Supreme Court New South Wales Medium Neutral Citation: Perpetual Trustees Victoria Limited v Cox and Anor [2013] NSWSC 1583 Hearing dates: 23 July 2012 to 27 July 2012, 31 August 2012; 15 November 2012 (written submissions closed 14 December 2012) Decision date: 31 October 2013 Jurisdiction: Common Law Before: Johnson J Decision: Parties to bring in short minutes to give effect to these reasons Catchwords: MORTGAGES - claim for possession of land following alleged mortgage default - defendants are husband and wife - mortgage broker acting for defendants - defendants executed mortgage and loan documentation - split-facility loan (Loans A, B and C) - Loan C remained in an undrawn account - written direction given to lender to disburse Loan C funds - funds paid into account of mortgage broker - defendants deny that direction to disburse Loan C funds executed by them or at their direction - whether husband and/or wife signed direction - whether defendants liable for disbursed Loan C funds - not established that husband or wife signed direction - whether defendants ratified the direction through their later conduct - held defendants did not ratify the direction - whether defendants were required to repay entire sum specified in mortgage (including Loan C funds) as mortgage contained a specific covenant to repay - construction of mortgage - held defendants not required to pay back entire sum - defendants not liable for Loan C funds drawn down without their authority - plaintiff's claim based upon failure to repay Loan C funds rejected Legislation Cited: Contracts Review Act 1980 Evidence Act 1995 Cases Cited: Australian Broadcasting Commission v Australasian Performing Right Association Limited [1973] HCA 36; 129 CLR 99 Briginshaw v Briginshaw [1938] HCA 34; 60 CLR 336 Goodrich Aerospace Pty Limited v Arsic [2006] NSWCA 187; 66 NSWLR 186 Hawksford v Hawksford [2005] NSWSC 463; 191 FLR 173 Jones v Dunkel [1959] HCA 8; 101 CLR 298 Leybourne v Permanent Custodians Ltd [2010] NSWCA 78 Manly Council v Byrne [2004] NSWCA 123 McVeigh (Trustee of the Bankrupt Estate of Piccolo) v National Australia Bank Ltd and Anor [2000] FCA 187 Palmer v Dorman [2005] NSWCA 361 Perpetual Trustees Victoria Limited v English & Anor [2010] NSWCA 32 Perpetual Trustees Victoria Ltd v Tsai [2004] NSWSC 745; (2004) 12 BPR 22,281 Provident Capital Ltd v Printy [2008] NSWCA 131; (2008) 13 BPR 25,199 Small v Tomassetti [2001] NSWSC 1112; (2002) NSW ConvR 56-011 Van den Heuvel v Perpetual Trustees Victoria Ltd [2010] NSWCA 171; (2010) 15 BPR 28,647 Vu v New South Wales Crime Commission [2013] NSWCA 282 Yazgi v Permanent Custodians Limited [2007] NSWCA 240; (2007) NSW ConvR 56-195 Texts Cited: --- Category: Principal judgment Parties: Perpetual Trustees Victoria Limited (Plaintiff) Raymond Allan Cox (First Defendant) Susan Jane Cox (Second Defendant) Representation: Counsel: Mr S Docker (Plaintiff) Mr SV Shepherd (Defendants) Solicitors: File Number(s): 2009/294831 Publication restriction: --- Judgment 1JOHNSON J: These proceedings relate to a claim of mortgage default by the Plaintiff, Perpetual Trustees Victoria Limited, against the Defendants, Raymond Allan Cox and Susan Jane Cox. The Plaintiff seeks orders that the Defendants give up possession of two properties owned by them, being land at 11 John Taylor Crescent, Tathra ("the Tathra property") and 11 Beauty Point Avenue, Wagga Wagga ("the Wagga property"). 2The Defendants have cross-claimed against the Plaintiff seeking a declaration that the mortgage and loan agreement are void. They also seek relief under the Contracts Review Act 1980. 3The hearing of these proceedings commenced before me on 23 July 2012 and continued to 27 July 2012, with the hearing being adjourned until 31 August 2012 (to complete the evidence) and to 15 November 2012 (for submissions). Further written submissions were furnished by counsel, in accordance with directions of the Court, by 14 December 2012. 4Mr Docker of counsel appeared at the hearing for the Plaintiff and Mr Shepherd of counsel appeared for the Defendants. The Basic Facts 5Most of the basic facts are not in dispute. It is useful to set them out to place the disputed issues in context. 6Mr and Mrs Cox are husband and wife. 7On 25 May 2006, Mr and Mrs Cox executed mortgage and loan documentation. A mortgage broker, named Denise Maloney, was utilised in the loan application process. Ms Maloney was the operator of a company named Mortgage Management Corporation ("MMC"). She was someone with whom Mr and Mrs Cox had both a professional and personal relationship that had existed for some years. 8The loan was for $598,500.00 and was to be split into three facilities. Loans A and B were in sums of $115,000.00 and $230,000.00 respectively. The purpose of these facilities was to discharge existing mortgages, with the remaining funds to be used to finance renovations to the Tathra property. 9Loan C was in the sum of $253,500.00. On 25 May 2006, Mr and Mrs Cox executed, in conjunction with the mortgage and loan documentation, a document entitled "Direction to Pay". This direction specified that the balance of funds from Loan C were to remain in an undrawn facility with the lender. 10The mortgage and loan settled on 7 June 2006. On this day, the funds from Loans A and B were disbursed by the Plaintiff in accordance with the arrangements under the loan agreement. 11What has been said so far is common ground. The controversy surrounds what happened next with respect to the Loan C funds. 12Also on 7 June 2006, a further direction was sent by facsimile from MMC to Galilee and Associates ("Galilees"), then solicitors for the Plaintiff. This document was in the following form: "7th June 2006 TO WHOM IT MAY CONCERN Galilee & Assoc Att: Joanne At settlement could you please telegraphically transfer the amount of $253,500 from Loan 3 to the following account: CBA BSB: [XXX XXX] A/C: [XXXX XXXX] Regards (signature) (signature) Raymond Cox Susan Cox" 13As will be seen, there is a significant dispute concerning the authorship of the signatures that appeared on this document. Mr and Mrs Cox maintain that neither of them signed this direction and that neither of them authorised the drawdown of the Loan C funds. 14Pursuant to the direction of 7 June 2006, the Loan C funds were disbursed into the specified account. As it happens, this was an account controlled by Ms Maloney. 15The direction was in a format Mr and Mrs Cox had utilised on prior occasions to authorise the transfer of money by Ms Maloney, and they continued to utilise such a format after 7 June 2006. It was typical for Ms Maloney to draw up such directions and send them on behalf of Mr and Mrs Cox. 16According to the terms of the loan agreement, the disbursement of the Loan C funds triggered an obligation on the part of Mr and Mrs Cox to repay. The repayments due on Loan C fell into arrears and, subsequently, the Plaintiff issued Mr and Mrs Cox with notices of default. 17Mr and Mrs Cox insisted to Ms Maloney that they were not responsible for Loan C, and that it was for Ms Maloney to pay the Loan C funds back to the Plaintiff. Ultimately, an agreement was reached between Mr and Mrs Cox and Ms Maloney to the effect that Ms Maloney would repay the disbursed money back into Loan C and negate the debt. This agreement was the result of a protracted period of negotiation between the parties commencing in about September 2006 and culminating, on 16 February 2007, with the signing of a statutory declaration by Ms Maloney. During this period, Mr and Mrs Cox communicated directly with Ms Maloney, as well as retaining the services of Creaghe Lisle, solicitors, to act on their behalf. 18It is common ground that Ms Maloney did not repay the money. 19On 16 June 2009, the Plaintiff filed a Statement of Claim seeking possession of the properties, the subject of the mortgage. The basis of the Plaintiff's claim was that Mr and/or Mrs Cox had signed the direction of 7 June 2006 in respect of Loan C, thereby directing Ms Maloney to invest the money on their behalf. 20There is no issue as to liability with respect to Loans A and B. 21On 9 July 2012, sale of the Wagga property was completed. The surplus proceeds of the sale, in the sum of $145,617.03, were paid into a controlled monies account pending the outcome of these proceedings. 22The evidence revealed that a police investigation was commenced in respect of Ms Maloney's handling of other clients' money during the relevant period. This investigation does not bear directly on the issues in these proceedings. However, as part of the police investigation, Mr Cox gave witness statements on 21 February 2007, 5 January 2008 and 29 January 2008 concerning his dealings with Ms Maloney. Mrs Cox gave witness statements on 5 January 2008 and 1 April 2008. Comments made by Mr and Mrs Cox in these statements were relied upon at the hearing. Issues in the Proceedings 23The live issues in these proceedings were narrowed significantly as the hearing progressed. 24The primary issue requiring the Court's determination is whether Mr Cox signed the direction of 7 June 2006. For reasons that will become clear, it was ultimately accepted by the parties that Mrs Cox did not attach her signature to that document. The only other realistic possibility, it was suggested, would be Ms Maloney. However, the Court is not required to make a positive finding as to whether Ms Maloney forged the signatures of Mr and Mrs Cox in order to resolve the primary issue. 25If the Court finds that Mr Cox did sign the direction of 7 June 2006, the Court will be required to address the further question of whether Mr Cox's signature alone is sufficient to activate the debt according to the terms of the loan agreement. 26If, on the other hand, the Court does not so find, there are subsidiary questions that will be enlivened. They may be expressed as follows: (a) Did Mr and Mrs Cox nevertheless ratify the direction of 7 June 2006 such that they are bound by it? (b) Notwithstanding who signed the direction, are Mr and Mrs Cox obliged to repay the sum secured by the mortgage on the basis that they acknowledged receiving that sum as valuable consideration? 27At the hearing, the Plaintiff withdrew a further submission that Ms Maloney had either actual or ostensible authority to give the direction to the lender to disburse the Loan C funds. 28Finally, if in respect of any of the above issues, Mr and Mrs Cox are found to be liable to the Plaintiff, the issues contained in the Cross-Claim will require consideration. Specifically, if Mr Cox is found to have signed the direction of 7 June 2006, it will be necessary to determine whether Mrs Cox ought be granted relief to discharge her from any liability arising from Mr Cox's conduct. Plaintiff's Case on the Primary Issue 29The Plaintiff's primary case is that Mr Cox signed the direction of 7 June 2006, thereby authorising Ms Maloney to invest the Loan C funds. 30The Plaintiff does not positively assert that Mrs Cox's signature was forged by her husband. Rather, Mr Docker submitted that it is not necessary to prove that matter. In other words, to succeed in its case, Mr Docker submitted that it was sufficient for the Plaintiff to prove that Mr Cox alone signed the direction. I will not express a view on this matter at this stage. Whether it is correct, will depend on the proper construction of the loan agreement, and it is a matter to be considered in the event the Court finds that Mr Cox signed the direction. 31In support of its argument that Mr Cox signed the direction of 7 June 2006, the Plaintiff relies on the following evidence: (a) eye-witness evidence of Ashleigh Brandon, a secretary in the MMC offices, that she saw Mr Cox sign the direction; (b) the failure of Mr Cox to deny at an earlier time that he signed the direction; (c) negotiations that took place between Mr and Mrs Cox and Ms Maloney after the disbursement of the Loan C funds; (d) other conduct on the part of Mr Cox that was said to be consistent with him having signed the direction. 32I will turn now to consider this evidence. The Evidence of Ashleigh Brandon 33The Plaintiff relied heavily upon eyewitness evidence given by Ashleigh Brandon, a secretary in the office of Ms Maloney. Ms Brandon asserted that she saw Mr Cox sign both his and his wife's signature on the 7 June 2006 document. Ms Brandon was cross-examined and challenged with respect to her evidence. Detailed submissions were made in writing and orally concerning the conclusions that ought be reached with respect to her evidence. 