Commonwealth Bank of Australia v Aspenview Productions and Ors [2001] VSC 444

5. On 10 March 1992 in those proceedings a default judgment in favour of the plaintiff was entered against the third defendant, Drieberg, in the sum of $77,802.70 which included interest on the sum claimed, together with costs.

8. On 4 October 1992 in those proceedings a default judgment was entered in favour of the plaintiff against the second defendant, O'Brien, for the sum of $84,551.78 which included interest on the sum claimed together with costs against that defendant.

11. On 1 June 1994 it was ordered by the Registrar of the County Court that those proceedings in the County Court be transferred to this Court pursuant to s. 21(1) of the Courts (Case Transfer) Act 1991. At that time the only remaining defendant to the proceeding, against whom judgment had not been entered, was Alexander McLean.

14. On 6 October 1997 an order was made in this Court adding as defendants to those proceedings the fourth and fifth defendants, Lana Dorothy McLean and Krystyna Masluk. The defendants, Alexander McLean and Lana McLean, are husband and wife. The defendant, Krystyna Masluk, is the mother of Lana McLean.

17. On 6 October 1997 it was further ordered that the plaintiff have leave to amend its statement of claim. Pursuant to the amended statement of claim the plaintiff alleged that by an agreement in writing dated 1 November 1989 the plaintiff agreed to grant to Whiteboards of Australia financial accommodation and that on 2 November 1989 the defendants, Alexander McLean, Peter O'Brien and Darrel Drieberg, executed and gave to the plaintiff a guarantee in writing whereby they jointly and severally guaranteed to the plaintiff payment of all moneys due and payable by Whiteboards of Australia to the plaintiff. It was alleged that on or about 2 October 1991, pursuant to the guarantee, the plaintiff gave to the defendants, Alexander McLean, O'Brien and Drieberg, a written demand for payment of the amount outstanding by Whiteboards of Australia as at 2 October 1991 and that such defendants had refused or neglected to pay the amount outstanding to the plaintiff. The plaintiff claimed against the defendants, Alexander McLean, O'Brien and Drieberg (notwithstanding that judgment had been entered against O'Brien and Drieberg), payment of the sum of $152,088.27 together with interest then accruing. The plaintiff further alleged that at all material times Alexander McLean and Lana McLean were the registered proprietors of and in possession of land described in Certificates of Title being Volume 9956 Folio 761, Volume 9956 Folio 762, Volume 9956 Folio 763 and Volume 9956 Folio 764. The properties the subject of those Certificates of Titles are situate at 1 Alfred Street, Prahran ("the Prahran Property"). The property described in Certificate of Title 9956 Folio 761 is known as Unit 1, 1 Alfred Street Prahran ("Unit 1"). The property described in Certificate of Title Volume 9956 Folio 762 is known as Unit 2, 1 Alfred Street, Prahran ("Unit 2"). The property described in Certificate of Title Volume 9956 Folio 763 is an accessory unit to Unit 1 and referred to as Unit 3. The property described in Certificate of Title Volume 9956 Folio 764 is an accessory Unit to Unit 2 and referred to as Unit 4. The plaintiff alleged that by a mortgage in writing dated 10 December 1986 the defendants, Alexander McLean and Lana McLean, for valuable consideration, granted to the plaintiff a mortgage over the Prahran Property and that pursuant to the terms of that mortgage Alexander McLean and Lana McLean agreed to pay to the plaintiff on demand all moneys then or thereafter payable to the plaintiff by Aspenview Productions Pty Ltd ("Aspenview Productions"), Alexander McLean and Lana McLean or any of them either alone or on joint or partnership account or on any other account and whether as principal or surety and, further, to pay to the plaintiff all moneys the payment or repayment of which Aspenview, Alexander McLean and Lana McLean or any of them had guaranteed or may thereafter guarantee to the plaintiff. The plaintiff alleged that by notice in writing dated 12 August 1996 it demanded repayment by Alexander McLean and Lana McLean of the moneys secured by the Prahran Property mortgage, but that in breach of the mortgage they had failed, refused and neglected to pay the sums outstanding and secured by that mortgage. The plaintiff alleged that it was entitled to possession of the Prahran Property pursuant to the terms of the mortgage. Further, the plaintiff alleged that by a caveat dated 6 December 1991 and lodged at the Office of Titles the fifth defendant, Krystyna Masluk, had claimed an equitable estate in fee simple of that part of the Prahran Property described in Certificates of Title Volume 9956 Folio 762 and Volume 9956 Folio 764 (Units 2 and 4) on the grounds that she was the transferee of that property and, further, forbidding registration of any person as a transferee of such part of the Prahran Property. It was alleged by the plaintiff that the fifth defendant, Krystyna Masluk, did not have the interest or any interest in the Prahran Property as claimed by her or alternatively, if she was entitled to the interest claimed, that interest was postponed to the interests of the plaintiff under the terms of the Prahran Property mortgage and that it was adversely affected by that caveat. The plaintiff further alleged that Krystyna Masluk was in possession of Units 2 and 4 of which it was entitled to possession.

20. In those proceedings the plaintiff claimed against Alexander McLean and Lana McLean payment of the sum of $152,088.27 together with interest accruing and possession of the Prahran Property. As against Krystyna Masluk the plaintiff claimed a declaration that any interest that she had in Units 2 and 4 of the Prahran Property was postponed to the interest of the plaintiff, or alternatively, an order for removal of the caveat in respect of Units 2 and 4 and possession of the property being Units 2 and 4.

23. By her defence in those proceedings, Krystyna Masluk admitted lodging the caveat in respect of the property being Units 2 and 4, she denied that she did not have the interest alleged in Units 2 and 4, she admitted that she was in possession of that property but denied that the plaintiff was entitled to possession of the same. She further alleged that in or about August 1988 she and Alexander McLean and Lana McLean agreed that in consideration of her selling her property at 17 Written Avenue, East Brighton and using the proceeds of the sale of the property to contribute to the purchase by Alexander McLean and Lana McLean of the Prahran Property and to the sub-division and renovation costs of that property they would transfer Units 2 and 4 to her. She alleged that it was a term of the agreement which she had with Alexander McLean and Lana McLean that the agreement would be subject to the plaintiff's consent and to the plaintiff agreeing to a proposed sub-division of the Prahran Property (into four units) and providing to her clear title of Units 2 and 4. She alleged that in or about August 1988 Alexander McLean informed the plaintiff that she wanted to purchase free of all encumbrances Unit 2 following a strata sub-division of the Prahran Property and requested the plaintiff's consent to the same. She alleged that in or about mid-August 1988 the plaintiff represented to Alexander McLean that it would consent to the agreement and that it would be prepared to discharge its mortgage over the proposed Unit 2 to enable registration of a transfer of that unit and accessory Unit 4 to her and that on or about 28 August 1988 Alexander McLean and Lana McLean informed her of that which the plaintiff had so represented to Alexander McLean. She alleged that acting on the faith of the representation of the plaintiff she signed a contract of sale of her East Brighton home on or about 26 September 1988; that she agreed with Alexander McLean and Lana McLean to pay $160,000 towards the purchase of the Prahran Property; that on or about 24 November 1988 she paid $13,000 towards the renovation of the Prahran Property; that in December 1988 she moved into Unit 2 of the Prahran Property; that on 9 February 1989 she paid $160,000 being the purchase of a two thirds interest in Units 2 and 4 of the Prahran Property and that during the period from January to April 1989 she paid $7,000 in cash for work to be done to complete Unit 2 of the Prahran Property. It was further alleged by Krystyna Masluk that in or about mid-1989 Alexander McLean informed the plaintiff that she had paid her two thirds share in Units 2 and 4, that in or about late June 1989 the plaintiff informed Alexander McLean that the title for Unit 2 would need to be released so that the transfer to her could be completed, and requested Alexander McLean to let it know when the title was required as the plaintiff would then arrange for a discharge of the mortgage in respect of Units 2 and 4. Krystyna Masluk further alleged that on 7 December 1989 an application for approval of strata sub-division for the Prahran Property was lodged and that the plaintiff made available the Certificates of Title relevant to the Prahran Property and thereafter the strata sub-division was approved and registered. Further, Krystyna Masluk alleged that the plaintiff had refused when requested to make available a discharge of its mortgage over Units 2 and 4 of the Prahran Property. She alleged that the plaintiff was estopped from denying that she was entitled to be registered as the proprietor of Units 2 and 4 of the Prahran Property. By its reply to the defence of the fifth defendant the plaintiff denied that it had any dealings with Krystyna Masluk and alleged that if there was any arrangement to the effect, as contended for by her, such arrangement did not constitute an enforceable agreement. Further, the plaintiff alleged that if it did state that it would be prepared to discharge its mortgage over the proposed Units 2 and 4, to enable registration of the transfer to Krystyna Masluk, the statement made was to the effect that the plaintiff was prepared to do that, provided that the value of the security retained by the plaintiff at the time of the discharge was in excess of the amounts of money then secured by the mortgage and was sufficient to satisfy the plaintiff's security requirements. The plaintiff further alleged by its reply that Krystyna Masluk had failed to take steps to obtain the discharge of the mortgage insofar as it related to Units 2 and 4 when her entitlement arose, promptly or at all, that she permitted the plaintiff to continue to provide banking accommodation in reliance upon the mortgage over the whole of the land the subject of the mortgage and that Krystyna Masluk was guilty of laches and delay in failing to act or to promptly act to obtain a discharge of the mortgage. Further, the plaintiff by its pleading, alleged that Krystyna Masluk did not pay any sums to Alexander or Lana McLean to obtain any interest in Units 2 and 4 and that the purported transfer of two thirds of their interest in Units 2 and 4 to Krystyna Masluk was in consideration of natural love and affection of her.

26. By their amended defence and counterclaim, Alexander McLean and Lana McLean, while not admitting that Alexander McLean had entered into a guarantee guaranteeing payment to the plaintiff of Whiteboards of Australia's debts, further alleged, in the alternative, that in or about October and November 1989 the plaintiff represented to the defendant, Alexander McLean, that the guarantee to be given by him to the plaintiff in respect of the indebtedness of Whiteboards of Australia would be limited to one-third of the indebtedness of Whiteboards of Australia to the plaintiff by reason that the plaintiff would also obtain guarantees from O'Brien and Drieberg which would cover their potential exposure of the indebtedness of Whiteboards of Australia to the plaintiff. They alleged that such representations were false and untrue as known to the plaintiff, that they were made to induce Alexander McLean to execute the guarantee and in reliance on the same he was induced to enter into the guarantee. They alleged that the plaintiff was estopped from enforcing the guarantee against Alexander McLean save to the extent of one-third of the alleged debt owing by Whiteboards of Australia. They further alleged that in or about July 1988, Alexander McLean, on behalf of himself and Lana McLean, informed a manager of the plaintiff, Murray, that Krystyna Masluk was considering selling her home and wished to live in part of the Prahran Property which was to be the subject of a strata title sub-division and, that she would do so on the basis of purchasing a unit or major interest therein and, that he asked the manager would the plaintiff agree to release Units 2 and 4 from the mortgage should Krystyna Masluk decide to live with him and his family. It is alleged that the manager, Murray, informed Alexander McLean that at the relevant time the plaintiff would release the title of the property for the purpose of a strata title sub-division being registered and that he would make arrangements for the discharge of the mortgage insofar as it related to Unit 2. Alexander McLean and Lana McLean alleged that acting on the faith of such representations they agreed that in consideration of Krystyna Masluk selling her property at East Brighton and using the proceeds of sale to contribute towards the purchase of the Prahran Property they would transfer to her proposed Units 2 and 4 from the same and that they informed Krystyna Masluk of these matters. They alleged that acting on the faith of such representations Krystyna Masluk sold her property in East Brighton and from the proceeds of sale contributed to the purchase of the Prahran Property and, further, made payments towards renovation, in particular, of Unit 2. It was further alleged by Alexander McLean and Lana McLean that on informing the manager of these matters the manager of the plaintiff confirmed the agreement to release, as security under the mortgage, title to proposed Units 2 and 4 that they carried out substantial renovations and alterations to the Prahran Property, that the plaintiff made the relevant Certificates of Title available for the strata sub-division to be approved and registered and thereafter the manager confirmed that the security under the mortgage was to be restricted to Unit 1 (which would include Unit 3), but the plaintiff had refused to release the title to enable Krystyna Masluk's interest in Units 2 and 4 to be registered and it had refused to discharge the mortgage insofar as it related to Units 2 and 4. The defendants, Alexander and Lana McLean, alleged that the plaintiff was estopped from enforcing the mortgage save in respect as it related to and provided security for a housing loan to Alexander and Lana McLean and security for advancements to Aspenview Productions insofar as it related to a business known as St Martins Garage. Alexander McLean and Lana McLean alleged that the plaintiff was estopped from enforcing the mortgage save for those limited securities, that it would be unconscionable for the plaintiff to enforce the mortgage save in respect of such secured indebtedness. They denied that the plaintiff was entitled to possession of the Prahran Property. Further, by counterclaim, they alleged that the plaintiff was estopped from recovering against them any sum more than one-third of the alleged debt of Whiteboards of Australia. Alexander McLean and Lana McLean sought orders that the guarantee be set aside, in the alternative a declaration that the plaintiff was estopped from enforcing the guarantee save as to one-third of the alleged liability of Whiteboards of Australia, and a declaration that any sum owed by Whiteboards of Australia to the plaintiff was not the subject of the mortgage. Further, Alexander McLean and Lana McLean sought a declaration that the plaintiff was estopped from enforcing the mortgage save in respect of the property being Units 1 and 3 of the Prahran Property. By its reply the plaintiff joined issue with the defence and counterclaim of Alexander McLean and Lana McLean.

29. Proceedings 8085 of 1993 were commenced in this Court by the plaintiff against Aspenview Productions (trading as St Martin's Garage), Alexander McLean and Lana McLean. Those proceedings were commenced by a writ filed on 18 August 1993. By order of a Master made 6 October 1997, Krystyna Masluk was joined as a fourth defendant to the proceedings and leave was granted to the plaintiff to amend its statement of claim. By the plaintiff's further amended statement of claim, made pursuant to leave granted on 5 February 1999 and on 2 March 2001, the plaintiff alleged that pursuant to an agreement made on 21 November 1986 between the plaintiff and Aspenview Productions it agreed to provide financial accommodation to Aspenview Productions from time to time and, pursuant to the agreement, it continued to grant accommodation under an overdraft account being account number 3170-120-375 (the first account), that it continued to grant an increase accommodation under account number 3170-132-173 (the second account) and it opened account number 3170-146-647 (the third account) and that at the request of Aspenview Productions it lent moneys to it from time to time and performed work and labour and incurred expenses in relation to the operation of such accounts. The plaintiff alleged that as at 11 December 1992 Aspenview Productions was indebted to it under these accounts in the total sum of $176,096.86 and that on that day by notice served on Aspenview Productions it demanded payment of that sum, but that in breach of the agreement Aspenview Productions refused, failed and neglected to pay the sum owing to the plaintiff. The plaintiff further alleged that at all material times Alexander McLean and Lana McLean were the registered proprietors of and in possession of the Prahran Property and by the mortgage dated 10 December 1986 for valuable consideration they granted to the plaintiff a mortgage over that property. Again, the plaintiff alleged, as previously referred to, that the mortgage was an "all moneys" mortgage and that by its terms, Alexander McLean and Lana McLean agreed to pay to the plaintiff on demand all moneys which they or any of them had agreed or thereafter agreed to pay to the plaintiff whether as a principal or a surety. The plaintiff in these proceedings alleged that pursuant to the provisions of the Transfer of Land Act 1958 it had demanded repayment by Alexander McLean and Lana McLean of the moneys secured by the mortgage over the Prahran Property, that they had failed and neglected to pay the same and that it was entitled to possession of the Prahran Property. They further alleged that although serving notice on Alexander McLean and Lana McLean for payment of the sum of $176,096.86 as due and owing by Aspenview Productions they had failed and neglected to pay that sum. The plaintiff further made allegations against the fourth defendant, Krystyna Masluk, relating to Units 2 and 4 of the Prahran Property, of the same nature and kind as referred to in the other proceedings. Against Aspenview Productions the plaintiff claimed payment of the sum of $191,636.39 together with interest accruing. Against Alexander McLean and Lana McLean it sought an order for possession of the Prahran Property and payment of the aforesaid sum, and against Krystyna Masluk it sought a declaration that any interest that she had in the land being Units 2 and 4 was postponed to the interest of the plaintiff, or alternatively, an order for removal of the caveat and possession of the land being Units 2 and 4.

32. By her defence filed on 19 December 1997 Krystyna Masluk sought a declaration that the plaintiff was estopped from denying that she was entitled to be registered free of all encumbrances as the proprietor of the property being Units 2 and 4 of the Prahran Property and an order that the plaintiff deliver to her a signed discharge of the mortgage insofar as it related to and affected that property. In seeking such relief Krystyna Masluk relied on pleadings in much the same terms as in Action No. 6398 of 1994.

35. By the further amended defence and counterclaim of Aspenview Productions, Alexander McLean and Lana McLean, amended pursuant to leave granted during the course of the trial on 14 March 2001, they admitted that Aspenview Productions had maintained the aforesaid accounts with the plaintiff. They alleged that from mid-1988 and thereafter a substantial proportion of the funds advanced to Aspenview Productions, to the knowledge of the plaintiff, was used to pay expenses relating to the establishment and conduct of the business of Whiteboards of Australia, which business was formerly part of a stand-alone business conducted by Aspenview Productions and known as "Whiteboards Office and Domestic". They alleged that in or about March 1988 Alexander McLean for and on behalf of Aspenview Productions had discussions with Murray a manager of the plaintiff at its South Yarra branch during which Murray was informed that Aspenview Productions was selling its business "Whiteboards Office and Domestic" to the company Whiteboards of Australia which company was to be owned as to 50% by a company (the shareholding of which was to be held as to 75% by him and Lana McLean and as to 25% by O'Brien and Drieberg), 331/3 % by an investment company which would invest $133,000 and as to 162/3 % by a guarantee company. They alleged that Alexander McLean informed the manager that the purpose of setting up the guarantee company was to ensure that his potential liability would be limited to one-third. It was alleged that Alexander McLean informed the manager that Aspenview Productions would continue to run and conduct the business, St Martin's Garage, that he was concerned that moneys expended in establishing and conducting Whiteboards of Australia would, as directed by the plaintiff's manager, be borne initially by them and then by Whiteboards of Australia following its incorporation. It was further alleged that Alexander McLean informed the manager that they had very little experience in business finance. By this further amended defence it was further alleged that the manager for and on behalf of the plaintiff advised Alexander McLean that he was very experienced in arranging and conducting the finance of businesses such as Whiteboards of Australia and that after Whiteboards of Australia was incorporated the plaintiff would arrange procedures and transactions necessary for effecting a transfer of the amount expended by Aspenview Productions in establishing and conducting the Whiteboards of Australia's business to an account in the name of Whiteboards of Australia which would limit Alexander McLean's exposure to that of one-third of the debt of Whiteboards of Australia. It was alleged that in reliance on the representations made by the plaintiff, Aspenview Productions expended substantial sums of money, pursuant to accommodation provided by the plaintiff, in establishing and conducting Whiteboards of Australia's business. It was further alleged that in reliance on the representations made by the manager, Murray, Aspenview Productions by Alexander McLean in conjunction with O'Brien and Drieberg caused bank accounts to be established with the plaintiff and caused Whiteboards of Australia's banking business to be conducted through such accounts and that Aspenview Productions expended moneys provided by financial accommodation provided by the plaintiff to it to fund the conduct of Whiteboards of Australia's business until 17 May 1990. It was alleged that contrary to the representations of the manager, Murray, made on behalf of the plaintiff it failed and refused to take measures to effect a transfer of the debt from Aspenview Productions to Whiteboards of Australia notwithstanding that the defendants and Whiteboards of Australia requested the plaintiff to do so.

38. The defendants further alleged that on 18 July 1991 Whiteboards of Australia was insolvent and Alexander McLean resigned as a director thereof and in or about December 1991 it ceased to conduct business. They alleged that by reason of the plaintiff's failure and or refusal to allow and or to institute measures and transactions necessary to effect a transfer of the debt from Aspenview Productions to Whiteboards of Australia, Aspenview Productions had been left with a debt as alleged to be outstanding to the plaintiff and that Alexander McLean and Lana McLean had been left with an alleged outstanding debt under the mortgage registered over the Prahran Property. The defendants alleged that it would be unjust and unconscionable for the plaintiff to be entitled to recover from Aspenview Productions moneys provided to it by way of financial accommodation by the plaintiff or to recover from Alexander McLean and Lana McLean, pursuant to the Prahran Property mortgage, such amounts allegedly owing thereunder being the total amount of moneys expended by the defendants in establishing and conducting the Whiteboards of Australia's business during the period from late 1987 to July 1991 and that the plaintiff was estopped from doing so.

41. As to the title to and possession of Units 1 and 3, and Units 2 and 4 of the Prahran Property, the alleged acquisition by Krystyna Masluk of an interest in Units 2 and 4 and the rights for her to be registered as the proprietor of the same and to have possession of the same, the first, second and third defendants pleadings in these proceedings were much the same as in the other proceedings referred to. Alexander McLean and Lana McLean alleged in these proceeding that they held Units 2 and 4 of the Prahran Property on trust for Krystyna Masluk. Further, Alexander McLean and Lana McLean alleged that the plaintiff failed to disclose to them that by the terms of the mortgage any debt of Alexander McLean under any security that he might enter into with it would affect the rights of Lana McLean under the mortgage and so affect her obligations to the plaintiff pursuant to the mortgage. It was further alleged by Alexander McLean and Lana McLean that by the plaintiff failing to disclose this matter to them and that, in consequence of representations made by the plaintiff's manager, they acted to their detriment in that they executed the mortgage, signed Letters of Acknowledgment of the debt of Aspenview Productions to the plaintiff and failed to recover from Whiteboards of Australia moneys owing to Aspenview Productions and transferred Units 2 and 4 to Krystyna Masluk. The defendants, Alexander McLean and Lana McLean, alleged that in the circumstances as existing it would be unconscionable to permit the plaintiff to enforce the mortgage save in respect of that referred to as "the secured indebtedness" which they identified as a housing loan to Alexander McLean and Lana McLean and as security for the business of Aspenview Productions so far as it related to the garage business conducted by it. It was further alleged on behalf of Lana McLean that subsequent to her executing a Letter of Acknowledgment of the debt of Aspenview Productions a servant or agent of the plaintiff fraudulently altered that document. By this pleading the defendants denied liability to the plaintiff and by way of counterclaim they sought a declaration that the plaintiff was not entitled to enforce the mortgage, save in respect of the property being Unit 1 and accessory Unit 3 of the Prahran Property, or alternatively a declaration that the plaintiff was estopped from enforcing the mortgage save and in respect of that property. It was further sought by way of declaratory relief that it be ordered that the plaintiff is estopped from recovering from Aspenview Productions any moneys which constituted expenditure by it in the establishment and conduct of the Whiteboards of Australia's business during the period 1987 to May 1990. Further, by such pleading, the defendants sought a declaration that the plaintiff was estopped from exercising any right under the mortgage in relation to Units 2 and 4 of the Prahran Property.

44. At the outset of the trial, on application by the solicitor for Krystyna Masluk, it was ordered that such solicitor have leave to file a notice that he had ceased to act for that defendant. Thereafter she was not represented by counsel or any legal practitioner at the trial. In proceeding numbered 8085 of 1993 the defendants, Aspenview, Alexander McLean and Lana McLean, were represented by counsel as was the plaintiff. In proceeding numbered 6398 of 1994 the first defendant, Alexander McLean, and the fourth defendant, Lana McLean, were represented by counsel as was the plaintiff.

47. The witness, Kathleen Ledney, a manager in the Group Credit and Market Risk Department of the plaintiff, a credit manager of the plaintiff, gave evidence that she was responsible for the plaintiff's recovery of the indebtedness of Aspenview Productions and Whiteboards of Australia to the plaintiff. She gave evidence and there was tendered through her statements of account details of the amounts owed by Aspenview Productions to the plaintiff as follows:

[diamond] On 11 December 1992 Aspenview Productions owed the plaintiff on accounts numbered 3170-0012-0375, 3170-0013-2173 and 3170-0014-6647, amounts totalling $176,096.86.

[diamond] On 23 July 1993 Aspenview Productions owed the plaintiff on such accounts amounts totalling $190,679.13.

[diamond] On 18 August 1993 Aspenview Productions owed the plaintiff on the aforesaid accounts amounts totalling $191,636.39.

[diamond] On 12 August 1996 Aspenview Productions owed the plaintiff on the aforesaid accounts amounts totalling $277,038.11.

[diamond] On 19 February 2001 Aspenview Productions was indebted to the plaintiff in the sum of $443,460.78 as follows and on which interest continued to be incurred as follows:

56. Ms Ledney further gave evidence and produced a statement as to the indebtedness of Whiteboards of Australia to the plaintiff on its overdraft account 3170-0014-7287, on the following dates and for the amounts stated:

She further gave evidence that interest was accruing and would continue to accrue on the amount outstanding on that account at the rate of $69.41 per day.

61. It was the plaintiff's case that the mortgage furnished by Alexander McLean and Lana McLean over the Prahran Property secured the amount of $443,460.78 owing by Aspenview Productions to the plaintiff and that the guarantee executed by Alexander McLean with respect to the debts of Whiteboards of Australia to the plaintiff secured the debt in the sum of $222,236.42 as owing by Whiteboards of Australia on 19 February 2001 and that, in turn, the mortgage provided security for that amount owing under the terms of the guarantee.

