domenica and Rosario's involvement in the family business and fourthly, he knew or at least appreciated that any capacity for Rosario and Domenica to repay the loan that they were seeking from RHG was dependent upon Joe's ability to run his businesses. There was nothing untoward with this last answer as it was apparent that Rosario and Domenica's income as asserted in the loan application was sourced from the proceeds of the business. 482Finally, at Black 1/380I-O-381C-R, a series of propositions were put to Famularo which he denied in the following exchange: "Q. I suggest to you that you at no time spoke to either Rosario or Domenica Ianni-- A. That's false. Q. --prior to the lodgement of the application or at any time prior to the settlement of the loan to RAMS? A. That's false. Q. The only person you ever spoke to was Joe Ianni? A. That's false. Q. I suggest to you that you had intimate knowledge, didn't you, from your experience of what would be required to place on this loan application to get this loan through, didn't you? A. That's false." ... "Q. And you had a wealth of experience in knowing what it was that a lending provider would take into account? A. I would like to think so. Q. And I suggest that you prepared this loan application without any instructions from Rosario or Domenica with information to ensure that it got approved regardless of whether the information on it was true or correct? A. That is false. Q. I suggest to you that the information that you have placed on this loan application that you knew to be false, firstly, are the following. One, that it was a refinance of a loan account of Rosario and Domenica Ianni? I suggest to you that you put that on there knowing that to be false? A. It was a fact, sir. Q. I suggest to you that you completed this application knowing that they were not purchasing any property at Dural? A. That's false. Q. I suggest to you that you completed this application knowing that the account name which was to be paid out by the RAMS finance was in fact in the name of Joe and Sandra Ianni? A. That's false. Q. I suggest to you you filled out this application knowing that the income stated on it was false? A. That's also false. Q. And you knew or had no regard whatsoever to whether it was true that they were self-employed? A. That's false. Q. What I suggest is that you completed this loan application and you have given it to Joe and Joe has brought it back signed? A. That's false." 483It is to be noted that in the above exchange it was not suggested that Famularo was aware that the appellants were pensioners. Yet reliance was placed on a water rates notice which was in the possession of Famularo although not included as one of the documents in the loan application to RHG. The notice related to the Drummoyne property of Rosario and Domenica. It provided for a pensioner rebate. Famularo was cross-examined with respect to the notice at Black 1/396G-R. On his attention being drawn to the document and in seeking an explanation as to why it was not included in the documents which accompanied the loan application to RHG, the following exchange occurred: "Q. Did you did you give that document careful consideration after the Iannis came to see you? A. The water rates? Q. Yes? A. Not particularly, no. Q. Did you observe the pensioner rebate associated with their account? A. No, I did not. Q. Did you provide that to RAMS? A. I can't be for certain, no. Q. You sent the council rates notice to RAMS though, didn't you? A. That I would have sent, yes." 484It was submitted to the primary judge on behalf of Rosario and Domenica that Famularo should have been aware from that document that they were pensioners. It was further submitted that given his knowledge of their age, the lack of any tax returns and the fact that the water rate notice stated that they received a pensioner rebate, Famularo must have known that the statements made in the loan application as to the income and self-employment of Domenica and Rosario were not correct. (h) The findings of the primary judge on the income issue 485The primary judge dealt with the issue concerning the alleged income of the appellants at [69] and [108] of his reasons in the following terms: "[69] In 2003 and 2004 payment of director's fees of $156,000 and $147,000 were debited to expenses. Joe and Sandra were the sole directors. In 2004 and 2005, payment of director's fees was eliminated from the expenses list but, in lieu, there were debits of $600,000 in each year for management fees. During those years expenses for payment of wages were noted at $470,406 and $480,536. Reference was made to the sum of $600,000 as "wages" but fairly obviously to the extent that that description is given, it refers to payments in substitution for director's fees. I do not infer anything improper about the accounting method, however it can be noted that there are no parallel personal income tax returns of Joe and Sandra absorbing $600,000. The overall picture lends credence to Famularo's evidence that he had been told that cash payments were being made although how or where any cash was ultimately channelled or funnelled was not revealed to him nor was it detectable from the evidence." "[108] It is significant to note that in a minute of that meeting on 14 September 2005, which had been diarised for 9.30 on that day, Famularo recorded "Family business". He was talking to Rosario and Domenica not to Joe and Sandra. I have already referred to the accounts of Jencon Management where an amount of $600,000 appears to have been distributed as "wages" other than wages to kitchen, waitstaff and the like who would have been comprehended within the expense item of Jencon Australia. As I have observed, no documentation was presented which shows any amount approaching $600,000 being paid directly or indirectly to Joe and Sandra only." 486His Honour made further findings on this issue in the following paragraphs of his reasons: "[131] Both Rosario and Domenica on the one hand and Baira also on the other had been content for years to offer their properties to secure facilities for Joe and Sandra's business enterprises. They did so in circumstances where such evidence as was made available showed a successful business with very high cash turn over and trading profits. All of Rosario, Domenica and Baira denied owning an interest in the restaurants, whether formal or informal, and no contesting party could have been in the position to challenge such propositions. There were however representations to Famularo of substantial income by all of them which, if true, must have been derived somehow or other from the cash flows emanating from the restaurant. [132] In both cases the defendants have chosen to adopt what was correctly described as a minimalist stance. In that circumstance what remains available for examination is the documentation which on its face is regular and untainted. Complaint was made of the absence of benefit but I am satisfied that, although I do not find the defendants had an identified proprietorial interest, all of the transactions were part of consensual family arrangements and the reality was that documents were signed for the benefit of general family prosperity. ... [145] ... The essential truth is that Baira, Rosario and Domenica were uninhibitedly willing to offer their properties to secure the continuation of what appeared to be an outstandingly successful business. ... ... [147] Baira, Rosario and Domenica were not induced to offer their properties to come to the aid of a perceptibly risky enterprise nor to one, examination of which, would have revealed the seeds of failure. The mortgagors were content to use their properties in circumstances where all the appearances of prosperity existed and this appearance was affirmed by the apparent ability for commitments to be met. ..." 