34Ms Brandon gave a statement to police in relation to the investigation of Ms Maloney's conduct on 11 January 2008. 35In June 2006, Ms Brandon was about 17 years of age and was working as a receptionist in Ms Maloney's office. Ms Brandon was employed by Ms Maloney from 30 January 2006 until some time in 2007. 36Ms Brandon's evidence was that she had spoken with Mr Cox on several occasions prior to 7 June 2006 in her capacity as a receptionist at MMC, both over the telephone and in person. Mrs Cox was only present on a couple of these occasions. 37Ms Brandon says that, on 7 June 2006, she observed Mr Cox enter the offices of MMC and ask to see Ms Maloney. Ms Maloney came into the reception area and handed Mr Cox a document. Ms Maloney then left the room. 38Ms Brandon's evidence was that she observed Mr Cox place a signature above his name on the document and a different signature above the name of Mrs Cox. Ms Brandon was sitting about one metre away from where Mr Cox was signing, and says she could see the document. The document was situated on the top of the counter, which was raised to about Ms Brandon's eye level. 39After Mr Cox signed the document, Ms Maloney re-entered the reception area and enquired as to where Mrs Cox was. Ms Brandon stated in her affidavit that Mr Cox replied, "I am [Mrs Cox]. Just forget what you saw today". 40Ms Brandon gave evidence that she was directed by Ms Maloney to make a note in her diary of what had occurred. The relevant diary entry for 7 June 2006 provides as follows: "Ray Cox - Investment letter - signed wife signature - told AB and DM to forget what we saw." 41The event is recorded as occurring between 2.00 pm and 3.00 pm. 42The other contemporaneous note of what occurred was a document headed "Originator's Notes". Ms Brandon identified this document as a series of file notes pertaining to the work being undertaken by MMC for Mr and Mrs Cox. The file notes were completed by either Ms Brandon or Ms Maloney. The entry for 7 June 2006 is signed "AB" and states: "DM went and got request signed for $253,500 from Loan 3 to be transferred at settlement today. AB faxed to Joanne @ Galilee & Ass." 43Ms Brandon agreed that "AB" referred to herself, and that "DM" referred to Ms Maloney. 44There were several challenges made to the veracity or reliability of Ms Brandon's evidence in oral and written submissions. Firstly, it was suggested that Ms Brandon had very little actual recollection of Mr Cox signing the direction of 7 June 2006 independent of her diary note. This was explored extensively in cross-examination: "Q. So when you say you can't recall, the reason you can recall it happened at all is because you wrote it in your diary? A. Yes. Q. So it's just because it's written down. Because in fairness to you it's six years ago? A. Yes. Q. Do you have any recollection of these events? A. I recall Mr Cox coming to the office and signing this document. Q. Can you really remember now, without look [sic] at this document that it was 7 June? A. Yes. Q. So without your diary note you can remember now that he came on 7 June? A. No. Q. So your diary note is what you're relying on? A. Yes." 45Secondly, it was contended that the items of contemporaneous documentation (the diary and the "Originator's Notes") were inconsistent. Reliance was placed on the fact that one of the documents refers to an "investment" whilst the other refers to a "request". Further, the "Originator's Notes" state that Ms Maloney "went and got" the direction signed. This language, it was suggested, is inconsistent with Ms Brandon's account of Mr Cox signing the direction in the offices of MMC. Moreover, whilst the diary refers to a forgery of Mrs Cox's signature, the "Originator's Notes" make no such mention. 46Thirdly, issue was taken by Mr Shepherd with respect to the authorship of entries in the "Originator's Notes". Ms Brandon admitted in cross-examination that she often retrospectively initialled entries made by Ms Maloney. This, it was contended by Mr Shepherd, compromised the reliability of the record. On the other hand, Mr Shepherd conceded that the file note in the "Originator's Notes" had to have been written on 7 June 2006 as it is a continuous record, and it would not have been possible to insert an event for a particular date at a later time. 47Fourthly, it was suggested that Ms Brandon's version of events was inconsistent with certain objective material in respect of the time when Mr Cox was said to have attended the office of MMC. Ms Brandon expressed a degree of certainty in her recollection that Mr Cox attended the office in the afternoon, after he finished work. Contrary to this, there was evidence in the form of time sheets from Mr Cox's employer to indicate that Mr Cox did not work that day. Further, the facsimile that was sent with the direction of 7 June 2006 bore the time "11:14". Additionally, it is accompanied by the words "Good morning Joanne". Mr Shepherd submitted that this evidence was indicative of the direction having been signed in the morning. 48Fifthly, it is suggested that Ms Brandon's belief that it was the direction of 7 June 2006 that she saw Mr Cox sign, and not some other document, is not supported by the evidence. The direction was prepared by Ms Maloney and, on Ms Brandon's own evidence, Ms Brandon did not see the document prior to it being signed. When it was signed, it was situated on top of the counter, equal to about Ms Brandon's eye level. It was contended that these matters make it unlikely that she could have interpreted its contents. In support of this argument, Mr Shepherd relied on an admission made by Mr Cox that he had forged his wife's signature on an unrelated document on 9 October 2006 in the offices of MMC. It was suggested that Ms Brandon may have confused the two events. 49Finally, Mr Shepherd submitted that there were inconsistencies between Ms Brandon's police statement, affidavit and evidence given in Court. Such inconsistencies included variations in her account of what occurred in the MMC offices when Mr Cox is said to have signed the direction. 50Mr Shepherd ultimately submitted that Ms Brandon's diary entry, and the "Originator's Notes", were not accurate records of what occurred. It was submitted that the diary entry was made at a later time and made to look like it was entered on 7 June 2006. Further, it was submitted that Ms Brandon effectively followed the instruction of Ms Maloney in respect of what to include in the "Originator's Notes". In circumstances where Ms Brandon relied on the diary entry to aid her recollection, it was suggested that Ms Brandon's evidence could not be relied upon. 51In response to these submissions, Mr Docker contended that, in fact, Ms Brandon was able to give a detailed account of what occurred in the MMC offices on 7 June 2006, and the only aspect for which she required the assistance of her diary was in recalling the date. Mr Docker also submitted that, because Ms Brandon says she made the diary entry on 7 June 2006, the Court would have to find that she was lying about this before it could refuse to accept her evidence. 52The Plaintiff sought to play down the inconsistencies between the diary and the relevant entry in the "Originator's Notes". It was submitted that the author was a 17-year old and, whilst the language may have been inelegant, it ought not found conclusions that Ms Brandon was dishonest. Further, it was contended that the reliability of the contemporaneous documentation is unaffected by the fact that Ms Brandon initialled entries made by Ms Maloney, nor by suggestions that she herself authored entries at Ms Maloney's instruction. Mr Docker also submitted that the precise time when Mr Cox attended Ms Maloney's office to sign the 7 June 2006 direction could not be established, and that the time indicated on the facsimile may have been inaccurate. Thus, he submitted that little weight ought be given to discrepancies in the evidence with respect to the timing of Mr Cox's alleged attendance. Failure by Mr Cox to Deny Signing the Direction Earlier 53Another significant aspect of the Plaintiff's case on the primary issue was the failure of Mr Cox to assert that his signature was forged at an earlier time. It was asserted that Mr Cox had numerous opportunities to deny signing the direction of 7 June 2006, and the failure to do so is relied upon by the Plaintiff as supporting its argument that Mr Cox had, in fact, signed the direction. 54Mr Docker argued that, even if Mr and Mrs Cox did not sign the direction, they ought to have become aware of it on or about 20 November 2006. On this date, Creaghe Lisle received a letter from Galilees, stating in relevant part: "We further enclose a copy of an authority sent to us via fax on the morning of settlement, 7 June 2006. This letter has been duly signed by Raymond Cox and Susan Cox and expressly requests: ... [emphasis in original]" 55The terms of the direction were then set out and the direction itself was annexed. 56Mr Docker submitted that Mr and Mrs Cox's knowledge of the direction warranted a denial by them that they had signed it, if that was the case. Instead, it would appear Mr and Mrs Cox continued to negotiate with Ms Maloney and her legal representatives. It was contended by Mr Docker that this conduct was consistent with the Loan C funds being invested by Ms Maloney on their behalf. 57The first written denial by Mr and Mrs Cox that they had signed the direction did not occur until 17 July 2007. In a letter from Creaghe Lisle to Deacons, the legal representatives for the Plaintiff, there was the following assertion: "We let you have a copy of a direction given to Messrs Galilee and Associates in relation to the payment of the sum of $253,500.00. Mr & Mrs Cox deny that the signatures on this direction are theirs and are satisfied that these signatures have been reproduced by Mrs Denise Maloney or some party on her behalf." 58It was further contended for the Plaintiff that the position adopted by Mr Cox with respect to the direction of 7 June 2006 was inconsistent over time. In support of this submission, Mr Docker relied on variations in the accounts given by Mr Cox in his statements to police and his affidavit. 59For example, in his witness statement of 21 February 2007, Mr Cox made the following assertions about the direction to pay (emphasis added): "On Wednesday 21st February 2007, I attended the Wagga Wagga Detective's office and spoke to Sergeant KELLY. He showed me a document he referred to an [sic] AUTHORITY FORM - This documents [sic] had the heading: 'TO WHOM IT MAY CONCERN' and was dated 7th June 2006. Upon looking at this document, I recognise what looks like my signature to be on the left hand bottom portion of this page. I am not 100% sure, as it was some time ago, and I remember Denise just passing over many documents for us to sign. I also recognise what looks like my wife's signature above the words 'Susan COX'. ... This document looks to be a request on our behalf to have money taken from a loan account and placed into the account number listed. Denise definitely did not tell me that arrangements were going to be made to action this money. I did not give permission for anyone to initiate a loan for this amount on our behalf. ... I have been negotiating with Denise MALONEY for around 6 months to finalise this outstanding debt that she has generated in our name. Recently, I have obtained a written undertaking that she will honour this arrangement. I did not give permission for Denise MALONEY to act on our behalf in anyway [sic] in initiating this third mortgage - Loan C in the amount of $253,500. I feel that Denise MALONEY has tricked my wife and I into completing paperwork. We have not been given copies of the paperwork we completed. It is my understanding that the $253,500 has been paid into an account operated by MALONEY and that she has used this money for her own purposes which was never an intention or [sic] mine, nor my wife, Sue." 60It will be observed that the statement does not contain a clear denial that Mr Cox signed the 7 June 2006 direction. However, the thrust of the statement was that it was Ms Maloney who had initiated the Loan C drawdown without the permission of Mr and Mrs Cox. After all, that was why Mr Cox was making a statement to the police in the first place. I will return to this issue when explaining my decision on this aspect of the proceedings. 