64. In the cross-examination of the witness, Ledney, the accuracy of these figures was not challenged. I accept her evidence as to the indebtedness of each of Aspenview Productions and Whiteboards of Australia to the plaintiff as at 19 February 2001 and the interest accruing daily on the identified accounts.

67. The witness, Fairweather, gave evidence that he was a manager employed by the plaintiff. He was the manager of the plaintiff's branch at South Yarra between April 1986 and February 1988. He said that, having had the benefit of reading a number of documents, he could recall that during his time as a manager of the branch there was in place a mortgage given by Alexander McLean and Lana McLean to the bank over their property at 146 Rae Street, North Fitzroy to secure moneys owed to the plaintiff by Aspenview. That mortgage was dated 20 August 1984 and it was an unregistered second mortgage. At this time Aspenview Productions carried on business as St Martin's Garage. In May 1986 Alexander McLean and Lana McLean sought to have the plaintiff extend the financial facilities provided by the plaintiff to Aspenview Productions by providing, in addition to an overdraft limit of $8,000, a small business loan of $20,000. Fairweather said that at the time of this application he was advised by the McLeans that they had $70,000 invested in the name of Kingcurry Investments and that it was put aside to provide for Mrs Masluk. The application was approved and funded on 29 May 1986. The authority providing for periodic repayments, was signed by Alexander McLean and Lana McLean.

70. On 12 November 1986 a diary note of the loans officer of the plaintiff at its South Yarra branch recorded that at that time the situation of Aspenview Productions' account, with the plaintiff, was that the overdraft account was overdrawn in the sum of $3,326 and the small business loan was in debt in the sum of $18,018. On that day Alexander McLean informed the loans officer that he was about to bid for the purchase of property in Prahran which comprised two units. He advised that he wished to write a cheque for $18,000 for the deposit on that property, should he be successful at the sale. The request was agreed to.

73. On 18 November 1986 Alexander McLean informed the plaintiff that the Prahran Property had been purchased for $180,000 and that the home of he and Lana McLean at 146 Rae Street, North Fitzroy was to be sold on 22 November 1986. Application was made that day to increase the small business loan facility by $20,000 to $38,018. This application was approved. This increased the sum secured by the mortgage dated 20 August 1984, which increase was consented to by Alexander McLean and Lana McLean. On 21 November 1986 the property purchased at Prahran, the Prahran Property, was valued by the plaintiff at the sale price, $180,000. The property consisted of two self contained units. It was noted in a memorandum by the loans officer of the plaintiff that once the property was established on separate strata titles the value of the same should exceed $200,000. A written application for the increase of the small business loan was dated 21 November 1986. The common seal of Aspenview Productions was fixed to the application which was signed by Alexander McLean and Lana McLean as directors of that company. It is to be noted that by paragraph 2(c) of that application it was provided:

"It is clearly understood that the following terms and conditions shall apply to all accommodation granted to the applicant(s) by the Bank from time to time: (c) the Bank may from time to time at its pleasure cancel or vary the limit of accommodation granted to the applicant(s) and/or vary the rate of interest and/or rate of discount and the charge for accepting or endorsing bills of exchange applicable to accommodation granted to the applicant(s)."

77. On 3 December 1986 the Commonwealth Savings Bank of Australia approved a home loan to be made to Alexander McLean and Lana McLean in the sum of $60,000. This loan was secured by a first mortgage over the Prahran Property purchased by Alexander McLean and Lana McLean. Once the Rae Street mortgage, which secured accommodation provided by the plaintiff to Aspenview, was discharged an unregistered second mortgage over the Prahran Property was taken to secure financial accommodation provided by the plaintiff to Aspenview. On 5 December 1986 the plaintiff approved the transfer of the security provided in respect of financial accommodation made to Aspenview Productions from the Rae Street property to the Prahran Property. The mortgage dated 10 December 1986 granted by Alexander McLean and Lana McLean to the plaintiff over the Prahran Property, described in the mortgage as the land in Certificate of Title Volume 6368 Folio 489 was given, "in consideration of certain advances and accommodation granted or to be granted at the request of the mortgagor to" Aspenview Productions, by the plaintiff, "for the purpose of securing to [the plaintiff] the payment of the moneys, interest and liabilities hereinafter mentioned and intended to be hereby secured mortgages" to the plaintiff. The mortgagors identified by the mortgage were Alexander McLean and Lana McLean. It was signed by them and also sealed with the common seal of Aspenview Productions. The fixing of the seal was witnessed by Alexander McLean and Lana McLean as directors of Aspenview Productions.

80. By cl. 39 of the mortgage it was provided in part:

"Except to the extent that such interpretation shall be excluded by or be repugnant to the context whenever the same are used herein the word[s] the mortgagor shall mean and include the mortgagor and the executors, administrators and assigns of the mortgagor and when two or more mortgagors are parties hereto shall mean and include the mortgagors or any of them or any of their executors, administrators and assigns..."

By the terms of the mortgage, Aspenview Productions was identified as "the Debtor".

85. By paragraphs 1 and 3 of Part A of the mortgage it was provided as follows:

"A. The Mortgagor hereby covenants with the Mortgagee (hereinafter called the Bank) and it is hereby agreed and declared as follows: The Mortgagor will at such time or times and in such manner as may at any time and from time to time be agreed in writing between the Mortgagor and the Bank and in the absence of any such agreement on demand pay to the Bank: 1. All moneys (including moneys advanced by way of loan for fixed term or provided by way of overdraft) now or hereafter to become owing or payable to the Bank by the Debtor and the Mortgagor or either of them either alone or on joint or partnership account or on any other account whether as principal or surety; also 2. ... 3. All moneys which the Bank shall lend or pay or become liable to lend or pay or may have advanced or may hereafter advance the payment or repayment to which the Debtor and the Mortgagor or either of them has guaranteed or may hereafter guarantee to the Bank;"

89. It was submitted on behalf of the plaintiff, as is relevant to these proceedings, that by the terms of that mortgage, if one of the mortgagors to the mortgage dated 10 December 1986 gave a guarantee to the bank in relation to an entity other than Aspenview Productions then the mortgage provided security to the plaintiff for any amount owing pursuant to such guarantee.

92. The Commonwealth Savings Bank provided the home loan to Alexander McLean and Lana McLean in the sum of $60,000 which was secured by a registered mortgage over the Prahran Property. That mortgage ranked ahead of the mortgage given by Alexander McLean and Lana McLean to the plaintiff dated 10 December 1986, to which I have referred. That ranking as between the plaintiff and the Commonwealth Savings Bank was recognised by each body by a document dated 10 December 1986. In consequence of the settlement of the sale of the property at 146 Rae Street, North Fitzroy and the purchase of the Prahran Property, the registered first mortgage on the former property was discharged and the mortgage granted by Alexander McLean and Lana McLean to the Commonwealth Savings Bank to secure the home loan provided to them was registered over the Prahran Property.

95. On 1 July 1987 Fairweather recorded in a diary memo concerning the Aspenview Productions account that the overdraft balance exceeded the limit for that account. The memo recorded the conversation that Fairweather had with Alexander McLean in which Alexander McLean informed him that although the account was under pressure the business was running well and that the "last month" was the best ever with a turnover exceeding the previous peak by $4,000. In the course of that conversation Alexander McLean informed Fairweather that he had been channelling funds from St Martin's Garage into the "Whiteboards business" which was said "to be booming". The "Whiteboards business" as referred to at this time was the business being conducted at this time separate from the motor car garage business being conducted by Aspenview Productions. By this business Alexander McLean was manufacturing and selling whiteboards. It was the predecessor of Whiteboards Australia. The business was conducted by Alexander McLean using moneys generated and made available, in part, to Aspenview Productions. McLean informed Fairweather that debtors currently stood at $50,000 but those funds were generally expended for working capital as soon as received. Fairweather said that, in substance, Alexander McLean was informing him that he did not have any money to reduce the overdraft account. At that time it was decided by Fairweather that as Aspenview Productions had been banking with the plaintiff for 11 years and that the plaintiff was well secured it had agreed to the excesses, subject to an excess interest rate being paid with respect to the overdraft debt which exceeded $8,000, and the third party mortgagors consenting to the peak debt of $58,623 and the mortgage being "up-stamped" to cover the peak debt and that there was paid an establishment fee of $50.00. On 3 July 1987 the directors of Aspenview Productions, Alexander McLean and Lana McLean, were advised of the decision made by Fairweather. Forms were enclosed in the letter for signing and sealing and returning to the plaintiff's office at South Yarra as soon as possible. That which was sought was the consent of Aspenview Productions to a temporary increase of the overdraft facility to $14,752 causing the total debts of it, to the plaintiff, at that time, to be $58,623. On 23 October 1987 a letter was written by the relieving manager of the South Yarra branch requesting the directors of Aspenview Productions to sign and seal the documents previously sent to them and to return them to that office as soon as possible. On 11 November 1987 a diary note was made by Richard Cullen, a bank officer, that he had seen Alexander McLean in the banking chamber and that McLean had said that he wanted to speak to Fairweather, on Fairweather's return, to increase the overdraft facilities on a permanent basis.

98. On 26 November 1987 a review of the Aspenview Productions account was made at the South Yarra branch of the plaintiff. The overdraft account which had a limit of $8,000 was then overdrawn to the sum of $29,960.66 and the small business loan showed a debit balance of $32,388.70.

101. On 26 November 1987, in consequence of Fairweather having an interview with Alexander McLean, Fairweather completed a "Preliminary Application for Company and Business Advances", with respect to Aspenview Productions, whereby the overdraft limit was to be increased from $8,000 to $25,000 thereby limiting the excess on the overdraft account of Aspenview Productions to $4,961. On that document the small business loan then existing was noted to be a debit amount of $32,389 and that sought was to remain the same. In the document Fairweather noted that the security was the existing mortgage by the directors of Aspenview Productions, Alexander McLean and Lana McLean, over the "two apartments" being the Prahran Property. He noted that the owners estimated the value of the same to be $300,000. In a further part of that document Fairweather recorded his discussion with Alexander McLean in which sought an increase of the overdraft limit of Aspenview Productions from $8,000 to $25,000, "acting on advice from his accountant". Fairweather recorded that he was told by Alexander McLean that the turnover for the 1987/88 financial year was estimated at $250,000 and that the financial statements for the year 30/6/87 were not yet available and did not look like being finalised until "Jan/Feb next year". He further noted that he was told that the financial statements were expected to disclose a small loss similar to the previous year and this had been part of a strategic plan for taxation purposes. It was noted that Fairweather said to Alexander McLean that the profit history and past account conduct did not instil confidence from a banking viewpoint, which he acknowledged, but that Alexander McLean went on to demonstrate "profitability" by detailing "expenditure" which included, $6,000 spent on renovations to the "second apartment" which would be shortly rented and which would return $180 per week; stock for "Whiteboards Pty Ltd" being purchased during the year at a cost of $60,000; and additional machinery costing $12,000 being also purchased. It was also recorded that Alexander McLean informed Fairweather that $53,000 had been repaid from the original $60,000 Commonwealth Savings Bank loan, which had been approved in November 1986 and which had been "given priority on accountant's advice as repayments are an after tax expense". Fairweather noted that at that time, all in all the business account had financed approximately $130,000 of outside activities and that this had caused a "hardcore" content of the overdraft account. Fairweather recorded that following his discussion with Alexander McLean he was prepared to accept that on face value, "in view of the future potential of the connection". He noted further that he had been informed that the McLeans had "sold a 49% interest in "Whiteboards" to a joint venture and that this should yield $300,000 over the next three years" and "$100,000 of this being due in 12 months time". Fairweather further noted that he was informed by Alexander McLean that in the meantime excesses above $25,000 would be cleared, the home loan of $7,000 would be repaid from the sale of a motor vehicle which would net $11,000 with payment arranged on 7 December 1987. Fairweather noted that "CBA will then gain first mortgage position which will strengthen an already strong aspect". Fairweather further noted, after interpreting abbreviations made by him, that an increased overdraft limit of $17,000 was approved taking the total commitment to $64,350 on the bank's usual terms and conditions and subject to the temporary excess over the formalised arrangement of $25,000 being cleared by 8/12/87 from the proceeds of a motor vehicle sale; the limit $25,000 being respected at all times and the financial statements for year ending 30/6/87 being produced by February 1988 at the latest at which time a usual review was to be undertaken.

104. On 3 December 1987 a letter was written by the plaintiff under the name of Fairweather to the directors of Aspenview Productions, Alexander McLean and Lana McLean confirming the plaintiff's apparent to increase the overdraft account of Aspenview Productions by $17,000 from $8,000 to $25,000. It stated that the approval was on the plaintiff's usual terms and conditions and subject to, inter alia, the security consisting of the "existing mortgage by AJ and LD McLean over their property at 1 Alfred Street, Prahran". That letter enclosed forms to be executed by Alexander McLean and Lana McLean. The letter requested that they be signed and sealed where appropriate and returned to the plaintiff's office. By a note on the copy letter retained by the plaintiff it was noted that the forms sent to Alexander McLean and Lana McLean were returned on 4 January 1988. Fairweather identified the forms that were sent to Alexander McLean and Lana McLean as a request by Aspenview Productions to increase the overdraft facility from $8,000 to $25,000 resulting in the approved facility to be made available by the plaintiff to Aspenview Productions being $62,350 and a certificate pursuant to s. 230(8)(a) of the Companies (Victoria) Code, together with a further covering letters. The covering Letters of Consent in part stated that each of Alexander McLean and Lana McLean, prior to signing the documents, should satisfy themselves that they fully understood the full nature and extent of their liabilities to the plaintiff and that they should obtain legal or other advices if they were uncertain as to their positions. The documents received by the plaintiff at its South Yarra branch from Alexander McLean and Lana McLean were the certificate pursuant to the Companies Code which was signed by each and dated 24 December 1987, a Letter of Acknowledgment dated 4 January 1988 signed by Alexander McLean acknowledging that the plaintiff had granted or may grant from time to time to Aspenview Productions accommodation permitting it to incur liabilities to the bank not to exceed $62,350 secured by the mortgage dated 10 December 1986 over the property, "situated at 1 Alfred Street, Prahran" and a like Letter of Acknowledgment signed by Lana McLean and dated 4 January 1988. Each of the last two documents bore the stamp of the plaintiff indicating that the document was received by the plaintiff at its South Yarra branch on 4 January 1988. There was also received by the plaintiff at its South Yarra branch on 4 January 1988 the letter addressed to the plaintiff bearing the common seal of Aspenview Productions and signed by each of Alexander McLean and Lana McLean whereby Aspenview Productions requested the plaintiff to increase its accommodation to $62,350 and which also contained the consent of each of Alexander McLean and Lana McLean to the increase of such facility to be secured by the aforesaid mortgage dated 10 December 1986.

107. On 6 January 1988 the acting manager of the plaintiff's South Yarra branch wrote to Aspenview Productions drawing attention to the fact that the overdraft account was currently overdrawn in the sum of $29,801.26 and requesting that it be reduced to the limit of $25,000. On 11 January 1988 Fairweather wrote to Aspenview Productions drawing attention to the fact that the overdraft account currently stood in debt in the sum of $33,346.75 and requested that it transfer funds to reduce the account to $25,000. A further letter was written by Fairweather to Aspenview Productions on 22 January 1988 informing it that its overdraft account was in debt in the sum of $33,002.93 and requesting that funds be transferred to reduce it to its limit of $25,000.

110. In February 1988 Fairweather ceased to be manager of the plaintiff's branch at South Yarra taking up the position of manager at the South Melbourne branch of the plaintiff, since which time he has continued in the employment of the plaintiff. Bernard Murray took over the position of manager of the South Yarra branch of the plaintiff after Fairweather vacated that position. Fairweather said that he thought that he and Murray had, perhaps, three days together, which he could not specifically recall. He said, that as to the account of Aspenview Productions, it was irregular constantly, but there was no great reason why he would make a point of calling in Alexander McLean to introduce him to the new manager. He said he did not recall that he had introduced Alexander McLean to Murray. He said that he did not recall introducing Murray to Alexander McLean as a highly capable financial adviser who would assist McLean with financial advice regarding his business interests and the development of the "Whiteboards" interests. He said that he would suggest that he did not say that, at any stage, for two reasons, being that the bank had a policy that they did not suggest that they were financial advisers and that he had no idea of Murray's background. He said that in 1988, to his knowledge, the plaintiff had no section which dealt with giving financial advice. It was put to him that it was going to be said by Alexander McLean that at such meeting Alexander McLean had spoken to him about a report that he had prepared in relation to his "Whiteboards interest" and that he would be giving that to Murray. Fairweather was asked whether that rang "any bells" to which he replied that it did not and that he really had no interest in "Whiteboards". He said he knew there was an account in its name which was not causing him any concern and that he knew that it was apparently a source of draining funds from the garage, that is, St Martin's Garage.

113. In cross-examination Fairweather agreed that Alexander McLean and Lana McLean were third party mortgagors of the debt of Aspenview Productions and, as such, were guaranteeing, to the plaintiff, the debt of Aspenview Productions. As to Letters of Acknowledgment sought by and obtained by the plaintiff from the third party mortgagors, he said that the purpose of obtaining such letters was to have an acknowledgment from the company that it was seeking to borrow certain amounts of funds and also it provided consents of the guarantors that they were aware that the security that they had already provided to the plaintiff would, in fact, support the increase in borrowing. He agreed that the consent of the guarantors was required before he had a "transaction". He agreed that before picking up the Court Books in preparation for the trial he virtually had no memory of what had occurred in the years in respect of which he had given evidence. He said that in the late 80s he was aware of the policy known as ICES, which was the acronym for "Individual Commitment to Excellence in Selling". Fairweather said he did not see himself as a sales person. The witness said that he was aware that there was an account in the name of "Whiteboards" but he had no idea what the operation of "Whiteboards" was all about. He said that he and McLean did not discuss the operation of "Whiteboards" other than the fact that he had spent a lot of money in setting it up. The witness said that he was in the habit of recording conversations that he had with a client and that any document that he returned to the bank over the counter during the day the first thing the officer would do would be to go and put the letter received stamp on it. Fairweather further said that although he had no recollection of introducing Murray to Alexander McLean, he could not exclude the possibility that he did in fact introduce McLean to Murray. The witness said that he did not discuss anything about "Whiteboards" with Murray and of that he could be positive because he knew nothing about "Whiteboards" and that he had nothing to discuss. Fairweather further said that he had no recollection of a discussion between himself, Murray and McLean concerning Drieberg. Further, he said that he had no recollection of a meeting in which McLean explained that a report, regarding the future of "Whiteboards", was being prepared and that he would bring it and show it to Murray when it had been prepared.

116. The witness, Bernard Murray, gave evidence that he was employed by the plaintiff from 1968 to June 1994 and that at the time of giving evidence he was employed as a "mobile lender" for the company, Members Equity. He said that he was the manager of the plaintiff's South Yarra branch from February 1988 to July 1991 and that when he took over from Fairweather they probably went through most of the loan accounts but he could not precisely say that he discussed anything about Aspenview Productions with Fairweather. He said that he could not recall a meeting with Alexander McLean and Fairweather and himself in which he was introduced by Fairweather as a person who had special financial knowledge. When asked whether he was a person with a special financial knowledge he replied, "No. I was a bank manager with no special financial knowledge apart from being able to operate accounts and run accounts at a branch". He said he did not recall Fairweather telling McLean, in his presence, that he was going to help McLean with financial advice regarding his business interest generally. He said that he did not recall Fairweather saying in a meeting with McLean that he would help McLean with an entity called "Whiteboards". He said that he could not remember having a meeting with McLean shortly after Fairweather left, and McLean giving to him a report about "the Whiteboards business". He said that if that had happened the report would be on the file. It should be noted at this point, as a matter of time sequence, that Whiteboards of Australia commenced to operate in July 1988. There was produced a letter dated 2 September 1988 from Murray to the secretary of Aspenview Productions drawing attention to the fact that the overdraft account was in debt to the amount of $32,458.05 which exceeded its limit of $25,000. The letter made suggestions as to how the accounts of the company could be rearranged. In a diary note made by Murray on 11 January 1989 it was recorded that the overdraft debt of Aspenview Productions, trading as St Martin's Garage, had peaked at $48,537 on 23 November 1988. On 12 January 1989 Murray wrote to Aspenview Productions addressing the letter "Dear Mr and Mrs McLean". The letter referred to a discussion had in November when it had been indicated on behalf of the company that the debt would be within normal limits by November and suggesting that either the small business loan be increased or adequate funds be placed in the overdraft account to allow it to operate within the approved limit. Murray said that to this point of time he had not been informed by Alexander McLean that "there was something they had to affect the security of the mortgage at 1 Alfred Street Prahran" (the Prahran Property). On 10 March 1989 Murray wrote to Alexander McLean and Lana McLean requesting that they call at his office to discuss the clearance of the excess on the overdraft account. On 16 March 1989 Murray made a diary note of a telephone conversation had that day with Alexander McLean. The diary note recorded that McLean had advised that the garage had $47,000 outstanding and that it was expected that 70% would be received over the next four months and that all accounts were being closed and that they were moving to credit cards which would improve their cash flow. The note also recorded that he was informed by McLean that there was $30,000 due to him from "Whiteboards Pty Ltd", that he was to meet with the other directors the following Monday and that he was hopeful that those funds would be received progressively over the next two to three months. The note recorded further that Alexander McLean was reluctant to increase the overdraft but was happy for the account to be reduced within the order of three months. The note further recorded, as a comment by Murray, "We are well secured and will allow to stand at the present time and will keep a watch on it through the daily Reference Report". On 15 June 1989 Murray wrote a letter to Aspenview Productions directed to Alexander McLean and Lana McLean stating that the overdraft account was then in debt to the sum of $48,489 and requesting them to contact the office to discuss the matter. On 30 June 1989 a "Diary memo" was made by Murray relating to a lunch meeting he had the previous day with Alexander McLean. It recorded that they had discussed a number of things including excesses on the account. It recorded that Alexander McLean was well aware of them and had advised that a lot of funds from the business had been used to do renovations to his property at "Alfred Street, Prahran". The memo further recorded, "They now have two properties on the title and one has been sold to his mother and the other one they will retain themselves. Strata title will be carried out shortly and the value of each property is in the vicinity of $300,000". The memo further recorded that Alexander McLean had requested that $55,000 be transferred from the business account to a small business loan with interest only for 12 months, that the existing small business loan be allowed to run as it was and that the approved advance limit of $25,000 be allowed to continue which, if agreed to, would give a total commitment of $102,317. Murray noted on the memo that at that stage "Security is U/M [unregistered mortgage] by directors over the property mentioned above and we have an extended valuation figure of $180,000 with Normal Lending Margins $126,000. At this stage until we receive Strata Plan we will not revalue the property". Murray recorded, "Please fund this loan as soon as possible". The memo further recorded that McLean discussed "the Whiteboards situation" and that he had informed Murray that it currently banked with the National Australia Bank, that they were very unhappy with the service they were getting, that the business was starting to proceed along "very nicely" and that they expected to have a turnover of somewhere in the vicinity of $2.5M in the next financial year. The reference to Whiteboards at this point must be a reference to Whiteboards of Australia. Further, the memo recorded that McLean would like Murray to meet the other directors with a view to transferring that account to the Commonwealth Bank and said that if that was successful possibly one of the other directors would transfer his account also as he was unhappy with the National Australia Bank. Murray said that he did remember having lunch with McLean, that a number of things were discussed at the lunch, and that, subsequently, the diary note had been made. Murray said that before the meeting he knew nothing about Whiteboards of Australia. Murray gave evidence that with respect to the sale of one of the Prahran properties to the mother of Lana McLean, the bank would have to approve the release of the title and that had not been sought at that stage. On 6 July 1989, Thurgood, the acting manager of the plaintiff's South Yarra branch, wrote to Aspenview Productions, a letter addressed to Alexander McLean and Lana McLean, informing them that the bank had approved a small business loan of $55,000 to clear the excess on the overdraft account. The letter set out the terms on which the loan had been approved. The letter made provision for Alexander McLean and Lana McLean to sign the same agreeing to the terms and conditions set out in the letter. The security as referred to in the letter was, "Security already held by the bank in connection with advances to yourselves". At that time the security held by the bank was the unregistered mortgage over the Prahran Property. The letter further noted that the advance would not be made available until "security documentation has been completed".

119. On 6 July 1998, Cullen, a loans officer of the bank, wrote a letter to Alexander McLean concerning Aspenview Productions enclosing a Letter of Acknowledgment for execution in relation to the new small business loan. In the letter it stated - "Prior to signing the acknowledgment you should satisfy yourself that you understand the full nature and effect of your liabilities to the bank and obtain appropriate advice, legal or otherwise, if you are at all uncertain of your position". On the same day a letter in the same terms was sent by Cullen to Lana McLean. Each letter advised that the signature, the acknowledgment, should be witnessed by an adult person who was not the debtor or co-mortgagor under the security concerned.

122. On 10 July 1998 Cullen wrote a letter to Aspenview Productions, directed to Alexander McLean and Lana McLean, advising that the bank had funded the small business loan of $55,000. The letter enclosed an authority for periodical payments to be signed. The letter requested that it be returned together with the documents which had been forwarded on 6 July 1989. On 10 July the plaintiff credited to the overdraft account of Aspenview Productions, noted as a "miscellaneous credit", the sum of $55,000. That sum was debited to the small business loan account of Aspenview Productions on the same day.