487On the appeal there was no direct challenge to the findings contained in these paragraphs. Although it was submitted that the income information contained in the loan applications was provided by Joe and was intended to represent to RHG the ability of the borrowers to repay the loans which were then being sought, it was never put directly to Famularo that the income information was for the purpose of falsely representing to RHG that the appellants had the necessary ability to repay the loan although it was put indirectly in the last question and answer of the exchange at Black 1/380 which I have recorded at [482] above and in the second question and answer in the exchange at Black 1/381 that I have also recorded above. In any event, even if this was the purpose of inserting that information in the loan applications, it was a matter for the primary judge whether he accepted, as Famularo had sworn, that it was provided to him by Baira and Rosario at his meeting with each and not by Joe in their absence. (i) The primary judge's findings with respect to Rosario's credit 488At [105] his Honour said that he was conscious of the recognised risks in founding his judgment on an assessment of demeanour albeit that that awareness did not require an artificial blindness to be adopted. Demeanour, he said, was but one of the reasons for his reservations about the testimony of Rosario. He continued: "... The submission that he was hardly a shrinking violet but a strong, wily and capable man was entirely compatible with my own assessment and I would accept that submission. His capacity to protect himself (and his wife) was demonstrated by his refusal when Joe and Sandra on the very first time sought assistance in the purchase of Galleria. This would have involved Joe and Sandra leaving their respective employments and Rosario declined to make available Drummoyne as a security for a bank loan. As earlier described, Joe and Sandra then went to Baira who was willing to accede to their request." 489His Honour then said: "[106] A question arises then, what caused the change in the attitude and willingness of Rosario and Domenica? The matter was not explored in those terms but, as already recounted, Galleria was said to have made a lot of money and Fiorianis was literally turning over millions of dollars and making huge trading profits. It would be quite unreal not to infer that in a broad way Rosario and Domenica were aware that Joe and Sandra's business was flourishing. That provides a likely answer to the question. [107] In somewhat parallel to the denial by Baira, a matter of particular import in relation to the evidence of Rosario is his denial that he ever met Famularo. That he and Baira make similar denials does not add strength to the contention of either. I have already dealt with the sheer incredibility of Baira's assertion. Again, there are handwritten notes by Famularo of his meeting with Rosario and Domenica which fortify his evidence that he did have the meeting and his testimony was coordinate with what he said he was told. I reject the claims that there had been no meeting with Famularo. A lie of this magnitude about a critical fact not only diminishes credibility generally but extinguishes it where it is contradicted by evidence, particularly that of Famularo." 490It was submitted on the appeal that the penultimate sentence of [106] was not supported by any evidence and was pure speculation. Given that Famularo's file notes with respect to his meeting with Rosario and Domenica refers to the café and the restaurant as a "FAMILY BUSINESS", it would be odd, to say the least, that neither Baira, Domenica nor Rosario were aware at the time that the businesses were doing well. In my view there was sufficient evidence from which his Honour could draw the inference he did. 491The second sentence of [107] of his Honour's reasons was also challenged on the appeal, it being submitted that the fact that Rosario and Baira made similar denials in fact added strength to the contention of each. I would have thought the matter was neutral. If anything, the fact that they had the same story and both denied ever meeting with Famularo would not assist their cause if Famularo's notes of his meeting with Baira on 2 December 2005 were accepted as genuine. For it to be otherwise, and as will appear, it would be necessary for his Honour to find that both file notes were false insofar as they purported to be notes of a meeting with Baira on the one hand and Domenica and Rosario on the other. One thing is for certain, and that is that his Honour's acceptance of the file notes as accurately recording what on their face constituted a meeting between Famularo and Baira on the one hand and Famularo and Domenica and Rosario on the other was not glaringly improbable. 492Paragraphs [115] and [116] of his Honour's reasons logically follow [106] and [107]. His Honour there said: "[115] Rosario's explanation for signing further documents was that Joe had told him that they were going to another bank to get a cheaper interest. He said he was willing to sign documents in the belief that he was liable to be called upon, at most, in respect of a guarantee of $100,000. He did not claim that he was misled by Joe (or Sandra or anyone else) into this belief but it became a mantra which he incanted during his testimony, frequently without reference to the question which was being asked at the time. I am satisfied that he has invented this belief in an attempt to deflect from himself the consequences of his knowing and voluntary actions. [116] In the absence of relevant contradiction it is easier to accept Famularo's evidence although he was, in any event, an impressive witness whose testimony as to events and circumstances was persuasively compatible with the pattern of recorded activity and documentation." The reference to the documentation would, significantly, include the file notes which his Honour implicitly accepted as genuine. 493At [125] his Honour returned to Domenica and Rosario's primary case of never meeting Famularo. He said: "... It was said in submission that Rosario and Domenica do not deny that their signatures are on the applications but they cannot give any evidence as to when or how their signatures were placed on the form. This language simply attempts obfuscation. It acknowledges that Famulao sent genuine applications signed by Rosario and Domenica and, as I have found, they did meet him and supply to him the necessary information. The unstated alternative that Famularo invented the content would attribute to him an ability to derive information without having a source. This would be truly remarkable. I do not accept the proposition that he was actually receiving information from Joe and pretending that it came from Rosario and Domenica." The relevant legal principles 494It was common ground that the relevant legal principles to be applied in the present case were those adumbrated by Gleeson CJ, Gummow and Kirby JJ in Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at [26] to [29]. In particular it was accepted that it was necessary for the appellants to establish that there were "incontrovertible facts" or "uncontested testimony" which demonstrated that the primary judge's conclusion with respect to the issue of Famularo's credit was erroneous or, in the absence thereof, that his Honour's finding that Famularo was a reliable witness was "glaringly improbable" or "contrary to compelling inferences". 495It must be remembered that Fox v Percy was not a case like the present where the issue was essentially one of credit, that is, was there a meeting between Famularo and Baira on the one hand and he and Domenica and Rosario on the other. True his Honour's finding that there were such meetings was one of fact. It was not submitted that such a finding was either "glaringly improbable" or "contrary to compelling inferences". Rather it was sought to attack the finding that Famularo was a witness of truth. In that context the so-called tests referred to by the plurality in Fox v Percy at [29] lose their relevance. Rather, the question is whether, in his credit findings, the primary judge "has failed to use or has palpably misused his advantage" in hearing the relevant witnesses. Thus, in Devries v Australian National Railways Commission [1993] HCA 78; (1993) 177 CLR 472 at 479 Brennan, Gaudron and McHugh JJ said: "More than once in recent years, this court has pointed out that a finding of fact by a trial judge, based on the credibility of a witness, is not to be set aside because an appellate court thinks that the probabilities of the case are against - even strongly against - that finding of fact. If the trial judge's finding depends to any substantial degree on the credibility of the witness, the finding must stand unless it can be shown that the trial judge 'has failed to use or has palpably misused his [or her] advantage' or has acted on evidence which was 'inconsistent with facts incontrovertibly established by the evidence' or which was 'glaringly improbable'." 