Commonwealth Bank of Australia v Mohamad Saleh & Ors

Commonwealth Bank of Australia v Mohamad Saleh & Ors - [2007] NSWSC 903 - NSWSC 2007 case summary — Zoe

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iv. Mr Qureshi alleges he was the accountant for TDM. That is disputed by the Salehs but the evidence establishes that Mr Qureshi (and his company, Qureshi & Associates Pty Ltd - now in liquidation) prepared various financial statements relating to TDM, prepared schedules detailing the receivables of TDM and wrote letters certifying key facts concerning the operations, receivables and tax position of TDM. Qureshi & Associates Pty Ltd traded under the name Mascot Taxation & Accounting Services. 3 The only defendants present throughout the hearing were Mr Edge, who was represented by his solicitor Mr Newman and Mr Qureshi who represented himself. Many of the defendants had however on earlier occasions been represented by legal advisers but by the time the hearing began Notices of Ceasing to Act had been given by those advisers. Mr Petts, himself a defendant, was called as a witness by the Bank. 4 During final address the Bank elected to restrict its claim against Mr Petts to one of nominal damages. The Bank made the point that the nature and gravity of the fraud and the participation of particular parties in that regard had developed during the course of the hearing. It submitted that it was now apparent on the detailed evidence that the respective proportion of responsibility by Mr Petts had reduced substantially from the position that appeared clear some time ago, even at the time when the default judgment was obtained against him. The ground for the default judgment involved his misleading and deceptive conduct under the Fair Trading Act where it had not been necessary to prove intent and where he had passed across to the Bank materials which turned out to have been fabricated and false. In the circumstance where the Bank accepted that by the end of the hearing it had great difficulty on the facts in being able to persuade the Court that there was a case for substantial damages against Mr Petts, it elected only to seek nominal damages. That being the case nothing further needs be said in this regard and a nominal damages award of $1 is appropriate as against Mr Petts. 5 The other defendants included:

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Did the plaintiff and the tenth defendant enter into a guarantee in respect of the performance of TDM under its loan agreement with the plaintiff?
Has the plaintiff made a demand upon the tenth defendant for payment under the guarantee?
Has the tenth defendant failed to pay the sum demanded under the guarantee?
What damages are the plaintiff entitled to from the tenth defendant by reason of that failure? Negligent Misstatement
Whether the pleaded representations by the first, third, fifth, tenth and eleventh defendants (respectively) were: (a) Made in circumstances where the defendant realised or ought to have realised that the plaintiff would rely upon the information or advice; (b) Made in circumstances where it was reasonable for the plaintiff to rely on the information or advice; (c) Made in circumstances where the defendant failed to ensure that the information supplied or advice given was accurate and correct; (d) Relied upon by the plaintiff to approve the loan and advance the $7 million; (e) The cause of the plaintiff's damage and if so, in what proportion having regard to the other concurrent wrongdoers? (f) Did the plaintiff contribute to its own loss by its own negligence? (g) Is the defendant precluded from relying upon any contributory negligence by the plaintiff or proportionate liability by reason of it intending to cause the plaintiff harm or his participation in a broader conspiracy with: a. [In respect of the first defendant], the third, fifth, tenth and eleventh defendants to defraud the plaintiff; b. [In respect of the third defendant], the first, fifth, tenth and eleventh defendants to defraud the plaintiff; c. [In respect of the fifth defendant], the first, third, tenth and eleventh defendants to defraud the plaintiff; d. [In respect of the tenth defendant], the first, third, fifth and eleventh defendants to defraud the plaintiff; e. [In respect of the eleventh defendant], the first, third, fifth and tenth defendants to defraud the plaintiff; (h) Is the plaintiff entitled to exemplary damages?