125. On 2 August 1989 an officer of the bank wrote a letter to Aspenview Productions addressed to Alexander McLean and Lana McLean requesting that they return the authority for the "interest only periodical payments".

128. There was tendered a "Preliminary Application for Company and Business Advances" dated 2 October 1989 signed by Thurgood, then acting manager of the South Yarra branch of the plaintiff, addressed to the appropriate regional department of the plaintiff. The applicant was Whiteboards of Australia. It was noted that the shareholders of that company were Alexander McLean, who held 50% of the shares and O'Brien and Drieberg who each held 25% of the shares. The application was for a loan of $25,000. In that section of the document headed "Background" it stated in part - "Security for these borrowings is an UM by Alex McLean and wife ESV [Extended Security Valuation] $180,000". In the section headed "Security" it was stated - "Guarantee unsupported (unlimited) 3rd party by Alexander John McLean; Peter O'Brien and Darrel Stephen Drieberg (directors of applicant co)". There was received by the plaintiff a statement of account of the assets and liabilities of Drieberg showing net assets of $906,000 as at 31 August 1988 and a similar statement of account for Peter O'Brien and Associated Trusts dated 31 August 1988 which showed net assets in the amount of $1,290,500. Further, there was received by the plaintiff an asset and liability statement of Alexander McLean showing total assets to be $605,200 and total liabilities to be $82,000. The assets of Alexander McLean included a house - $400,000, two pieces of land - $35,000, business - $60,000 and debtors - $45,000. Murray said that he could not specifically recall any discussion that he had with directors concerning the application by Whiteboards of Australia for a loan of $25,000.

131. On 9 October 1989 Murray wrote to the secretary of Whiteboards of Australia advising that the bank had approved an overdraft limit of $25,000 to assist with its working capital requirements. The letter advised that the advice was subject to the bank's usual terms and conditions which included that the security was to comprise, "guarantee unlimited as to amount by Alex McLean, Darrel Drieberg and Peter O'Brien". The final sentence of the letter stated that if the offer was acceptable the duplicate copy of the letter should be signed and returned to the bank. There was provision made for the signatures of McLean, Drieberg and O'Brien. On 30 October 1989 the bank at its South Yarra branch received back the duplicate copy of that letter signed by McLean, Drieberg and O'Brien. It is to be noted that in that letter there was no reference to security being the unregistered mortgage given by Alexander McLean and Lana McLean over the Prahran Property.

134. On 30 October 1989 Cullen sent to each of Drieberg, O'Brien and McLean a letter enclosing a guarantee to be signed by them. In that letter it stated, in part, that prior to signing the document the recipient must satisfy himself that he understood the full nature and effect of his liabilities to the bank and obtain appropriate advice, legal or otherwise, if the recipient was at all uncertain of his position.

137. There was tendered a guarantee signed by each of Alexander McLean, O'Brien and Drieberg and dated 2 November 1989. The guarantee guaranteed to the plaintiff payment on demand of the debts of Whiteboards of Australia to the plaintiff. By paragraph 4 of such guarantee it was provided -

"Every security already executed or which may at any time and from time to time be executed by the guarantor in favour of the Bank shall also be and remain continuing security to the Bank for the payment by the guarantor to the Bank of the moneys hereby secured."

141. On 7 December 1989 Wisewould Schilling Cohens, solicitors, for Alexander McLean and Lana McLean wrote to Murray referring to a telephone conversation had with him that day and enclosing an application to "Register Strata Plan". The letter requested that he endorse the "necessary Order to Register thereon and return it" to them. The letter further requested that he advise when the relevant certificate of title would be available at the Titles Office. Murray gave evidence that at that time the bank did not oppose the request to register a strata title plan. The strata title plan was with respect to the Prahran Property. He said that the bank did not, at any stage, oppose the request. On 15 December 1989, Cullen, for the manager, by letter, returned the application to Wisewoulds Schilling Cohens, duly endorsed as requested, stating that the relevant certificate of title would be made available at the Titles Office on receipt of a production fee of $60. That fee was sent to the plaintiff at its South Yarra branch by the solicitors on 19 December 1989 requesting that the certificate of title be made available at the Titles Office before Christmas in order that they may lodge the application. That letter was received at the bank's South Yarra branch on 27 December 1989. On 23 January 1990 the solicitors, on behalf of Alexander McLean and Lana McLean, sent to the bank the Application to register Strata Plan to be signed by the bank's Attorney. Cullen attended to that matter sending the document to the Branch Lending Support Division for the bank's attorney to endorse the strata plan application.

144. On 1 February 1990 Cullen sent to the Branch Lending Service Division of the plaintiff the Certificate of Title for the Prahran Property together with the unregistered mortgage over the Prahran Property requesting that the mortgage be registered and then to action the plan to sub-strata sub-division of the property. In evidence Cullen said that the mortgage was to be registered before the sub-division went through. On 20 February 1990 Cullen sent to the solicitors, for Alexander and Lana McLean, the application to register the strata plan signed by the bank's Attorney.

147. On 21 February 1990 Murray wrote to Aspenview Productions a letter, addressed to Alexander McLean and Lana McLean, concerning the St Martin's Garage overdraft account which had a limit of $25,000 and on which there was a debit balance at that time of $37,693.82. The letter requested that they communicate with the bank as soon as possible to discuss their requirements and arrange clearance of the excess on the account.

150. On 5 March 1990 the solicitors for Alexander McLean and Lana McLean advised that the dealings, relevant to the application to registered the strata-plan, had been finished at the Titles Office. There were tendered diary notes of Andrew Pickard, a loans officer of the plaintiff made on 5 March 1990. Cullen, in evidence, explained such notes and the events that occurred, which were that the solicitors for Alexander and Lana McLean sought to lodge the application of the strata-plan sub-division in the dealing of the bank which was to register the mortgage over the Prahran Property, but by the time they lodged their application the dealing had been finished, that is, the mortgage had been registered, and the documents returned to the bank with the consequence that the solicitors, at that time, were unable to have the strata-plan of sub-division registered. The final note of Pickard was that he had spoken to the solicitors, for Alexander McLean and Lana McLean, and they had requested them not to send the title back as the bank "may be getting paid out".

153. On 5 April 1990 Murray wrote to Alexander McLean and Lana McLean concerning Aspenview Productions - St Martin's Garage - enclosing additional consent forms for their signature "following the payment of cheques drawn on" the account respect to that account. The letter advised that prior to signing the document they should understand that their "maximum liability under the documents is $113,000" and stating, "We suggest that you obtain legal advice should you not understand the full implications of the documents". The debt of $133,000 represented the debt of Aspenview Productions, trading as St Martin's Garage, on its overdraft account and the two small business loans.

156. On 27 April 1990 Wilson, on behalf of the manager of the South Yarra branch of the bank, wrote to Alexander McLean and Lana McLean, with reference to Aspenview Productions, requesting their early attention to the matter referred to in the letter of 5 April 1990. There was produced and tendered in evidence a diary note of Murray dated 2 May 1990 concerning Aspenview Productions - St Martin's Garage and Whiteboards of Australia. The diary memo recorded that the overdraft account of Aspenview Productions, which had a limit of $25,000, was overdrawn having a debit balance of $49,599 and that the small business loans were in order providing the payments were being made. The security noted against the overdraft account was an "unregistered" third party mortgage by Alexander McLean and Lana McLean, "$180,000". The diary memo relevant to Whiteboards of Australia showed a limit of the loan account of $25,000 being overdrawn to the amount of $60,729. The security noted was a guarantee, unsupported, unlimited. The memorandum recorded that Murray had had a number of discussions with Alexander McLean regarding the excesses on both accounts and that he had made arrangements to visit the business premises of Whiteboards of Australia in Moorabbin. Further, on 9 May 1990, Cullen wrote to Alexander McLean and Lana McLean concerning Aspenview Productions - St Martin's Garage - referring to previous correspondence and requesting their urgent attention to the return of the consent forms that had been forwarded to them originally. A further diary memo of Murray dated 11 May 1990 was tendered which set out the financial position of Aspenview Productions - St Martin's Garage - and Whiteboards of Australia showing that Aspenview's overdraft account, with a limit of $25,000, was overdrawn then to $50,926 and the Whiteboards of Australia account with a limit of $25,000 was overdrawn then to $62,198. The memo recorded the visit of Murray to the factory premises of Whiteboards of Australia at which Alexander McLean and O'Brien were present. The memo recorded that excesses on the account were discussed and that O'Brien suggested that the bank take a registered equitable mortgage over the business. It further recorded that O'Brien was also the accountant for St Martin's Garage and excesses on that account were able to be discussed. Further, the memo recorded -

"A lot of funds were used from St Martin's to finance Whiteboards and the partners will be injecting capital into this to clear the excesses. This should happen over the next month to six weeks. Peter has asked us to write to him setting out exactly what securities we hold to secure the debts on St Martin's and Whiteboards."

160. On 17 May 1990 Cullen wrote a letter to O'Brien enclosing a Letter of Acknowledgment for execution in relation to the excesses in the overdraft limit on the Whiteboards of Australia account. The letter gave directions to O'Brien relevant to advice that he may seek to obtain before signing the document. The letter further stated -

"As a separate matter, we advise securities held supporting debts as follows: Aspenview Productions Pty Ltd trading as St Martin's Garage - Registered first mortgage by Alexander John McLean and Lana Dorothy McLean over property situated at 1 Alfred Street, Prahran. Whiteboards of Australia Pty Ltd - Unlimited Guarantee by Alexander John McLean, Peter Leslie O'Brien and Darrel Stephen Drieberg."

On 17 May 1990, Cullen wrote to each of Alexander McLean and Lana McLean regarding Aspenview, enclosing Letters of Acknowledgment for execution in relation to the excesses on the overdraft limit for the account of that company. Each letter contained a statement as follows:

"Prior to signing the acknowledgment you should satisfy yourself that you understand the full nature and effect of your liability to the Bank and obtain appropriate advice, legal or otherwise, if you are at all uncertain of your position. Your signature to the acknowledgment should be witnessed by an adult person who is not the debtor or co-mortgagor under the security concerned."

On that day separate letters were also sent to Drieberg and Alexander McLean concerning Whiteboards of Australia enclosing a Letter of Acknowledgment for execution in relation to the excesses on the overdraft limit. Each letter contained advice in the same terms as that contained in the advice to each of Alexander and Lana McLean in the letter addressed to them dated 17 May 1990.

167. On 1 June 1990 Cullen sent a letter to each of Alexander McLean and Lana McLean referring to the correspondence of 17 May 1990 requesting each of them to sign and return the Letters of Acknowledgment. On that day Cullen wrote letters to each of Drieberg, O'Brien and McLean regarding Whiteboards of Australia requesting each of them to sign and return the Letters of Acknowledgment previously sent to them on 17 May 1990.

170. As on 7 June 1990 the Aspenview Production, St Martin's Garage, overdraft account with a limit of $25,000 was overdrawn to $53,321, the Whiteboards of Australia account with a limit of $25,000 was overdrawn to an amount of $69,652.

173. There was tendered an undated note signed by Cullen which stated -

"Form S34 was handed to Lana Dorothy McLean and I clearly advised her not to sign the document until she understood the full nature and effect of her liabilities, if necessary by obtaining independent advice. The mortgagor wished to sign the document immediately notwithstanding such explanation."

There was also tendered a "Letter of Acknowledgment" dated 14/6/90 on which was stamped "received" with the date "27 Jul 1990". The Letter of Acknowledgment was signed by Lana McLean. Cullen's signature was affixed to the document as a witness. By its terms the letter stated -

"The Manager Commonwealth Bank of Australia South Yarra Vic I hereby acknowledge that the Bank has granted or may be granting from time to time to Aspenview Productions Pty Ltd (The Debtor) accommodation and otherwise permitting the Debtor to incur liabilities to the Bank not exceeding an aggregate amount at any one time and from time to time of $122,230 against the security of my mortgage(s)/guarantee(s) to the Bank referred to in the schedule below. I clearly understand that my mortgage(s)/guarantee(s) will also secure the payment to the Bank of interest and any costs, charges and expenses with which the Bank shall be at liberty to debit and charge the account of the Debtor or for which I am liable under my mortgage(s)/guarantee(s).

SCHEDULE

Mortgage dated 10/2/86 over a property at 1 Alfred Street, Prahran."

The words, "South Yarra Vic", "Aspenview Productions Pty Ltd", and "Mortgage dated 10/2/86 over a property at 1 Alfred Street Prahran" were in handwriting.

180. Murray was asked whether he handed the "Letter of Acknowledgment" to Lana McLean and he was asked whether he had any recollection of that matter at all. He said he had a recollection that she came into the branch and the document was given to her and that Richard Cullen took over getting it signed. Murray gave evidence that the handwritten parts on that document were on the document when he was with Cullen and before it was handed to Lana McLean for signing. It was put to Murray that Ms McLean was going to say that the writing under the typed part "Schedule" was not on the document when she signed it. He was asked whether he was able to comment on that. He replied, "I disagree with that". He was asked, "Was there any reason at that time to omit that information before having Mrs McLean sign the document". He replied, "No, there wouldn't have been because the document would have been made out prior to her - Lana McLean - coming in, and we weren't in the habit of asking clients to sign documents that were not completed". He was asked whether there was any reason to keep the information from Mrs McLean at that time? He replied, "None whatsoever".

183. I shall return to the note of Cullen and the Letter of Acknowledgment further when dealing with the evidence of Cullen and Lana McLean as the documents are relevant with respect to issues to be determined.

186. There was also tendered a "Letter of Acknowledgment" in the same terms signed by Alexander McLean. All parts of the document were typed. Stamped on the document was a "Received" stamp dated 18 June 1990. The date on the document was "14.6.90" which was handwritten.

189. On 14 June 1990 there was received at South Yarra branch of the bank the Letter of Request of Whiteboards of Australia requesting and authorising the bank to increase its accommodation to it from $25,000 to $66,508. On the letter was affixed the seal of Whiteboards of Australia and it was signed by two directors. On 18 June 1990 there was received at the plaintiff's South Yarra branch Letters of Acknowledgments signed by each of McLean, O'Brien and Drieberg acknowledging that the plaintiff may grant accommodation to Whiteboards Australia, from time to time, of $66,508. The security identified on each letter was, "Guarantee dated 2/11/89".

192. There was also tendered a document addressed to the Manager, Commonwealth Bank of Australia and signed by each of Alexander McLean and Lana McLean. At the top right side of the document it was dated "12/7/1990" of which the 19 of the date 1990 was typed but it was otherwise in writing. The document stated as follows:

"The Manager Commonwealth Bank of Australia South Yarra Vic Sale of Land Act 1962 - Victoria I/We acknowledge that in connection with the mortgage dated 10/12/86 given to the Bank over my/our property at 1/1 Alfred Street, Prahran no sale of the said property or any part thereof has been effected by me/us on terms and no purchasers interest in the property or any part thereof exists, by way of option or otherwise. I/We also undertake not to sell on terms the property held as security by the Bank."

Thereunder and on the left side were the signatures first of Alexander McLean and then beneath that, that of Lana McLean. Those parts of the document "South Yarra Vic", "10/12/86" and "1/1 Alfred Street, Prahran" were handwritten and not in type as was the rest of the document. On the document below the addressee, "Commonwealth Bank of Australia", there was typed, "Commonwealth Savings Bank of Australia", and "Commonwealth Development Bank of Australia". Each of those identities had lines ruled through them in ink. Murray gave evidence that none of the writing on the document was his handwriting. This letter also was the subject of evidence given by Cullen, each of Alexander McLean and Lana McLean and also that of a handwriting expert.

197. Murray was asked, "In relation to Unit 2 at Alfred Street, Prahran - in July 1990 were you aware of what the position was with Unit 2 in terms of whether it was held by Mr and Mrs McLean or anyone else?" He replied, "We still had security over a unit - the whole - the both properties, or one property, as far as we were concerned. Number 1 Alfred Place." Murray further gave evidence that there had been plans for sub-division put in but to his knowledge it was not finalised at that stage.

It was put to Murray - "... it is going to be the evidence of Mr and Mrs McLean that they met you at the branch on 12 July 1990 regarding this document. Do you recall any such meeting on that date?" He replied, "No I don't recall any such meeting". The following further questions were directed to Murray and he answered as follows:

"Q. Prior to 12 July 1990 do you remember making a statement to the effect to Mr McLean that you would release the mortgage insofar as it affected Unit 2 at 1 Alfred Street, Prahran? A. No I can't - I cannot remember stating that. Q. Is it possible that you said it prior to that time? A. It could be possible that - that I - I might have said something along those lines, yes."

202. Further in the evidence of Murray he was asked the following questions and gave answers thereto as I set out.

"Q. Mr Murray, you said it is possible that you told Mr McLean that a release could be given in relation to Unit 2. You also gave evidence yesterday that at a lunch meeting in June 1989 Mr McLean told you he had sold the Unit 2 to his mother - as it turns out it's his mother-in-law. Having that knowledge from June 1989 and we are now at 12 July 1990 when you talk about this possibility what is it that you would have responded when asked that Unit 2 be released? A. I would have explained that we can - we could release the security document - security providing revaluation of the property of Unit 1 was done. The accounts would have been in order, providing we were covered on the security of the unit - the remaining unit, the one that we were holding for security, if we were totally covered on security and everything else was in order, we would - we would agree to release the document - release the title. Q. In terms of bank practice, what you are saying - would have to be - you would have organised? A. Yes, yes. Q. What would that have involved? A. We would arrange a revaluation of the remaining unit and providing that remaining unit - we had sufficient security to cover any of the debts in their names, or in the company name, then we may - we would have considered releasing the security document, or the security."

206. After some further questions were asked and answers given by Murray the following further questions were asked to which answers were given by the witness.

"Q. The evidence of Mr McLean will be that in about mid-August 1988 he told you that Mrs Masluk wanted to buy a share of the upstairs unit following the strata sub-division of 1, Alfred Street, Prahran. In relation to that assertion did Mr McLean tell you in mid-August 1988 that Mrs Masluk wanted to buy a share of the unit? A. I cannot recall that he told me that. Q. It is said by Mr McLean that you responded by saying that the bank was prepared to discharge the mortgage over the unit to enable registration of the transfer to Mrs Masluk, Mr McLean and his wife. Did you tell Mr McLean that in mid-August 1988? A. I can't recall telling him that. Q. Is it possible upon Mr McLean asking you in these words, `I want the bank to release Unit 2 because I want to sell a share of it to my mother, so - my mother-in-law - myself and Mrs McLean can hold it together and I want the bank to immediately release it'. Would you have said yes at any time to that proposition? A. No."

210. Murray was taken back to the document dated 12/7/90, on which was stamped "Received 12 Jul 1990 South Yarra Victoria" and signed by Alexander McLean and Lana McLean and he was told that it was going to be said that on 12 July 1990 he and both McLeans were in his office and that Mrs McLean was concerned that the description in relation to Alfred Street, Prahran was prefaced by "the digit one", there was no "stroke one". Murray said he did not recall any discussion along these lines. He was then asked the following questions and gave the following answer:

"Q. They're both going to say that when Mrs McLean said to you that the description of the property should be amended to read Apartment 1/1 Alfred Street, Prahran... that you simply picked up your pen and amended it. Do you recall doing that? A. I do not recall doing that - doing that.

214. There was also tendered a document bearing the seal of Aspenview Productions and signed by Alexander McLean and Lana McLean, as directors of that company, being the form of a letter to the manager of the plaintiff's branch at South Yarra whereby Aspenview Productions requested and authorised the bank to increase the accommodation to be provided to Aspenview Productions by a temporary excess of $26,602. That document bore the "Received" stamp of the bank dated 12 July 1990. On the same day, 12 July 1990, Murray wrote to Aspenview Productions stating that its account with the bank which had a formal limit of $25,000 was overdrawn in the sum of $57,304.13. The letter requested arrangements to be made to place the account in order by no later than 24 July 1990. Again, on the same day, Murray wrote to the Secretary of Whiteboards of Australia concerning its cheque account which had a formal limit of $25,000 stating that it was in debt in the sum of $68,640.76. A similar request was made as that contained in the immediately preceding letter. It was put to Murray that, if he had had a meeting with Mrs McLean on 12 July 1990, would he have discussed the state of accounts of Aspenview Productions and Whiteboards of Australia? Murray replied, "If I had a meeting with them I would have, yes". It was further put to Murray that it was going to be said against him that at the meeting on 12 July 1990 he told them that letters for payment of the Aspenview Productions debt would be coming out to them but the letter sent would be sent as a formality having regard to the fact that they had just signed the Sale of Land Agreement. He was asked whether he told Alexander and Lana McLean anything like that? He replied, "I wouldn't have told them anything like that. It'd be a waste of time sending letters out if I had have said that".

217. On 24 August 1990 Murray prepared a diary memo headed "Application for Finance" which he identified as being a document to restructure the debt between Whiteboards of Australia and Aspenview Productions. When asked what the preliminaries to it were as between him and the customer he said, "Just general discussions about clearing the debt on Aspenview and replacing the money that was said was used by Aspenview Productions or St Martin's Garage for Whiteboards". He said it was prepared for the bank's records to be placed on the file to explain to anyone reading the file what was going on. At the time that he prepared that document the existing debt of Whiteboards of Australia was $91,585 and that of Aspenview Productions - St Martin's Garage - $126,300.90 making a total debt of $217,975. He said that the plan was that a Bill Discount Facility of $100,000 was to be provided to Whiteboards of Australia and that money was to be used to repay the debts in St Martin's, Aspenview Productions. That, he said, was what "they've requested from me". He said that he did not decide to do that which had been recorded but that it had probably come from Alexander McLean. It is to be noted that on that document, under the heading "Suggested Security", Murray had written that the first suggested security was a registered second mortgage by Darren (no doubt a reference to Drieberg) over property - 24 Labassa Grove and, secondly, an unregistered mortgage "etc by Alex over 1/1 Alfred Street, Prahran, Owners Value $300,000". He said that he was not suggesting that security, but it was the security suggested to him.

220. As part of a bundle of documents comprising that diary memo was a list of assets and liabilities, as at 6 August 1990, of Alexander and Lana McLean. Among their assets was listed -

[diamond] One-third share in 2/1 Alfred Street, Prahran $100,000

[diamond] Full share in 1/1 Alfred Street, Prahran $300,000

[diamond] "Commonwealth Bank 1/3 share in loan for

The memorandum concluded with a recommendation which was to the effect that Murray did not propose to submit the application. The significance of the document as prepared by Murray, is that the "suggested Security" as stated by Murray was the unregistered mortgage by "Alex" "over 1/1 Alfred Street Prahran". Also it is pertinent that on the document on the file of the bank, was the statement that the assets of Alexander and Lana McLean were as set out and referred to above

229. On 22 August 1990 Murray spoke to Alexander McLean expressing concern about the then level of Whiteboards of Australia debt. McLean informed him that $15,000 would be paid into the account within the next few days and $33,000 plus in 15 days. McLean also informed him that he would let him know which way they were going to secure overdrawings by the following Friday.

232. As at 3 September 1990 the Whiteboards of Australia account was in debt in the sum of $95,955 against a limit of $25,000. On that day Murray made a diary memo in which he directed his document's clerk, who was Gregory Chapman, as follows:

"Please arrange for valuation of 1/1 Alfred Street, Prahran which Alex values at in excess of $300,000."

At that time Alexander McLean was suggesting to Murray that security could be provided for the Whiteboards of Australia account by Drieberg providing a registered second mortgage over property at North Caulfield and he providing an unregistered mortgage over Unit 1, 1 Alfred Street, Prahran. In consequence of the direction by Murray to have Unit 1, 1 Alfred Street, Prahran valued, that valuation was carried out and on 12 September 1990, that property was valued by the bank at $270,000.

237. On 17 September 1990 the plaintiff's South Yarra branch received a Land Titles Office Search Statement concerning the Prahran Property which contained copy certificates of title and an application for the purpose of s. 9 of the Strata Titles Act 1967. The titles related to each of Units 1, 2, 3 and 4. Each were registered in the names of Alexander McLean and Lana McLean as joint proprietors and each were subject to a registered mortgage to the plaintiff numbered P.654749R and registered 9 February 1990. The application for the registration of the plan of strata sub-division by the solicitors for Alexander and Lana McLean was dated 7 September 1989 and it stated that the property was subject to the aforesaid mortgage identified by number. By reference to the plan of strata sub-division it appears that Units 1 and 2 were each part of a two storey building and that Units 3 and 4 were accessory units, car park units.

240. On 1 November 1990 the plaintiff wrote a letter to Whiteboards of Australia advising that the bank had approved financial facilities of and to it, "to assist clear excess on overdraft, provide working capital and repay $100,000 to Alex McLean to reduce debt on St Martin's Garage". The facilities offered were an overdraft account with a limit of $50,000, a small business loan of $30,000 and a Bill Discount Facility of $100,000 net. The security sought by the bank was the "Security, already held by the bank in connection with the advances to St Martin's Garage", "Guarantees joint and several by Alexander John McLean and Lana Dorothy McLean and Darrel Stephen Drieberg" together with further additional security to the bank's satisfaction. When asked what was the purpose of the lending, Murray said it was to give working capital to Whiteboards of Australia "to repay $100,000 debt to Alexander McLean". He said that that sum was to go into the St Martin's Garage account. Murray said that at that time there was no guarantee held, by Lana McLean, for the debts of Whiteboards of Australia. On the same day Murray wrote to Aspenview Productions referring to the Letter of Approval of that day regarding Whiteboards of Australia and advising that when their new facilities were taken up by it the limit on the overdraft account of Aspenview Productions would need to be reduced to $10,000. Murray said that he could not recall whether the offer was taken up by Whiteboards of Australia. He said that he could not recall whether the consequential offer to Aspenview Productions was accepted.