61Further, Mr Cox said the following in respect of the Loan C funds in his witness statement of 5 January 2008: "At no time did I give Denise MALONEY permission to invest that money. My wife Sue did not give Denise MALONEY permission to invest that money." 62Additionally, in his witness statement of 29 January 2008, Mr Cox said of the direction (emphasis added): "... I do not ever recall signing that document, but the signatures appear to be that of Sue and me. I'm sure that if I had seen that document I would have questioned whose account details the money as [sic] being transferred to as we do not have a CBA account." 63Finally, in the affidavit he swore on 27 May 2010 in these proceedings commenced, Mr Cox made the following assertion (emphasis added): "Although it appears to be my signature, I did not sign that document." 64The Plaintiff relies on the failure by Mr Cox to deny signing the direction of 7 June 2006 at an earlier time as evidence that Mr Cox did, in fact, sign the document. It was submitted that the Court should not accept Mr Cox's denial in these proceedings. Evidence of Subsequent Negotiations 65Another key aspect of the Plaintiff's case concerned evidence of efforts taken by Mr and Mrs Cox and their legal representatives to negotiate with Ms Maloney to have the Loan C funds returned. Mr Docker submitted that this conduct signalled an acceptance that Mr Cox had signed the direction of 7 June 2006, and an acceptance of their liability for Loan C. Mr Docker pointed to items of correspondence and other documents, allegedly evidencing the existence of an agreement with Ms Maloney to repay the funds. 66It is not entirely clear when Mr and Mrs Cox learned that Loan C had been drawn down. Mr Cox gave evidence that, in or about September 2006, Ms Maloney informed him that she had invested the Loan C funds on his behalf, and that the principal sum was accruing interest at 10%. The Court heard evidence from Mr Cox that he instructed Ms Maloney that he and his wife did not want the investment. 67What followed was a period of discussion between Ms Maloney and Mr and Mrs Cox. On 14 September 2006, Mr and Mrs Cox executed two further directions to pay. Both were addressed "To whom it may concern", in the same manner as the direction of 7 June 2006. The first stated: "Could you please transfer back to [Loan C] the funds that were invested and transfer the surplus funds from interest to [Loan A]." 68The second direction of 14 September 2006 said: "In regards to [Loan C] could you please reduce it to zero and cancel the facility totally." 69Mr Docker submitted that, in light of the circumstance of Ms Maloney being in control of the Loan C funds at this point, the first of these directions must have been intended for her. The second, it was submitted, must have been intended for the lender (the Plaintiff in these proceedings). 70It would appear that, at some time in October 2006, Mr and Mrs Cox instructed Creaghe Lisle to act on their behalf. Philip Goldsmith of Creaghe Lisle took up the negotiations with Ms Maloney. On 23 October 2006, Mr Goldsmith sent similarly worded letters to both Ms Maloney and her legal representatives. What follows is taken from the letter sent directly to Ms Maloney (emphasis added): "We advise that we have been consulted by Mr and Mrs Cox in relation to certain refinancing recently undertaken by you on their behalf. They are very concerned that there may have been irregularities in relation to this refinancing. When the refinancing was first discussed with you our clients were of the understanding that two loans were to be provided, one in the amount of $115,000.00 and a second in the amount of $230,000.00. In addition there would be an undrawn facility available to them in the amount o [sic] $253,500.00. Completely contrary to their wishes they now understand that in fact the third loan of $253,500.00 has been drawn. This is despite the fact that the funds have never been paid to them. They are concerned that the monies may well have been misappropriated. We understand that on them discussing the matter with you they have been informed that the funds were drawn and that they are in an account managed by you. This is absolutely contrary to any understanding on the part of our clients or instructions given. ... On the situation becoming known to Mr and Mrs Cox we understand that arrangements were made for the loan to be repaid to the mortgage provider in early August this year. Notwithstanding we understand that no payment has yet been made. Please provide details." 71Ms Maloney replied to Creaghe Lisle on 8 November 2006, stating in relevant part (emphasis added): "Several meetings were held with Mr & Mrs Cox in relation to the refinance on their current loans and a discussion took place in regards to having extra funds available for the future in the case of ever being needed for another purchase or if an opportunity ever arose that they wanted to take advantage of, several meetings were also held with Mr Cox at our office. Upon settlement of their loan the sum of $253,500 was drawn and placed into an account, interest was being paid on this account of 12% per annum. On the 14th September, 2006 Mr & Mrs Cox attended our office and discussed the arrangement, at that time they also signed a form to place the funds back into the home loan account and cancel the facility. At that time I advised I would start the process and advise of the date the funds would be returned. Several meetings and discussions were held with Mr Cox over this next period and a meeting was arranged for the 25th October, 2006 to confirm the date and clarify the transfer, with both Mr & Mrs Cox. Mrs Cox had been away the previous week and we had been discussing the situation with Mr Cox. I confirm that the funds will be returned to their loan account and the facility will be cancelled on or before 24th November, 2006 including any outstanding interest. I will provide a statement showing a balance and any interest payable to Mr & Mrs Cox once that date or an earlier date has been confirmed." 72Ms Maloney did not return the relevant funds as agreed. 73Negotiations continued into early 2007. In particular, the parties negotiated the terms of a statutory declaration. On 16 February 2007, Ms Maloney executed a statutory declaration, the relevant parts of which were: "2. I acknowledge an outstanding amount to Raymond Allan Cox and Susan Jane Cox in the amount of $253,500.00; 3. The above sum of $253,500.00 is to be repaid by me to Raymond Allan Cox and Susan Jane Cox by 1 March 2008; 4. Until the sum of $253,500.00 has been fully repaid to Raymond Allan Cox and Susan Jane Cox I will meet and take full responsibility for all payments due to Perpetual Trustees Victoria Limited ... Such payments currently being at the rate of $1,774.57 per month; ..." 74An earlier draft of this document was in evidence before the Court. The draft version contained the following clause: "I, Denise Maloney ... declare that I invested the following amount of money, $253,500 ... belonging to Mr R.A Cox and S.J Cox." 75Mr Docker placed significance on variation in the language between the draft and the final version. The relevant change effectively removed any reference to there having been an investment. It was suggested that the language was changed after the receipt of legal advice. The evidence of Mr Cox, however, was that the statutory declaration was drafted by his solicitor and was changed at the request of Ms Maloney when the draft document was presented to her. 76Nevertheless, the Plaintiff submitted that the evidence of the negotiations should be taken by the Court as an acceptance that Mr Cox authorised Ms Maloney to invest the Loan C funds. The clear desire of Mr and Mrs Cox to have Ms Maloney return the money, in Mr Docker's submission, demonstrated an acceptance by Mr and Mrs Cox of their liability for that money. Other Evidence Consistent With Mr Cox Signing the Direction 77The Plaintiff relied upon a range of other matters as supporting its argument that Mr Cox signed the direction of 7 June 2006. 78The Plaintiff relied on evidence of Mrs Cox being angry with Mr Cox, at or about the time Mr and Mrs Cox were negotiating with Ms Maloney for the return of the Loan C funds, as being supportive of its case that Mr Cox authorised the investment of that money, apparently without his wife's authority. 79In her witness statement of 1 April 2008, Mrs Cox referred to the attempts taken by her and her husband to have Loan C cancelled. In respect of this, she said, "I was very angry with Denise and Ray over the whole situation". When asked about this comment in cross-examination, Mrs Cox explained that, at the time, she was probably thinking that the whole problem with Loan C would not have occurred if they had not obtained the pre-approval. 80In his witness statement of 5 January 2008, Mr Cox referred to an argument between he and his wife that occurred after Ms Maloney informed him that she had invested the Loan C funds: " ... I got up and left the office and returned home to my wife. I told her what Denise MALONEY had done with the money. Sue was absolutely livered [sic] and upset. I saw Sue start to cry. I had an argument with Sue over the money. I walked off feeling shattered and so upset about the matter. I did not talk to Sue about the matter for the rest of the day as I was so upset." 81Mr Docker also pointed to evidence of disharmony in the Cox family. The "Originator's Notes" contained an entry for 23 January (year not specified), which stated as follows: "Ray came to the office & advised that Christmas wasn't good as the family had a huge fight and threw tables & chairs. Also wanted to know where the money is and how long until he receives it?" 82Mr Docker submitted that indications of Mrs Cox being angry with Mr Cox were supportive of the Plaintiff's version of events. Namely, that Mr Cox authorised Ms Maloney to invest the Loan C funds without Mrs Cox's knowledge, and that Mrs Cox was not happy about this. 83Further evidence that was said to be consistent with Mr Cox having signed the direction of 7 June 2006, thereby authorising the investment of the Loan C funds, was a document entitled "Debtors History". 84This document was a statement of account in respect of the Loan C funds after the investment on 7 June 2006. It records the principal sum of $253,500.00 and the interest rate of 10%. It relates to a period between August and September 2006. 85There was some controversy concerning when Mr and Mrs Cox were alerted to the existence of the "Debtors History" document. Mr and Mrs Cox said that they did not receive it until shortly before these proceedings, when it was shown to them by their legal representatives. The Plaintiff submits that Mr and Mrs Cox must have been aware of the document some time in about August or September 2006, or shortly thereafter. 86Mr Docker submitted that this document evidences an investment of the Loan C funds. Counsel submits that the Court should infer that it was prepared for Mr and Mrs Cox as part of the investment process. 87Mr Shepherd submitted for Mr and Mrs Cox that, if there was an investment, it might be expected that there would be some sort of investment agreement as evidence of the parties' intention to invest the funds. Mr Shepherd relied on the fact that the Plaintiff had not called direct evidence from Ms Maloney concerning the alleged investment and had relied, instead, on a series of correspondence, the statutory declaration and the "Debtors History" to retrospectively establish an investment. Moreover, he contended that there was no evidence of how the investment came about. The Defendants' Case on the Primary Issue 88It is the Defendants' case that Mr Cox did not sign the direction of 7 June 2006. The principal evidence relied upon by the Defendants was that of Mr and Mrs Cox, to which I now turn. The Evidence of Mr and Mrs Cox 89Mr and Mrs Cox each gave evidence about matters which substantially overlapped and which, for convenience sake, may be dealt with together. 90I have kept in mind the close association and common interest between Mr and Mrs Cox. This is relevant to an assessment of credibility and reliability. Each was cross-examined thoroughly by counsel for the Plaintiff. An assessment of the evidence of Mr and Mrs Cox will take into account, as well, the surrounding circumstances and any contemporaneous or near-contemporaneous documentation. 