496The plurality in Fox v Percy at [25] reasserted the proposition confirmed in Warren v Coombes (1979) 142 CLR 531 at 551 that an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge. This was reiterated by McHugh J in Fox v Percy at [88] where he observed that Warren v Coombes was concerned with the approach of an appellate court in drawing inferences from facts admitted or found by the trial judge. On the other hand Abalos v Australian Postal Commission [1990] HCA 97; (1990) 171 CLR 167 and Devries were concerned with the approach of an appellate court where the trial judge had made a finding as a result of accepting the oral evidence of a witness that other evidence contradicted. The distinction between the two classes of case was, his Honour said, fundamental and "almost always decisive". Such a distinction, he added, was recognised by the High Court in Brunskill v Sovereign Marine and General Insurance Co Limited [1985] HCA 61; (1985) 59 ALJR 842 at 844; 62 ALR 53 at 56 where the Court said: "The authorities have made clear the distinction which exists between an appeal on a question of fact which depends upon a view taken of conflicting testimony, and an appeal which depends on inferences from uncontroverted facts." 497McHugh J continued: "[88] ... In support of the first class of case, the Court cited much of the passage in Hontestroom that I have already set out. Significantly, the Court also cited - apparently in support of the first class of case - a passage in Warren that cites the same passage in Hontestroom. [89] The issues in Abalos and Devries were quite different from that in Warren. That was why Warren was not cited in the judgments in Abalos or Devries - it was irrelevant to the issues that had to be determined in those cases." 498Nevertheless at [90] McHugh J noted that it would be a mistake to think that anything said Abalos and Devries necessarily prevents an appellate court from reversing a trial judge's finding when it is based, expressly or inferentially, on demeanour. But there must be something that points decisively and not merely persuasively to error on the part of the trial judge in acting on his or her impressions of the witness or witnesses. In the present case the primary judge did not rely, except peripherally, on demeanour in accepting the evidence of Famularo over that of the appellants with respect to whether a meeting between them took place. 499There are a number of decisions in this Court which deal with Fox v Percy. I shall mention but a few of the more recent. In Shimokawa v Lewis [2009] NSWCA 266 Giles JA, with the agreement of Beazley and Ipp JJA, said: "[181] The constraints brought by the trial judge's advantages to the appellate court's review of fact-finding do not exclude recognition of error in the process of fact-finding in other respects. In Abalos v Australian Postal Commission (1990) 171 CLR 167, one of the trilogy of cases said in Fox v Percy at [26] to remind of the limits under which appellate judges typically operate when compared with trial judges, McHugh J (with whom Mason CJ and Deane, Dawson and Gaudron JJ agreed) took from the speech of Lord Sumner in SS Hontestroom v SS Sagaporack (1927) AC 37 at 47 that appellate judges are in a position of disadvantage against the trial judge 'unless it can be shown that [the trial judge] has failed to use or has palpably misused his advantage'. These words, which have achieved mantra-like status, encompass where the trial judge has made credibility based findings (even expressly by regard to demeanour) for reasons which in whole or in part do not truly go to the reliability or veracity of the relevant evidence, or without taking account of an important consideration or considerations material to evaluation of the credibility or veracity." 500At [183] his Honour noted the trial judge had given reasons for his adverse views as to the reliability or veracity of the relevant witnesses. On examination, his Honour did not consider that those reasons warranted the reliance which appeared to have been placed upon them in rejecting the evidence of the appellant's witnesses. He said: "Some reasons were given which could properly have caused [the trial judge] to take an unfavourable view of the evidence of the appellant's witnesses, although variably between them. But his conclusions, often in strong terms requiring sound support, were founded on the collections of reasons, without indication that some only of the reasons sufficed. They are undermined when, in my view, to a material extent the reasons do not support them." 501At [184] his Honour observed that of particular importance was the fact that the trial judge did not bring into his consideration two critical matters despite their prominence in the submissions of the appellant at trial. In this he failed to "stand back to assess the significance of the evidence of" the relevant witnesses. Accordingly the process of fact finding was flawed. An application to the High Court for special leave was denied on the basis that no disputed question of principle would fall for consideration if such leave were granted. 502In Davis v Veigel [2011] NSWCA 170 Macfarlan JA, with the agreement of Hodgson and Young JJA, said, relevantly, at [42]: "[42] ... Before addressing these, I point out that, as Mr Davis recognised, he had a substantial hurdle to overcome in order to successfully challenge the primary judge's acceptance of Ms Grey's evidence because that acceptance was credit-based. In the case of such a finding it is necessary for an appellant to demonstrate that the finding is 'contrary to incontrovertible facts or uncontested testimony', 'glaringly improbable' or 'contrary to compelling inferences' (Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at [28]-[29]). As Giles JA noted in Shimokawa v Lewis [2009] NSWCA 266, credit-based findings may be set aside, consistently with Fox v Percy, if the findings are made 'for reasons which in whole or in part do not truly go to the reliability or veracity of the relevant evidence, or without taking account of an important consideration or considerations material to evaluation of the credibility or veracity' (at [181]). I would add that, in relation to the first, as well as the second, alternative postulated by Giles JA, for the finding to be vitiated the error that the primary judge made must be an important one which was material to evaluation of the reliability or veracity of the relevant evidence." 503In Xu v Jinhong Design & Constructions Pty Ltd [2011] NSWCA 277 Basten JA relevantly said: "[14] ... At least once in every decade, there has been a reassessment by the High Court: see, eg, Warren v Coombes [1979] HCA 9; 142 CLR 531; Abalos v Australian Postal Commission [1990] HCA 47; 171 CLR 167; State Rail Authority (NSW) v Earthline Constructions Pty Ltd (In liq) [1999] HCA 3; 73 ALJR 306 and Fox v Percy [2003] HCA 22; 214 CLR 188. Some cases emphasise a deferential, non-interventionist approach based on judicial restraint and emphasising the primacy of the trial. Other judgments emphasise the entitlement of a dissatisfied party to a full review on the merits in accordance with the terms of the relevant statute, without the imposition of implied constraints. Since Fox v Percy , there has been a tendency to distinguish between errors which are described as credit-based and those where the demeanour of the witness does not constitute a substantial element in the fact-finding. In relation to the former category the test commonly applied, as identified by Macfarlan JA at [66] below, is to require, as a precondition to intervention, 'incontrovertible facts', uncontested testimony, compelling inferences to the contrary or a conclusion that the finding is 'glaringly improbable'. [15] However, while such guidelines are