243. On 30 November 1990 there was sent by Murray to O'Brien, Alexander McLean, Lana McLean and Drieberg letters, enclosing guarantees to be executed by each of them to secure the indebtedness of Whiteboards of Australia to the bank. In respect of the letters written to each of Alexander McLean and Lana McLean the document sent by the plaintiff to them was described as a guarantee by them, O'Brien, Drieberg in respect of the indebtedness of Whiteboards of Australia adding the "liabilities under which are secured by mortgage by `you' and the other, over unit property at 1/1 Alfred Street, Prahran".

246. On 22 January 1991 the acting manager of the branch wrote a letter to Alexander McLean concerning accounts held by Whiteboards of Australia and Aspenview Productions - St Martin's Garage. The letter recorded that at that date the Whiteboards of Australia account, with a limit of $25,000, was overdrawn to $96,457 and that of St Martin's Garage, which had a limit of $25,000, was overdrawn to $66,579. The letter referred to discussions held in November 1990, the approval letters dated 1 November 1990 stating that they had not been returned. In response to that letter Alexander McLean wrote a letter to Murray referring to the letter of 1 November 1990 and stating that, as had been pointed out to him, the letter did not include O'Brien as one of the guarantors.

249. On 1 February 1991 a letter of further offer was sent by Murray to the Secretary of Whiteboards of Australia concerning the offer to provide facilities totalling $180,000. That letter also included O'Brien as one of the persons from whom a consent was sought. The letter was returned purportedly signed by Lana McLean, Drieberg and O'Brien as indicating that they agreed with the terms and conditions.

252. On 28 February 1991 Alexander McLean wrote a letter to O'Brien and Drieberg stating why "1 Alfred Street" could not be used as a security for the extended loan to Whiteboards of Australia. In that letter he stated in part that St Martin's Garage had financed "Whiteboards" from the start. In response in a letter dated 1 March 1991 O'Brien set out that which he claimed was his contribution to Whiteboards of Australia and the securities provided. He claimed that the contribution of Alexander McLean had been paid for. It is apparent from that letter that O'Brien did not agree to the proposition that Whiteboards of Australia should become further indebted to the plaintiff as had been proposed by Alexander McLean. In a letter dated 4 March 1991 from Drieberg to Alexander McLean, he challenged the contribution that Alexander McLean contended that he had made to Whiteboards of Australia. He set out that which he said was his contribution to the company. He asserted that Alexander McLean had received payment for his contribution to the company. He made it clear in his letter that he did not agree to Whiteboards of Australia increasing its debt to the plaintiff by $100,000 particularly for the purpose sought by Alexander McLean.

255. On 6 March 1991 Murray wrote to the Secretary of Aspenview Productions drawing attention to the offer made to provide facilities to enable the account of Aspenview Productions to be reduced, noting that the facilities had not been put in place and stating that unless new arrangements were in place no later than 13 March 1991 the approval would be cancelled. On the same day a similar letter was written to the Secretary of Whiteboards of Australia by Murray. It is to be noted that in that letter it was stated that some of the new facilities were to be used to reduce the debt in the name of Aspenview. In an internal memorandum of Murray dated 12 March 1991 he recorded that, following his letter to Whiteboards of Australia, Drieberg, O'Brien and Alexander McLean had called to discuss the position, that the bottom line was that they were unable to have the debts reduced below the approval figure of $180,000 on Whiteboards of Australia and $10,000 on St Martin's Garage. It was further recorded that they, being Whiteboards of Australia, "would like to have the $100,000 approval to continue on a [small business loan] and funds used to reduce the St Martin's Garage debt by that amount". In his memorandum Murray recorded that the effect of that suggestion would be to increase the Whiteboards of Australia small business loan by $100,000 and likewise reduce the St Martin's Garage small business loan by a similar amount but taken together the debt to the bank would still remain at $224,720.

258. On 20 May 1991 Murray wrote a letter to Whiteboards of Australia advising that its application for additional financial of $100,000 had been declined. The letter advised that the current account which stood at $79,986.74 was not to be increased. In response to that letter on 23 May a letter was written to Murray from Whiteboards of Australia acknowledging the letter of the bank and acknowledging that the balance was not to exceed the aforesaid sum. In part the letter said -

"The proceeds of the proposed loan were to be used to reduce other accounts with your bank in the name of Aspenview Productions and/or A. and L. McLean who are creditors of the company."

262. In evidence in chief Murray was asked whether he recalled getting any documentation from McLean early in 1988 regarding Whiteboards of Australia or the Whiteboards Domestic and Office Trust. He said that he did not. He said that he certainly was not a highly capable financial adviser and that if he had been introduced as such he probably would have remembered that. He said that had he been given the documents by a customer in 1988 he would have put them on the file after looking through them. He said he believed that he did not receive from McLean, in early 1988, documents relating to the financial business structure of Whiteboards. He said early in 1988 he would not have been able to comment on whether McLean should have sold Whiteboards completely or kept an interest in it as a joint venture situation. He said that that was not his business. He said that if he had had a meeting with McLean and received information about a proposed business regarding Whiteboards and his intention to have the bank finance that business venture he would have done some diary memo about the discussion. Murray further gave evidence that if, in early 1988, he had had a discussion with McLean about a proposal to transfer some of the debt from "Aspenview" to "Whiteboards", he certainly would have done a diary memo and placed it on the "Aspenview file". When asked whether he had a discussion with McLean early in 1988 about taking some debt out of "Aspenview" and transferring it to "Whiteboards", he replied, "Not to my knowledge". He said that if that had taken place it would be a fairly important discussion and he certainly would have made a diary memo on the "Aspenview file".

265. Murray was further asked, that if the evidence led by Mr and Mrs McLean was that there was an arrangement with the bank to release Unit 2 so that they could transfer the interest in Unit 2 to Lana McLean's mother whether that that was something that he would have responded positively to or otherwise. He said that he would have had a diary note about that, that he may have agreed to it, that the agreement would have been on the basis, "that we need to do another valuation of the property". He was again asked, that if the evidence given by Mr and Mrs McLean was that he informed Mr McLean that the bank was prepared in mid-August 1998 to discharge the mortgage over the unit to enable registration of the transfer to Mrs Masluk, then what was his response to that? He said, "I don't believe I was informed about that until '89', if I remember rightly, about that - about registering or Mrs McLean's mother-in-law taking over the property". He was taken back to his diary note dated 30 June 1989, as to entries made relevant to the lunch meeting that he had had with Alexander McLean on the previous day. He said that to the best of his knowledge he was not told of the sale of Unit 2 to McLean's mother-in-law before 29 June 1989. He was asked whether at that lunch Mr McLean had asked him to release Unit 2. He replied "If it's not in my diary memo I possibly didn't, but I can't say for sure that I didn't." He said that he did not remember being asked directly by McLean why he had failed to release Unit 2.

268. As to the Whiteboards of Australia guarantee, it was put to Murray that if evidence was led that Mr McLean had said that he wanted his exposure under such guarantee to be limited to one-third of the debt of Whiteboards of Australia, whether he was able to recall anything that he said to Mr McLean that would make him think that he, Murray, was able to obtain that position. He replied "Certainly not because we couldn't do that on our guarantees."

271. In cross-examination Murray agreed that as at 2 October 1989 when Whiteboards of Australia made a preliminary application to the plaintiff for a financial facility it was part of the banking policy to enlist as many customers to the bank as possible. When it was put to him that in his position he would comment on the advisability of a project that the bank was getting involved in, he said that they had to be very careful as to how they advised clients and what they said to clients because they could not be seen to be saying that the Commonwealth Bank, "advises to do that". But he agreed that from time to time he would agree on a customer's business projects.

274. As to the time that he became the manager of the South Yarra branch, Murray said that it was quite possible that he had been introduced to Alexander McLean. He said that he did not recall being introduced to Alexander McLean by Fairweather as a highly capable financial adviser who would be able to assist Alexander McLean through financial advice regarding his business interests. He said that he could not recall meeting with Alexander McLean in February 1988 when it was discussed that there was a consideration of selling the business and patent of Whiteboards or establishing a manufacturing company. Murray also said that he did not recall a meeting with Alexander McLean when McLean left with him documents being the proposed structure of Whiteboards of Australia. He said that he did not recall such a meeting in March 1988. He said that he could recall a discussion later about Alexander McLean limiting his liability as to Whiteboards to one-third and telling him that the bank document did not allow that. He said that he recalled a little about a discussion with Alexander McLean concerning the concept of transferring the debt out of the Aspenview Productions' account into the account of Whiteboards of Australia. He said that that was when there was a discussion about making a loan of $100,000 to Whiteboards of Australia to clear the debt of the McLeans. Murray further said that he could not recall a meeting in July/August 1988 with Alexander McLean when he was handed a "prospectus" with respect to Whiteboards of Australia. He said that at some stage he discussed the "prospectus" but he could not say when that was. He said that he could not recall getting a document concerning such a "prospectus". He said he could not recall that Alexander McLean told him that he, McLean, had little experience in financing businesses and that he was looking to him for support during his time at the South Yarra branch.

277. The witness further said that he could not recall an account operated by Alexander McLean which was known as the Whiteboards Office and Domestic account. Murray said that at some stage he was told that the excesses of Aspenview Productions were in a large part caused by expenditure relating to "Whiteboards". He said that he could not recall any agreement with Alexander McLean that he could incur such expenses on the basis that the excesses would be transferred to the "Whiteboards'" account at a later date. Murray said that he did not agree with Alexander McLean, that as soon as Whiteboards of Australia was up and running he would transfer the debt from the Aspenview Productions account to the account of a new company. He said there may have been discussion along those lines but it certainly would not have been on an unsecured basis. He said there were discussions about that matter and he would have agreed providing the bank had appropriate security. Murray said that he was aware that the Aspenview Productions' account was being used for "Whiteboards" and was aware that there was a general plan for the transfer of the debt to Whiteboards of Australia at a later date. He said it was quite possible that he told McLean that he would personally approve temporary excesses on the Aspenview Productions' account given that that was the plan.

280. In answer to further questions put to him Murray said that he believed that he had a discussion with Alexander McLean about his desire to limit his liability with respect to Whiteboards of Australia to one-third. On a further question as to that matter he said that he could not recall it happening so he was not too sure if it happened or not.

283. Murray said further that he could not recall a meeting with Alexander McLean at which he was asked whether the bank would have any problem with Alexander McLean selling Unit 2 to his mother-in-law as she was planning to move in with them as she was old and frail and that he wanted to get a clearance from Murray before mentioning it to his mother-in-law. Murray said that the records show that in mid-1989 at the lunch meeting there was a discussion about the matter of the sale of Unit 2 to his mother-in-law. When further questioned about the relationship of Aspenview Productions and the account of Whiteboards of Australia he said that he was aware that the Aspenview Productions' overdraft account was paying for expenses of Whiteboards.

286. When further questioned about any discussions he had with Alexander McLean concerning the money that Mrs Masluk had paid for the purchase of Unit 2, Murray said that he could not remember the lunch meeting with Alexander McLean. He said that he did not recall any discussion with Alexander McLean at a lunch meeting to the effect that Alexander McLean asked him whether he should use the proceeds of the sale of Unit 2 to Mrs Masluk to pay off the excesses on the account and saying to Alexander McLean, "Why do you want to pay off the debt, its not yours. The debt will go to Whiteboards and be shared by the three directors". The witness further said that he could not specifically say that he had a discussion with Alexander McLean about releasing the title to Unit 2. He said that they may have had discussions over lunch or at a later date. He said that he could not remember such discussions. He said he could remember something being said about it but could not specifically recall what was said.

289. Murray gave evidence that as a matter of banking practice, if a party filled out an application for an advance there would be no transaction until the transaction was acknowledged by the party covering the amount of money that was being borrowed. As to the matter of the exposure of Alexander McLean to the debt of Whiteboards of Australia, Murray said that he could not recall any discussion about limiting his liability to one-third of the debt, adding that the bank's documentation did not allow him to so limit the liability. The witness denied that he had told Alexander McLean that he had taken securities from the other two directors of Whiteboards of Australia and that as a consequence he would only be liable for one-third of its debts. He said that he would not have said that.

292. Counsel for the defendants took the witness, Murray, to a letter written by him to Alexander McLean and Lana McLean on 21 February 1990 concerning the clearance of excesses on the Aspenview Productions - St Martin's Garage accounts and asked him if he recalled Alexander McLean at that time, contacting him and telling him that the solicitors for Mrs Masluk were arranging to transfer to Mrs Masluk two thirds of the interest in Unit 2 and that he said to Alexander McLean that he should have the solicitor contact him so that he could arrange for the discharge of the mortgage over Unit 2. Murray said that he did not recall that and further said that it could quite easily have happened. Counsel informed him that Alexander McLean would give evidence that in about mid-March 1990 he telephoned Murray and asked him to release the title. Murray said that he did not recall that. When it was put to him that it could very well have happened he replied, "It could very well have happened". It was further suggested to him that he told Alexander McLean, at that time, that he needed to sort out Aspenview Productions' debt situation before he could release the title to which the witness said that he could quite possibly have told Alexander McLean that but said that he could not recall it.

295. As to the guarantee provided by the three directors of Whiteboards of Australia it was put to Murray that he knew that at the time that he sent out the Whiteboards of Australia guarantees, for approval, the guarantee was an unsupported guarantee because there was no real estate involved. The witness said that there was no real estate involved for Drieberg and O'Brien but the bank could have attached any security in the name of Alexander McLean to the Whiteboards of Australia debt. He was asked whether any documents were sent to Lana McLean to sign in relation to the Whiteboards' facility at any time. He replied, "No not that I know of". The witness said that until the guarantees were obtained the mortgage supported Aspenview Productions but under the guarantee that security could also support the debt of Whiteboards of Australia. He agreed that Lana McLean had not signed any guarantee in respect of Whiteboards of Australia. He said she had executed the unregistered mortgage over 1 Alfred Street and to his knowledge Lana McLean had never been notified of any liability to Whiteboards of Australia up to 2 May 1990. Murray said that in the ordinary course of events she would not be notified as to that liability. Murray agreed that Alexander McLean was a guarantor of the debt of Whiteboards of Australia and that the situation was that if there was any increase in the facility made to the borrower the consent of the guarantor was required. Counsel for the defendants informed Murray that Alexander McLean would give evidence that at a time when he initially refused to sign the guarantee providing security for the debt of Whiteboards of Australia, that he, Murray, said to him, "We don't have guarantees that limit each director's liability to one-third". Murray agreed that that was the sort of thing that he would have said to McLean. Murray denied informing Alexander McLean that although the guarantees did not limit his liability to one-third, having regard to the fact that the directors, O'Brien and Drieberg, were people of substance, that in the wash up of things he would only ever have to pay one-third because of their asset situation.

298. Murray was also cross-examined as the document executed by Alex McLean and Lana McLean which was dated 12/7/99 and on which there was affixed "received" stamp dated 12 July 1999 and which document was headed - "Sale of Land Act 1962 - Victoria". Murray said that he did not recall meeting Alexander and Lana McLean on 12 July 1990 in his office. He said he had no recollection of Lana McLean wanting to be assured that a component of the Aspenview Productions debt was being transferred to the accounts of Whiteboards of Australia. He said that he had no recollection of a discussion that the title to Unit 2, Mrs Mazluk's unit, would be released from the mortgage. He said that possibly at some time he could have discussed that matter with Lana McLean, saying that he could not say that he could specifically remember any particular time. Addressing the document he said that to his knowledge the "1" was not his handwriting. Murray maintained that he could recall a meeting with Alexander and Lana McLean on 12 July 1990 and he could not recall saying to Lana McLean that a formal letter of demand for payment of Aspenview Productions' debt would be coming to them but the letter would be sent as a formality only. Murray was further cross-examined as to the execution by Lana McLean of the "Letter of Acknowledgment" dated "14/6/90" which bore the signature of Cullen as a witness.

301. Murray, in evidence in chief, gave evidence that he had a recollection of Lana McLean coming into the branch, that the document was given to her by Cullen and that Cullen took over having it signed. In cross-examination, he said that he could not recall that happening. Eventually on being further cross-examined he said that he surmised that which he had previously said was what had happened. It was specifically put to him that that which he had previously said, that he had a recollection that Lana McLean came into the branch and the document was given to her and Richard Cullen took over getting it signed, was false. He made no reply to that proposition being put to him. He then said that he may have thought that that was what happened but in "hindsight now its probably not". It was suggested to him that when Lana McLean came to the bank to sign the Letter of Acknowledgment there was nothing written under the heading "Schedule". Murray said that he had no idea. It was put to him that the occasion when this document was given to Lana McLean for her to sign was 27 July 1990. He said that he did not recall it. He said that he did not recall the figure in the document, $122,230, was said to be in the document to quantify the debt before it was transferred. Murray said that he vaguely remembered Lana McLean signing the document but could not remember any details about it. However, when pressed on that matter he said that he could not say that he even remembered her signing the document.

304. In further cross-examination of Murray it was put to him that the mortgage over the Prahran Property, referred to as the "Aspenview Mortgage", did not support the borrowings of Whiteboards of Australia from the bank's point of view. Murray said that it did by virtue of the guarantee. The guarantee referred to was the guarantee executed by Alexander McLean with respect to the debts of Whiteboards of Australia to the plaintiff.

307. Murray was further cross-examined as to a diary note made by him on 2 May 1990 dealing with the account of Whiteboards of Australia which stated that the balance was a debit balance of $60,729 and that the limit was $25,000. On that diary note there was typed with reference to that account - "SEC: G/U (UL)". Murray said that as at 2 May 1990 the security for the Whiteboards of Australia debt was an unlimited guarantee. It was put to him that there was no other security for that debt to which he replied, "By virtue of the guarantee, the securities by Mr McLean were connected with a debt to Whiteboards, and we just didn't write it up that way". Murray was later recalled and further cross examined. He said that he did not have any direct knowledge of the meeting with Alexander McLean on 29 June 1989, but he was able to give evidence as to it from which he saw in his diary note of 30 June 1993. He said that note did not refresh him memory at all. He again said that he could not remember the meeting at all and could not remember the occasion.

310. Richard Cullen who was formerly employed by the plaintiff was called as a witness on behalf of the plaintiff. By reference to an inter office memo dated 1 February 1990, Cullen said that it was a directive to the lending support division to register the mortgage over the Prahran Property. He said that it was to be registered before the sub-division of that property went through. Through this witness the certificates of strata title sub-division re: Units 1, 2, 3 and 4 of 1 Alfred St, Prahran (the Prahran Property) were tendered. On each title the plaintiff's mortgage was noted as an encumbrance. On the titles of Unit 2 and Unit 4, the unit and accessory unit occupied by Mrs Masluk, the caveats lodged by her were noted. From the certified copy of title, being the parent title to the Prahran Property, there is to be seen that the mortgage given to the Commonwealth Savings Bank of Australia by Alexander and Lana McLean was registered on 30 December 1986 and discharged on 10 December 1987 and, further, that the mortgage to the plaintiff was registered on 9 February 1990. That latter mortgage signed by Alexander McLean and Lana McLean and dated 10 December 1986 carried stamps of the Stamp Duties Office Victoria increasing the amount provided by it as collateral security for advances made by the plaintiff. It was on 20 February 1990 that Cullen for the manager wrote to the solicitors for Alexander McLean and Lana McLean sending to them their application to register the strata plan signed by the plaintiff's Attorney, as had been requested by such solicitors. The solicitors for Alexander McLean and Lana McLean had sought to lodge the application for registration of the strata plan into the dealing of the plaintiff but at the time that that was done the mortgage had been registered on the parent title so that it was necessary for the solicitors to obtain from the bank the title to the Prahran Property in order that application could be made to register the strata title. Accordingly, in sequence the mortgage given by Alexander McLean and Lana McLean to the plaintiff was registered on the parent title before the strata title was registered.

313. The witness gave evidence that the plaintiff had on 5 April 1990 sent to Alexander and Lana McLean, a letter, enclosing a consent form for their signatures stating that with respect to Aspenview Productions - St Martin's Garage their maximum liability was at that time $113,000 being on the overdraft account and two small business loans, but as that document had not been responded to on 17 May 1990 a further letter was sent to each person enclosing a Letter of Acknowledgment to be executed by them in relation to the excesses on the overdraft limit which he said at that time caused the total amount owing to be $122,230. He said the consent forms stated the total debt and that it was necessary to obtain the same as the security documents needed to be "up stamped" to cover the increased debt. In those letters there was also enclosed a Sale of Land Act acknowledgment to be signed by the mortgagors of the security property. It was this latter document which was subsequently dated 12/7/1990 and bore the "received" stamp dated 12 July 1990. As to that document, Cullen said that he had written the date; that in the address he had written "South Yarra Vic" and that in the body of the document he had written "10/12/86" and "1 Alfred St Prahran". He said further that in pencil he had written the names "Alex and Lana" where Alexander and Lana McLean were to sign the document. Expert evidence was called by the plaintiff as to the writing on this document. For convenience I shall refer to this document hereafter as the "Sale of Land Act document".

316. Cullen identified the "Letter of Acknowledgment" which was sent to Alexander and Lana McLean by the letter of 17 May 1990 as that which had been executed by Alexander McLean acknowledging that the bank may grant accommodation to Aspenview Productions from time to time in the sum of $122,230. The document as signed by Alexander McLean bore the date "14.6.90" and also bore the "received" stamp "18 Jun 1990". The security identified in the schedule to that document and as typed as part of the document was "mortgage dated 10/12/86 over property at 1 Alfred Street Prahran". The document sent to Lana McLean via the letter 17 May 1990 was in the same form. The witness was taken to the Letter of Acknowledgment bearing the date "14/6/90" signed by Lana McLean which, although in its contents was the same as that signed by Alexander McLean and dated "14.6.90", was completed in handwriting including the mortgage set out in the schedule being "mortgage dated 10/2/86 over property at 1 Alfred St Prahran". Cullen gave evidence that that was not the original document that he had sent to Lana McLean. He said that he did not specifically recall her coming into the branch. He said that he had signed the document as a witness to the signature of Lana McLean and that it bore the "received" stamp 27 July 1990. Although saying that he did not specifically recall Lana McLean coming into the branch he said that he witnessed her signature and before it was signed the document had been completed and that he had made no alterations to the document under the word "schedule" after Lana McLean had signed it. He further gave evidence that prior to Lana McLean signing it he advised her that, because it was a third party security, if she was unsure of what she was signing that she should take it and get independent advice, legal or otherwise before she signed it but if she was happy and understood the nature of the document she could sign it in front of him and he would witness the signature. The witness was taken to the note signed by him which was in part in type and part completed in hand. He said that that note had been signed by him after Lana McLean had signed the Letter of Acknowledgment. This undated note is that referred to and set out in paragraph 52 of this judgment. It was put to Cullen that Lana McLean was going to give evidence that she did not sign the document in front of him and that he was not a witness to her signature. He said that that was incorrect and that he had witnessed her signature. He said that he did not put his signature to anything that was not already there or that he had not witnessed. He said that the document was complete when Lana McLean signed it and the only thing that was done after it being signed was the receipt stamp was put on the document. Cullen was adamant that he had witnessed the signature of Lana McLean to the document stating that he was certain that he had witnessed her signature.

319. Cullen was cross-examined by counsel for the defendants. He said that he could not specifically recall the events of 27 July 1990, but he could see by the "received" stamp on the document that that was the date that he had witnessed Lana McLean's signature. He said that from his observation of documents he had deduced what had happened on that day. He agreed that he had no specific recollection of witnessing Lana McLean signing the document. He agreed that on occasions he had explained the meaning of documents to customers and that he went through the bank's policy and procedure and described what the documents entailed and what it meant by signing particular documents. He was asked what was the function of a "Letter of Acknowledgment". He replied "....that they understand that the documents that are held as security secure advances to whatever the dollar amount was placed on those documents." He agreed that on the Letter of Acknowledgment signed by Lana McLean bearing date 14/6/90 and also bearing the "received" stamp 27 Jul 1990 that the amount stated was $122,230. He agreed that the letter sent to Lana McLean on 1 June 1990 requesting her to sign and return the Letter of Acknowledgment was addressed - "Re: Aspenview Productions Pty Ltd". He agreed that the Letter of Acknowledgment signed by Lana McLean again had in writing within the body of the document that it was acknowledged that the bank had granted or may grant from time to time accommodation to Aspenview Productions. The witness further agreed that when on 17 May 1990 he wrote to O'Brien "re: Whiteboards of Australia Pty Ltd" enclosing a Letter of Acknowledgment for execution "in relation to excesses in the overdraft limit for the abovementioned". He agreed that the letter advised that the securities held supporting "debts" was, as to "Aspenview Productions Pty Ltd trading as St Martin's Garage", the "registered first mortgage by Alexander McLean and Lana McLean over the property at 1 Alfred Street, Prahran" and, that, as to Whiteboards of Australia, the securities identified were "unlimited guarantees by Alexander John McLean, Peter Leslie O'Brien and Darrel Stephen Drieberg". He agreed that by that letter it was his intention to set out the security supporting the Aspenview Productions' debt and the security supporting the Whiteboards of Australia debt and that the Whiteboards' debt was supported by the unlimited guarantees. He agreed that it was his intention by sending that letter to show that the Alfred Street property supported the Aspenview Productions' debt and the guarantees supported the Whiteboards of Australia debt.