91The Court heard evidence that Mr and Mrs Cox had met Ms Maloney shortly after moving to Wagga Wagga some time in 1998. Their first property dealing with Ms Maloney did not occur until about 2002, when they purchased a block of land at Tarraganda. 92It was the evidence of Mr and Mrs Cox that, some time in early 2006, they expressed interest to Ms Maloney in acquiring finance for the purpose of renovations to the Tathra property, one of the properties that are subject to the current mortgage. The Court was told of plans to refinance existing loans with respect to the Tathra and Wagga properties, with an additional redraw of about $30,000.00 to carry out the renovations. 93Evidence was given by each of Mr and Mrs Cox that Ms Maloney encouraged them to obtain pre-approval for an additional sum of about $250,000.00, in case they wished to purchase additional properties in the future. The evidence was that there was some persuasive force exerted by Ms Maloney in this respect. Whilst initially reluctant, both Mr and Mrs Cox said that they acceded to Ms Maloney's suggestions on the assurance that it would not cost them anything if they did not use the funds. 94Mr Cox asserted that neither he nor his wife had any intention of purchasing further properties at that time. Mrs Cox gave evidence that, whilst she did not wish to obtain such a pre-approval, she thought that having the funds available might be a good thing for her husband, who had suffered health difficulties. 95Neither Mr Cox nor Mrs Cox recalled precisely the date on which the mortgage and loan documentation was signed. Nevertheless, they both described the process of signing the loan documentation as rushed. Each asserted that Ms Maloney presented documents to them in such a way that they were afforded little opportunity to inspect them. In fact, both Mr and Mrs Cox acknowledged that they did not read all the documents presented to them. Mr Cox said they looked like ordinary loan documents, and that he trusted Ms Maloney. 96On 14 June 2006, Mr and Mrs Cox received a letter from Interstar Wholesale Finance ("Interstar") on behalf of the Plaintiff. Each of Mr and Mrs Cox testified that it was this letter that alerted them to the fact that interest was accruing on Loan C, and both asserted that they immediately contacted Ms Maloney. 97Mr Cox gave evidence that he approached Ms Maloney upon becoming aware of the irregularity with Loan C, only to be informed that the interest was a mistake by the Plaintiff. Mrs Cox gave evidence that she received numerous telephone calls from the Fire Brigade Credit Union ("FBCU"), Mr and Mrs Cox's banking institution, notifying her that the Plaintiff was attempting to access their account to withdraw funds. Mrs Cox says that she informed the FBCU that this should not be happening. 98Over the following weeks and months, Mr Cox says he attempted to follow up the Loan C situation with Ms Maloney with increasing persistence. He described one occasion on which he showed up at Ms Maloney's office with a sleeping bag and pillow, refusing to leave until he had spoken with her. There was some suggestion in this evidence that Ms Maloney was avoiding he and his wife. 99Mr Cox's evidence was that, in about September 2006, Ms Maloney eventually informed him that she had invested the Loan C funds on his behalf. Mr Cox said that he told Ms Maloney that he and Mrs Cox did not want the investment, and directed her to cancel the loan facility. 100In respect of the direction of 7 June 2006, Mr and Mrs Cox both denied signing the document. They each gave evidence that they did not become aware of the direction until a time significantly after its execution. The Court heard evidence from both Mr and Mrs Cox that, when they were ultimately shown the direction, they each observed that the signatures appeared to be theirs. 101Mr and Mrs Cox also asserted that other documents relating to the loan, apparently bearing their signatures, were not signed by them. Among these was a document entitled "Easy Doc Declaration of Financial Position", executed on 16 May 2006 as part of the loan application process. 102Mr Docker made detailed submissions for the Plaintiff concerning the credibility and reliability of Mr Cox's evidence. In respect of Mrs Cox, it was not ultimately suggested that she was other than a witness of truth. It was accepted that Mrs Cox did not sign the 7 June 2006 direction, and the Court was not asked to reject her denial of having signed that document. 103It was submitted for the Plaintiff that Mr Cox was an unsatisfactory witness. This submission was directed to both his evidence itself and the manner in which it was given. There were a range of matters relied upon in support of this submission. 104Firstly, it was submitted that any assertion in these proceedings that Ms Maloney pressured Mr and Mrs Cox into obtaining the pre-approved loan was inconsistent with earlier statements given by Mr and Mrs Cox. The same was said to be true of the assertion that Ms Maloney rushed Mr and Mrs Cox through the signing process. 105In her witness statement of 5 January 2008, Mrs Cox spoke of the discussions with Ms Maloney during the early stages of the loan application process. Mrs Cox said (emphasis added): "It was during one of these meetings while we were doing this, that she suggested that we get a pre approved loan, which would be a redraw facility only, in case we saw another property we wanted to buy, and we would have the money already for the deposit and loan, without having to go through the process again ... At these meetings I would question her about the costs and charges, and how the whole system worked. Ray seemed happy with the proposal ... After a while, Denise stopped ringing the home phone to talk about the proposal, and would only ring Ray on his mobile. ... After some thought and reluctance I decided that we should go ahead with this proposal. Ray seemed happy with the proposal. Ray had been having problems with Post Traumatic Stress Disorder, and I thought that the money and renovations at Tathra might help him ... Ray had stressed that it was for pre approval only, and not a loan where there were on going payments unless we drew on the money. Denise confirmed that with us, that it was a pre approval only. I looked at the paperwork and questioned why there were costs and charges recorded on a number of the pages. Denise explained that by saying that the documents were a standard form and that the costs shown did not apply to our loan." 106Mr Cox, in his witness statement of 21 February 2007, stated in relevant part: "Denise suggested that she could complete an application for a 'Pre approved loan'. She explained that this would benefit us as funds would be available immediately if we saw a place we wanted to buy, say at auction. She told us that it would not cost us a cent until we decided to use it. Denise suggested an amount of $250,000. Sue and I agreed and as a result we signed a number of forms for this arrangement. I signed these forms on the condition that it would not cost us any money unless we used the funds. In early June 2006, Denise got Sue and I to sign a large number of documents. She kept talking to us and handing over the forms, I trusted her and signed them as she passed them to me. Denise did not give Sue or I copies of these papers. Instead she insisted that they would remain with her on our file." 107In his affidavit in these proceedings, Mr Cox said, "I was aware that Sue was not interested in the pre approval". 108In the Plaintiff's submission, the evidence suggested that it was only Mrs Cox who was not happy to obtain the pre-approval. It was contended that Mr Cox was, in fact, quite eager. It was also submitted that the evidence is not consistent with them having been rushed through the signing process, as Mrs Cox, in her 5 January 2008 witness statement, acknowledged asking questions of Ms Maloney in respect of certain costs and charges that appeared on the documents. 109Secondly, it was contended that Mr Cox had failed to properly explain why his position had changed with respect to the direction of 7 June 2006. It was put to Mr Cox that there was an omission of any reference to his signature being forged in any of his witness statements, and that his first denial did not appear until his affidavit in these proceedings. Mr Cox said, in reply, "Well I am being guided by solicitors". In this respect, the Plaintiff submitted that Mr Cox was attempting to hide behind his legal representatives. 110Thirdly, Mr Docker argued that the evidence of Mr and Mrs Cox in respect of when they became aware of the irregularity in Loan C was inconsistent with incontrovertible facts. Both Mr and Mrs Cox asserted that it was a letter from Interstar dated 14 June 2006 that alerted them to interest that was accruing on the Loan C funds. That document, in fact, disclosed no such event. Mr Docker submitted that, whilst Mrs Cox was prepared to resile from her position in cross-examination, Mr Cox was not prepared to make such an obvious concession. It was suggested that the manner in which he dealt with that issue made him an unsatisfactory witness. 111Fourthly, there was a submission that Mr Cox's evidence in respect of when he first sighted the direction of 7 June 2006 was not credible. There was some inconsistency in the evidence concerning the point at which Mr and Mrs Cox became aware of the direction. In cross-examination, Mrs Cox conceded that this occurred shortly after Creaghe Lisle received the letter from Galilees on 20 November 2006 enclosing the document. This was consistent with her witness statement of 5 January 2008. On the other hand, Mr Cox maintained that he first saw the direction on 21 February 2007 when he signed his first witness statement. This is inconsistent with the other evidence bearing on the matter, and the Plaintiff submits that he should not be believed. 112Finally, Mr Docker submitted that Mr Cox's admission that he signed his wife's signature on a document on 9 October 2006 displayed a willingness to deceive the lender. This, it was suggested, bears directly on his reliability with respect to the primary issue in these proceedings. 113In response to these submissions, Mr Shepherd relied heavily on the circumstances of Mr and Mrs Cox. Those circumstances being that Mr Cox was a medically retired fireman and that, whilst he and his wife had some minor investment properties and a small number of NRMA shares, they were neither experienced nor sophisticated investors. That the sum they were alleged to have invested was a quarter of a million dollars, it was submitted, made the Plaintiff's case even less likely. It was submitted that what the Plaintiff was essentially trying to establish was that Mr Cox did a deal on a handshake with Ms Maloney, only one week after indicating that the Loan C funds were to remain in the undrawn facility. Resolution of the Primary Issue Onus and Standard of Proof 114Mr Docker accepts that the Plaintiff carries the onus of establishing that Mr Cox signed the direction of 7 June 2006 insofar as it relies upon this fact for its claim. The Plaintiff accepts that this is an example of the rule that "he who asserts must prove": Hawksford v Hawksford [2005] NSWSC 463; 191 FLR 173 at 185 [34]. 115Mr Shepherd also submits that the Plaintiff bears the onus on this issue and that, having regard to the gravity of what is alleged (that Mr Cox forged the signature of his wife) the principles in Briginshaw v Briginshaw [1938] HCA 34; 60 CLR 336 have application. Mr Docker did not take exception to this suggestion. 116I approach the resolution of this aspect upon the basis that the Plaintiff bears the onus of proof on the question of whether Mr Cox signed the direction of 7 June 2006. Notwithstanding it being accepted that the Plaintiff is not required to prove the further fact that Mr Cox forged his wife's signature, there was clearly a suggestion, predominantly in the evidence of Ms Brandon, that Mr Cox did forge that signature. I accept, therefore, that the gravity of the finding sought by the Plaintiff in these circumstances is relevant to the question of standard of proof. Thus, in determining whether the Plaintiff has discharged the civil standard of proof on this issue, the Court should take into account the gravity of the matters alleged against Mr Cox: s.140(2)(c) Evidence Act 1995. Section 140(2) imports the principles in Briginshaw v Briginshaw by requiring a Court, when considering whether it is satisfied on the balance of probabilities, to take into account the gravity of the matters alleged in relation to the question: Palmer v Dorman [2005] NSWCA 361 at [40]-[47]; Vu v New South Wales Crime Commission [2013] NSWCA 282 at [77]-[78]. 