helpful, the supposed categories are so porous that no definitive test is possible. In most trials, the material facts do not depend upon the assessment of a witness, based upon demeanour alone, but on the complex interaction of documentary material, elements of testimony from different witnesses and matters of emphasis, none of which readily appear from reading a transcript. This fact, sometimes referred to as the 'disadvantage' suffered by the appellate court, is, of course, widely appreciated and is articulated by reference to the oft-cited passage in the speech of Lord Hoffmann in Biogen Inc v Medeva plc [1997] RPC 1 at 45. As explained by Gleeson CJ, Gummow and Kirby JJ in Fox v Percy at [41]: 'No judicial reasons can ever state all of the pertinent factors; nor can they express every feature of the evidence that causes a decision-maker to prefer one factual conclusion over another.' [16] It is clear that a nuanced approach is often required: see, eg, Shimokawa v Lewis [2009] NSWCA 266 at [176]-[188] (Giles JA) and the authorities there referred to. The present case was one in which his Honour did make findings based on the oral testimony of three key witnesses. Nevertheless, in careful and clearly articulated reasons, the primary judge explained the limited role that demeanour had played in his assessment and further explained his reasons by reference to the oral testimony and other considerations. In these circumstances, I agree with the analysis and conclusions of Macfarlan JA at [65]-[85]." 504At [66] Macfarlan JA said: "Whilst in these circumstances it can be inferred that his Honour's reliance upon his views of the witnesses' demeanour was limited, it is apparent that that factor was not entirely excluded and that his Honour's conclusions must be regarded as at least in part credit based, attracting the need for the appellants to surmount the hurdle identified in Fox v Percy [2003] HCA 22 ; (2003) 214 CLR 118 in order to challenge his Honour's conclusions successfully. In substance it is thus necessary for the appellants to satisfy this court that his Honour's findings were contrary to "incontrovertible facts or uncontested testimony", "glaringly improbable" or "contrary to compelling inferences" (ibid at [28]-[29]). It is sufficient in this respect for an appellant to demonstrate that a primary judge has treated objective circumstances as providing material support for the credibility or reliability of a witness when those circumstances cannot reasonably be regarded as providing that support (see Shimokawa v Lewis [2009] NSWCA 266 at [181] and Davis v Veigel [2011] NSWCA 170 at [42])." 505Finally, in McCartney & Ors v Orica Investments Pty Ltd & Ors [2011] NSWCA 337 Giles JA, with the agreement of Macfarlan JA and, on this point, Young JA, said at [87]: "This court has an appellate court's advantage, which can be a counter to a trial judge's advantage of the unfolding of the evidence over time, of careful assistance in examination of the evidence free of distraction by other trial issues: see Yarrabee Coal Co Pty Ltd v Lujans [2009] NSWCA 85 ; (2009) 53 MVR 187 at [3] per Allsop P referring to the court's "capacity for appellate synthesis and perspective". If on examination the objective reasons given by a trial judge for a conclusion as to credibility and a credibility based finding are unsound, the finding is unsound." His Honour then quoted what he had said in Shimokawa at [181] and [182] and, at [88] noted that in Davis v Veigel at [42] it had been pointed out that "for the finding to be vitiated the error that the primary judge made must be an important one which was material to evaluation of the reliability or veracity of the relevant evidence". 506A special leave application was made to the High Court in McCartney. Reference was made to Giles JA's consideration of Fox v Percy at [85] to [89] of his judgment and the alternate or counter advantages of an appellate court reviewing the evidence to that enjoyed by the primary judge in assessing the evidence of witnesses. The applicant for special leave submitted that Giles JA had engaged in an impermissible dilution of the principle in Fox v Percy. Special leave was refused on the ground that there were insufficient prospects of success in overturning the order remitting the matter for a re-trial, but Gummow J stated that the refusal of the grant of special leave should not be taken to endorse what was said by Giles JA in the paragraphs referred to. However, until the High Court determines otherwise I must accept his Honour's analysis. 507In the context of the present case and in the light of the submissions made on the appeal to which reference is made below, the issue would seem to be whether the primary judge has "failed to use or has palpably misused his advantage" in hearing the relevant witnesses. The gloss placed upon those words by Giles JA in Shimokawa is that they encompass situations where the trial judge has made credibility-based findings for reasons which, in whole or in part, do not truly go to the reliability or veracity of the relevant evidence or has failed to take into account an important consideration or considerations material to the evaluation of the credibility or veracity of a witness or witnesses. 508As will appear, in the present appeal the appellants' case, and particularly Baira's oral submissions, seem to be based on the fact that his Honour failed to take account of two critical considerations, being the sham contract document and Snapshot of Account statements when determining the credibility of Famularo. Their submissions did not assert, at least directly, that the reasons given by the primary judge in rejecting the evidence of Baira and Rosario that they did not meet with Famularo did not support his findings as to their credibility. 509However, in oral argument (at Appeal tpt 43-44), senior counsel for Baira accepted that he had to demonstrate that the primary judge's failure to properly take account of the sham contract document and the Snapshot of Account statements and to understand their relevance or significance to Famularo's credit, rendered his decision to accept the evidence of Famularo glaringly improbable or contrary to compelling inferences. The grounds of appeal 510The appeal grounds were as follows: "1. The trial judge failed to discharge his judicial function in that he failed to address the primary cases sought to be made by the appellants at the trial. 2. The trial judge erred in: a. finding that the third respondent ("Mr Famularo") was a witness of credit; and, b. relying upon his evidence to make a finding of credit adverse to the appellants. 3. The trial judge erred in rejecting the evidence of the appellants that they never met, nor had any direct dealing with, Mr Famularo and the second respondent ("AMBFS"). 4. The trial judge erred in failing to give any, or any adequate reasons, for accepting the evidence of Mr Famularo and rejecting the evidence of the appellants. 5. The trial judge erred in the case of the first appellant ("Rosa Baira") in finding that on or about 12 October 2005 she met, and received proper and competent legal advice from, Mr Frederick Forster, a solicitor employed by Egisto Solicitors of Five Dock, in the terms of a certificate dated 12 October 2005 and addressed to the St George Bank. 6. The trial judge erred in the case of the second and third appellants in failing to address the evidence of Dr Cameron to the effect that the third appellant was incapable of understanding the nature and effect of the loan transaction even if the documents were explained to her." 511Grounds 2, 3 and 4 overlap in that the emphasis in the appellants' submissions was mainly on his Honour's findings with respect to Famularo's credit. Thus the focus of the submissions on the appeal was on Ground 2, although that focus had a subtext in Ground 3. Ground 4 was not the subject of separate submissions although in a sense it was encapsulated in Ground 2. Ground 5 was the subject of written submissions, but was subsidiary to the primary thrust of the appeal submissions relating to Famularo's credibility. The appellants' submissions on the appeal Ground 2: The sham contract document and Snapshot of Account statements (a) The submissions of Domenica and Rosario 512As I indicated at [454] above, in their written submissions filed on 10 May 2012 the solicitors for Domenica and Rosario raised two issues on the appeal the first of which I have already dealt with. The second was stated to be whether the primary judge's credit finding in favour of Famularo was unsafe on the basis that his Honour failed to appreciate the significance of the sham contract document and the sham Snapshot of Account statements both of which he dismissed out of hand as being of no relevance to the issues before the court. It was submitted that his Honour needed to have appreciated the significance of those documents in his evaluation of the Famularo credit. 