322. Cullen said that the plaintiff would send a Letter of Acknowledgment to a third party guarantor to have the guarantor acknowledge an increased amount of the debt that, he said, was to advise the third party guarantor of such increase. He said that it was normal banking practice to require the consent of the guarantor to any variation of facilities to the borrower before the bank would proceed and that if the consent of the guarantor to the variation of the facility was not received the bank may not go ahead with the transaction of the borrower. He said that to his understanding the bank would not contemplate a substantial variation to facilities with a customer where a guarantor was involved and the guarantor had not given his or her consent.

325. Cullen was taken to the document being the preliminary application for an advance by Whiteboards of Australia dated 2/10/89 addressed to the Branch Network Department of the plaintiff from Thurgood, the acting manager of the South Yarra branch, where under the heading, "Security" it was stated - "Guarantee Unsupported (unlimited) Third Party by Alexander John McLean, Peter O'Brien and Darrel Steven Drieberg (directors of applicant co)". He said that "unsupported guarantee" meant that there was no additional security attached to that guarantee document.

328. The witness was also taken to the Letter of Acknowledgment dated 14/6/90 signed by Lana McLean and which he said that he had witnessed. He agreed that he did not have any recollection of the execution of the document. It was put to him that he was not present when the document was signed. He said that was incorrect because he had placed his signature there as a witness to her signature and had supported that with the document which had been signed by him stating what had occurred before Lana McLean signed the document. He said that as to the Letter of Acknowledgment he had written that which was in the schedule before it was signed because it was his practice to have the documents completed and that the last thing done was the signing of such document. He said that he had written the date "14/6/90" to be consistent with the date on the document signed by Alexander McLean.

331. The "Sale of Land Act 1962" document bearing the date "12/7/1990" and the "received" stamp dated "12 Jul 1990" had been examined on behalf of the plaintiff by Leonard Timewell, a forensic document examiner. He gave evidence that in the address within the body of the document being "1/1 Alfred St Prahran" two different pens had been used to write that address and that one had been written with a paste ink and the other in a liquid ink. He said that the first figure 1 in the writing "1/1" was written in blue paste ink as were the words "Alfred St Prahran". He said that the figures "/1" was in a different ink, a blue liquid ink and that the signatures on the document were written in the same blue liquid ink. He further said that the date written "12/7/90" was written in a black ink. He further said that the words in the document "South Yarra Vic" and the date "10/12/86" were written in a blue ink which responded to tests as being the same as the writing "Alfred St Prahran". The witness further said that in having regard to the figures written "/1" and the signatures that there was a high degree of probability that the same pen was used to write those matters.

334. On 2 October 1991 the then manager of the South Yarra branch of the plaintiff's bank wrote to each of Alexander McLean, O'Brien and Drieberg regarding the account of Whiteboards of Australia referring to the guarantees executed by them on 2 November 1989 guaranteeing the payment to the bank of moneys owed by Whiteboards of Australia to it and demanding payment of the sum of $72,181.80. By the letter the securities were identified as the "guarantee (unlimited as to amount) by A.J. McLean, P.L. O'Brien and D.S. Drieberg". It was stated that under such guarantees the obligation of each guarantor was joint and several. Each were further advised that interest was accruing on the sum referred to at the rate of $30.58 per day.

337. On 11 February 1992 the plaintiff's South Yarra branch manager, Chapman, sent a letter to Alexander and Lana McLean which, inter alia, set out the balance then standing to the accounts of Aspenview Productions trading as St Martin's Garage. The three accounts identified were in debit and the total of the indebtedness was $155,090.13. By reference to an internal memorandum dated 21 February 1992 there was recorded, in part, that which Chapman said was told to him by Lana McLean when she visited the branch as to the indebtedness of St Martin's Garage. Chapman had recorded that he had been told by Lana McLean that the "McLeans" wished to leave the large debt as is for the moment as it relates to the "Whiteboards' accounts". The memorandum was tendered. To the extent that the last part to which I have referred may be some admission it could only be an admission against Lana McLean, however, when considering that matter regard must also be had to the fact that when Chapman was asked about this matter specifically and, as to what it referred to, he said that he could not remember, I have no regard to this matter when considering the case against Lana McLean. On 27 February 1992 Chapman wrote to Alexander and Lana McLean regarding the accounts of St Martin's Garage requesting them to call so that the bank could discuss a suitable repayment program for the two small business loan accounts.

340. On 11 December 1992 letters of demand were sent on behalf of the plaintiff to each of Alexander McLean and Lana McLean and also to Aspenview Productions Pty Ltd demanding payment of the moneys allegedly due and owing by Aspenview Productions to the plaintiff on the overdraft and first and second small business accounts. In the letters addressed to Alexander and Lana McLean the security identified was the registered mortgage "dated 10/12/86 over the property situated at Units 1 and 2 and the accessory Units 1 Alfred Street Prahran".

343. On 5 May 1993 Chapman, on behalf of the plaintiff, wrote to Wisewoulds regarding Krystyna Masluk referring to a letter received from them on 16 April 1993 and confirming that the plaintiff held a registered mortgage over the property known as Unit 2 and accessory Unit 4 1 Alfred Street Prahran, stating that it "secures various amounts owing to the bank." Via the letter Chapman further said that he would be pleased to be provided with a copy of the "Contract of Sale pertaining to this transaction". Further letters of demand were written on behalf of the bank on 10 May 1993 to Aspenview Productions and each of Alexander and Lana McLean demanding payment of the amounts due on each of the three bank accounts of Aspenview Productions with the plaintiff. The total amount alleged to be due and owing at that time was $185,458.22.

346. In cross-examination Chapman was taken to a memorandum written by him on 9 July 1991 relating, in part, to a proposal to transfer part of the debts of Aspenview Productions owing to the plaintiff to the account of Whiteboards of Australia and, in particular, to that part written by him, "Prior to transfer of debt we propose taking a fresh unlimited guarantee from the three directors as the `money' clause, in the existing guarantee was not initialled by any of the parties. In cross-examination Chapman said he could not remember why the bank proposed taking fresh unlimited guarantees. It became apparent to me that Chapman had no real recollection of the events as to why such note was written by him. He said that he could not recall the significance of initialling such a clause.

349. In cross-examination Chapman said that he was sent to the South Yarra branch following Murray and he was sent there "to fix things up". He said that there were a lot of files conducted by Murray which were out of order and outside established arrangements and that there was evidence that Murray had come to arrangements with customers that were outside the bank guidelines. When further cross-examined as to this matter and asked what irregularities did he observe when examining the Aspenview Productions' accounts and the Whiteboards of Australia accounts, the witness said that the overdraft account for Aspenview Productions had a debit balance of $74,512 against the limit of $25,000 and the Whiteboards of Australia account had a debit balance of $75,320 against the limit of $25,000. He said, further, that when he looked at the security, in his eyes they were holding the whole of the Prahran property and not just Unit 1 of it.

352. The witness Ms Ledney, in addition to the evidence previously referred to as to the moneys owing by Aspenview Productions and each of Alexander and Lana McLean as at 19 February 2001, gave further evidence. She gave evidence that on 23 July 1993 by covering letters addressed to each of Alexander McLean and Lana McLean notices were served on them pursuant to section 76 of the Transfer of Land Act 1958 on behalf of the plaintiff as first mortgagee pursuant to mortgage number P654749R over the land described in Certificates of Title Volume 9956 Folios 761, 762, 763 and 764 requiring payment of the moneys then due and owing under such mortgage and further giving notice that if such moneys were not paid within seven days the plaintiff proposed to exercise the power of sale in respect of the land referred to. Further, on that date by a covering letter addressed to Aspenview Productions there was enclosed the formal notice sent to Alexander and Lana McLean pursuant to s. 76 of the Transfer of Land Act and further giving notice that unless the moneys then due and owing under the mortgage were paid the plaintiff intended to sell the mortgaged property. Further, on 23 July 1993 by letter addressed to Ms Regina K. Masluk there was enclosed in the same the formal notice addressed to Alexander and Lana McLean pursuant to s. 76 of the Transfer of Land Act as it appeared by the Register Book in the Office of Titles that she was a person affected. There was also on that day sent to Wisewoulds, solicitors with reference "Regina Krystyna Masluk caveat number R681953X" a notice pursuant to s. 76 of the Transfer of Land Act.

355. Ms Ledney gave further evidence that on 12 August 1996 further notices were served on each of Alexander and Lana McLean pursuant to s. 76 of the Transfer of Land Act and pursuant to the terms of the mortgage demanding payment then due and owing by each of them to the plaintiff and, further, giving notice that unless the moneys were paid within seven days the plaintiff proposed to exercise the power of sale in respect of the land being that described in the Certificate of Title and the Folios previously referred to. She gave further evidence that on 12 August 1996, by letter, notice was given to Ms Masluk requiring payment of the moneys due to the plaintiff and secured by the mortgage and further giving notice that unless such moneys were paid, the plaintiff proposed to exercise the power of sale in respect of the land being that comprised in Certificate of Title Volume 9956 Folios 762 and 764. Further, Ms Ledney gave evidence as to the repayment by Alexander and Lana McLean of the home loan account which repayment was completed on 10 December 1987 and which led to the discharge of the Commonwealth Savings Bank mortgage.

358. Through this witness there was also tendered company extracts search documents relevant to the incorporation and matters relevant to each of Aspenview Productions and Whiteboards of Australia. Further, the witness gave evidence that in relation to the default judgment entered by the plaintiff against Drieberg on 10 March 1992 in the sum of $77,802.20 and the default judgment entered by the plaintiff against O'Brien on 14 October 1992 in the sum of $84,551.78 the plaintiff had been unable to enforce such judgments and it had received no payment under the same.

361. Alexander McLean gave evidence that in 1978 he and his wife purchased the property at 146 Rae Street, Fitzroy and took a mortgage over the property with the Commonwealth Savings Bank. He said that when he took the mortgage it was the first time he had taken out a mortgage and he received a detailed explanation as to what they were getting involved in from a bank officer. He said that he was not told that he would be liable for any debts incurred by himself on any other security that he might enter into. McLean gave evidence that when working as a manager with Pitstop Motors, Aspenview Productions was incorporated. He said that that was done for the purpose of splitting his salary so that his wife could share his salary through a company process. Later he purchased the garage business, St Martin's Garage in South Yarra. McLean gave evidence of borrowing $18,000 in order to pay the deposit on the purchase of the Prahran Property. Later, in November 1986, the moneys borrowed for the deposit were converted to a small business loan to Aspenview Productions on advice from their accountant. They were advised that as the directors were owed money it could be converted into something on which they could claim tax. He said that that was the advice he received from his accountant. McLean agreed that on 10 December 1986 he and his wife Lana gave a mortgage over the "Prahran Property", to the plaintiff to secure financial accommodation granted and to be granted to Aspenview Productions . It is to be noted that before that and on 5 December 1986 Fairweather, on behalf of the plaintiff, advised Alexander and Lana McLean that the bank had approved their request to transfer the security held over the Rae Street property to the Prahran Property.

364. In or about December 1986 not only was Alexander McLean conducting St Martin's Garage but there had been established a small factory in Prahran in which he commenced to manufacture whiteboards. He used money from the Aspenview Productions account to start to build up a stock of the whiteboards that were being manufactured. The whiteboards business at that time was known as Whiteboards Office and Domestic. Alexander McLean was using overdraft facilities as provided by the plaintiff at that time for that whiteboards business.

367. Alexander McLean said that he signed the Letter of Acknowledgment on 4 January 1988 extending the Aspenview Productions' facility to $62,350.00 because it was an Aspenview Productions' debt, and that the overdraft part of it was, in effect, the Whiteboards' part. It was on the same day that Lana McLean signed a similar document. On each document the security listed was - "a mortgage dated 10/12/86 over property at 1 Alfred Street Prahran, Vic." Alexander McLean said that he had a meeting with Fairweather in February 1988 when Fairweather introduced him to Murray. He said Fairweather discussed what McLean was doing with the garage and "Whiteboards" and that he, McLean, explained it as well as he could. He said that he discussed the matter further with Murray and that Murray encouraged him to create the "Whiteboards" business.

370. Alexander McLean said that when Fairweather introduced Murray to him he introduced him as a man that could give financial advice in terms of business set ups and things like that. Alexander McLean said that Fairweather explained to Murray that he and his wife, Lana, had a patent for the Whiteboard process and it was really quite an exciting invention. He said that Murray said that it was a great idea and that he should look towards the development of the business because the potential was incredible. Alexander McLean said that shortly after first meeting Murray he had a further meeting with him and explained to Murray that Drieberg and O'Brien had prepared a document which gave the concept of the new entity of Whiteboards of Australia. He said that he gave to Murray a document that he had received from O'Brien as to the proposed structure of Whiteboards of Australia which concept included a trading company, an investment company and a guarantee company. He said that he explained that the concept was that a guarantee company would be set up and, by it, each director would be exposed only to one-third of the debt of Whiteboards of Australia. Alexander McLean gave evidence that Murray looked at the structure and a diagram demonstrating the proposed company structure and that Murray said to him that it was an excellent idea, that it was terrific, and that it was quite a clever set up. He said that Murray said to him that, on the face of it and from what was being presented, "where could you go wrong". Alexander McLean said that he said to Murray that he required advice, independent from Drieberg and O'Brien, and that he wanted to know, from someone that had experience with financing a business, whether, what the other two were saying was actually able to be done. He said that he had told Murray that he had not made an arrangement with O'Brien and Drieberg. He said that he told Murray that he was relying on his advice, at that point, as to whether the things said by O'Brien and Drieberg could be done and, if so, whether, in his opinion, he felt it was a good process. Alexander McLean corrected one piece of earlier evidence and said that it was the second meeting that he had with Murray that he showed him the business plan. He said that at this meeting Murray said that he had had a lot of experience with finances to businesses, that he had seen a lot of business structures in terms of how they were put together and how he was asked to look at ways of financing them.

373. McLean said that Murray said that as to Whiteboards of Australia and the proposed structure, that he was very familiar with a structure of that type and that he was familiar with the way it was set out. Alexander McLean said that he was very confident with the advice that Murray was giving him. Alexander McLean gave further evidence that at this meeting with Murray he explained to Murray that the excesses in the garage accounts were directly attributable to the time he was spending on the "Whiteboards'" project so that if it went ahead and he sold the business any money received could come back into the garage, primarily to pay out that debt. He further said that he explained to Murray that he was spending a lot of time researching the "Whiteboards'" concept and that it had been agreed that such expenses would come back to the new company, Whiteboards of Australia, and that he asked Murray how to approach that. He said that Murray informed him that he was quite happy to allow the excesses in Aspenview Productions to keep going and that once everything was running, "We'll transfer that debt across into the new company, the Whiteboards company".

376. Alexander McLean said that each time that he spoke with Murray, in relation to the liabilities, he would say to Murray that if anything went wrong and they had to pay the debt back that would mean that he would only have to pay one-third. He said that Murray always confirmed that by saying that that was correct. He said that on one occasion Murray called him a "reluctant entrepreneur".

379. Alexander McLean said that he told Murray that his wife Lana would not be involved because it was not a family business. He said that Murray said that that sounded quite reasonable to him and that it was agreed at that point that she would not be involved in Whiteboards of Australia. When asked whether the topic of Lana McLean's liability for "Whiteboards" was a topic raised in discussion with Murray, Alexander McLean said that it was never discussed at all. He said that at the second meeting with Murray, he was informed by Murray that he was prepared to allow any excesses in the account of Aspenview Productions to go through and that, ultimately, the excesses in the Aspenview Productions' account would be transferred.

382. Alexander McLean gave evidence that at this time Mrs Masluk was living on her own in Brighton, that it was becoming difficult to get to see her, that her health was not as good as it had been and that he and Lana McLean discussed the matter of inviting Mrs Masluk to move from Brighton to live in the apartment above them in the Prahran Property. He said that at the second meeting he had with Murray he told him about the situation of Mrs Masluk and asked him whether, in the event of Mrs Masluk choosing to live with them, it would be possible to sell to her the number 2 Unit. Alexander McLean said that Murray said to him that he could not see any reason why that was not possible. This, he said, occurred at his meeting with Murray in March 1988.

385. Alexander McLean said that at the meeting with Murray in July/August 1988 he gave to Murray a copy of the "prospectus" for Whiteboards of Australia as had been put together by O'Brien. He said that when he showed the "prospectus" to Murray he said to him that the process was set up so that each held one-third share in the guarantee company and that their exposure was one-third. He gave evidence that at this meeting with Murray when he gave to him a copy of the "prospectus" he told Murray that Mrs Masluk wanted to purchase the upstairs unit and he wanted to know whether they could actually sell her that part of the property to Mrs Masluk. He gave evidence that Murray said to him that there was no problem with that at all. He said that he had discussed with Murray that they were going to "strata title" the property. He said that he was able to recall that he discussed this with Murray at this time, July/August 1988, because it was Lana's birthday on 23 August and on that occasion they told Mrs Masluk that at the meeting he had had with Murray, Murray had said it was okay and they could go ahead with her purchasing the second unit and that it could be released. Alexander McLean said that they had the title to the Prahran Property and that he had discussed with Murray that he wanted to strata title the property. He was asked, "Did you have any discussion at this time about the mortgage over the whole of 1 Alfred Street?" Alexander McLean replied, "Well that was the point of asking his advice because at that stage we knew that there was a mortgage over number one and I had to have his answer as to whether that was we could do that and that would be okay to be done because if he said that couldn't have been done then we'd have had to have approached it in a different way". He was again asked, "Did you discuss what would happen to the mortgage over 1 Alfred Street?" He replied, "We discussed that we would - once Mrs Masluk had taken - purchased the above premises - the number two unit that we would have no real rights on number two so we could only the only property we would have would be number one - apartment, 1 Alfred Street".

388. Alexander McLean gave further evidence that in January 1989 Mrs Masluk moved into Unit 2 and that he rang and spoke to Murray and told him that she had actually moved in. He was asked, "Did you discuss with him anything to do with the transfer of unit 2?" He replied, "I confirmed that the transfer of unit 2 was - there was would be no problem once the strata was completed and he confirmed that?" He was asked, "What did he say?" To which Alexander McLean replied that he did not know the exact conversation but there were words to the effect that the basic process was that now that Mrs Masluk is in apartment 2 of course once the strata is completed there will be no problems in terms of releasing it so you can put apartment number 2 in her name. McLean said that Murray said that there would be no problem with that at all.

391. Alexander McLean gave evidence that, following receipt of a letter from Murray dated 10 March 1989, when he and his wife were asked to call at the office of the bank to discuss the clearance of the excess on the overdraft account he telephoned Murray and told him that he had had a meeting with O'Brien and Drieberg and that they had discussed moving profits from "Whiteboards" to the account of Aspenview Productions to take a bit of the pressure off that. He said, however, that that did not happen because whenever Whiteboards of Australia made money, they were consuming money building up stock.

394. Alexander McLean, in evidence, confirmed that he had had a meeting with Murray at lunch on 29 June 1989. He said that at this meeting the first thing they discussed was the fact that Mrs Masluk had paid for Unit 2 and that they were concerned about the account of Aspenview Productions. He said that he said to Murray that they had some funds in investment and that maybe he should, in fact, pay out the overdraft. Alexander McLean said that those funds were from the sale of the unit to Mrs Masluk. Alexander McLean said that he put to Murray an offer that he would pay the overdraft out with that investment money, but that Murray was of the opinion, "Why would you do that, its not your its not your bill". He said that Murray said, "Its not your money and the whole process that's been set up is that your exposure to anything like that would be only one-third". Alexander McLean said that he was quite happy with that because that is what they had discussed all along and that they discussed more about how Mrs Masluk had settled in and what was happening in terms of the strata. He said that at this meeting he said to Murray that he wanted the debt, that is, the debt of Aspenview Productions, transferred and they decided that what should be done was to open an account for "Whiteboards" within the bank. He said that at that time Murray was aware that the account of Whiteboards of Australia was with the National Bank. He said that Murray suggested that they take out a $55,000 interest only loan and that once the "Whiteboards'" account was set up the periodic payments to service that loan could be paid by Whiteboards of Australia and, ultimately, that loan could be completely transferred over to the "Whiteboards'" company. Alexander McLean said that at that meeting he explained to Murray that Whiteboards of Australia owed Aspenview Productions in excess of $100,000.

397. Counsel again took Alexander McLean back to the matter of Unit 2 and asked him whether there was anything further discussed at the lunch meeting than that which he had already said in evidence? He said that they discussed the progression of the strata title plan and that he had said to Murray that he was wanting to get it transferred into Mrs Masluk's name and that Murray basically said - "Well as soon as we've got the strata in place, then that should be no problem at all, we'll do that, that's not a worry." He was asked, "What's not a worry?" Alexander McLean replied, "That we could actually transfer the ownership of Unit 2 into Mrs Masluk's name". He was asked whether there was any discussion about the mortgage over 1 Alfred Street. He replied, "Well, the mortgage would only be relevant to 1/1 because that would be the only thing that we could put up as a mortgage." He was asked, "Was there any discussion about that?" Alexander McLean replied, "Yes. Mr Murray was aware of that. He was - he'd even started talking in the view of 1/1 that he considered that was all they had or all they would have". He was asked, "Do you recall anything he said?" Alexander McLean replied, "Only that when he discussed the mortgage agreement is the gist - what we have to do now is to get the strata done, so that we can in fact secure the transfer for Mrs Masluk put it in her name, and that was pretty much what he was discussing". McLean gave further evidence as to what was discussed by him and Murray at this lunch meeting.

400. Alexander McLean said that he received from the bank the letter dated 6 July 1989 in which he and Lana McLean were advised that the bank had approved a small business loan of $55,000 to clear the excess in the overdraft account. In that letter it stated that the security was, "security already held by the bank in connection with advances to yourselves". Alexander McLean said he believed that he signed that letter accepting the offer of the establishment of the small business loan.

403. Alexander McLean said that when speaking to Murray in September 1989 they discussed the transference of the overdraft liability of Aspenview Productions to Whiteboards of Australia and that Murray said, "Let's get some runs on the board before we do the transfer over ..... onto the Whiteboards account".

406. Alexander McLean said that he received the letter from the plaintiff bank dated 9 October 1989 addressed to Whiteboards of Australia re "application for finance" in which it was said that the bank had approved an overdraft with a limit of $25,000 to assist with the working capital of Whiteboards of Australia. The letter said that the advance was subject to the bank's usual terms which included - "security is to be to the bank's satisfaction and is to comprise - guarantee unlimited as to amount by Alex McLean, Darrel Drieberg and Peter O'Brien". Alexander McLean said he did not understand what the security aspect of it was. When asked what Murray said to him he replied - "He told me that all the directors were exposed to the full amount of the loan and I expressed to him that that wasn't what we'd been agreeing to and the whole process of setting everything up was that I would only be liable for one-third of the debt. And he said that it was bank policy at that time and there wasn't anything he could do about it". Alexander McLean said, further, that, nearing the end of the conversation, Murray said, "Well, look, let me just go and revisit the assets and liabilities of the other directors and I'll get to you." Alexander McLean said that he received a further letter in the same terms and still dated 9 October 1989, that he spoke to Murray and asked him about the security aspect of the document. When asked what did Murray say Alexander McLean replied - "He said, no, he'd taken steps to secure or get - he got securities for - from the other directors which would put my position where I was only liable for one-third of the debt". McLean continued and said that he put to Murray that he was telling him that in the worst scenario where they had to pay the debt he would only be liable to pay one-third and that Murray said to him, "Yes, that's correct". Alexander McLean said that Murray further said to him that with O'Brien being a chartered accountant and a professional and Drieberg being a financial adviser their reputations were precious things and that, "even in a joint and several scenario we would take from all three people at any rate equally so that you would still only be liable for one-third of the debt and they would be keen to protect their reputation and not allow anything to happen to them in terms of recovery of debts". He said that this conversation was just before 30 October 1989 and that on the assurance that Murray had taken securities on the debt he was happy to go ahead and sign the document and to get the other directors of Whiteboards of Australia to sign the same.

409. Each of McLean, Drieberg and O'Brien signed the letter offering an overdraft account limited to $25,000. He was taken to the guarantee dated 2 November 1989 and executed by him, O'Brien, Drieberg and sealed with a common seal of Whiteboards of Australia and on being asked what was the basis on which he put his signature on the document, Alexander McLean said that it was based on the assurance that Murray had given him that his exposure to the debt was only one-third. Alexander McLean said he was not able to say for sure where he signed the document and that he did not totally recall signing it. He said, further, that he had no specific memory of signing the document and then said that he remembered signing the document but could not recall exactly where it was signed. When asked whether he had any recollection or not he replied, "no I can't say".

412. Alexander McLean said that at this time O'Brien was having discussions with Murray about the Whiteboards of Australia situation and that he also discussed Aspenview Productions. He said that O'Brien was his personal accountant and that he did Aspenview Productions' accounts and that he also did the Whiteboards of Australia accounts.