117It will be appropriate to have regard to the totality of the evidence for the purpose of determining whether the Plaintiff has discharged the onus of proof on this question. The Direction of 7 June 2006 118The original version of the document was not provided to the Court and was not subjected to any expert forensic analysis. Mr Docker submitted that it was not the fault of either party that the document was not before the Court, and that neither party ought bear any consequence arising from this. I accept that submission. The Effect of Ms Maloney's Absence 119A question was raised at the hearing as to why Ms Maloney was not called as a witness. Clearly, she was a person who could give relevant evidence bearing on the issue of whether Mr Cox signed the direction of 7 June 2006. Her evidence could relate to not only the circumstances in which the document was signed, but also her later course of conduct in accepting, in effect, that it was her responsibility to bear the cost of the drawdown of Loan C and to reverse it. 120There was no evidence adduced before me explaining why Ms Maloney was not called as a witness at the hearing. 121Mr Shepherd submitted that there was an unexplained failure on the part of the Plaintiff to call Ms Maloney. He submitted that Ms Maloney could not be considered a witness who would be in the Defendants' camp in this case. Rather, Ms Maloney could be considered as a potential witness for the Plaintiff, to support or corroborate (if she could) the account of Ms Brandon that it was Mr Cox who attended the office on 7 June 2006 and signed the direction. 122Mr Docker submitted that the Court could not determine that Ms Maloney was a potential witness favourable to the case of either the Plaintiff or the Defendants in these proceedings. 123I am satisfied that Ms Maloney may be regarded as a witness who was capable of assisting the Plaintiff's case. I do not consider that it could be said that Ms Maloney could have assisted the case of Mr and Mrs Cox. 124In these circumstances, there is a question of whether the Court ought draw an inference adverse to the Plaintiff, in accordance with the principles in Jones v Dunkel [1959] HCA 8; 101 CLR 298. It is important to keep in mind, however, that the Court should determine the case upon the evidence which has been adduced at trial. The conclusions or inferences available as a result of a particular witness not being called should be approached with care. 125A recent statement of the relevant legal principles appears in Vu v New South Wales Crime Commission, where McColl JA (Meagher and Emmett JJA agreeing in separate reasons) said at [84]: "Here the appellant seeks to weaken the cogency of the respondent's case by invoking the rule in Jones v Dunkel. However, that rule does not apply whenever a potential witness is not called. Rather, it applies 'where an inference is open from facts proved by direct evidence and the question is whether it should be drawn, [so that] the circumstance that the [party] disputing it might have proved the contrary had he chosen to give evidence is properly to be taken into account as a circumstance in favour of drawing the inference': Jones v Dunkel (at 312) per Menzies J; RPS v The Queen [2000] HCA 3; (2000) 199 CLR 620 (at [26]) per Gaudron ACJ, Gummow, Kirby and Hayne JJ; see also Manly Council v Byrne [2004] NSWCA 123 (at [54]) per Campbell J (as his Honour then was), Beazley JA and Pearlman AJA agreeing." 126As was stated in Manly Council v Byrne [2004] NSWCA 123 by Campbell J (Beazley JA and Pearlman AJA agreeing) at [45]: "The statement of the Australian law about the effect of a party failing to call an available witness has been complicated by the fact that the leading cases on the topic have involved appeals from the decision of a jury. In consequence, principles about the directions which a jury should be given have interacted with principles about the effect of failure to call a witness. Some adaptation of the principles stated in the leading cases is needed to derive a statement of law which a judge sitting alone should apply to a situation where a party has failed to call a witness." 127After referring to the relevant passages from Jones v Dunkel, his Honour continued at [51]: "Thus, if a witness is not called two different types of result might follow. The first is that the tribunal of fact might infer that the evidence of the absent witness, if called, would not have assisted the party who failed to call that witness. The second is that the tribunal of fact might draw with greater confidence any inference unfavourable to the party who failed to call the witness, if that witness seems to be in a position to cast light on whether that inference should properly be drawn." 128The inference that is available on the direct evidence given before me is that Mr Cox did not sign the direction. Mr Cox himself gave evidence affirming that inference, and Ms Brandon gave evidence negating it. I accept that Ms Maloney would be in a position to give direct evidence bearing on that issue. As I have said, on Ms Brandon's version of events, Ms Maloney was present in the room when Mr Cox signed the direction on 7 June 2006. 129Mr Shepherd submitted that the Court should draw an inference of the first kind referred to by Campbell J in Manly Council v Byrne. That is, that the evidence of Ms Maloney would not have assisted the Plaintiff's case. 130I accept that submission. In circumstances where the Court has been offered conflicting versions of events from two witnesses, one of which was given by a party to the proceedings who is directly affected by the result in a significant way, I am not prepared to use Ms Maloney's absence to draw, with greater confidence, any inference adverse to the Plaintiff. It remains the case, however, that the Plaintiff is not assisted by the unexplained absence of Ms Maloney as a witness at the hearing. Decision 131The Plaintiff asks the Court to find that Mr Cox signed the direction of 7 June 2006. The Plaintiff says that he did this to intentionally instruct Ms Maloney to invest the funds from Loan C. 132There is direct evidence bearing on this issue from Mr Cox himself and from Ms Brandon. I have considered the Plaintiff's failure to call Ms Maloney to corroborate the version of events given by Ms Brandon. This failure does not assist the Plaintiff. 133As well as the direct evidence, the Court has received evidence of negotiations between the Defendants and Ms Maloney, as well as other documentary evidence, which the Plaintiff says supports its case that the Loan C funds were intentionally invested. The Plaintiff also relies on a failure of Mr and Mrs Cox to complain that their signatures were forged at an earlier occasion. 134Given the challenges made to the reliability of the direct evidence in these proceedings, I have had regard to the demeanour of Ms Brandon as well as that of Mr and Mrs Cox. I have kept in mind that it is necessary to weigh impressions as to demeanour carefully, against the probabilities, and to examine whether the disputed evidence given by each witness is consistent with undisputed facts and other relevant evidence in the case, including suggested contemporaneous documentation: Goodrich Aerospace Pty Limited v Arsic [2006] NSWCA 187; 66 NSWLR 186 at 190 [27]. 135Ms Brandon was a somewhat nervous witness who gave her evidence with a degree of hesitancy. I keep in mind that, even in July 2012 when she gave evidence, she was a young person giving evidence about events that occurred when she was 17 years of age. I keep in mind also that, at the time when Ms Brandon made her statement to police in 2008 concerning these events, she was still working for Ms Maloney. 136As I have mentioned, there are significant inconsistencies in what are said to be the contemporaneous notes made by Ms Brandon. I find most persuasive among these the fact that one note refers to the most serious matter of a husband forging the signature of his wife, whilst the other entry, allegedly made at the same time, contains no reference to a forgery. Moreover, contrary to the Plaintiff's submission, I am of the view, that it is more likely that the direction was faxed in the morning, meaning Mr Cox had to have attended Ms Maloney's office at some time prior to this. Ms Brandon's evidence was plainly inconsistent with such a state of affairs. Further, Ms Brandon's actual recollection of events was extremely limited, with the diary being the primary basis for her evidence. 137Having regard to the totality of the evidence, I am not satisfied that Ms Brandon has given reliable evidence concerning the alleged events of 7 June 2006 involving Mr Cox. 138Mr Cox denied completely having signed the direction. There was a direct conflict between his evidence and that of Ms Brandon. 139It was apparent that Mr Cox was a defensive witness, a perhaps understandable position having regard to the strong challenge that was made to his credibility and reliability. He was closely cross-examined and his conduct over the period in and after June 2006 was questioned. I accept that there are aspects of the evidence of Mr Cox that do not assist him. 140It is pertinent, however, to make some observations concerning Mr and Mrs Cox. Mr and Mrs Cox were 61 and 63 years of age respectively at the time of the hearing. Mr Cox was a medically retired fireman who had experienced some health difficulties. He was not a person with a business background, nor did he appear to have any particular sophistication when it came to property matters. That is not to say that he, together with his wife, had not taken steps to acquire some rural properties over the years, in the interest of themselves and their family. 141Mrs Cox impressed as a straightforward witness who had been supportive of her husband through his health difficulties and had in mind a practical use of the loans. She had experienced some health difficulties of her own during the relevant period. Mrs Cox had some understanding of practical business matters but, once again, this was in the context of the limited activities of their family over a number of years. 142The strongest feature of the challenge to the evidence of Mr Cox was the differing accounts given by him concerning the authorship of the direction of 7 June 2006 and, in particular, the fact that an explicit denial by him of signing that document did not occur until these proceedings. I have considered the submissions made concerning these features of his evidence. In the end, I am not persuaded that they operate adversely to the Defendants. 143I accept that Mr Cox gave changing accounts concerning the author or authors of the signatures on the direction. I do not accept, however, that these accounts are, in reality, inconsistent with the position adopted by Mr and Mrs Cox at trial. Namely, that neither had signed the document. 144What the evidence of Mr and Mrs Cox shows, in conjunction with the contemporaneous correspondence, is a process of gradual understanding of the state of affairs. When giving evidence, they were clearly confused as to when they first learned that Loan C had been drawn down. That this was the case is not at all surprising. It was obviously a stressful period in which much correspondence was passing between them, the lender and Ms Maloney. 145Nevertheless, it is apparent that they approached Ms Maloney some time in the period after 7 June 2006, upon being alerted to the fact that the Loan C facility had been drawn down. What they did thereafter is strongly supportive of the position that neither of them had authorised Ms Maloney to draw down the Loan C funds. That they did not confront Ms Maloney with an allegation of forgery at this point is entirely reasonable. Ms Maloney had been a personal friend of Mr and Mrs Cox, and someone with whom they had engaged on a professional basis since 2002. Moreover, their initial concern was simply to know why the Loan C facility had been drawn down at all. The very fact they made this inquiry is inconsistent with a finding that either of them had requested that the drawdown take place. 