513After setting out a summary of Famularo's evidence relating to the sham contract and which I have recorded in more detail above, and the primary judge's finding at [118] (recorded at [465] above), reference was made to [132] of his Honour's reasons where he said: "In both cases the defendants have chosen to adopt what was correctly described as a minimalist stance. In that circumstance what remains available for examination is the documentation which on its face is regular and untainted. Complaint was made of the absence of benefit but I am satisfied that, although I do not find the defendants had an identified proprietorial interest, all of the transactions were part of consensual family arrangements and the reality was that documents were signed for the benefit of general family prosperity." 514Further reference was made to [127] where his Honour said that the Snapshot of Account issue "was a 'red herring' which has no determinative relevance but which was sought to be accumulated with matters of similar ilk. The purpose was apparently to cast an aura of suspicion about the transactions." It was submitted that one of red herrings to which his Honour was referring was the sham contract document upon the basis that, as his Honour had observed at [118], it did not operate so as to affect one way or another the transaction into which Rosario and Domenica had entered with RHG. 515It was then submitted that his Honour's treatment of the sham contract document was not complete enough to enable him to make positive credit findings in favour of Famularo. This was because first, his Honour did not appreciate the importance of that document in securing finance from RAMS; secondly, consideration of the document suggested that Famularo may have been involved in its creation or that, at least, further investigation was warranted; and thirdly, Famularo was at the relevant time aware that Joe and Sandra were purchasing the Dural property but nonetheless sent a copy of the sham contract document to RAMS, thereby evincing a level of dishonesty. 516The second of these reasons can be immediately rejected as it was never suggested to Famularo that he had any part in the creation of the sham contract document. Whether or not further investigation was warranted is not to the point. The first and second reasons can be dealt with together. Essentially the submission was that providing the sham contract document as part of the RAMS application was important in securing approval of the loan as was evidenced by one of its stated purposes, namely, the purchase of a property for $500,000. The difficulty with this submission is that Famularo was not asked why he included the document in the documentation forwarded to RAMS or what relevance, if any, he accorded to it. 517It was then submitted that his Honour failed to attach any importance to the words "NOT SECURITY" on the document. It can be reasonably inferred, it was submitted, that those words were placed on the document to make it clear to RAMS that the Dural property was not being offered as security for the loan. If this be the case, then it was true. The Dural property was not being offered as security for the loan sought by Domenica and Rosario from RAMS. 518It was next submitted that his Honour grossly overstated the position when he observed in the last sentence of [118] that the sham contract document did not operate so as to affect one way or another the transaction into which Rosario and Domenica entered with RHG. This was because of the document's utility in investing a purpose to the RAMS loan. His Honour needed to understand the role of that document before making any determination with respect to Famularo's credit. He thus failed to take into account an important consideration. 519It was then submitted that Famularo must have known that the document was indeed a sham as he acted on Joe and Sandra's application to NAB in respect of the acquisition of the Dural property. Irrespective of the authorship of the document, it was submitted that Famularo was dishonest in that he either actively participated in a deception on RAMS or was willing to submit an application which he knew contained a deception. Accordingly, his Honour should not have regarded Famularo as a witness of credit unless he had clearly satisfied himself that there was a wholly innocent explanation for Famularo's involvement with the document. 520Domenica and Rosario's written submissions then turned to the question of the "Snapshot of Account" statements. In part I have already dealt with this issue at [467] and [477] above. His Honour dealt with the document at [126] and at [127] regarding it as a "red herring". In one sense his Honour was correct in finding that it had no determinative relevance to RHG's case against Domenica and Rosario and he was correct, in my view, in stating that its purpose was to cast an aura of suspicion about the transaction and, I would add, as to whether or not there was a meeting between Famularo, Domenica and Rosario. 521Nevertheless it was submitted that his Honour did not appreciate the importance of the statements in securing the RAMS loan, as they were a fabricated version of the authentic Snapshot of Account statements. Their importance, so it was contended, was their utility in giving the RAMS loan a purportedly legitimate purpose. The inference is that without it, the loan had an illegitimate purpose. What that purpose may have been was neither explained nor explored in the evidence although it was the subject of a submission to which I refer at [527] - [532] below. 522In any event, as I have already observed, the difficulty with the submission is that it was never put to Famularo that his purpose in including the documents in the application which went forward to RAMS was to give the RAMS loan a legitimate purpose. There was simply no evidence to support the contention referred to. 523It was then submitted that it was his Honour's lack of understanding as to how the statements fitted into the approval of the RAMS loan application which, had he been aware of it (whatever "it" was), could have given rise to suspicions about their provenance and their authorship and the implications such enquiries as to these matters would have had on his assessment of Famularo's credit. In my opinion this submission must be rejected. Further submissions sought to speculate as to how the statements could be produced by some form of computer manipulation. The nature of the document was such that it was clearly open to the primary judge to infer that it emanated from SGB itself. Further, as already observed, there was the unchallenged evidence of Famularo that, in his ten year experience with SGB, it was its practice to send such statements not only to the borrower but also to any guarantor. His Honour accepted that evidence in the penultimate sentence of [126] of his reasons. In my view it was open for him to do so. It follows, in my view, that no error has been demonstrated as to the manner in which his Honour dealt with the Snapshot of Account statements. (b) The submissions of Baira 524In her written submissions in the Orange Book, Baira contended that the incorporation of the sham contract document in the loan application documentation constituted a representation to RHG that the loan from RAMS was sought by Domenica and Rosario for the dual purpose of enabling them to purchase the Dural property and to re-finance the SGB loan in circumstances where RHG was to take security only over the Drummoyne property and not over the Dural property. It was submitted that this was a fraud, presumably upon RHG. However, as the Dural property was not being offered as security, the relevance to RAMS of Domenica and Rosario purchasing the Dural property is unexplained. As I have said, no-one was called from RAMS to suggest that the sham contract document played any part in their agreement to approve the loan or that it was even considered. 