415. Alexander McLean said that he signed the Letter of Acknowledgment dated 14 June 1990 in which it acknowledged to the plaintiff that it had extended to Whiteboards of Australia $66,508 against "the security of my mortgage(s)/guarantee(s) to the bank referred to in the schedule below", in which schedule it stated - "guarantee dated 2/11/89". He said that before signing that and when he got the letter he expected that he would be only "indebted" for one-third and he asked Murray why was it that it was reading the total figure. He said that Murray did not give him an answer in relation to it and that he, was pretty upset about the whole process and that Murray said to him that everything was okay. He said, "Well I signed it on the basis that all of those - any document like this I got it was in the - a surety of the transferring of the debt to Whiteboards, the release of number - the Unit 2 and of - a surety that I would only pay one-third". Alexander McLean was also taken to the Letter of Acknowledgment signed by him dated 14 June 1990 acknowledging advances to Aspenview Productions in sums totalling $122,230 in which it was stated that the security was that in the schedule being - mortgage dated 10/12/86 over property at 1 Alfred Street, Prahran". He said he signed that letter on the basis of what Murray had promised would be done. When asked what was the situation with Unit 2, he said that on Murray's promises he was always of the opinion that Unit 2 was going to be released.

418. Taken to the Sale of Land Act document dated 12/7/90 which was the subject of the evidence of Leonard Timewell, the forensic document examiner, Alexander McLean said that before that document was signed by him and his wife he spoke to Murray and told him that his wife was getting upset over the fact that there had been no action in the terms of transferring Unit 2 and or the transfer of the debt to Whiteboards of Australia and that he told Murray that she was adamant that she was not going to sign anything until she had an assurance herself from Murray that things were going to be carried out.

421. He said that he made an appointment to see Murray and that he and his wife attended. Alexander McLean gave evidence that his wife expressed to Murray that she was unhappy about the fact that the transfer of Unit 2 had not gone ahead and that she wanted an assurance from him that the transfer of Unit 2 would go ahead so that the unit title was clear and had absolutely nothing to do with Aspenview Productions or Whiteboards of Australia in any way. He said that Murray assured his wife that all was going to be attended to, that the document had to be signed. He said that the document was handed across the desk to them, that his wife looked at it and said it was incorrect and she could not sign it because it said, "1 Alfred Street Prahran" and he had agreed that Unit 2 was going to be transferred and it should only read "1/1". He said that Murray took the document back altered it to read that the property was "1/1 Alfred Street Prahran" and that then he and his wife signed the document using Murray's pen. He said there was a further conversation with Murray when they again discussed the transfer of funds to Whiteboards of Australia and when the title was going to be released and that Murray said that they had to get Whiteboards' of Australia documentation in order and there should be no reason why it can not be released straight away.

424. Alexander McLean further gave evidence that the letter which was signed and sealed by Aspenview Productions authorising an increase in the bank's accommodation from $95,628 to $122,230 was signed and sealed because in his mind it was Whiteboards of Australia's debt, all of it, at that stage. McLean said that he continued to seek to have Murray transfer the debts of Aspenview Productions to Whiteboards of Australia and he was told that they would soon start to organise getting the debt transferred.

427. Alexander McLean also said that he saw the letter from the plaintiff bank addressed to Whiteboards of Australia dated 1 November 1990 informing Whiteboards of Australia that the bank had approved facilities which included $100,000 Bill Discounted Facility in which it was stated that it was to "repay $100,000 to Alex McLean to reduce debt on St Martin's Garage". He said that he noted that the security stated in that letter included guarantees, joint and several, which included his wife, Lana McLean. He said that he spoke to Murray and asked what his wife's name was doing on it, to which Murray said, "Well she's got to be involved in the guarantee". He said that when he said to Murray that the whole process that they had discussed from day one was that his wife would not be involved with "Whiteboards" he said that Murray said, "Oh well" and didn't answer that.

430. Alexander McLean said that after Murray left the South Yarra branch he went and spoke to Chapman and explained to him what was going on, that the bank had promised to him that it would transfer the debt and that he would only be one-third liable for the debts of Whiteboards of Australia. He said that Chapman said that he could not do anything about that, it had nothing to do with him. He said that at that time he had left Whiteboards of Australia.

433. Towards the conclusion of Alexander McLean's evidence in chief he was again taken back to the mortgage dated 10 December 1986 executed in favour of the plaintiff bank over the Prahran Property securing advances and accommodation provided and to be provided by the plaintiff to Aspenview Productions . He was taken to cl. 1 (the "all moneys" clause) and he said that before signing the document his attention was not drawn to that paragraph. He said further that at no time did any officer of the plaintiff or the Commonwealth Savings Bank or a bank officer alert him to the fact that by signing such a mortgage if one of the mortgagors was to sign any other document giving the bank security that the other mortgagor would be liable under that security. He said further that cl. 3 in the mortgage was not explained to him and that it was not explained to him that if he was to sign a guarantee, his wife, because she had signed the mortgage, would also be liable for the debts that he might incur under that guarantee.

436. In cross-examination Alexander McLean was taken to the accounts of the Whiteboards Office and Domestic Trust for the year ended 30 June 1984. In part they showed that he was a beneficiary of the trust and a distribution had been made to him from the trust. He was taken to the sale figure for the year ended 30 June 1984 in the sum of $160,551. He said that sounded like a lot of money to him for "Whiteboards". He said he did not understand that amount of money and it seemed to be an unrealistic figure to him. He said he did not know that the figure represented a combination of businesses. When taken to the distribution in the accounts and agreeing that it appeared that distribution from the profits of the trust had been distributed to members of his family, he said that he did not remember any of those things and that he left it to his accountant. When taken to the trust accounts for the year ended 30 June 1986 and, in particular, the sales, $182,077, and asked what those sales related to, he said without understanding the document and how the figures were arrived at he could not say. He said he did not remember doing $182,000 worth of "Whiteboards".

439. In the course of the evidence of Fairweather the preliminary application for company and business advances completed by him dated 26 November 1987 was tendered. Part of the document included notes taken by Chapman of the meeting he had with Alexander McLean when he had called to seek an increase in the overdraft limit from $8,000 to $25,000 for Aspenview Productions . As part of the notes, Chapman had recorded that Alexander McLean told him that $6,000 was spent on renovations to "second apartment" and this "will shortly be rented which will return $180.00 pw". In answer to questions put in cross-examination Alexander McLean said he would not have told Fairweather that. He said that he did not remember spending any money in terms of renovations to the "apartment" from Aspenview Productions' money. He said he would not have spent $6,000 of Aspenview Productions' money towards the renovation of the "apartment". He said that in his opinion that was totally and completely untrue. In the notes of Fairweather it was further recorded that Alexander McLean had told him that "Stock for Whiteboards Pty Ltd (manufacturers of notice, pin boards etc) was purchased during the year at cost of $60,000..." He said that he did not tell Fairweather that. The note of Fairweather also said that he had been told, "additional machinery costing $12,000 was also purchased". Alexander McLean said he did not tell that to Fairweather. He said that he did not tell him that he had spent those amounts of money. The note of Fairweather also recorded that Alexander McLean had told him that $53,000 had been repaid from the original $60,000 Commonwealth Savings Bank housing loan approved in November 1986. McLean said that he did not tell him that. When asked whether that was the case he said that counsel should ask that question of his wife as she was the one in charge of the housing loan. When it was put to him that the mortgage showed that the mortgage, with respect to the housing loan, had been discharged in December 1987, McLean again said that the question should be referred to his wife as she was the one in charge of that. When asked where the $53,000 would have come from he said they had an investment which was a gift, a wedding present, and it could have come from that but again his wife should be asked about the matter.

442. Alexander McLean said that he did not tell Fairweather that they were using the income from Aspenview Productions to pay off the home loan so that a tax benefit could be obtained. He agreed that all interest paid on the overdraft of Aspenview Productions was claimed as a business expense. When asked again how $60,000 had been paid in twelve months he replied by saying that he could only say that the wrong person was being asked and the question should be directed to his wife. The note of Fairweather also recorded, "the McLeans have sold a 49% interest in "Whiteboards" to a joint venture and this should yield $300,000 over the next three years; $100,000 of this sum being due in 12 months time". He said that he did not tell Fairweather that in November 1987 because he had not sold it. He said that the matters that were addressed to him were not comments that he had made. He agreed that Fairweather had not been challenged on any of these matters.

445. Alexander McLean was asked in cross-examination as to his understanding, from what was explained to him by O'Brien, as to the purpose of setting up the guarantee company in the proposal to establish Whiteboards of Australia. He said that it was his understanding that if there was any problem in the situation of the business that it didn't make it, that it failed, that the guarantor's, Drieberg, O'Brien and himself would only be liable to pay one-third of the debt that the company had actually put up and that they would actually cover that one-third of the debt. He said it was his understanding that he would be exposed only to one-third of the overall debt. He said that O'Brien and Drieberg told him that. He said that he spoke to Murray to get a second opinion, an independent opinion, and he agreed that that was the way it was set up in the document that he had seen and that he was happy with it. He said that apart from what Drieberg and O'Brien had given him and putting aside Mr Murray, no other person had advised him that there was a guarantee company set up. He agreed that there was an investment company established called Hawthorn Peak in which he and his wife had shares. He said through company structures he and his wife had just over 50% of the business of Whiteboards of Australia and it was that that they were attempting to do so that they had some control of the business.

448. In further cross-examination Alexander McLean was asked whether he remembered giving a guarantee to the National Australia Bank for the overdraft of Whiteboards of Australia. He said that he did not remember signing a guarantee but he could have done so. He said he could not recall receiving a demand from the National Australia Bank on the security of the guarantee. Although he said he did not remember executing such a guarantee he said that it was possible that he could have done so and he could not deny it.

451. In cross-examination Alexander McLean was asked why he signed the Letter of Acknowledgment dated 14 June 1990 acknowledging the liabilities of Whiteboards of Australia to the bank to the extent of $66,508 where the security was identified as the guarantee dated "2/11/89". He said that when he got the letter he spoke to Murray, that Murray still reassured him, that he still had not been told by Murray that he had a joint and several liability, although he considered that a possibility, and that based on what he required was the release of "Apartment" 2, the transfer of the debt from Aspenview Productions and that relying on what Murray had said to him that the other directors would be sought after equally if there was any problem with the accounts, it still remained important to him to get the account transferred and that was the situation.

454. Alexander McLean was cross-examined as to whether he and his wife had received moneys from Mrs Masluk for the sale of Unit 2. He said that counsel should ask his wife about that matter as she would be able to tell her exactly what had happened. He said he was not sure how much it was sold to her for. When it was put to him he agreed that he and his wife had retained one-third interest in that unit. He said that he would have told Murray that he had sold the unit to his Mother-in-law. He said he did not know how the moneys were paid by Mrs Masluk, that counsel should ask his wife. When cross-examined about this matter and transaction he, on a number of occasions, said that the question should be addressed to his wife.

457. However, in cross-examination Alexander McLean was shown a letter dated 11 May 1993 from Wisewoulds, solicitors addressed to both he and his wife in which was enclosed a letter from the plaintiff bank to those solicitors dated 5 May 1993 which stated that the bank held a registered mortgage over the property, Unit 2 and accessory Unit 4, 1 Alfred Street Prahran, and that it would not discharge the same without receipt of due consideration of the market value of the property. He was also shown a copy transfer of the above property from himself and Lana McLean to himself and Lana McLean as joint tenants to one equal undivided part or share of the property and to Krystyna Masluk as to two equal undivided parts or shares as tenants in common. In the copy transfer shown to him the consideration was stated to be, "natural love and affection". It was put to Alexander McLean that no money had passed between Mrs Masluk and he and his wife. He denied that saying that she, Mrs Masluk, paid for the property. He said that he did not know what "consideration" meant. He denied that he had told the solicitors who had prepared the transfer that he and Lana McLean had not received moneys from Mrs Masluk.

460. He was asked why he did not tell the solicitor to get on with the job. He said that it was his understanding that they requested the transfer and that he had spoken to Murray about the fact that the bank would not release it and that Murray had said to him, "No we've just got to get the account in order and that'll be okay". He said that that was his understanding. He said the he had spoken to Murray and that Murray had told him that the title would be released. Alexander McLean said that he would have spoken to Murray and asked him why it was not being released and that he would have explained to him as to what was going on.

463. Alexander McLean was taken to the Letter of Acknowledgment dated 14 June 1990, signed by him, acknowledging that the bank had provided accommodation to Aspenview Productions in the sum of $122,230 and the security being stated in the schedule as: "mortgage dated 10/12/86 over property at 1 Alfred Street Prahran." It was put to him that he was content to sign that document unchanged on 14 June 1990. He said that it was his belief that the transfer was going through and that was the current state of the mortgage. He said that he signed it on the basis of his understanding as to what was going to happen. It was put to him that his wife would say that after she had signed a similar Letter of Acknowledgment the schedule was completed and she did not agree that that should have been written there. He said that he had to say in hindsight that he should have been of the same mind. He said that he signed the letter in its form on the assurances that Murray had given to him. It was on 12 July 1990 that Alexander McLean and Lana McLean had signed the Sale of Land document on which the property was altered to read "1/1 Alfred Street Prahran".

466. Alexander McLean was asked, did he think that Murray was trying to set him up. He replied, "no he'd been saying all along that it was important that all the paper work was in place so I saw nothing wrong with that".

469. It was put to Alexander McLean that he had sent the Sale of Land document by mail to the bank in an envelope with a document in which Aspenview Productions requested a temporary excess increase on the facility provided in the sum of $26,602. He denied that. He denied that he and his wife had altered the Sale of Land document and that had been done not in the presence of Murray. He agreed that at the time that that document was signed Unit 2 had been sold to Mrs Masluk. He agreed that it would not have been correct to allow the document to stand unless it was clarified that only Unit 1 was unaffected by a sale. He said Murray made the change and that they requested him to do that, he said that they made an appointment especially to see Murray because his wife was becoming agitated that the transfer of debt from Aspenview Productions to Whiteboards of Australia had not gone ahead nor had the unit been transferred to Mrs Masluk.

472. Lana McLean gave evidence on the trial of the proceedings. She said that in 1987 she was involved in the management of Aspenview Productions in that she made phone calls to clients, followed up accounts, ordered parts, occasionally did the wages and if the need arose she did the banking and collected and distributed wages. After referring to a diary memo of the plaintiff dated 25 March 1985 she said that at that time the property of she and her husband at 146 Rae Street Fitzroy was on the market and that they were looking to purchase a property in South Yarra. She said that it was in such circumstances that she communicated with the bank to see if it was possible for them to obtain bridging finance of the sum of $180,000 to $200, 000.

475. As to the Letter of Acknowledgment dated 4/1/88 signed by her acknowledging that the plaintiff had made facilities available to Aspenview Productions in the sum of $62,350 in which the security identified was - "a mortgage dated 10/12/86 over a property situated at 1 Alfred Street, Prahran, Vic", Lana McLean said that she understood at that time that their property at 1 Alfred Street Prahran provided security for those moneys.

478. As to the document, "Letter of Acknowledgment" dated 14/6/90 acknowledging that from time to time the plaintiff had granted accommodation to "Aspenview Productions Pty Ltd" in the sum of $122,230, Lana McLean said that on the day that she signed that document she had gone to the bank at the request of Murray. She said that after asking for him at the counter he came to the counter telling her that he needed her to sign the document to quantify the debt that was to be transferred from Aspenview Productions to Whiteboards Australia. She said that she noticed that there was nothing written under the word "schedule" and that having noticed that she said to Murray, "this isn't going to impact on my property in any way is it?" She said that he replied, "no". She said that Murray said, "It'd simply to quantify the debt so we can transfer the Whiteboard debt in Aspenview to Whiteboards Australia". She said that Murray further said to her that he had to sign the document as a co-director of Aspenview Productions in order for the transfer to proceed and that he further explained to her that the transfer was imminent and he expected it to happen in the next week or so. She said that on being told these matters she signed the document. It is to be noted that this account of Lana McLean is in conflict with the evidence of Cullen whose signature appears as a witness on that document. Lana McLean said the document was signed on the 27 July 1990. A bank "received" stamp bearing date "27 Jul 1990" is on that document. This in sequence is subsequent to the date appearing on the Sale of Land Act document which bears the bank "received" stamp "12 Jul 1990".

481. As to the Sale of Land document Lana McLean said that she did not receive the document or letter and that she was given it by Murray on 12 July 1990. She said that on that day she and her husband attended at the bank to keep the appointment her husband had made. She gave evidence that when she and her husband entered Murray's office he was seated on the opposite side of the desk. She said that at the time she was upset and that she said to Murray that she was left to pay the wages at St Martins Garage because her husband was at "Whiteboards" and she could not work out what the earnings were for "Whiteboards" and what related to the "Whiteboards" debts in "Aspenview". She said that she informed Murray that it was vital for her understanding to run the books that the debt be transferred immediately because it was impacting on how she could manage the business of "Aspenview". She said that she further said to Murray that the Garage was small and couldn't carry the debt any longer. She gave evidence that she asked Murray how soon could the "Whiteboards" debt in "Aspenview" be transferred to "Whiteboards". She said to that Murray replied that the documents were pretty well "tied up", "completed" and "the transfer would happen in a matter of weeks". Lana McLean further said that she spoke to Murray about her mother's "apartment" and that she expressed concern that it took so long to get the transfer of the debt organised and said that she wanted assurance that immediately the strata and other legal documents had been finalised they would be able to secure the release of the upstairs "apartment", that is, Unit 2, debt free. She said to this Murray said that they should advise her mothers solicitors that that would happen as soon as they completed the documents and to tell them that he, Murray, would arrange directly with them for the release of the title. She said that they were about to leave when Murray said that there was one last document that needed to be signed in order to tie up the paper work for the transfer of the "Whiteboards'" debt out of "Aspenview" and that he explained that it was a "Sale of Land Act" document. Lana McLean gave evidence that Murray presented the document to them and that he said that, "this is a Sale of Land Act document that you need to sign, it's the last document. You need to sign it to tie up the paperwork for the transfer of the Whiteboards debt out of Aspenview". She said that having read the document she said to Murray, "We've just been speaking about Rita's apartment and you're aware we've sold it so I can't possibly sign a document in relation to apartment 2". She gave evidence that Murray read it and said, "Oh yes that's true", to which she said, "The only property that we would have by way of ownership to sell or not sell is apartment 1". She said that she would be happy to sign it if it was corrected to read, "apartment 1, 1 Alfred Street Prahran".

484. She gave evidence that Murray took up his pen and inserted "/1" in the document. She gave evidence that he turned the document back to them, handed her the pen and that she signed the document and passed it with the pen to her husband who also signed it. She gave evidence that as they left, her husband had a discussion with Murray about a letter and Murray said that they didn't need to worry about the letter that was going to arrive.

487. Lana McLean gave evidence that at no stage did she sign a guarantee with respect to the debts of Whiteboards of Australia. She further gave evidence that in about July 1992 she and her husband had a discussion with Chapman in which her husband said that he was concerned about the fact that he no longer worked for "Whiteboards", that there was a rising debt and as a guarantor he would be exposed. She said that her husband said that he wanted the debt limited to $72,000 and requested that his one-third exposure as agreed, be registered at that point. She gave evidence that Chapman said he wouldn't register any one-third liability but he would restrict the expenditure of Whiteboards Australia to $72,000.

490. On being shown the transfer bearing date 17 March 1991 whereby she and her husband as transferors transferred to she and her husband as to one-third interest and to Mrs Masluk as to two-thirds interest in the property Unit 2 and accessory Unit 4 of the Prahran Property, she identified her signature, that of her husband and that of Mrs Masluk on the document. She said that she was advised by her solicitor who was handling the matter that as part owner of Unit 2 she was forfeiting two thirds of that share to Mrs Masluk.

493. Lana McLean gave evidence that when a mortgage was taken over the property at Rae Street Fitzroy the bank explained to her that if the payments were not made she would be liable to lose the property. She said that she was never given any explanation at the time that she signed the mortgage subject of these proceedings that by signing it she was in fact giving to the bank security which enabled it to look to her to repay any debts that her husband might incur by signing documents with the bank.

496. In cross examination Lana McLean was asked what was the date on which her husband first went to see Murray to ask him about the release of Unit 2 from the mortgage. She said that her husband reported that he had had discussions with Murray in July/August 1988 in which Mr Murray confirmed that her mother could purchase Unit 2, mortgage free, and that it was an easy process and that he would support the Transfer of Land. She gave evidence that she did not discuss that matter with her mother before Murray had given his approval and that she did not discuss it with her mother until Murray had given his final approval. Lana McLean gave evidence that she celebrated her birthday at the end of August 1988 and that on that occasion her husband told her mother that he had spoken to Murray at the bank and that he had said there would be no difficulty in her purchasing, mortgage free, a significant portion, if not all, of "apartment" 2 at 1 Alfred Street. She said that her mother was thrilled, that she had previously declined to live with them, but after speaking to her on this occasion they asked her to think about it before she put her house on the market. Lana McLean gave evidence that the following day her mother confirmed that she would go ahead with that proposed. She was asked, did she think it would be proper to get something in writing from the bank. She replied, "No, because in the past - I've dealt with bank managers for over 35 years and if a bank manager says he is going to do something he does it. I've never had the experience where they haven't done it in the past at all, until I have dealt with Mr Murray". She said that it was in July 1990 that Murray confirmed to her everything that her husband had told her.

499. As to the signing of the Letter of Acknowledgment dated 4/1/88 concerning the provision of accommodation to Aspenview Productions in the sum of $62,350 she said that it was Fairweather with whom her husband had discussed the matter and that if she had said that it was Murray when first giving her evidence she had made a mistake. She was cross examined in some detail about this matter and she accepted that at the time relevant to signing this letter the bank manager was Fairweather and not Murray.

502. In further cross examination Lana McLean agreed that she and her husband had paid out the home loan account in a period of twelve months, but when pressed as to the source of the funds to pay that account out, she said she couldn't recall the details of how or where the money came from.

505. In cross examination Lana McLean was taken to the letters signed by she and her husband bearing the plaintiffs "received" stamp dated "4 Jan 1988" in which Aspenview Productions requested and authorised an increase in the accommodation provided by the plaintiff to it in a total sum of $62,350. In part of the letter it stated that they consented to the increase as against the security which was identified as the "mortgage dated 10/12/86 over the property at 1 Alfred Street, Prahran". She agreed that the Aspenview Productions' debt was secured by the property at 1 Alfred Street at that time.

508. Lana McLean accepted in cross examination that the plan of strata title was registered in mid 1990 and she was aware of that fact. She was asked whether she asked her solicitor to pursue the transfer of an interest in the property to her mother. She replied by saying that it was in mid 1990 that they were having enormous difficulties with the transfer of the debt from Aspenview Productions and it was then that she asked her husband to arrange the appointment with Murray on 12 July 1990 to get some finalisation on all matters. She said it was after that that she contacted her solicitors to meet with her husband and her mother in order to proceed with the transfer of title. She repeated that Murray had said to her at the meeting that there would be no problem with the transfer of the title that they needed to finalise the last Sale of Land Act document and that the transfer of the debt was imminent. She again said that Murray advised her to contact Mrs Masluk's solicitors to have them request the bank to release the title. She added, "He didn't follow through on that". She said that at that time she had no doubt in her mind that as a bank manager and representative of the Commonwealth Bank what Murray had said would transpire. She said at no time did she accept that the mortgage couldn't be altered because the Aspenview Productions debt was too high. She again said that it was Murray that assured her that the matter of the transfer of Unit 2 to Mrs Masluk would proceed in a matter of weeks.

511. Lana McLean was cross examined as to whether she and her husband received any money from her mother. She said that she was absolutely sure that she received $160,000 from her mother. She said that her mother gave her a bank cheque for $160,000 and further she arranged for another $20,000 to be available to pay for renovations to the "upstairs apartment" (Unit 2) in which she was to move into.

514. When further cross examined about signing the Letter of Acknowledgment bearing the date 14/6/90 but on which there was impressed the "received" stamp dated "27 Jul 1990", Lana McLean said that Murray made it clear that he had made the effort to come out of a meeting with clients and that the document was to be signed simply as a procedure to get the transfer of the debt across from Aspenview Productions to Whiteboards Australia. She said that after signing the document Murray said, "Thank you very much for coming in, I will complete the document when I finish with my clients." When asked what he was going to do to complete the document she said that she presumed he was going to sign it and date it. She said that as he said that it was not going to impact on her home or jeopardise the home she presumed there was nothing under the heading "schedule". She denied categorically that Cullen was present when she signed the document on 27 July 1990. She said the only person present at the meeting was Murray.

517. Lana McLean said that she was aware that her husband had given a guarantee for Whiteboards Australia. Again when cross examined as to the "Sale of Land Act" document dated "12/7/1990" she said it was absolutely false to suggest that Murray was not present when she and her husband signed the document. She said the document was handed to her by Murray and it could not possible have been mailed to her. She agreed that she was refusing to sign any document at that time because she wanted to clarify things about the transfer of the Whiteboards of Australia debt in Aspenview Productions.

520. Lana McLean agreed that the strata title plan had been registered on 19 June 1990. In response to a question of wether she raised that matter with Murray she said that she did on 12 July. She said that she had been advised by her solicitors before the meeting with Murray that the strata title plan had been completed and said that the purpose of her meeting with Murray on 12 July was to tidy up the transfer of the "Whiteboard" debt in "Aspenview" and to have a final direction from Murray as to the release of the mortgage free title so that they could proceed with the transfer of the ownership for her mother and that is what she asked Murray specifically about. It was put to her that she accepted that there had to be a transfer of funds from the Whiteboard debt in Aspenview Productions before the release of Unit 2. She said she did not accept that, but the bank manager would not release the title. She said he refused to. When further asked about a discussion she had with her solicitor she said that her solicitor did not say that Murray would not release the title but he said that Murray wouldn't release the title until he had finalised the transfer of the Whiteboard debt from Aspenview. She said there was never a point at which Murray said that he would not release the title. She agreed that her husband had resigned from Whiteboards of Australia at the end of June 1991. She agreed that between the time that the strata sub-division had been registered in mid 1990 until early 1993 her solicitors had not pursued the release of the title to Unit 2.