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Chronicling the material events 42 The difficulty in chronicling the material events concerns the amount of detail into which the Bank's case descends: likely for the reason that to prove a case of fraud and fraudulent conspiracy against particular persons, a plaintiff has to comply with the dictates set out in the above described authorities, the allegation constituting one of the utmost seriousness. In consequence almost every conversation, meeting, e-mail and document of relevance to the application for the facility is before the Court. 43 Notwithstanding the plethora of evidence of this type, the Bank's case in essence is a simple one. The case which the Bank has made out is that it was defrauded into granting the facility by numerous outright lies as to: i. TDM's past financial records; past annual net profits at particular points in time; receivables for past years; sales income over past periods; net assets as at particular points in time; aged payables at particular points in time; anticipated sales and turnover at particular points in time; monthly gross credit sales at particular points in time; monthly debtor payments at particular points in time; levels of stock at particular points in time in its warehouse and paid for: shipments of stock in China awaiting delivery; genuineness of receivables in terms of being genuine assets at particular points in time; ii. TDM being a reliable and reputable supplier; iii. TDM's financial accounts having been independently verified by an external accountant at particular points in time; iv. details of particular contractual arrangements between TDM and Carella Electrical Distribution and the prospects of those arrangements generating additional sales for TDM; v. Mr Edge having entered into a genuine arms length contract to purchase TDM for $17,000,000; vi. TDM being a company of such substance that it could command a purchase price of $17,000,000; vii. the $7,000,000 requested to be borrowed to be paid to the vendor to complete his purchase of TDM; viii. Mr Edge having paid a deposit of $10,000,000 in connection with a genuine arms length purchase by him of TDM; ix. TDM having fulfilled all of the terms and conditions of each sale to each of the debtors identified in the attachment to the Offer Statement. 44 The causes of action outside of the fraudulent conspiracy are generally also made out on the evidence before the Court. In a number of instances these causes of action [as for example the representational causes of action] simply overlap with the fraudulent conspiracy case. However the tracing claims require more particular examination. The witnesses called by the Bank 45 The Bank adduced evidence, usually in affidavit form, sometimes complemented by evidence in chief, from a large number of witnesses. In some instances those witnesses were not required for cross-examination. The way forward 46 There were so many witnesses called by the Bank that it seems appropriate as to very many of them, to simply end the judgment with a précis of their evidence. Adopting this procedure has the benefit of enabling the reader to follow the evidence without being distracted by the chronicling of much evidence which was often unexceptional. 47 Likewise and in light of the fact that there are a reasonably large number of critical documents which were provided to the Bank and in respect of which the finding is that the documents were misleading, the convenient course is simply to include a table at the end of the reasons identifying the significant documents and the evidentiary references to those documents. 48 In outlining the events which occurred and in terms of the general structure of the whole of these reasons, it seems convenient to:

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53 Mr Budai met Mr Petts in July 2000 when he commenced his employment with Bartercard. At that time, Mr Petts was the part owner and operator of a Bartercard franchise in Melbourne. 54 Some time around 2002, Mr Petts sold his share in the Melbourne franchise and commenced employment with Bartercard as the State Sales Manager for NSW. Mr Petts worked from Bartercard's head office in North Sydney. Mr Budai worked in the same office of Bartercard in North Sydney from July 2003 to 2004. They became friends. 55 Around December 2004 Mr Petts commenced working as a director for GE, where he was involved in commercial lending from a sales perspective. It was Mr Petts' responsibility to generate new business for GE. Mr Petts made a referral partner of the Bank 56 The Bank operates a program known as the "Referral Partner Program". Pursuant to the program, the referral partner introduces clients or prospective clients to the Bank in return for part of the disclosed establishment fee charged to the Bank's customers. 57 During the period from about April 2005, Mr Petts referred potential clients to Mr Budai and so Mr Budai decided to register Mr Petts as a referral partner. Prior to the TDM deal described below, Mr Petts had referred about three clients to Mr Budai at the Bank. The TDM Deal 58 In early May 2005, Mr Budai had a phone conversation with Mr Petts. Mr Petts said that he had a deal that might be suitable for CBA. It was a factoring deal that had been presented to GE, but it could not approve it in under six weeks and the borrower was looking to settle the deal in a few weeks. The company being purchased was TDM Australia. It seemed like a good company and had good turnover, good profit and no debt. Mr Budai asked Mr Petts to send the details to him. 59 Mr Budai met Mr Petts on 12 May 2005. The purpose of the meeting was to discuss the possible provision of finance by the Bank to complete a purchase of TDM. During the course of the meeting words to the following effect were said:

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Mr Petts: "I have some documents in relation to the company including a printout of the aged debtors list that I will fax through to you." 60 On the morning of Friday 13 May 2005 Mr Budai received a facsimile transmission from Mr Petts. It contained documents purporting to be financial statements for TDM for the 2002-3, 2003-4 financial years and the nine months to 31 March 2005, together with aged receivables and aged payables as at 31 March 2005 and TDM's credit application forms [PX 482-495] [PX 757-774]. 61 In reviewing the above facsimile Mr Budai was interested in TDM's turnover, profit, equity and receivables. He was aware that the Bank's receivables finance area would provide finance to a customer to an amount up to 80 per cent of its approved receivables. He was therefore interested to see the value of TDM's receivables, whether there was a positive growth in the value of its receivables over the years, how concentrated its customer base was and the age of the debtors. Based on his review of the documents, he thought that the financial position looked good. He also noted that the receivables were spread out amongst several debtors of TDM and that TDM was being paid within a relatively short period of time - there were no aged receivables outstanding more than 90 days. 62 It was not Mr Budai's role as a Relationship Executive to analyse TDM's financial statements to determine the company's credit worthiness or whether the Bank would grant final approval. The Bank had in place a two-stage approval process in relation to applications for a receivables finance facility. The first stage involved an assessment of the credit worthiness of the deal. The second stage involved a field visit by a Bank officer to verify the details of the level of debtors presented to the Bank as well as a satisfactory review by the receivables finance section with regard to the documentation of the borrower. As the reasons which follow make clear, Mr Harrison [a risk executive in the Corporate and Business Services Division of the Bank] reviewed and gave the Stage 1 approval of the TDM credit submission prepared by Mr Budai. Among other documents, he relied upon the financial statements for the year ended 30 June 2004 and the financial statements for the 9 months ended 31 March 2005 for this purpose [Exhibit MH2 pp29-58]. Mr Placek [a risk executive working in the Franchising and Factoring Division of the Bank] was the person responsible for approving Stage 2 of the receivables finance application. 63 On Friday 13 May 2005 Mr Budai discussed the contents of the above-described materials with Ms Sue Kenny, who held the position of Risk Executive in the Bank and to whom Mr Budai was assigned. 64 Ms Kenny's role in the Bank was that of analysing potential transactions with regard to credit risk to the Bank. 13 May 2005 - Mr Budai speaks to Mr Edge 65 On or about 13 May 2005, Mr Budai had a telephone conversation with Mr Edge in words to the following effect: Mr Budai: "I'm Oscar Budai from CBA. I'll be organising TDM's application for finance. What's the best way to contact you if I need additional information?"

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Mr M Saleh: "I will be there." 70 Mr Budai then forwarded the attachments that he had received from Mr Morris by email to Mohamad Saleh on Friday 13 May 2005 [PX 901 - 903]. 71 On 17 May 2005, and in accordance with Mr Morris' request that he be provided with further information as available, Mr Budai sent an email to Mohamad Saleh asking if he could provide the Bank with the information referred to in his email to Mohamad Saleh of 13 May 2006 [PX 931]. 72 Also on 17 May 2005, Mr Budai received a facsimile from Mr Petts attaching the information which he had requested in the email of 13 May 2005 [PX 938-954]. The information provided in the facsimile was for the purposes of work being done by the receivables finance area of the Bank (Mr Morris and others) and not for the credit submission that Mr Budai was preparing with Ms Kenny. Accordingly, Mr Budai provided a copy of the facsimile to Mr Morris as soon as it was received so as to expedite things as much as possible. 73 Late in the afternoon of 17 May 2005, Mr Budai sent an email to Mr Harrison with an update on the TDM deal. Mr Harrison was working with Ms Kenny on the review and approval of the TDM deal because the amount to be financed exceeded Ms Kenny's authorisation level [PX 955]. Meeting of Wednesday 18 May 2005 at TDM's premises 74 On Wednesday 18 May 2005 Mr Budai attended TDM's premises at Wollongong Road, Arncliffe, with Mr Morris. They met Mr Petts and were introduced to two other gentlemen: Mohamad Saleh who was identified to Mr Budai by Mr Petts as the then-current owner of TDM and Mr Edge who was identified as the prospective purchaser of TDM. 75 The purpose of the meeting was to meet Mr Edge and Mohamad Saleh personally, to start developing a relationship with TDM and to explain the process involved in the application and the receivables finance facility. The focus of the meeting was not on auditing figures. That work was to be carried out later during the Stage 2 field visit referred to below. 76 TDM's premises were in an industrial complex. The entry into TDM's premises was via a roller shutter door or a side door. Inside the premises, three of the four walls of the warehouse had shelving and there were two levels of pallets on the shelves. In the centre of the warehouse, there were approximately 24 pallets on the floor. The pallets were stacked with sealed boxes. The warehouse was neat and tidy. 77 After entering the warehouse, Mr Morris and Mr Budai were led upstairs to an office where the meeting took place. The office contained a desk, a computer, a table, a buffet-type cupboard with drawers and about five chairs. There was a folder of documents on the buffet. During the course of the meeting, Mr Morris and Mr Budai were shown a folder of documents as Mr Edge and Mohamad Saleh were talking about TDM's products. The folder contained what was purported to be a folder of original patents that TDM owned. 78 Mr Budai gave evidence that Mr Edge was well-presented, eloquent and appeared knowledgeable about TDM's business and products. During the meeting, Mr Edge told Mr Morris and Mr Budai a little about his business background, saying words to the following effect: "I am also a property developer. I develop residential and commercial properties. I get my funding through ANZ for that." 79 Mr Budai gave evidence that that Mr Edge and Mohamad Saleh behaved like a "tag team". At certain times during the meeting, when Mr Budai directed a question at Mr Edge for his response, he would often refer it to Mohamad Saleh to answer and when Mr Budai directed a question at Mr Mohamad Saleh he would refer it to Mr Edge. For example, during the meeting, Mr Budai asked Mohamad Saleh a question about a product that he had designed thinking that he would be best able to answer. The question was answered by Mr Edge. Similarly, Mr Budai asked Mr Edge a question about whether TDM was prepared to offer the Bank any security and this was answered by Mohamad Saleh. That question and answer was in words to the following effect:

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Mr Newman cross-examined Mr Morris on why he did not query Mohamad and/or Mr Edge when one of them told him that TDM only employed two people - namely Mohammad and one other that Mr Morris could not identify [T274:35, Mr Morris's 26 June 2006 affidavit at [18]]. Mr Morris gave evidence that he accepted the explanation from either Mr Edge or Mohamad that part-time or casual people were employed when TDM required assistance with unpacking shipments and delivery of orders.] 86 After the meeting Mr Budai returned to the office. During the course of the meeting he had made some hand written notes of details which were supplied to him. Mr Budai inserted those details into the draft credit application, which he and Ms Kenny were preparing for Mr Harrison. He also created a call report which is a document prepared to show his superiors the contact he had with customers. It does not purport to be a detailed explanation of everything that was discussed at the meeting [PX 972]. Mr Budai destroyed his handwritten notes after entering the detail of them into the draft credit application and the call report. To the best of his recollection, the information recorded in paragraphs 2 to 4 of the report was provided during the meeting by Mr Edge and the information recorded in paragraph 5 was provided by Mohamad Saleh. 87 On 18 May 2005 Mr Budai spoke to Ms Kenny after returning from TDM's premises. The purpose of the conversation was to update her regarding the meeting. The discussion also revolved around potential technical difficulties with providing the entire sum of $7,000,000 sought by TDM on the day of settlement. Under the Bank's lending criteria for receivables finance facilities, the maximum amount able to be lent is 80% of the value of the customer's debtors (which are the security). In TDM's case, this 80% figure was in the order of $6,500,000. Ms Kenny and Mr Budai agreed that any shortfall could be advanced to TDM by way of a different product issued by the Bank - a Better Business Loan (BBL) - which would be repayable by TDM within 12 months. 88 Later on 18 May 2005 Mr Budai had a conversation with Mr Edge in words to the effect of:

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Mr Edge: "I have been in Queensland and Victoria repping TDM's products." 99 Mr Budai then conducted a formal identification procedure as required by the Financial Transactions Reports Act 1992 (NSW). This is carried out by filling out a Bank form known as a W4. It involves witnessing the prospective customer sign the form and comparing that signature against forms of identification provided by the customer. The forms of identification must add up to 100 points as set out in a table on the W4. 100 In support of his identification, Mr Edge provided Mr Budai with the originals of his Australian passport number and Heavy Vehicle Drivers Licence. Both of those documents contained photographs. Mr Budai identified the man in the photographs as Mr Edge. He took photocopies at TDM's premises of Mr Edge's passport and driver's licence which he retained. Mr Edge and Mr Budai were sitting at a small round table upstairs at the time that Mr Edge signed the W4 document. He was approximately one metre away from Mr Budai when he signed the document three times. 101 When Mr Edge signed the W4, Mr Budai noticed that the signatures he placed on the W4 were markedly different from those appearing on the passport and driver's licence, both of which were similar to one another. When asked why this was so, Mr Edge explained to Mr Budai that he was in the middle of a divorce and had changed his signature when he left his wife. Mr Budai accepted this explanation and did not question his signature on any subsequent occasion when he witnessed him sign documents. 102 Mr Newman's cross-examination of Mr Budai went some way to establishing the Bank's process of filling out the W4 document, and in particular, questioned Mr Budai about the W4 document signed by Mr Edge [PX 1000]. Somewhat curiously Mr Budai did not sign the W4 document where the words "[s]ignature of person verifying identification" and "date" appear. Mr Budai gave evidence that it was his practice not to sign his own name immediately after the client [relevantly Mr Edge] had done so, but rather it was normal procedure for him to return to the office with the W4 document and copies of the identification documents provided, and to then instruct his assistant, Mr Peter Allcock, to initial each place where the client [Mr Edge] had signed. Mr Allcock's initialling process was said to be for the purpose of verifying that the relevant sections had been completed, and not for the purpose of verifying that the person initialling [Mr Allcock] had witnessed the client's signatures [T425:30]. Mr Budai acknowledged that he should have signed the space under "[s]ignature of person verifying identification" and dated it [PX 1005] but had omitted to do so [T427:25]. 103 Mr Budai gave evidence [during cross-examination by Mr Newman] that upon filling out the W4 form, Mr Edge had told Mr Budai of his new address at Lot 2 Martins Ridge Road, Conjola, and that the 252 East Kurrajong Road, East Kurrajong address entered by Mr Budai prior to the actual meeting was no longer correct.