525It was submitted by Baira that Famularo's conduct with respect to the sham contract document was far more dubious and worthy of censure than any conduct on the part of the appellants or any of them. It was submitted that his explanation that he did not check the details and did not compare the document with the original in a different customer's file, was not credible. His credit was undermined, so it was submitted, by the fact that he permitted the loan application to go forward on the pretext that Rosario and Domenica were acquiring the Dural property and that they were the principal borrowers from SGB rather than guarantors of Joe and Sandra's debt. The latter was a reference to the Snapshot of Account statements with which I have already dealt. 526It was further submitted that his Honour failed to appreciate the meaning of the words "NOT SECURITY" at the foot of the page of the document. Whether this be so or not, as I have already noted, that endorsement on the document was never the subject of any cross-examination of Famularo. I would have thought that it was obvious, as it was to the primary judge, that it was never intended that the Dural property being purchased by Joe and Sandra would be provided as security for the loan to any of the appellants. In fact each of the two loan application made it clear that in the case of Baira, the security being offered was the Marrickville property and that in the case of Domenica and Rosario, the only security being offered was the Drummoyne property. 527It was next submitted that his Honour was in error because there was clear and uncontradicted evidence as to the provenance of the sham contract document. This is so in the sense that Famularo's evidence was that he was provided with the document by Rosario. As I have already observed, it was not suggested that he played any part in its production. Neither Sandra nor Joe were cross-examined about the document. I have already expressed the view (at [466] above) that it is difficult to understand why Famularo included the document at all. Its relevance to RHG's assessment of the loan application is difficult to understand. If it had a purpose it was not one that was put to Famularo. This, no doubt, was why his Honour regarded it as "mysterious". Although it is true, as I have observed at [453] and [466] above, that one of the purposes of the loan sought by Domenica and Rosario was the purchase of a property for $500,000, the affidavit evidence of Famularo to which reference has already been made (at [448] above) supported that position as did his file notes of the meeting on 14 September 2005. However, as I have said, it was not suggested to Famularo that this was the reason why he included the document in the loan application. 528It is true, as Baira submitted, that it was not suggested to Rosario that one of the purposes of his and Domenica's loan application was to purchase a property near to their son, Joe, or that he permitted Famularo to make that assertion on his behalf. There was little purpose in any such questioning given that Rosario's case was that he had never met with Famularo. 529However, Famularo had given evidence that Rosario had informed him that he wished to purchase a property so that he and his wife would be close to Joe and he denied (at Black 1/378W) that as at 14 October he knew that there was to be no purchase by Rosario and Domenica of a property at Dural. It was not until 18 months later that he found out that no such property was purchased. It was then suggested to him that he knew that the NAB loan was to purchase the Dural property and that Rosario and Domenica were not purchasing any property at Dural, a proposition that he said was false. In other words, his evidence both in his affidavit and in cross-examination was that first, he knew that Joe and Sandra were purchasing a property at Dural; secondly, that he had been informed by Rosario that he wanted to purchase a property so that he could be near to his son Joe; and, thirdly, that he proposed to purchase such a property for $500,000. 530In these circumstances, the sham contract document would have been supportive of each of these propositions were it not for the particular address of the property the subject of the contract. However Famularo's evidence was that he did not look at the document in detail and at Black 1/395 in the passage of his evidence that I have recorded at [460] above, he swore that he did not check its specific details and did not compare it with that contained in the file of a different customer, namely, Joe and Sandra. In my opinion this was a rational and not glaringly improbable explanation and one which it was open to the primary judge to accept as he apparently did. Although his Honour made no specific finding in this regard, his general acceptance of Famularo as a reliable and credible witness would indicate that he inferentially accepted his explanation as to why he did not appreciate, as he said he did not, that the sham contract document related to the same property at Dural as that which was to be purchased by Joe and Sandra pursuant to a loan from NAB. 531Famularo's evidence, as I have indicated, was that he simply did not appreciate what was the content of the sham contract document. The details as to the property being purchased are not easily identified (Blue 4/1361J) as the photocopy in evidence is presumably the same as that which Famularo had in his possession and is not easy to read. In my view it was a matter for the primary judge whether he accepted that explanation. It was open to him to do so given that the document was one among a large number that accompanied the application to RAMS. 532In respect to the Snapshot of Account statements it was suggested in submissions by Baira that they were forwarded by Famularo to RHG in order to represent to RHG that first, the relevant loan account was in the name of Domenica and Rosario and, secondly, that it demonstrated that they had a track record in meeting their financial commitments and that this would have influenced RHG in approving their loan. No evidence was identified that suggested directly or indirectly, that this was Famularo's purpose in providing the statements to RHG. Grounds 2 & 5: Mr Forster's certificate 533This principal error in relation to the question of Famularo's credit was compounded, so it was submitted, by an apparent misunderstanding of the significance of the certificate given by Egisto Solicitors, being Mr Forster, in his letter to SGB of 12 October 2005 confirming that Baira attended their office on that date when the nature of the then proposed guarantee and increased liability was explained to her. 534It was submitted that the certificate did not address the core reason why that advice was required, namely, SGB's proposal to the detriment of Baira that the securities to which she might otherwise have had recourse would be released. Mr Forster accepted that he did not advise on the release of securities. 535It was submitted that the primary judge proceeded upon an assumption that Baira had appropriate advice tendered to her (presumably by Mr Forster) when she entered into the contractual arrangement with RHG in circumstances in which she gave her fully informed consent to those arrangements without appreciating that first, she did not receive legal and financial advice in relation to those transactions and, secondly, Famularo never explained to her the terms upon which Joe and Sandra proposed to borrow monies from RHG. However, in my view, these submissions do not go to the issue of Famularo's credit. Although in the first cross-claim of each appellant against, amongst others, Famularo, it was submitted that he had a duty of care to the appellants, it was not a duty Famularo considered that he was under. That proposition is also not relevant to the issue of his credit. 