523. Lana McLean acknowledged that she had signed a document written by the plaintiff to the secretary of Whiteboards of Australia dated 1 November 1990 whereby the bank stated that it had approved a facility to Whiteboards of Australia in the sum of $180,000 to provide working capital, to repay $100,000 to Alex McLean to reduce debt on St Martins Garage. That letter stated the security was to be the security held by the bank in connection with the advances to St Martins Garage and guarantees joint and several by Alexander McLean, Lana McLean, Drieberg and O'Brien. She was asked why she signed that document to which she replied, "because Mr Murray had advised Alex that if we didn't sign this document the bank would be shutting the Aspenview Productions facility". She said that basically they were given an ultimatum - "You are to sign this document and all of you sign this document or we're shutting down Aspenview".

526. She said that she signed the letter agreeing to the terms because of the ultimatum set down by Murray saying that if they didn't sign it he would shut down the Aspenview Productions business entirely. In further cross examination Lana McLean said that she had one meeting with Chapman in July 1991 at a time when she believed the exposure of the bank to Whiteboards was $72,000. She said that her husband requested that he be limited to one-third of that exposure, but Chapman was not prepared to do that, but would make sure that Whiteboards expenditure would be limited to $72,000. She said that this request was made at a meeting with Chapman not on the telephone on 19 July 1991.

529. Lana McLean agreed that her husband resigned as a director from Whiteboards of Australia in mid 1991. She said thereafter a company, "Premier Banner" was set up and with the patent which they claimed was theirs they commenced to manufacture whiteboards. Taken to a diary note made by Chapman and dated 20 November 1991, which recorded a meeting he had with Alexander and Lana McLean, with a loans officer in attendance, Lana McLean said that she could not recall such a meeting and the only meeting she could recall with Chapman occurred in July 1991. As part of the diary note it was recorded, "They are now investigating a possible property purchase in Queensland maybe Cairns in the company name". She said that she and her husband in November 1991 were not thinking about purchasing such a property. She denied categorically that she and her husband were contemplating purchasing such a property in November 1991.

532. Again Lana McLean was taken to a diary note of Chapman made concerning a meeting he said that he had had with her on 24 December 1991. She said that she could not recall such a meeting with Chapman on 24 December 1991 and said again that the only meeting she could recall with Chapman was in July 1991. She said the discussions at that meeting revolved around her husband requesting one-third exposure to the $72,000 debt of Whiteboards of Australia. Lana McLean was taken to a letter written by Chapman to she and her husband dated 11 February 1992 referring to "our brief discussions with Lana McLean on 24 December". She said that she did not recall receiving the letter. Again she was taken to an internal memorandum signed by Chapman dated 21 February 1992 which referred to him speaking to her. She said that she did not recall having spoken to Chapman on or about 21 February 1992 and again said that she had no recollection of speaking to Chapman at all except at the one meeting in July 1991.

535. In re-examination Lana McLean said that she would not have signed the mortgage over the property at 1 Alfred Street if she had been told that the mortgage she was signing covered debts which might be incurred in the future by her husband over the "Whiteboards" business. Lana McLean gave evidence that her mother, Mrs Masluk had paid moneys in respect of the sale of Unit 2. She said that in the event of the decision of the court deciding in favour of the plaintiff they would have to pay her back. She said that they would have to work out how to pay her back. She further said that as at 1 February 1991 it was her understanding that the property "1/1 Alfred Street" secured any debt owed to the bank by Aspenview Productions .

538. Pursuant to leave granted to counsel for the plaintiff she directed some further questions to Lana McLean in further cross examination. Lana McLean said that she had signed the mortgage dated 10 December 1986 by which she and Alexander McLean mortgaged the Prahran Property to the plaintiff to secure the debts of Aspenview Productions to the bank. She was asked did she read the document before signing it, to which she said that she scanned the document. She said she asked the bank manager to explain it to her. She was asked whether if she really wanted to know what was in the document would she have thought it appropriate to go and see a lawyer. To that she replied, "Not if I had the bank manager there to explain it to me, no".

541. She said that she asked him about the document and he did not take her to any special clause. She said that she would not have signed the document if she had known that it would be subject to debts that she had not been aware of and certainly anything to do with the "Whiteboards" company for which she had no association. She said that if her husband built up debts a creditor could have her husbands part of the property sold but she said, "but not my part of it". She said that she would not have signed the document if she was subject to debts outside the parameters of what she and her husband were jointly committed to. She said that other than what the bank manager had explained to her she did not seek to get advice from anyone else about the mortgage.

544. Mrs Masluk gave evidence that she resided in Unit 2, 1 Alfred Street Prahran and that she was a pensioner. She gave evidence that before residing at her present address she lived in East Brighton and that in 1988 she had not been very well. She said that she was on her own and Lana McLean often came to her house to help her. She said that there had been discussion about her moving to live with them in Prahran but on 23 August 1988 when celebrating the birthday of Lana McLean they said to her that the new bank manager had accepted the proposal and she could move in. She said that she was thrilled because she wasn't well and wanted to be somewhere closer to her family. She said that she then sold her East Brighton home for which she received $220,000 and she paid to Alexander and Lana McLean $160,000 plus $20,000 to cover the renovations for Unit 2. She said that she paid $160,000 by cheque and $20,000 was paid to workers who did the renovations to the property. She said that she had had discussions about a mortgage and that she had asked Mr and Lana McLean whether they had a mortgage and that they told her that they had but Unit 1 would cover that sufficiently.

547. Although counsel for the defendants addressed the court making final submissions before counsel for the plaintiff is convenient to refer to the submissions of counsel for the plaintiff before referring to the submissions made on behalf of the defendants. On behalf of the plaintiff it was submitted that the major issues to be determined in these proceedings were:

(a) did the plaintiff make the representations alleged by the defendants in the proceedings against Aspenview Productions and others that it would transfer to Whiteboards of Australia debts owed by Aspenview Productions to the bank which were incurred in the course of establishing Whiteboards of Australia so as it would entitle Aspenview Productions to be not obliged to pay such debts on the grounds that it would be unjust and unconscionable;

(b) did the plaintiff make representations to Alexander McLean before and at the time of him entering into the guarantee with the plaintiff to guarantee payment to it of the debts of Whiteboards of Australia to it as would estop the plaintiff from enforcing against Alexander McLean such guarantee beyond the extent of one-third of the debts of Whiteboards of Australia to the plaintiff;

(c) can the plaintiff rely on, in its claim against Lana McLean, the mortgage entered into by her as security for Alexander McLean's liability to the plaintiff under the guarantee, by which he guaranteed to the plaintiff payment to it of the debts of Whiteboards of Australia;

(d) did Alexander McLean and Lana McLean enter into an agreement with Mrs Masluk to transfer to her for valuable consideration two thirds interest in Unit 2 and accessory Unit 4 of the Prahran property in circumstances that the plaintiff agreed to release such units from the mortgage over the Prahran property so that it may be transferred to her as would now entitle Alexander McLean and Lana McLean to assert that the plaintiff is estopped from enforcing the mortgage insofar as it relates to Unit 2 and accessory Unit 4 of the Prahran property;

553. As to the first matter it was submitted that that which was relied on by Aspenview Productions were representations said to have been made by Murray in March 1998. It was submitted that although it was claimed that Aspenview Productions sold to Whiteboards of Australia the business of Aspenview Productions, Whiteboards of Australia and Domestic, that no document was produced to evidence such sale and that the evidence of Fairweather was that in November 1997, Alexander McLean told him that the sale had occurred by then, that is, before Murray came to the South Yarra branch of the plaintiff and before Whiteboards was incorporated on 5 May 1998. It was submitted that in such circumstances, it was improbable that in February 1988, when Alexander McLean had dealings with Murray, he sought his advice on the establishment of Whiteboards of Australia and acted on his advice. It was submitted that Alexander McLean was dealing with O'Brien, his accountant, and there was no reason to distance himself from O'Brien and seek and rely on advice said to have been proffered to him by Murray. It was submitted, on the evidence, that it was improbable that Fairweather represented to Alexander McLean that Murray possessed the capability contended for by Alexander McLean, as he did not know Murray. It was submitted that when the "prospectus" of Whiteboards of Australia is compared to the company structure and shareholding of the company when it was incorporated that that alleged to have been spoken to Murray and represented in the prospectus did not accord one with the other. This is so. It was submitted that as an example of this no "guarantee company" was ever established. It was further submitted that there could be no agreement on behalf of the plaintiff to transfer a debt in Aspenview Productions owed to the bank, to Whiteboards of Australia, unless the plaintiff held accounts for both companies and that at least at the outset when Whiteboards of Australia was formed its banker was not the plaintiff but the National Australia Bank. It was submitted that although it was alleged that Murray agreed, on behalf of the plaintiff, to transfer debts owed to the plaintiff from Aspenview Productions to Whiteboards of Australia it could not be concluded, on the evidence, that Whiteboards of Australia agreed to that. It was submitted that for such an agreement to be operative, the agreement of Whiteboards of Australia was an essential step. It was further submitted under this head that insofar as Alexander McLean, on behalf of Aspenview Productions, had any claim against Whiteboards of Australia for "setting up costs", which may constitute the basis of having debts owed to the plaintiff transferred from one company to the other, there was no satisfactory evidence to establish the amount of the moneys or costs incurred by Aspenview Productions on such exercise or that by expending moneys, with respect to this matter, Aspenview Productions increased its overdraft commitment to the plaintiff. Further, it was submitted that as the foundation of the contention made by Aspenview Productions and Alexander McLean that the plaintiff could not recover against them that part of the debt due to the plaintiff to be transferred from Aspenview Productions to Whiteboards of Australia, as it would be unconscionable and unjust to do so, it could not be concluded that Alexander McLean was in a position of special disadvantage to the plaintiff. It was submitted that this was to be seen from the fact that while working for Pitstop Motors, he had incorporated Aspenview Productions to split his income or wage and when he commenced to make whiteboards, he had applied for and obtained a patent with respect to the Whiteboards made by him. It was submitted that these matters demonstrated that he was aware of the ways of business and that it could not be said that he was in a position of special disadvantage to the bank. It was submitted that the claim made on behalf of Aspenview Productions and Alexander and Lana McLean under this head should be rejected.

556. As to the second matter, it was submitted that on the evidence there was no basis on which it could be concluded that the plaintiff was estopped from enforcing against Alexander McLean, pursuant to the terms of the guarantee, any amount beyond one-third of the debts of Whiteboards of Australia to the plaintiff. It was submitted that on the evidence it should be concluded that what Murray said to Alexander McLean was that the other two directors of Whiteboards of Australia and guarantors would be looked to if the guarantee was called on. It was submitted that beyond that there was no commercial reality in the proposition now contended for by Alexander McLean with respect to this matter. It was further submitted that it should be concluded that when Alexander McLean, before signing the guarantee, wanted to have his liability limited to one-third of any obligation of Whiteboards of Australia to the plaintiff, that Murray said that he could not do that, that the liability was joint and several, and that the other two directors would be looked to also. It was submitted that it was on that basis that Alexander McLean was prepared to and did enter into the guarantee.

559. It is to be noted at this point that, on the evidence, the plaintiff sought to recover, pursuant to the terms of the guarantee, the debt of Whiteboards of Australia to it, not only against Alexander McLean but also against O'Brien and Drieberg and that with respect to its proceedings against the latter two, although recovering judgment against them, the judgment was barren.

562. It was submitted further, that the wording of the guarantee was clear, that Alexander McLean's obligation to the plaintiff under it was not limited to one-third of the debt, that there was no application to rectify the terms of the guarantee and that in consequence there was not basis in law or fact which would cause or result in the plaintiff from being estopped from recovering no more than one-third of the debts of Whiteboards of Australia to the bank, against Alexander McLean, under the terms of the guarantee.

565. As to the third matter it was submitted that by the clear terms of the mortgage entered into by Alexander McLean and Lana McLean with the plaintiff, the obligations of Alexander McLean to the plaintiff, pursuant to the guarantee given by him to the plaintiff with respect to the debts of Whiteboards of Australia to the plaintiff, were secured by the mortgage. It was submitted that in these proceedings the terms of the mortgage should not be read down by the court. It was submitted further that there was no obligation on the plaintiff to inform either Alexander McLean or Lana McLean before they entered into the mortgage that any guarantee provided by either of them securing any debt of another to the plaintiff would be secured by the mortgage. Further, it was submitted that there was no facts in this case to provide any foundation to cause or result in it being able to be concluded that the plaintiff was estopped from enforcing the mortgage against each of Alexander and Lana McLean, including the debt of Alexander McLean to the plaintiff arising out of the guarantee.

568. As to the fourth matter, it was submitted and should be concluded, that at no time before the lunch meeting of Alexander McLean with Murray on 29 June 1989 was the plaintiff informed of the sale of Unit 2 to Mrs Masluk. Further, it was submitted that it should be concluded that in 1988 nothing was said by Murray to Alexander McLean to the effect that the bank would permit the sale of Unit 2 to Mrs Masluk and that the unit could be transferred to her free from any encumbrance of the plaintiff. It was further submitted that on the facts it should be concluded that no sale was affected by Alexander and Lana McLean to Mrs Masluk of an interest in Unit 2.

571. On behalf of the defendants it was submitted:

(a) that the court should accept and find that Alexander McLean was introduced to Murray by Fairweather and was introduced in terms, which represented that Murray had considerable business experience and that he could assist Alexander McLean with respect to business matters;

(b) that the court should find that before the birthday of Lana McLean in August 1988 and during or about July or August 1988, Alexander McLean told Murray that he wanted to transfer Unit 2 of the Prahran Property to Mrs Masluk and that Murray said that there would be no problem with that at all;

(c) that the court should find that before the meeting between Alexander McLean and Murray on 29 June 1998, they had discussed together the transfer of Unit 2 of the Prahran Property to Mrs Masluk;

(d) that the court should find and conclude that from the records of the plaintiff's South Yarra branch particularly from or about 12 July 1990, that the plaintiff accepted that the property, secured by the mortgage, entered into between Alexander and Lana McLean on 10 December 1986 with the plaintiff, was limited to Unit 1 of the Prahran Property and did not include Unit 2;

(e) that it should be found that Murray represented to and agreed with Alexander McLean to transfer part of the debts of Aspenview Productions to the plaintiff to the account of Whiteboards of Australia, which caused Alexander McLean to agree to increase the facilities provided by the plaintiff to Aspenview Productions knowing that they would be transferred to Whiteboards of Australia, where Alexander McLean would be responsible pursuant to a guarantee provided by him to the plaintiff for one-third only of the debts of Whiteboards of Australia to the plaintiff;

(f) that it should be accepted and found that at the time that Murray became manager of the South Yarra branch of the plaintiff in February 1988, Fairweather knew about "Whiteboards" and had known of "Whiteboards" since 26 November 1987;

(g) that the court should accept and find that the plaintiff represented to and or agreed with Alexander McLean that by entering into the guarantee dated 2 November 1989, by which he guaranteed to the plaintiff payment of Whiteboards of Australia debts to the plaintiff, that Alexander McLean would be responsible only for and bear the obligation to meet one-third of Whiteboards' debts to the plaintiff;

(h) that the court should find that the Sale of Land document dated 12 July 1990, was altered by Murray in the presence of Alexander McLean and Lana McLean and that it was signed by each of them in the office of Murray and in his presence;

(i) that the court should find that the Letter of Acknowledgment dated 14 June 1990, bearing the "received" stamp date 27/7/90, was not signed by Lana McLean in the presence of Cullen;

(j) that it should be held by the court that before Alexander McLean and Lana McLean executed the mortgage dated 5 December 1986, the plaintiff owed a duty to each of them to draw to their attention cll. 1 and 3 of the mortgage and explain the operation and how such clauses may operate and that, in particular, it should be held that the plaintiff was under a duty to draw these matters to that attention of Lana McLean and explain the operation of them to her;

(k) that it should be held by the court that the plaintiff, in breach of its duty to each of Alexander McLean and Lana McLean, failed to draw to their attention these clauses of the mortgage with the consequence that it should be found that it would be unconscionable to enforce such clauses so as to cause the mortgage to be security for the guarantee entered into by Alexander McLean on 2 November 1989, whereby he guaranteed to the plaintiff payment of the debts of Whiteboards of Australia to the plaintiff;

(l) that it should be concluded and found by the court that at the time that Lana and Alexander McLean entered into the mortgage with the plaintiff dated 10 December 1986, it was not within the contemplation of the parties, nor was it the intention of the parties, that the mortgage would provide security, other than for the debts of Aspenview Productions, to the plaintiff;

(m) that it should be held by the court that when Alexander McLean and Lana McLean entered into the mortgage with the plaintiff to secure the debts of Aspenview Productions to the plaintiff, it was not within the contemplation of the plaintiff and Alexander McLean and Lana McLean that any guarantee entered into by Alexander McLean to provide security for payment of debts to the plaintiff for any person other than Aspenview Productions would result in or cause the mortgage provided by Lana McLean to provide security for the obligation of Alexander McLean pursuant to such guarantee;

(n) that it should be concluded by the court that it is unconscionable to enforce the mortgage against Lana and Alexander McLean other than for the debts of Aspenview Productions to the plaintiff.

577. Having regard to the submission made by counsel on behalf of the parties appearing on the trial of these proceedings, in my view it is appropriate to first consider the terms of the mortgage entered into between Alexander and Lana McLean with the plaintiff dated 10 December 1986, and to consider whether the plaintiff was under any duty to draw attention to or explain to Alexander and/or Lana McLean cll. 1 and 3 thereof and, if there was such duty, the effect of not drawing attention to and explaining such clauses to them, for it appears to be common ground that, before they executed the mortgage, no explanation was given to either of them as to the nature and effect of such clauses and, in particular, the effect of the same in the event of one or other or both of them, subsequent to executing the mortgage, providing to the plaintiff a guarantee of the payment of another's debts to the plaintiff.

580. In Commercial Bank of Australia v Amadio[1] Gibbs CJ at p.457 considered the obligation of a creditor to disclose to a surety its knowledge of the party whose debts and obligations are to be secured by the guarantor or party providing the security. His Honour, the Chief Justice, said:

"The obligation is to reveal anything in the transaction between the banker and the customer which has the effect that the position of the customer is different from that which the surety would naturally expect, particularly if it affects to the nature or degree of the surety's responsibility."

Mason J, at p. 463, after referring to the "well entrenched proposition that a guarantee is not a contract uberrimae fide_i_" cited with approval that said by Barwick CJ, in Goodwin v National Bank of Australia Ltd[2] as to the duty of a principle creditor, which was:

"To disclose to the intending surety anything which has taken place between the bank and principal debtor `which was not naturally to be expected', or as it was put by Pollock M.R., in Lloyds Bank Ltd v Harrison[3] `the necessity for disclosure only goes to the extent of requiring it where there are some unusual features in the particular case relating to the particular account which is to be guaranteed'."

586. In the circumstances of these proceedings, by entering into the mortgage on 10 December 1986, the debtor, as provided by its terms, was Aspenview Productions of which they each had knowledge of its day-to-day activities. That mortgage replaced the former mortgage granted by them to the plaintiff to provide security for the debts of Aspenview Productions, which former mortgage was over their previous home at Rae Street, Fitzroy. There can be no suggestion, in my view, that the principles enunciated and referred to by Gibbs CJ and Mason J were breached by the plaintiff in any way in the circumstances of this case. In my view, there was no obligation or duty cast on the plaintiff to draw attention to Alexander and/or Lana McLean to the "all moneys" clauses contained in paragraphs 1 and 3 of the mortgage, the failure of which could lead to the setting aside of the mortgage. On the facts of this case, in my view, it cannot be concluded that Alexander and Lana McLean, in entering into the mortgage were under a serious misapprehension as to the terms and effect of clauses 1 and 3, that the plaintiff was aware of that fact and that it set about to ensure that Alexander and Lana McLean would not become aware of the effect of such clauses before they entered into the mortgage. Even if Alexander and Lana McLean were under a misapprehension as to the effect of clauses 1 and 3 of the mortgage, there is no evidence, that any conduct on behalf of the plaintiff relevant to the execution of the mortgage as would entitle Alexander and Lana McLean in equity to have the mortgage set aside: see Taylor v Johnson[4]. The submissions made on behalf of the defendants did not go so far as suggesting that such should occur in this case. Further, in my view, in cannot be said in the circumstances of this case that either Alexander or Lana McLean were under a "special disability" in dealing with the plaintiff, such that it would be unfair or "unconscientious" for it to procure and accept their assent to the mortgage in circumstances where attention was not specifically drawn to clauses 1 and 3 or in which they were not invited to take independent advice before executing the document - Commercial Bank of Australia Ltd v Amadio[5].

589. However, the next question to be addressed is whether by the terms of the mortgage and in particular by cll. 1 and 3 thereof, the "all moneys" clauses and in particular cl. 3 of the mortgage provides security to the plaintiff, which is able to be enforced against each of Alexander and Lana McLean for advances made by the plaintiff to Whiteboards of Australia, the repayment of which was guaranteed subsequently by Alexander McLean. In short, it is contended on behalf of the plaintiff that on the clear meaning of cll. 1 and 3 of the mortgage, in consequence of Alexander McLean guaranteeing to the plaintiff the debts to it by Whiteboards of Australia, the mortgage provided security for the obligations under that guarantee and to the extent that Whiteboards of Australia was indebted to the plaintiff the mortgage was able to be enforced against each of Alexander and Lana McLean. As against that it was contended on behalf of Alexander and Lana McLean that it should be concluded that it was the intention of the plaintiff and each of them and within their joint contemplation, that the mortgage secured to the plaintiff payment of the debts to it by Aspenview Productions only, but not a guarantee entered into by one or other of them (and in this case Alexander McLean) to secure the debts of another company altogether.

592. In Smith v Australia and New Zealand Banking Group Ltd[6] Kirby P, at paragraph 5, said that there was "authority in Australia, which supports a general approach to the construction of `all moneys' clauses in mortgages in such a way as to confine their operation."

However, as his Honour further pointed out in that paragraph the "scope for differences of view can be seen in the respective opinions of Gleeson CJ (with whom [he] agreed) and of Meagher JA in dissent." in Fountain v Bank of America National Trust and Savings Australia Ltd[7].

596. In Estoril Investments Pty Ltd v Westpac Banking Corp[8], Young J set out a number of "guidelines" which he suggested could be applied in ascertaining whether that agreed to by parties and as set out in an "all moneys" clause, could have application to a subsequent transaction entered into by the mortgagor or guarantor. However, in Smith v Australian and New Zealand Banking Group Ltd[9], which was an appeal from Young J, the guidelines of Young J found no real support in the actual reasons of the members of the Court of Appeal.

599. In Re Bankrupt Estate of Murphy; Donnelly v Commonwealth Bank of Australia[10], Hill J, at p. 54 concluded that following the Court of Appeal (NSW) in Smith v Australian and New Zealand Banking Group Ltd that he, "should treat the guidelines suggested by Young J, as not requiring [him] to read down an `all moneys clause' if its language actually covers the situation". His Honour thereafter set out a number of principles which he concluded were acceptable law in NSW. The first principle was:

"there is no principle of law that an all moneys clause should be read down merely because it is to be found in a document prepared by a bank".

"a bank mortgage is traditionally drawn to cover a multitude of possible situations and intended to secure the bank as effectively as possible. The question is whether the situation falls within the contemplation of the clause as written".

605. In Panebianco v Bendigo Bank Ltd and Anor[11], the plaintiff's husband who was a joint debtor with her under a mortgage had stolen moneys from the mortgagee, as an employee of it. The question addressed by her Honour was whether on a true construction of the mortgage and in the events that had occurred, the obligation to repay moneys, which had been stolen, fell within the language of the "all moneys clause". Her Honour found that on the proper construction of the clause it extended to secure moneys owed by the husband.

608. In Re Clark's Refrigerated Transport Pty Ltd[12], a finance company took a mortgage of book debts to secure all the borrower's obligations in contemplation of advances. Advances of $200,000 were made. The mortgage provided that the moneys secured by the mortgage included:

"All moneys now or hereafter to become owing or payable to the Mortgagee by the Mortgagor either alone or on a joint partnership account or on any account whatsoever."

After a petition to wind up the borrower had been presented, the parent of the finance company assigned to it liabilities of the borrower to the parent company amounting to $162,000. The finance company, holding the mortgage, claimed in the ensuing winding up to be secured not only in relation to the $200,000 lent but also in respect of the assigned liabilities. In rejecting that claim Brooking J held that it was likely that the parties to the mortgage agreement did not intend to comprehend "assigned debts" in their agreement.

613. In McVeigh v The National Australia Bank Ltd[13], Kenny J, with specific reference to that said by Gleeson CJ in Fountain v Bank of America National Trust and Savings Association[14] and with reference to other authority including Re Clark's Refrigerated Transport Pty Ltd, said at para 83:

"... it is accepted that `all moneys' clauses in guarantees and mortgages are to be `confined' in their operation by reference to the context in which they appear and by reference to the commercial purpose which they are intended to serve."

"... in many cases an `all moneys' clause will not be construed to secure a debt of a fundamentally different character from the debts specifically contemplated by the parties at the time of entering in the contract. In construing such a clause a court confines its operation by reference to its context and commercial purpose."