146Nothing stated prior to the affidavits of 27 May 2010 is inconsistent with Mr and Mrs Cox's final position. Their previous statements were to the effect that the signatures on the direction appeared to be their own, but they did not recall signing such directions. That they honestly believed the signatures to be their own explains, in part, why they did not immediately cry forgery. They assumed that their signatures must have been procured in what they described as the rushed process of signing the loan documentation with Ms Maloney on 25 May 2010. 147Furthermore, I do not consider that the efforts taken by Mr and Mrs Cox to negotiate with Ms Maloney to have the funds returned, including the resulting statutory declaration, constitute evidence that Mr Cox had authorised the investment of the Loan C funds. Again, this behaviour is consistent with a desire on the part of Mr and Mrs Cox to negate the debt created by Ms Maloney without their authorisation. 148I do not consider that any statement contained in the correspondence, or any witness statement of Mr or Mrs Cox, constitutes an admission that either of them had signed the direction or authorised the investment of the money. The correspondence, including the directions of 14 September 2006, are, in fact, entirely corroborative of the accounts given in evidence by Mr and Mrs Cox. That is, that they urged Ms Maloney to return the funds to the lender as they did not want the investment. The evidence given by Mr and Mrs Cox as to the steps they took during this period was compelling. 149The correspondence exchanged between the legal representatives for Mr and Mrs Cox and Ms Maloney during October and November 2006 is highly probative of the state of affairs as described by Mr and Mrs Cox in evidence. By his letter of 23 October 2006, Mr Goldsmith set out the situation then existing between the parties, including an unequivocal assertion that what had occurred with Loan C was contrary to any instructions given to Ms Maloney by his clients. 150In my view, Ms Maloney's response of 8 November 2006 can be taken as affirming this state of affairs. Ms Maloney said that, at settlement, the funds from Loan C were placed in an account and were accruing interest. There was a complete omission of any statement that the investment was made pursuant to a direction from Mr Cox. If the investment was, in fact, undertaken at the direction of Mr Cox, why, when it was put to her by Mr Goldsmith that the investment was contrary to his clients' instructions, did Ms Maloney not refer Mr Goldsmith to the direction of 7 June 2006, or otherwise state that she had acted at the direction of Mr Cox? 151In the absence of actual evidence from Ms Maloney as to the events of 7 June 2006, this letter contains highly persuasive evidence in support of the evidence of Mr and Mrs Cox. 152Further, no evidence was adduced of an investment agreement, or some other document executed at a contemporaneous time, to illustrate any mutual intention of the parties to invest the money. I am not satisfied that the direction of 7 June 2006, taken together with other evidence in these proceedings, is sufficient evidence of an investment. 153The Plaintiff has pointed to documents occurring later in time, which it says support the existence of such an arrangement. These documents include the statutory declaration and the "Debtors History". The "Debtors History" document, in my view, is the computer-generated product of a system in Ms Maloney's office. It does little more than demonstrate that that is the way in which Ms Maloney characterised the Loan C funds, and the way in which she utilised them. In my view, the "Debtors History" document does not operate in any probative way against Mr and Mrs Cox. 154I consider that the statutory declaration was simply another means adopted by Mr and Mrs Cox, with the assistance of legal advice, to protect themselves against the actions of Ms Maloney, and to ensure the repayment of the money. There is nothing in the wording adopted, including any change of language, which is inconsistent with Ms Maloney having taken it upon herself to invest the Loan C funds, without the authority of Mr and Mrs Cox. 155I have kept in mind the submission for the Plaintiff which drew attention to an authority in October 2006, where Mr Cox did sign for his wife. Mr Cox admitted this. The context of this document was entirely different to that of the direction of 7 June 2006. The October 2006 document authorised a payment back to Mr and Mrs Cox, rather than a drawdown or expenditure of further money. It ought be viewed in light of the circumstances prevailing at the time, being circumstances in which Mr and Mrs Cox were eager to have the Loan C funds returned to the lender. That Mr Cox would sign both for himself and on his wife's behalf so that they could retrieve the funds is, although not desirable, understandable in the circumstances. I do not consider that this aspect assists the Plaintiff in its case. 156Taken together, the evidence in these proceedings points to a state of affairs in which Mr and Mrs Cox had, on 25 May 2006, provided a direction that the proceeds of Loan C be retained in their redraw facility with the lender. I accept the evidence of Mr and Mrs Cox that they had no foreseeable desire to draw upon those funds. 157The Plaintiff's case essentially involves Mr Cox changing his mind some time between 25 May 2006 and 7 June 2006 and, subsequently, engaging in a type of frolic of his own, with his wife being ignorant of the course he was undertaking. The evidence simply does not reveal any development during this period that would have led Mr Cox to take such a radically different step in the agreed loan arrangements that he and his wife had entered into. 158I have had regard to the evidence of tension between Mr and Mrs Cox and, in particular, the suggestion that Mrs Cox was angry with Mr Cox during the time of their attempts to have the funds returned to the lender. In my view, these matters illustrate nothing more than the obvious stress that Mr and Mrs Cox were sustaining due to them having been exposed to a potentially significant liability arising from the unauthorised behaviour of a person who was supposed to be acting in their interest. Mrs Cox clearly regretted obtaining the pre-approval. So much is clear from her explanation in cross-examination of why she was angry with Mr Cox during the period in which they were attempting to have the funds returned. Also, Mr Cox acknowledged that he wanted the pre-approval despite the reluctance of his wife. However, taken in conjunction with the other evidence in these proceedings, such matters do not support the Plaintiff's claim that Mr Cox effectively conspired with Ms Maloney to invest Loan C without his wife's authority. 159Accordingly, I am not satisfied, on the balance of probabilities, that Mr Cox signed the direction of 7 June 2006. In reaching this conclusion, I have had regard to all the evidence, including that of Ms Brandon (with its difficulties as discussed earlier), the oral evidence of Mr and Mrs Cox and the substantial body of documentation dating from 2006 and 2007 which strongly supports the Defendants in this case. 160With the threshold question of whether Mr Cox signed the direction being answered in the negative, it is not necessary to consider the further issue of whether the signature of Mr Cox alone is sufficient to trigger the debt. Accordingly, I move to consider the subsidiary issues in the proceedings. Resolution of the Subsidiary Issues Did Mr and Mrs Cox Ratify the Direction of 7 June 2006? 161It was submitted for the Plaintiff that, even if the Court finds that the direction was not authorised by Mr and Mrs Cox, it was nevertheless ratified by them to the extent that they are bound by it. This submission proceeds on the basis that Mr and Mrs Cox are found to have been unaware that the Loan C funds were being invested on 7 June 2006. The Plaintiff says that, upon learning that Ms Maloney was in possession of the Loan C funds, Mr and Mrs Cox entered into a series of agreements with Ms Maloney, which amounted to an adoption of the original direction and an acceptance that Ms Maloney had invested the funds on their behalf. 162The Plaintiff relies on three suggested acts of ratification. The first act relied upon is the series of agreements struck between Mr and Mrs Cox and Ms Maloney between September and December 2006 for Ms Maloney to pay back the Loan C funds. The Plaintiff relies also on payments made by Ms Maloney pursuant to these agreements. The second act is a withdrawal made personally by Mr and Mrs Cox from Loan C in October 2006. The third act is the final agreement reached between Ms Maloney and Mr and Mrs Cox, which is embodied in the statutory declaration of 16 February 2007. 163The legal principles upon which the Plaintiff relies, in support of its submission, were summarised by the Court of Appeal (Giles and Tobias JJA, Sackville AJA) in Leybourne v Permanent Custodians Ltd [2010] NSWCA 78 ("Leybourne") at [131]ff: "[131] A principal can ratify the making of a contract entered into by a purported agent when the agent did not in truth have authority to make the contract on behalf of the principal. The ratification has retrospective effect, and the agent is treated as having had the requisite authority: Union Bank of Australia Ltd v McClintock (1922) 1 AC 240 at 248; [McKeand v Thomas] [2006] NSWSC 1028 at [81]; Jones v Peters (1948) VLR 331 at 335. [132] Whether the conduct of the principal amounts to ratification is a question of fact, but there should be 'clear adoptive acts' (Eastern Construction Co Ltd v National Trust Co Ltd (1914) AC 197 at 213 per Lord Atkinson); the conduct must be unequivocal (for example, Petersen v Moloney (1951) 84 CLR 91 at 101). It is well expressed in Dal Pont, Law of Agency, 2nd ed at 5.28 - 'The positive acts of the alleged principal may, aside from any express words, constitute sufficient evidence of ratification. This may be so where the fair inference to be drawn from a person's conduct, on an objective basis, is that the person consents to a transaction to which he or she might properly have objected. Put another way, ratification 'is implied from or involved in acts when you cannot logically analyse the act without imputing such approval to the party whether his mind in fact approved or disapproved or wholly disregarded the question'.' (citations omitted) [133] Acceptance of the benefit of the unauthorised act of the agent with knowledge that the benefit flows from that act will ordinarily suffice (Australian Blue Metal Ltd v Hughes (1961) 79 WN (NSW) 498 at 515; Brockway v Pando [2000] WASCA 192 at [120]). Suing on a transaction brought about by an agent acting beyond authority will also ordinarily mean ratification of the unauthorised transaction: the reason is obvious, see Dal Pont, op cit, at para 5.29 and cases cited. [134] There must be full knowledge of all the material circumstances in which the act was done, unless the principal intends to ratify and take the risk whatever the circumstances (for example, Bremner v Sinclair NSWCA, 3 November 1998; (2001) ANZ Conv R 29 at [32] per Campbell J. The extent of knowledge necessary depends on the particular facts. It should be enough knowledge to decide whether or not to adopt the unauthorised act (Bremner v Sinclair at [32])." 164There are, essentially, four elements that must be satisfied before the Plaintiff can make good this submission. The Plaintiff must establish that there was: (a) a principal; (b) a purported agent who acted without authority; (c) an unauthorised act or acts; (d) ratification of that unauthorised act or acts. 165Mr and Mrs Cox are, of course, the relevant principals, and Ms Maloney is the alleged agent. The unauthorised act is said to have been Ms Maloney giving the direction of 7 June 2006 without authority, and the resulting investment of the Loan C funds. As stated earlier, it is not necessary for the Court to make a positive express finding that Ms Maloney forged the signatures of Mr and Mrs Cox on the direction (although it is likely that this is what happened). For the purpose of determining this issue, it will be assumed that Ms Maloney signed it, and that she did so without the authority of either Mr or Mrs Cox. 166These facts were disputed by Counsel for Mr and Mrs Cox. Therefore, the sole issue in respect of this aspect of the Plaintiff's claim is whether the actions of Mr and Mrs Cox amounted to ratification of the direction of 7 June 2006. 