536His Honour accepted the evidence of Mr Forster that he gave advice to Baira in accordance with the letter of 12 October. But even if he had not, that fact could in no way reflect upon his Honour's acceptance of Famularo as a credible witness particularly with respect to the primary issue in the case, namely, whether there was a meeting between the appellants and Famularo on 14 September 2005 and 2 December 2005. The meeting of Baira with Mr Forster (assuming it was held) occurred after 2 December 2005 and although it may have had some relevance to RHG's approval of the Baira loan, it was not a matter which concerned Famularo although his file notes of the meeting recorded a recommendation that she obtain independent legal advice. Findings, had they been made, that Mr Forster had not given proper advice may have entitled Baira to relief against the solicitor but there was no cross-claim to that effect. In my view the submissions do not address the real issue agitated on the appeal. Ground 6: The evidence of Dr Cameron 537Ground 6 of the Grounds of Appeal relates to the evidence of Dr Cameron, Domenica's general practitioner since 1993, and to which his Honour made no reference. Dr Cameron was not required for cross-examination. It was submitted that in view of his unchallenged evidence, it was not open to his Honour to conclude that Domenica was capable of understanding the nature and impact of the RHG loan at the time it was made. Dr Cameron's evidence, however, was that Domenica was totally reliant upon Rosario to attend to all her personal needs. She was no doubt also dependent upon him in relation to their commercial activities such as they were. Famularo's evidence was that Domenica was a different person when he saw her in 2005 than when he saw her in 2011. In September 2005 Domenica was 67 years of age. In paragraph 7 of Dr Cameron's affidavit he expressed the opinion that Domenica had very little comprehension due to her mental health and that Rosario communicated with her with difficulty in Italian repeating often two or three times in order to get a response from her to Dr Cameron's questions. It is apparent that he was speaking as at the time he swore his affidavit in September 2010. At paragraph 8 he opined that between the years 2002 and 2010 he had seen a rapid deterioration in Domenica's health and she was now no longer able to look after herself and was incapable of managing her affairs. 538In my opinion Dr Cameron in his evidence was, generally speaking, expressing an opinion as at September 2010. Although he said that there had been a rapid deterioration in Domenica's health between 2002 and 2010 he did not express an opinion as to the extent of her ability to comprehend the loan application as at 2005. At Black 1/383G-Y it was put to Famularo that he recognised that Domenica and Rosario probably did not understand what was happening to them to which he responded "A little". However, he was conversing with them in Italian so any issues relating to their knowledge of English did not then arise. It was not suggested to Famularo that to his observation, Domenica did not understand at all the discussion that was proceeding in Italian between himself and her husband. In my view Ground 5 of the Grounds of Appeal should be rejected. I note that the issue to which it related was not addressed by senior counsel for Baira in his oral argument on behalf of the appellants or in Domenica and Rosario's written submissions filed on 10 May 2012. Ground 1: The primary judge failed to address the appellants' case at trial 539In their written submissions in the Orange book Baira finally turned to Ground 1 of the Grounds of Appeal which alleged that the primary judge failed to address the appellants' cases at trial. These submissions were generally directed at RHG it being suggested that it was indifferent as to whether the income information in the loan application was truthful and that they failed to act with prudence. It was submitted that RHG was aware of a number of factors which, so it was submitted, would have indicated unusual features of the loans that were being sought. 540It is not clear whether these submissions were intended to support a defence to RHG's claim or whether they were intended to support the first cross-claims of Baira on the one hand, and Rosario and Domenica on the other against RHG, the second respondent and Famularo. Criticisms were made of RHG and in particular the fact that no loan officer was called in respect of either loan. It was again submitted that the primary judge did not deal in any effective way with the factors to which reference has been made and which related, in particular, to the fact that the appellants were now borrowers rather than guarantors and that as principal borrowers they had no recourse in the event of default on the loans against Joe and Sandra or their properties. I respond to this submission at [545] below. 541It was submitted that the appellants had strong cases to advance in that they had no ability to protect their own interests in circumstances where their respective properties were being deployed by Joe and Sandra without any appreciation of what Joe, Sandra and Famularo were in truth doing with them. The primary judge rejected their cases based primarily, so it was submitted, on his acceptance of Famularo's file notes and his erroneous acceptance of his credit. This is not an entirely fair submission as his Honour, for reasons that he set out and which related to other than his acceptance of Famularo's credit, did not regard Baira or Rosario as credible witnesses. 542It was then submitted that it being resolved to accept Famularo's evidence as both credible and reliable and having characterised that of Baira and Rosario as lacking credit, his Honour regarded himself as relieved of any obligation to examine the facts of the case in detail. He thus closed his eyes to the case the appellants sought to make. In my opinion this submission is without substance. 543In any event, Ground 1 in my view seems to be more directed to the cross-claims but in oral argument senior counsel for Baira made it clear that it was not necessary for the Court to consider those claims. No doubt, this concession was made because his primary submission was that his Honour's acceptance of the evidence of Famularo should be set aside and a new trial ordered in which the issues of credit would be determined afresh as would the cross-claims. In this respect the observations of the plurality in Fox v Percy at [45] as to the wisdom or lack of it of new trials when issues of credit are involved should be borne in mind. The appellants' submissions should be rejected 544It was submitted both with respect to Domenica and Rosario as well as Baira that each had become principal borrowers when prior thereto they had only been guarantors. The legal effect of this was that should there be default in the repayment of the loans by either of them, then they would be liable to repay the amounts then owing and would have no recourse either to Joe or Sandra on the one hand or to any of Joe and Sandra's properties on the other, which had originally been secured with respect to their indebtedness to SGB. 545The difficulty with this contention, which was not the subject of oral argument, is that first, it does not directly impact on the issue of Famularo's credibility and, secondly, his Honour in effect rejected the submission upon the basis that each of the appellants were fully aware of what they were doing and, in particular, that they were principal borrowers and not guarantors. In my view this was a finding which was open to him. 546It was submitted that his Honour failed to appreciate the fraudulent character of the loan applications as they were for the commercial benefit of Joe and Sandra rather than for the benefit of the appellants. It was further contended that his Honour failed to appreciate the commercial disadvantages the effect of Joe and Sandra's activities and those of Famularo had on each of the appellants. Again this submission should be rejected. It is true that there were benefits and disbenefits in the transactions that took place. The primary judge at [132] stated that although he did not find that the appellants had an identifiable proprietorial interest in Joe and Sandra's businesses, all of the transactions were part of consensual family arrangements and the reality was that the documents that were signed were for the benefit of the general family prosperity. 