619. In this case the mortgage given to the plaintiff by Alexander and Lana McLean over their home was given:

"In consideration of certain advances and accommodation granted or to be granted at the request of the mortgagor to Aspenview Productions Pty Ltd... by the mortgagee for the purpose of securing to the mortgagee the payment of the moneys and interest and liabilities hereinafter mentioned and intended to be hereby secured mortgages to the mortgagee...."

Clauses 1 of the mortgage contemplated that the security provided by the mortgage would include security for moneys owing to the plaintiff by the mortgagors (Alexander and Lana McLean); "or either of them, either alone or on joint partnership account or on any other account whether as principal or surety." Further by cl. 3 of the mortgage it is contemplated that the obligation of the mortgagors was to pay to the plaintiff moneys which it

"'may advance' the `payment or repayment of which the.... mortgagor or either of them has guaranteed or may hereafter guarantee to the Bank'." (Emphasis added.)

625. In my view, clauses 1 and 3 of the mortgage secure the liabilities of Alexander McLean to the plaintiff arising out of the guarantee entered into by him, by which he guaranteed to the plaintiff payment of the debts of Whiteboards of Australia and by their terms give rise to an obligation on the part of Lana McLean to pay to the plaintiff moneys the payment of which Alexander McLean had subsequently guaranteed to the plaintiff. The debt of Whiteboards of Australia to the bank was of a similar nature and character to the debt by Aspenview Productions to the bank for which security was given by Alexander and Lana McLean by the mortgage. The guarantee provided by Alexander McLean to the bank for the debts of Whiteboards of Australia was for a commercial purpose of the same nature or kind as that secured by the terms of the mortgage. The plain meaning of the words provided by cll. 1 and 3 of the mortgage, in my view, contemplate that, by their terms, an event of the very nature that occurred in this case, that is, that subsequent to the mortgage being entered into that if one or other of Alexander or Lana McLean entered into a guarantee with the plaintiff to guarantee payment to it of the debts to it of another, that would give rise to an obligation on the other mortgagor to pay to the plaintiff the debt to it by the debtor and that the mortgage would secure that obligation. Accordingly, I conclude that the mortgage dated 10 December 1986, provided by Alexander and Lana McLean, secures the debt of Alexander McLean to the plaintiff pursuant to the guarantee entered into by him with the plaintiff, whereby he guaranteed to the plaintiff payment of the debts of Whiteboards of Australia to it and also by its terms Lana McLean is obliged to pay to the plaintiff the moneys the payment of which Alexander McLean guaranteed to the plaintiff.

628. I now turn to other issues in these proceedings. As is to be expected in a case of this nature when the facts to be determined which were the subject of evidence of witnesses related to events which occurred during the period from 1987 to 1992, it is to be expected that witnesses may have varying memories of events that occurred and that witnesses may have no direct memory of events which occurred so long ago. It is in such circumstances that contemporaneous diary notes and memos are likely to provide a record of events that occurred, conversations that took place, and information that was given to the person who made the diary note or memo. The witness, Fairweather, who was the manager of the South Yarra branch of the plaintiff from April 1986 to February 1988, impressed me as a careful and honest witness and a person who would accurately record events that had occurred, conversations that had taken place and actions to be undertaken. I have also reached the conclusion that Fairweather was probably a conservative and careful man in the conduct of his position as a bank branch manager and that he would and did adhere to bank policy and guidelines. The evidence of Alexander McLean was that it was Fairweather who introduced him to Murray in February 1988. Fairweather had no memory of this event.

631. Although Alexander McLean may be correct in his recollection that it was Fairweather who introduced him to Murray in February 1988, I do not accept that in introducing Murray to Alexander McLean he represented or told Alexander McLean that Murray was a highly capable financial adviser who could or would assist McLean regarding his business interests and the development of the "Whiteboards" interests. I accept the evidence of Fairweather that he would not do so for the reasons given by him, that is it would be against bank policy to make such a representation and further he had no knowledge of Murray's background. I accept that his recollection was that at the time he was aware of "Whiteboards" and that he was aware that it was said, by Alexander McLean, to be a source of draining funds from the account of St Martin's Garage. This was recorded in his diary note of 1 July 1987.

634. I accept the evidence of Fairweather that he said that before having reference to various documents in preparation for the trial he had virtually no memory of the events which had occurred relevant to his evidence. Such is to be expected. I am satisfied that he was a person who kept accurate notes recording events that had occurred and what was said to him. I accept that in the "Preliminary Application" written up by Fairweather and dated 26 November 1987, he accurately recorded what he was told by Alexander McLean. I do not accept that Fairweather sought to promote or did promote Murray to Alexander McLean as a person with business experience and able to give financial advice to Alexander McLean.

637. On the other hand Murray, who I am satisfied, had little actual recollection of events that occurred or what he was told, was prepared to give evidence as to what he said or did based on what he considered was the practice of the plaintiff. However, because a matter may have been the practice of the plaintiff I am not prepared to accept that Murray followed such practices on all occasions. From listening to his evidence and observing his manner and demeanour in the witness box and taking into account evidence of Alexander McLean, I am of the view that in his management of the South Yarra branch of the plaintiff and his dealings with the plaintiff he was probably entrepreneurial in nature and probably proffered financial and business advice from time to time. However, diary notes and diary memorandum recorded by him, in my view, were likely to accurately record events that occurred and what he was told. In his diary note of 30 June 1989, he recorded that he was told at the luncheon meeting with Alexander McLean on the previous day, that one of the properties of the Prahran Property had been sold to "his mother" and that a strata title subdivision would be carried out shortly. One of the issues in this case is whether, in 1988, Alexander McLean sought and obtained the consent of Murray, on behalf of the plaintiff, to sell one of the units of the Prahran Property to Mrs Masluk and for the release of the unit from the mortgage and that in reliance on the consent given by Murray, he and Lana McLean sold the major interest in Unit 2 and accessory Unit 4 to Mrs Masluk.

640. It was the evidence of Alexander McLean that in or about July, August 1988, he spoke to Murray and informed him that Mrs Masluk wanted to purchase the upstairs unit, (Unit 2) of the Prahran Property and asked whether they, which I take to be himself and his wife, could sell that part of the property to Mrs Masluk. He gave evidence that Murray said that there would be no problem with that at all. The evidence of Alexander McLean was that at this meeting with Murray they discussed the fact that he and Lana McLean were proceeding to strata title the property. It was the evidence of Alexander McLean that he was able to place a time on this conversation, it occurring before 23 August 1988, because that was the day of his wife's birthday and it was on the day that they celebrated his wife's birthday that he told Mrs Masluk of the meeting that he had had with Murray and that Murray had said that it was alright, that they could go ahead with her purchasing the second unit and that it could be released.

643. As to the conversation that Alexander McLean said that he had with Murray on this occasion, he gave further evidence that they discussed the fact that when Mrs Masluk had taken or purchased Unit 2, he and his wife would have no real rights on that unit and the only property that they would thereafter own would be Unit 1.

646. In her evidence, Lana McLean corroborated her husband's evidence as to the events that occurred and what was said on the day on which she celebrated her birthday in August 1988. She gave evidence that on this occasion her mother, Mrs Masluk, was informed that Murray had said that there would be no difficulty with her purchasing, mortgage free, a significant portion, if not all, of "apartment 2" of 1 Alfred Street. In turn, Mrs Masluk gave evidence that, when celebrating the birthday of her daughter Lana McLean, she was informed that the new bank manager had accepted the proposal that she could move in to Unit 2 of the Prahran Property. In evidence Murray said that he could not recall before 12 July 1990 making a statement to the effect that the plaintiff would release a mortgage insofar as it affected Unit 2 of 1 Alfred Street Prahran. When asked whether it was possible he said something like that, he said, it could be possible or that he might have said something along those lines. It was evident that Murray had little or no real recollection of events the subject of these proceedings.

649. I turn in the course of considering this matter, to have regard to the signing of the Sale of Land Act document on 12 July 1990, as, in my view, it is relevant to this matter. I accept the evidence of Alexander McLean and Lana McLean as to the circumstances in which this document was signed by them. I am satisfied that Alexander McLean and Lana McLean signed the document in the presence of Murray, that he by his hand, added to the document as initially written, by writing "/1" and that he then handed his pen to Alexander McLean and Lana McLean to sign the same. I accept the evidence of Lana McLean generally as to the events that occurred in the office of Murray on 12 July 1990, and that which was said by her to Murray before he, by his hand, amended the document. The alteration of this document by Murray in the manner which he did, supports in my view the evidence of Alexander McLean that before this occasion Murray had informed Alexander McLean in substance that Unit 2 of the Prahran Property could be sold to Mrs Masluk and that the property would be released from the mortgage. It is for that reason that he readily amended the "Sale of Land" document on that occasion.

652. As to the document signed by Lana McLean, the Letter of Acknowledgment, dated 14 June 1990, bearing the "received" stamp dated "27 Jul 1990", I accept the evidence of Cullen as to the completion and signing of that document by Lana McLean. I accept his evidence that, although he had no direct memory of the events, he recorded in the undated note as to what he said to Lana McLean before she signed the document. I accept his evidence that he did put his signature to the document as a witness after witnessing Lana McLean's signing the same and that the document was then complete. A document in the same terms, although typed, was signed by Alexander McLean which was stamped with the "received" stamp dated "18 Jun 1990". Although it was put, in substance, that those documents as completed by each of Alexander and Lana McLean contradicted the case that by that time the plaintiff had agreed to release Unit 2 from the mortgage held by it over the Prahran Property and, on the face of such documents, that could be said, I am nevertheless satisfied that it was in July or August 1988 that Murray informed Alexander McLean, in substance, that he and Lana McLean could go ahead and sell a unit in the Prahran Property to the mother-in-law of Alexander McLean and the property would be released from the mortgage. I accept the evidence of Alexander McLean in substance as to this matter.

655. There were a number of documents produced from the file of the plaintiff relevant to the time during which Murray was the manager of the plaintiff's branch at South Yarra which recorded that the security held by the plaintiff with respect to the debts of Aspenview Productions was Unit 1 of the Prahran Property. An example of such a document was the memorandum completed by Murray and dated 24 August 1990. Again another is the direction dated 3 September 1990. Notwithstanding the Letters of Acknowledgment signed by each of Alexander and Lana McLean and dated 14 June 1990 I am satisfied that in July or August 1988 Murray did inform Alexander McLean that Unit 2 would be released. I am satisfied that as a result of Alexander McLean's conversation with Murray in July or August 1988 and before 23 August 1988 Mrs Masluk was told of this matter and thereafter she proceeded to sell her home in Brighton. Although the signed transfer by Alexander McLean and Lana McLean to Mrs Masluk was not tendered in evidence, I am satisfied that Lana and Alexander McLean agreed to sell and did sell a two-third interest in Unit 2 and accessory Unit 4 of the Prahran Property to Mrs Masluk. I accept her evidence that she paid to Alexander McLean and Lana McLean $160,000 and also paid a further $20,000 towards the renovation of Unit 2. Notwithstanding it was referred to in evidence that the transfer of part of the interest of Alexander and Lana McLean to Mrs Masluk recorded the consideration as being "for love and affection" I am satisfied that the aforesaid sums were paid by Mrs Masluk to Alexander McLean and Lana McLean for the purchase of a two-third interest in Unit 2 together with a like interest in accessory Unit 4. Before the sale of the major portion of the interest in Unit 2 and accessory Unit 4 of the Prahran Property to Mrs Masluk they owned this property. It, in part, secured the debt to the plaintiff. I am satisfied that in selling a major interest in the property to Mrs Masluk, Alexander and Lana McLean acted on the representation and promise made by Murray which was, in substance, that they could sell this property to Mrs Masluk and that the property would be released from the mortgage. To the extent that Alexander McLean and Lana McLean sold a substantial interest in Unit 2 and accessory Unit 4 to Mrs Masluk disposing of part of the assets which they had and would otherwise have continued to hold and which they would have as a resource in the conduct of their business and private affairs, they acted to their detriment.

658. It was the promise of the plaintiff by its agent, Murray, to permit part of the property held by the plaintiff, by way of security, to be sold to Mrs Masluk which encompassed the discharge of the plaintiff's mortgage over that property that was the root and cause of Lana and Alexander McLean selling a major portion of their interest in that property to Mrs Masluk. The promise or representation of Murray, as to the release of part of the property held by the plaintiff from the security of the mortgage, was a promise as to a future event. The fact that such was the case does not prevent the principles of estoppel being applied in such circumstances - Waltons Stores (Interstate) Ltd v Maher and Anor[15] and Commonwealth of Australia v Verwayen[16]. In the manner in which this issue was conducted during the trial no distinction was made between Alexander and Lana McLean selling and transferring to Mrs Masluk the whole of their interest in Unit 2 and accessory Unit 4 of the Prahran Property and them selling and transferring to her two-thirds of their interest in that property. The issue as contested in this case was whether Mrs Masluk paid for the purchase of an interest in Unit 2 and accessory Unit 4 and whether the plaintiff, in the circumstances, is estopped from enforcing the mortgage held by it and registered on the title of such properties. Accordingly, I do not seek to draw any distinction between these matters in this case. In the circumstances of this case I am satisfied that the plaintiff is estopped from enforcing the mortgage insofar as it relates to Unit 2 and accessory Unit 4 of the Prahran Property. I am satisfied that Mrs Masluk has an estate and interest in the property being Unit 2 and accessory Unit 4 of the Prahran Property as the purchaser of two-thirds interest in those units which supports the caveat lodged by her and recorded on the title with respect to those properties. Alexander and Lana McLean are entitled to receive from the plaintiff a signed discharge of the mortgage entered into by them with the plaintiff insofar as it relates to and has been registered on the title to Unit 2 and accessory Unit 4 of the Prahran Property in order that they may lodge a transfer of two-thirds of such property to Mrs Masluk.

661. I turn next to consider the issue in these proceedings whether the plaintiff is now estopped from enforcing against Alexander McLean and consequently Lana McLean the Whiteboards of Australia guarantee beyond the extent of one-third of the indebtedness of Whiteboards of Australia to the plaintiff. It was the case of Alexander McLean, in substance, that Murray promised to him that the plaintiff would only seek to recover under any guarantee given by him to the plaintiff, guaranteeing payment to it of the debts of Whiteboards Australia to it, 1/3 of the debts of Whiteboards of Australia to the plaintiff that he acted on that promise, by entering into the guarantee and the plaintiff was now estopped from recovering against him and Lana McLean pursuant to the terms of the guarantee which he executed, more than 1/3 of the debts of Whiteboards of Australia to the plaintiff.

664. It was apparent from the evidence of Murray that he had little or no recollection of this matter. When it was put to him in cross-examination that evidence would be called that he said, relating to this matter, "We don't have guarantees that limit each director's liability to one-third", Murray agreed that that was the sort of thing that he would have said to McLean. He denied, however, that he said to Alexander McLean that the directors' O'Brien and Drieberg were people of substance and that in the wash-up of things he would only ever have to pay 1/3 because of their asset situation.

667. Even accepting the evidence of Alexander McLean relevant to this matter, in my view, it goes no further than Murray informing him that it was bank policy that a joint and several guarantee was required from the three directors of Whiteboards of Australia and that the plaintiff would look to each of the guarantors if the guarantee was called on. I do not accept that it was represented by Murray or promised by him, on behalf of the plaintiff, that in the event of Alexander McLean executing the guarantee with the other two directors of Whiteboards of Australia that if the guarantee was called on by the plaintiff the liability of Alexander McLean (and thereby Lana McLean) under the same as would be enforced by the plaintiff would be limited to one-third of the debts of Whiteboards of Australia to the plaintiff regardless of that which the plaintiff was able to recover from the other two directors. I am satisfied that it was explained to Alexander McLean that his obligation under the guarantee to be executed by him was both joint and several with the other two directors, O'Brien and Drieberg, who also executed the guarantee. There was no representation or promise made by Murray which was acted on by Alexander McLean which would now estop the plaintiff from enforcing the guarantee executed by Alexander McLean on 2 November 1989 beyond the extent of one-third of the indebtedness of Whiteboards of Australia to the plaintiff.

670. The evidence was that although judgment was entered against each of Drieberg and O'Brien, pursuant to the guarantee which they gave guaranteeing to the plaintiff payment of the debts of Whiteboards of Australia to it, the plaintiff has not been able to recover any part of its judgment against those persons. In the result Alexander McLean is liable to the plaintiff under the guarantee for the debts of Whiteboards of Australia to the plaintiff. For the reasons previously expressed Lana McLean is likewise liable to the plaintiff for the debts of Whiteboards of Australia and the mortgage given by each to the plaintiffs as it affects Unit 2 and accessory Unit 4 of the Prahran Property secures such liability.

673. I next turn to the claim by the defendants, Aspenview Productions, Alexander McLean and Lana McLean, that it would be unjust and unconscionable for the plaintiff to recover against them the entire amount of the debt owed by Aspenview Productions to the plaintiff as the plaintiff had agreed to transfer to Whiteboards of Australia a considerable part of Aspenview Productions' indebtedness and increasing indebtedness to the plaintiff, it being recognised and accepted by the plaintiff that facilities, provided by the plaintiff to Aspenview Productions, were used by it to meet costs incurred in the setting up and conducting of Whiteboards of Australia. Murray had little recollection of this matter, although he said he could recall a discussion about making a loan of $100,000 to Whiteboards of Australia to clear the debts of the McLeans. I accept the evidence of Alexander McLean that there were discussions had by him with Murray seeking to have the plaintiff transfer part of Aspenview Productions' debt to the plaintiff to Whiteboards of Australia and that at times Aspenview Productions, by Alexander McLean, agreed to the increase of facilities provided by the plaintiff to Aspenview Productions in order to meet debts incurred by Aspenview Productions in the establishment and conduct of Whiteboards of Australia. It was in consequence of such discussions that on 1 November 1990 the plaintiff offered to provide to Whiteboards of Australia a Bill Discount Facility of $100,000 to "repay $100,000 to Alexander McLean to reduce the debt on St Martin's Garage". Although there was produced and tendered a document signed by Lana McLean, Drieberg and O'Brien which purported to accept the offer not only was there no agreement reached between the directors of Whiteboards of Australia, Alexander McLean, O'Brien and Drieberg as to this matter, but there was positive disputation between O'Brien and Alexander McLean and Drieberg and Alexander McLean as to this offer proceeding. That this was so is evident from letters passing between O'Brien and Alexander McLean and Drieberg and Alexander McLean to which I have previously referred. Eventually the offer was withdrawn by the plaintiff to Whiteboards of Australia and the matter proceeded no further. Other than a reference to this amount, on the evidence before the court, no calculation could be made as to the amount of any debt of Aspenview Productions which may be said to be attributed to Whiteboards of Australia.

676. For any debt of Aspenview Productions to the plaintiff to be transferred to Whiteboards of Australia and to become a debt of that company to the plaintiff it needed the agreement of Whiteboards of Australia. Without such agreement no such transfer could take place. Notwithstanding that from time-to-time Alexander McLean sought to have the plaintiff transfer part of the debts of Aspenview Productions to Whiteboards of Australia and, to the extent that Murray agreed to that or represented that that would be done, Murray could not effect such promise without agreement of Whiteboards of Australia. In my view, to the extent that Murray made representations of this nature, they could amount to no more than the plaintiff was prepared to make such transfer if there was agreement with Whiteboards of Australia. It must have been appreciated by Alexander McLean that such was the case. I am not satisfied that Whiteboards of Australia at any time agreed to such a transfer.

679. Although Alexander McLean gave evidence that he had limited education and limited comprehension of business matters, it was while he was working for Pitsop Motors, before acquiring the business of St Martin's Garage, that Aspenview Productions was incorporated in order that he may split the income and bonuses received from such employer with his wife. He also had sufficient business acumen and skill to ensure that when he commenced making whiteboards he obtained a patent in respect of the whiteboards produced. In my view it would be folly to conclude, and I do not, that there was a promise or representation of the nature contended for by the plaintiff which was acted on by Alexander McLean which would either estop the plaintiff from recovering against Aspenview, Alexander McLean and Lana McLean the entire debts of Aspenview Productions to the plaintiff or that it would be unjust and unconscionable to permit the entire debts of Aspenview Productions to be recovered against such parties.

682. I accept the submission, made on behalf of the plaintiff, that although it was claimed that Aspenview Productions sold to Whiteboards of Australia the business of Aspenview Productions, being Whiteboards Office and Domestic, no document was ever produced or tendered evidencing such sale. I reject this defence on behalf of Aspenview Productions and Alexander and Lana McLean.

685. The evidence of Ms Ledney, which I accept, was that at 19 February 2001 Aspenview Productions was indebted to the plaintiff in the sum of $443,460.78 with interest accruing at the rates that I have set out in paragraph 16 of this judgment. Each of Aspenview Productions, Alexander McLean and Lana McLean are liable to the plaintiff in this amount together with the interest as accrued. As at this day that amount totals $483,625.78.

688. In proceeding 8085 of 1993 the plaintiff is entitled to judgment against Aspenview Productions, Alexander McLean and Lana McLean in such sum. Further, the plaintiff is entitled to judgment for possession of the property being Unit 1 and accessory Unit 3 of the Prahran Property. On the counterclaim of Mrs Masluk, I propose to order and declare that the plaintiff is estopped from denying that she is entitled to be registered with Alexander and Lana McLean as proprietors of the property comprising Unit 2 and accessory Unit 4 of the Prahran Property. In such proceedings I propose to further order that the plaintiff deliver to Alexander McLean, Lana McLean and Krystyna Masluk a discharge of the mortgage registered by it on the title to the property comprising Unit 2 and accessory Unit 4 of the Prahran Property.

691. In proceedings 8085 of 1993 I propose to make orders in accordance with the following minutes:

1. That Aspenview Productions Pty Ltd, Alexander McLean and Lana McLean pay to the plaintiff the sum of $483,625.78.

2. That the plaintiff recover possession of the property being that situate and known as Unit 1 and accessory Unit 3, 1 Alfred Street, Prahran and being the property more particularly described in Certificates of Title Volume 9956 Folio 761 and Volume 9956 and Folio 763.

3. That the plaintiff's claim against the defendant, Krystyna Masluk, be dismissed.

4. That on the counterclaim of the defendant, Krystyna Masluk, it is ordered and declared that the plaintiff is estopped from denying that she is entitled to be registered with Alexander McLean and Lana McLean as proprietor of the property situate and known as Unit 2 and accessory Unit 4, 1 Alfred Street, Prahran and being the property more particularly described in Certificates of Title Volume 9956, Folio 762 and Volume 9956 Folio 764 and that the plaintiff deliver to the defendants, Alexander McLean, Lana McLean and Krystyna Masluk a signed discharge in proper form of the mortgage registered by it on such titles to each of those properties.

I shall give counsel the opportunity to make submissions relevant to the form of the orders.

699. In the proceedings numbered 6398 of 1994 I am satisfied that as at 19 February 2001 Whiteboards of Australia was indebted to the plaintiff in the sum of $222,236.42 and that interest accrued thereon at the rate of $69.41 per day. As calculated to this day and taking interest into account, the amount of that indebtedness is $242,365.10. For the reasons expressed I am satisfied that the plaintiff is entitled to judgment in those proceedings against Alexander McLean and Lana McLean in that sum. In those proceedings the plaintiff is further entitled to an order for possession of the property being Unit 1 and accessory Unit 3 of the Prahran Property. In such proceedings I am also satisfied that it should be declared that the plaintiff is estopped from denying that Krystyna Masluk is entitled to be registered with Alexander and Lana McLean as proprietors of Unit 2 and accessory Unit 4 of the Prahran Property. In such proceedings I propose to make orders in accordance with the following minutes:

1. That Alexander McLean and Lana McLean pay to the plaintiff the sum of $242,365.32.

2. That the plaintiff recover possession of the property being that situate and known as Unit 1 and accessory Unit 3, I Alfred Street, Prahran and being the property more particularly described in Certificates of Title Volume 9956, Folio 761 and Volume 9956, Folio 763.

3. That the plaintiff's claim against the defendant Krystyna Masluk be dismissed.

4. it is further ordered and declared that the plaintiff is estopped from denying that Krystyna Masluk is entitled to be registered with Alexander McLean and Lana McLean as proprietors of the property situate and known as Unit 2 and accessory Unit 4, I Alfred Street, Prahran and being the property more particularly described in Certificates of Title Volume 9956 Folio 762 and Volume 9956 Folio 764.

I shall given counsel the opportunity to make submissions relevant to the form of such orders.

[1] [1983] HCA 14; (1983) 151 CLR 447.

[2] [1968] HCA 30; (1968) 117 CLR 173 at p. 175.

[3] (1925) unreported, cited in Paget's Law of Banking, 7th ed (1966), p. 583.

[4] [1983] HCA 5; (1983) 151 CLR 422.

[5] [1983] HCA 14; (1983) 151 CLR 447, Mason J at 461-62, Deane J at 474-5.

[6] (1996) NSW Conv R 55-774.

[7] (1971) 18 FLR 95 FC.

[8] [1993] 6 BPR 13,146.

[9] (1996) NSW Conv R 55-774.

[10] (1996) 140 ALR 46.

[11] Unreported, Balmford J, 12 March 1999: [1999] VSC 50.

[12] [1982] VicRp 100; [1982] VR 989.

[13] [2000] FCA 187 (28 February 2000) at Para. 83.

[14] (1992) 5 BPR 11, 817 at 11819-11820.

[15] [1988] HCA 7; (1988) 164 CLR 387.

[16] (1990) 17 CLR 394.