167Assuming that neither Mr nor Mrs Cox signed the direction, nor knew that Ms Maloney was investing the Loan C funds, the first significant event relevant to the determination of this issue is the moment Mr and Mrs Cox became aware that the Loan C funds had been invested. It would appear from the evidence that this occurred some time in about September 2006. 168The key dispute is in respect of what followed the provision of this information. On the Plaintiff's version, this is the point when Mr and Mrs Cox began to negotiate with Ms Maloney, in what the Plaintiff describes as ratification of the original direction of 7 June 2006. Mr and Mrs Cox assert that they instructed Ms Maloney that they did not want the investment and to cancel the account, and that any negotiations that took place amounted to no more than attempts to see this carried out. 169In relation to the first act of ratification, Mr Docker submitted that the correspondence passing between Ms Maloney and the legal representatives for Mr and Mrs Cox, in which attempts were made to have Ms Maloney repay the Loan C funds, constituted unequivocal adoption of the direction of 7 June 2006. The reasoning on which this submission was premised was that, if it can be assumed the direction was unauthorised, Mr and Mrs Cox acquired no liability under the loan agreement. Thus, the only reason for Mr and Mrs Cox to arrange for payments to be made against their arrears would be if they had adopted Ms Maloney's disbursement of the Loan C funds into an investment account and, thereby, had become responsible for them. 170Specifically, the Plaintiff relied on a letter addressed to Deacons, on 17 May 2007. The letter contained the following indication (emphasis added): "We understand that since the issue of the Notice by you that a payment has been made in relation to the arrears. We understand that further payments are to be made." 171Payments were, in fact, made by Ms Maloney against the arrears on Loan C. A document entitled "Loan Statement" was generated by the Plaintiff and indicates money coming into and leaving Mr and Mrs Cox's loan accounts. The Loan Statement for Loan C indicates that a payment of $5,000.00 was made into the account on 20 September 2006. Further payments were made on 28 September 2006, 6 October 2006 and 24 November 2006. Each payment was made by either Ms Maloney or her company, MMC. 172In addition, discussions took place between the parties over a number of weeks, in an apparent attempt to negotiate the applicable interest that had accrued while the Loan C funds sat in the account controlled by Ms Maloney. In correspondence dated 18 December 2006, Creaghe Lisle purported to accept a final figure in respect of this amount: "On the basis that $253,500.00 is transferred to the appropriate loan account on 21 December, 2006 Mr and Mrs Cox will accept the additional sum of $1,666.12 in payment of outstanding interest." 173It was submitted for the Plaintiff that the agreement with respect to the interest that would be paid on the Loan C funds was further evidence of Mr and Mrs Cox adopting the investment. 174The Plaintiff says that money was paid by Ms Maloney to the Plaintiff, in satisfaction of the Loan C arrears, and that the agreements struck between Ms Maloney and Mr and Mrs Cox evinced an adoption of these payments by Mr and Mrs Cox in discharge of their liability under the loan agreement. According to the Plaintiff, this is a sufficient act of ratification. 175The second act of ratification relied upon by the Plaintiff was the withdrawal by Mr and Mrs Cox of a sum of money from Loan C. A sum of $1,731.58 was withdrawn on 11 October 2006, pursuant to a written direction given by Mr Cox on 9 October 2006. This is the occasion on which Mr Cox admitted to placing his wife's signature on the document. The purpose of this withdrawal, according to Mr and Mrs Cox, was to refund monies that were taken via direct debit from a separate account of theirs on 6 October 2006. 176The Loan Statement for Loan C indicates that, after Loan C was drawn down, the Plaintiff attempted to direct debit a sum of money at the beginning of each month from an account previously nominated by Mr and Mrs Cox. This sum represented the monthly repayment owing on Loan C, taking into account the relevant interest rate applicable at a given time. The first direct debit was attempted on 7 July 2006, one month after the initial drawdown. This payment was dishonoured. Further direct debits were dishonoured on 7 August 2006 and 7 September 2006 respectively. The sum debited on 6 October 2006 was the first payment that was not dishonoured. Accordingly, that sum was withdrawn from Mr and Mrs Cox's account. On 9 October 2006, Mr Cox directed the sum be removed from Loan C and placed back in the initial account. 177It was submitted by Mr Docker that the actions of Mr and Mrs Cox in dealing personally with Loan C, by withdrawing money from the account, constituted ratification of the initial direction by adopting a state of affairs in which the Loan C funds were to be drawn upon. 178The third act of ratification contended for by the Plaintiff was the statutory declaration of 16 February 2007. Like the agreements of 2006, it was submitted that the statutory declaration evidenced an acceptance that Ms Maloney had invested the Loan C funds on behalf of Mr and Mrs Cox, and was to make repayments on Loan C. In support of this, the Plaintiff relied on further payments made by Ms Maloney on 14 May 2007 and 23 May 2007, pursuant to the statutory declaration. 179Mr Shepherd submitted that Mr and Mrs Cox simply sought, by whatever means available to them, to get their money back. Mr Shepherd sought to distinguish the principles in Leybourne, on the basis that this was not a case that involved an unauthorised agent entering into an agreement with a third party, as the withdrawal of the funds from Loan C did not create a "new" agreement. In doing so, he sought to characterise the behaviour of Ms Maloney as a misappropriation of funds. It was submitted that entering into an agreement to recoup the stolen funds did not amount to ratification of the original theft. 180In response, Mr Docker submitted that the principle of ratification was not restricted to the actions of a purported agent making a contract on behalf of the principal, and can extend to any unauthorised transaction. 181In my view, it is not necessary for the Court to rule on this question as, for the reasons that follow, I do not consider that it affects the resolution of the present issue. 182I am not persuaded that the actions of Mr and Mrs Cox amounted to ratification. 183Upon learning that Ms Maloney was in possession of the Loan C funds, Mr and Mrs Cox entered into a protracted period of negotiation with Ms Maloney, the intended purpose being to ensure Ms Maloney paid back the funds into Loan C and negated the debt. Plainly, there were agreements sought in this respect. In my view, however, agreement between the parties that the funds would be repaid does not, of itself, amount to ratification of the initial investment. In fact, one would expect that, if Mr and Mrs Cox wished to agree ex post facto to the funds being invested, they would have given a written or verbal indication to that effect. The evidence simply does not demonstrate that this was the case. 184The correspondence reveals that Mr and Mrs Cox expressed, in clear terms, that they did not agree to the investment of the Loan C funds and wanted the investment cancelled. This is evident in the first letter written by their legal representatives on 23 October 2006. It is also apparent from the further directions given on 14 September 2006. From Ms Maloney's response dated 8 November 2006, it is clear that Ms Maloney assented to this. She agreed to the return of the money to the Plaintiff and the cancellation of the facility. 185In addition to the contemporaneous documentation, I have had regard, as well, to the evidence given by Mr and Mrs Cox with respect to their actions after learning that Ms Maloney had invested the funds. As I have stated in determining the primary issue in these proceedings, I find no reason to reject their evidence on this aspect. 186The practical reality of Mr and Mrs Cox's position was that Ms Maloney had drawn down the Loan C funds without their authority. Thereafter, Mr and Mrs Cox wished a practical solution to this problem so that they were not at risk. Opportunities were presented to Ms Maloney, which she did not meet. 187In my view, none of the matters to which the Court was directed give rise to a situation where the Court ought conclude, as a matter of fact and law, that Mr and Mrs Cox ratified the unauthorised actions of Ms Maloney in drawing down the Loan C funds on 7 June 2006. 188It is significant that Mr and Mrs Cox did not obtain a benefit from the investment of the Loan C funds. It is true that negotiations were undertaken in respect of the interest that ought be paid to Mr and Mrs Cox for the period that the Loan C funds were invested. The interest, however, was to be paid back into Loans A and B. It was not to be paid into a separate account, and there was no financial benefit to be obtained by Mr and Mrs Cox from any interest that may have been earned by Ms Maloney on the invested money. 189Finally, in respect of the actions taken by Mr and Mrs Cox to personally withdraw money from Loan C, I do not accept that this ratified the direction of 7 June 2006. In circumstances where that was the first occasion on which Mr and Mrs Cox actually lost money by reason of repayments on Loan C, it is understandable that they might take steps to have the money refunded to them. The fact that Ms Maloney and the lender acquiesced is only supportive of the state of affairs as perceived by Mr and Mrs Cox. In any event, this is but one matter that must be taken into account along with the other evidence that bears on this issue. 190The test which the Plaintiff is required to satisfy is a strict one. It is an objective assessment, requiring unequivocal acts of adoption on the part of the principals. 191Whether or not the steps taken by Mr and Mrs Cox made commercial sense, it has not been shown that there was unequivocal adoption of the direction of 7 June 2006. In fact, the evidence demonstrates that Mr and Mrs Cox made clear their disapproval of the drawdown and investment of the Loan C funds, as well as their desire that Ms Maloney undo what she had done without their permission. 192Accordingly, I reject this part of the Plaintiff's claim. Acknowledgement of Receipt of Valuable Consideration 193The Plaintiff contends that, notwithstanding the authorship of the direction of 7 June 2006, the Defendants acknowledged receiving valuable consideration in the sum of $598,500.00 pursuant to the mortgage (being the total loan advanced by the lender in Loans A, B and C). Accordingly, the Plaintiff submits that the Defendants are liable to repay that sum. 194The Plaintiff relied upon the following statement from Perpetual Trustees Victoria Limited v English & Anor [2010] NSWCA 32 ("PTVL v English"), where Sackville AJA (Allsop P and Campbell JA agreeing) said at [68]: "Generally speaking, if the mortgagee specifies a sum of money (plus interest) as the amount secured by the mortgage, the charge created by the mortgage will secure the amount so specified even if the document creating the indebtedness is void under general law principles: Small v Tomassetti." 195As previously stated, a mortgage was executed in favour of the Plaintiff on 7 June 2006. The mortgage was registered on 20 June 2006. There is no issue as to its validity. 196The mortgage specified "Raymond Allan Cox and Susan Jane Cox" as mortgagor, and the Tathra and Wagga properties were identified as the subject of the security. The mortgage contained a brief schedule of provisions ("the Schedule"), clause 1 of which also incorporated a Memorandum of Common Provisions ("the Memorandum"). Clause 3 of the Schedule provided that any inconsistency between the Memorandum and the Schedule was to be resolved in favour of the Schedule. 197The relevant acknowledgement relied upon by the Plaintiff is contained in clause 2 (being the second clause numbered "1") of the Schedule, which provides as follows (emphasis added): "You acknowledge giving this mortgage and incurring obligations and giving rights under it for valuable consideration of $598,500.00 received from Us which You agree to repay together with interest and Expenses in accordance with the Memorandum of Common Provisions." 