547In my view this was a finding that was open to his Honour in the circumstances given the nature of the businesses conducted by Joe and Sandra and the fact that at the relevant time, they appeared to be doing well and producing substantial cash funds. Although his Honour made no finding that the appellants were receiving cash payments from the profits of the business, he did find, and the evidence clearly established, that they were very profitable. As RHG submitted, they thus had the capacity to supply considerable funding to members of the family as was reflected in Famularo's file notes. Furthermore, it was not in contest that Joe and Sandra accepted responsibility for the payments required under the loans made by RHG to the appellants. It was common ground that Joe and Sandra met the repayments under the two loans until such time as their businesses ceased to operate when there was default. 548It should be observed that in oral argument Baira did not attack, at least frontally, the authenticity of Famularo's file notes. The nature and detail of their contents tells against the validity of any such submission, had it been made. Nor did those parts of the appellants' submissions at trial, both written and oral and which I have chronicled at [436] and [444] above, challenge the genuineness of those notes. 549However, Baira's written submissions asserted that the fact that she, Domenica and Rosario were steadfast in their denials of ever having met or instructed Famularo should be regarded as highly corroborative of their evidence and their credibility. His Honour took a different view based, it was asserted, solely upon the existence of what was submitted to be self-serving file notes produced by Famularo that were suggestive of meetings with the appellants. It was submitted that the existence of the notes were, ultimately, proof of nothing other than that Famularo had prepared them and that he did so occurred in circumstances destructive of his credit, namely, first, he permitted the sham contract document to go forward to RHG; secondly, he had been provided with a water rate notice that showed that Domenica and Rosario were pensioners and, thirdly, he had taken no steps to verify any of the information that went forward, particularly relating to the appellants' income and asset position. I have responded to those assertions at [442], [478] - [487] above and which it is unnecessary to repeat. 550It was submitted that his Honour did not address the fact that an internal record of RHG described the Baira loan as "unusual" but commercially acceptable because of an explanation which Famularo had allegedly given but which he denied having given in the terms asserted. It is unnecessary to detail this issue. It does not advance the issue of Famularo's credit. 551It was then submitted that once the deficiencies in the primary judge's reasons are taken into account his Honour's findings on credit and his findings generally "are obviously unreliable". In my view this submission cannot be sustained. 552Although at trial it was submitted that the sham contract document and Snapshot of Account statements were "significant", that significance was confined to the proposition that Famularo knew they were false. His cross-examination on those documents bears that out. 553Again, in oral argument on the appeal it was only contended that Famularo knew the sham contract document was false, it being submitted that his explanation for not being aware of that fact should not be accepted. It was also submitted that Famularo knew the Snapshot of Accounts statements to be false and that he provided them to Baira to demonstrate Rosario's track record in meeting his loan repayments. Once the latter argument is rejected as not being the subject of any cross-examination of Famularo to that effect, one is left with the submission that he should not have been believed when he said he did not appreciate the inconsistency between the sham contract document and the front page of the authentic contract. 554As it was never suggested to Famularo that he was party to the creation of the sham contract document, it is not glaringly improbable or contrary to compelling inferences that he did not appreciate that it related to the Dural property. As I have observed, the only inference the primary judge was asked to draw from the document was that first, it was false and, secondly, Famularo knew it was false and, thirdly, as he provided a false document to RAMS, his credibility was destroyed. 555In my view, only the first of these inferences is capable of being drawn. Even if the second could be drawn (which would require the rejection of Famularo's testimony with respect to the document as untrue), the third inference cannot be drawn. This is because there was no direct evidence as to his purpose in providing the document to RAMS. I have suggested one at [527] above which, if true, is innocent. There was, in any event, other evidence, such as the file notes, which supported the credibility of Famularo on the core issue in the case: did he meet with Domenica and Rosario on 14 September 2005 and with Baira on 2 December 2005? If he did then it followed that the appellants' credit was undermined. 556Baira submitted in oral argument that his Honour's findings on credit were flawed in the sense that he did take into account and said he did not understand "matters of central significance", this being a reference to, relevantly, the sham contract document. But why it was of central significance was never explained unless it was that Famularo knew the document was a fabrication of the front page of the authentic contract. But the cross-examination of Famularo with respect to the document was confined to his knowledge of its falsity. At Appeal tpt 28, it was conceded, properly, that "there were a number of points that could have been pressed" but were not. It is too late to press them now. Therein lies the weakness of Baira's submission that the sham contract document was a matter of "central significance". 557Finally, it must be remembered that the sham contract document and Snapshot of Account statements related only to the loan application of Domenica and Rosario. They played no part in that of Baira. This notwithstanding, the latter relied on them to support her own case that there was no meeting. It was a boots strap argument without merit. If anything, Baira's case is extremely weak once Famularo's file notes are accepted as genuine. If that meeting occurred, it is a reasonable inference that the meeting with Domenica and Rosario also occurred. In these circumstances the sham contract issue ceases to have any material influence on his Honour's assessment of Famularo's credit. Conclusion 558In the foregoing circumstances, in my opinion the appellants have not demonstrated that his Honour has failed to use or has palpably misused his advantage in hearing Famularo give his evidence at some length; nor have they demonstrated that his Honour's reasons did not support his credit finding with respect to Famularo or that he had failed to take account of a consideration (the sham contract document) that was truly material to the evaluation of his credibility. 559In my opinion it follows that the various challenges made by the appellants to his Honour's credibility findings cannot be sustained. In particular, the primary issue between the parties relating to whether or not the appellants met with Famularo was one which his Honour was entitled to resolve in favour of such meetings taking place in circumstances where there were extensive file notes which were not demonstrated to have been created fraudulently. I would therefore reject each of the grounds of appeal. Accordingly, the order which I would propose is that the appeals be dismissed with costs. ********** 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: 03 December 2012