198Resolution of this issue will depend upon the proper construction of clause 2 of the Schedule. 199Mr Docker submitted that the effect of clause 2 was that the whole amount of $598,500.00 was repayable by Mr and Mrs Cox, regardless of whether they authorised the drawing down of funds from any of the three facilities. 200Mr Shepherd submitted that Mr and Mrs Cox cannot be liable for that part of the loan funds which they did not receive. In circumstances where the Defendants neither authorised the drawing down of funds, nor actually received them, it was contended that the requirement in clause 2 that the $598,500.00 be "received" was not satisfied. Mr Docker submitted, in response, that the relevant consideration was "received" when the funds were made available as a line of credit. 201In light of the evidence as to the nature of the loan transaction, I accept that clause 2 of the Schedule was capable of creating an obligation on the part of Mr and Mrs Cox to repay. 202However, the words "in accordance with the Memorandum of Common Provisions" form an important part of clause 2. This phrase refers to the manner in which Mr and Mrs Cox were required to repay. These words are most instructive in the construction of clause 2, to which I now turn. 203Part 2 of the Memorandum is entitled "Mortgage Obligations". Clause 2.2 provides as follows (emphasis added): "The Mortgage is security for payment to Us of the Secured Money and for the performance of all of your obligations under the Mortgage. You agree to pay the Secured Money as and when the Secured Money becomes due and payable in accordance with the provisions of each Secured Agreement or the Mortgage." 204"Secured Money" is defined in clause 1.1 as: " ... all amounts that are payable at any time or are contingently owing or payable to Us under a Secured Agreement ..." 205"Secured Agreement" means: " ... any present or future agreement between Us, and You or any of You that You acknowledge in writing to be an agreement secured by the Mortgage ..." 206"You" is defined in clause 1.1 to mean "the person or persons named in the Mortgage Form as the Mortgagor". It follows that "Us" is defined as "the person or persons named in the Mortgage Form as the Mortgagee". 207Mr Docker advanced a submission that the promise to repay contained in clause 2 of the Schedule was, of itself, a "Secured Agreement" for the purpose of clause 2.2 of the Memorandum. Consequently, it was submitted that that promise constituted a stand-alone obligation to repay the whole amount contained therein. 208I do not accept this submission. Clause 2 simply states that the mortgagor is obliged to repay the sum of $598,500.00. It does not provide for the manner by which the money is to be repaid, other than to direct the reader's attention to the Memorandum. The Memorandum is silent in respect of the terms of repayment. Instead, it says the "Secured Money" must be repaid "as and when [it] becomes due and payable in accordance with the provisions of each Secured Agreement. ...". 209If clause 2 of the Schedule constituted the relevant "Secured Agreement", as contended by the Plaintiff, a rather cumbersome and unworkable construction would result. I do not accept this construction. 210In my view, the appropriate and correct construction is that the loan agreement, secured by the mortgage, constituted the relevant "Secured Agreement". 211A document entitled "Loan Offer" was provided to Mr and Mrs Cox on 24 May 2006. Part 5 of that document is headed "Security", and provides as follows: "By accepting this Offer You agree that the following new Security is to be provided to the Lender for the Loan: First registered mortgage over the properties located at Lot [X] of Section [XX] in DP [XXXXXX] 11 John Taylor Crescent TATHRA NSW 2550 AND Lot [XX] in DP [XXXXX] and Lot 1 in DP [XXXXXX] 11 Beauty Point Avenue [WAGGA WAGGA] NSW 2650" 212The properties referred to in the preceding paragraph correspond with those specified in the mortgage. 213Mr and Mrs Cox accepted the "Loan Offer" by affixing each of their signatures to it on 25 May 2006. This document became the loan agreement that is referred to throughout this judgment. Once accepted, the "Loan Offer" constituted a "Secured Agreement" for the purposes of clause 1.1 of the Memorandum. 214Therefore, the issue turns on the terms and conditions of the "Loan Offer", and the manner specified therein by which Mr and Mrs Cox were required to make repayments. 215At the outset, I observe that nowhere in the terms and conditions of the "Loan Offer" does it state that the "Secured Money" (that is, the total sum of $598.500.00) is payable in full, regardless of what action is taken by the borrower. Instead, when regard is had to the terms and conditions as a whole, and to the nature of the agreement, it is clear that the repayments required on the part of Mr and Mrs Cox depended entirely on the amounts actually drawn down. 216For example, the front page of the "Loan Offer" contains a table setting out the basic features of the three facilities provided under the loan. Under the heading "Repayments - Facility 3", the following conditions appear (emphasis added): "During the interest only period (ie, from the Date of First Advance to the Interest Only Expiration Date) Your monthly payment is $1658.31 ('Notional Monthly Repayment') in the event that your Facility is drawn down in full on the Date of First Advance. If You do not draw down your Facility in full on the Date of First Advance, We shall recalculate your monthly payment and promptly advise You in writing of a reduced monthly payment. ..." 217Additionally, under Part 7 of the "Loan Offer", entitled "Disbursement of the Loan", there is the following: " ... You must complete a disbursement order which tells the Lender to whom and in what amounts your Loan is to be paid." 218Further, Part 9 of the Loan Offer is entitled "Special Conditions". Special Condition (1) states: "Clause 2.1 of the Terms and Conditions is amended by the deletion of the sentence 'At least 85% of the amount of the Facility must be drawn on the Date of First Advance.'" 219It was not submitted by the Plaintiff that the obligation to repay under the "Loan Offer" was triggered other than in the event of a disbursement. This was, in fact, the premise that underpinned the primary issue in these proceedings. 220In my view, the loan terms and conditions disclose the true nature of the transaction between the Plaintiff and Mr and Mrs Cox. That is, the Loan C funds were available in an undrawn facility, requiring appropriate direction from Mr and Mrs Cox as to how the funds were to be disbursed. The monthly repayment was calculated by reference to the sums actually drawn down and the amount outstanding. Further, there was no mandate requiring any minimum figure to be drawn down by Mr and Mrs Cox. 221As stated earlier, the Plaintiff relied on the principle that where a mortgage specifies a sum of money as being secured, the mortgage will secure that sum, even if the document giving rise to the debt is void under general law principles: Small v Tomassetti [2001] NSWSC 1112; (2002) NSW ConvR 56-011 at [12]-[15]. 222Small v Tomassetti concerned two mortgages that contained express covenants to repay a specified sum, in similar terms to the present case. The primary issue in that case, however, was not whether the mortgagor acknowledged an obligation to repay. Rather, it was whether the mortgagee was entitled to enforce the debt in circumstances where the mortgage and loan documentation were subject to forgery. The decision illustrates that, where mortgage and loan documentation are forged and the mortgage is subsequently registered, the principle of indefeasibility will protect the right of the mortgagee to enforce the debt only in circumstances where the debt itself is contained or incorporated in the mortgage document. 223A number of decisions have considered this principle: Perpetual Trustees Victoria Ltd v Tsai [2004] NSWSC 745; (2004) 12 BPR 22,281 at [13]; Yazgi v Permanent Custodians Limited [2007] NSWCA 240; (2007) NSW ConvR 56-195 at [21]; Provident Capital Ltd v Printy [2008] NSWCA 131; (2008) 13 BPR 25,199 at [16] and [40]; PTVL v English at [68]; Van den Heuvel v Perpetual Trustees Victoria Ltd [2010] NSWCA 171; (2010) 15 BPR 28,647 at [135]. Several of these decisions were relied upon by the Plaintiff. 224In my view, the cases referred to in the preceding paragraph do not bear upon the present question. This case does not concern the issue of indefeasibility. Moreover, the loan and mortgage documentation in the present case were not forged. Instead, the document subject to conjecture concerning the authenticity of the signatures it bore, was the direction of 7 June 2006. This document was ancillary to, and created after, the mortgage. What distinguishes this case from those relied upon by the Plaintiff is that, upon acceptance of the "Loan Offer" and registration of the mortgage, no debt was effectuated in law. This is because, upon a proper construction of the "Loan Offer", the Plaintiff was not entitled to call in the loan automatically. What was required was a lawful drawing down of funds by Mr and Mrs Cox before they could be liable. 225What the authorities do illustrate is the necessity to consider each mortgage instrument on its own terms, and that the determination of what is secured by a mortgage will depend on a proper construction of the specific covenants contained therein: PTVL v English at [12]. 226In the present case, the direction of 7 June 2006 did not attract the protection of indefeasibility. Therefore, it was liable to be struck out because of fraud. Once the direction was void, the Plaintiff still retained a mortgage securing the sum of $598,500.00, but was not entitled to enforce that mortgage until some lawful drawdown had occurred. 227I note that clause 3 of the Schedule states that, "If the wording of the memorandum is inconsistent with this schedule, this schedule prevails". I do not consider that this operates against the construction I have applied to clause 2 of the Schedule. Nothing in clause 2 is inconsistent with the relevant provisions of the Memorandum which, in turn, direct attention to the terms of the "Secured Agreement" (which, as stated at [217], constituted the "Loan Offer" of 24 May 2006). In my view, this is entirely consistent with the meaning of the phrase "in accordance with the Memorandum of Common Provisions". 228I have had regard for the text of clause 2 of the Schedule. I have considered the meaning of that clause in the context of the agreement as a whole: Australian Broadcasting Commission v Australasian Performing Right Association Limited [1973] HCA 36; 129 CLR 99 at 109. The fact that the mortgage and "Loan Offer" are in separate documents does not constitute an impediment to the Court giving a clause from the latter document a construction that is consistent with the former (and vice versa): McVeigh (Trustee of the Bankrupt Estate of Piccolo) v National Australia Bank Ltd and Anor [2000] FCA 187 at [29]-[30]. 229In circumstances where the mortgage secured the "Loan Offer" document, I consider that the documents ought be construed as a single transaction, notwithstanding that each were executed on occasions briefly separated in time. 230For these reasons, I reject this aspect of the Plaintiff's claim. The Cross-Claim 231Having regard to these findings, it is not necessary to consider the Cross-Claim. I should observe, however, that, if a finding had been made that Mr Cox had signed the direction of 7 June 2006, then it would have been both open and appropriate on the evidence for the Court to grant relief to Mrs Cox on the Cross-Claim, so that she did not have to bear the consequences of that conduct. 232However, no more need be said concerning the Cross-Claim given the findings made on the Plaintiff's claim. Conclusion and Orders 233On the various bases advanced by the Plaintiff in support of its claim for relief, I find in favour of the Defendants. 234The expected outcome, consistent with these reasons, would be a verdict in favour of the Defendants, dismissing the Plaintiff's claim with costs following the event. 235However, in the event that some different formulation of orders is appropriate in the circumstances of the case, I will request the parties to bring in appropriate Short Minutes of Order to give effect to these reasons. ********** 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: 31 October 2013