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Mr Edge: "Here are some of our products. You can see the quality is of a very high standard. We do rigorous testing so we can offer a better guarantee than our competitors. …We are taking market share off competitors in Adelaide." 125 At some point during the meeting, Mr Petts arrived but to the best of Mr Budai's recollection he was not introduced to Mr Watson or Mr Saia and did not take part in the meeting. Messrs Saia and Watson then left the meeting. Mr Budai remained behind so as to obtain Mr Edge's signature on the guarantee and equitable mortgage. [I interpolate to note that Mr Watson - whose other evidence is also set out in brief in the reasons below - gave his opinion that Mr Edge's demeanour at this meeting did not seem out of the ordinary in that he appeared informed and did not seem to be nervous or on edge.] 126 After Messrs Saia and Watson departed, Mr Budai gave the guarantee and equitable mortgage to Mr Edge to review and sign. Mr Edge appeared to read the guarantee and the equitable mortgage and then signed the documents in the presence of Mohamad Saleh, Mr Petts, and Mr Budai. Mr Budai witnessed Mr Edge's signature on the guarantee and equitable mortgage. At Mr Budai's request Mr Edge also supplied him with a signed authority and direction [PX 1195-1211, 1212-1213, 1214-1225]. 1 June 2005 127 On 1 June 2005, Mr Budai prepared a note of the meeting attended by Messrs Watson, Saia and himself on 31 May 2005. The note was in the form of a call report. It did not comprehensively set out everything that was discussed at the meeting but was more focussed on future opportunities including foreign exchange services and the use of business consultants for TDM [PX 1322]. 128 On or about 1 June 2005 Mr Budai received what appeared to be 12 months of bank statements for TDM by facsimile from TDM, [who in turn had originally received them from Mascot Taxation] for the period May 2004 to May 2005 [PX 462, 466, 520, 554, 576, 580, 586, 650, 662, 690, 728, 791]. 129 Also on 1 June 2005, Mr Budai sent a facsimile to Ms Smith attaching copies of the bank statements for TDM [PX 1323-1335]. 130 Mr Allingham [a compliance officer employed by St George Bank Limited] provided affidavit evidence that the copies of St George bank statements said to be the TDM statements for the period May 2004 to May 2005 were not in fact genuine bank statements. A search of St George Bank's records in relation to all accounts held in the name of TDM show that only one bank account exists. Copies of all bank statements issued by St George in relation to this TDM account were exhibits to Mr Allingham's 3 May 2007 affidavit: Exhibit HAM pp14-77. Mr Allingham confirmed that when these official bank statements for the period May 2004 to May 2005 were compared to those provided to CBA by TDM on 25 May 2005 [Ex OB22 pp118-120] and 1 June 2005 respectively [Ex OB 32 pp216-227], those that CBA received did not reflect the true transactional history of the account. [For example, the true balance of the account never in fact exceeded $100,000 and show bank fees charged to the account. On the other hand the queried bank statements provided to CBA show closing and opening balances of approximately $1 million and show no bank fee transactions.] It was therefore concluded by Mr Allingham that the purported TDM bank statements provided to CBA in support of the application were fabricated bank statements. 131 Mr Parbery [a partner of PPB Chartered Accountants, appointed by the Bank as receiver and manager of TDM] gave evidence of how he came to realise that the TDM bank statements supplied to the Bank were not genuine bank statements. During cross-examination by Mr Qureshi, he provided a further description of the process [referred to in his 24 May 2007 affidavit] in which he discovered there was a discrepancy between the TDM bank statements that were provided to the Bank and the TDM bank statements from St George [later found out to be the genuine statements] [T 857:35]. 2 June 2005 132 Ms Smith was assigned to conduct a field visit of the TDM premises on 2 June 2005, where she met with Mohamad Saleh and Mr Petts. Among her key findings on the field visit and resulting Field Report [that she submitted to Mr Placek] was that she was unable to explain the differences for the October and July 2004 figures ('the July and October 2004 discrepancies') and also that there was a difference of $1.4 million in the reconciliation of the deposits (payments from debtors) for the month of April 2005. 133 Mr Placek reviewed Ms Smith's Field Report and other documents provided to CBA in support of the application. 134 Under cross-examination by Mr Qureshi, Mr Placek was asked why he did not contact Mr Qureshi, as TDM's external accountant, in relation to the discovery of the discrepancies in figures provided to the Bank. Mr Placek stated that his role was not to reinvestigate the proposal with the original sources but to act on the information supplied to him. If he had any problems, he would refer it to the people who passed the information onto him and ask them to provide the further information since he did not deal with clients directly [T511:42]. Mr Placek did not find it unusual that no one in his section contacted Mr Qureshi because in his experience discrepancies did occur from time to time. It was Mr Placek's evidence that this was because the information contained in the trading analysis could sometimes be hard to obtain, and difficulties could generally be worked out by the Bank from the company's records [T512:51]. 135 On 2 June 2005, Mr Budai received a call from Mr Placek. They had a conversation in words to the following effect:

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179 Mr Erwin is the State Manager of the NSW Business Development division at Bibby Financial Services Australia Pty Limited. Mr Erwin had dealings between March and May 2005 with Mr Rami Darwich of Qualiya Group Pty Limited in relation to an application for debtor finance relating to TDM. Mr Erwin was provided documents by Mr Darwich relating to the performance of TDM. 180 Mr Erwin attended the 18 May 2005 meeting at TDM where he met Messrs Edge, Mohamad Saleh, Darwich and an associate of Mr Darwich, Safaa Tarocco. At this meeting, Mr Erwin provided details of Bibby's receivables finance product and described the type of information required in support of the application. After this meeting, no further information was provided to Mr Erwin in support of the application and it did not proceed. 181 During his evidence in chief, Mr Erwin stated that at no time during his dealings with Messrs Darwich, Edge or Mohamad Saleh did they mention to him that Mr Edge required $7 million to complete the TDM acquisition. Early to late May 2005 Mr Oberbillig 182 Mr Oberbillig is a real estate salesperson employed by Quaid Real Estate Pty Ltd and was contacted by telephone in early to mid May 2005 by a person identifying himself as Will Barlow and expressing an interest in a property on Captain Cook Highway in Queensland. He met "Mr Barlow" in person in or about early to mid May 2005 when he came to inspect the property with a female companion, Ms Joyce Wakefield. Ms Wakefield is or was in a relationship with Mr Edge. [She was also involved as a party in Federal Court proceedings with Mr Edge and had dealings with Biady & Associates (Mr Edge's solicitors).] Under cross-examination by Mr Newman, [it not being in dispute that Mr Edge was the man who introduced himself under the alias Will Barlow (T461:21)], Mr Oberbillig gave evidence that Mr Edge had introduced himself to him as "Will Barlow" and then introduced his female companion as "Joy Barlow". On three occasions during May 2005 "Will and Joy Barlow" came to inspect the property and ultimately made an offer to purchase the relevant property. The purchase price was agreed to be in the sum of $2.3 million. A deposit of $230,000 was received by Quaid Real Estate on or about 9 June 2005 [part of the proceeds of the $7 million advanced by the Bank on 3 June 2005], but the sale was never settled. All documents relating to the purchase [for example the 'Selling Agent's Disclosure to Buyer' form, the Contract for Sale of the property and all correspondence] were signed by "Joy Barlow" on 30 May 2005 or addressed to "Joy Barlow" only. 183 Mr Newman's cross-examination merely sought to confirm that nothing had been signed by "Mr Barlow" in the documents relating to the proposed purchase. In this way, Mr Newman sought to establish that "Mr Barlow" did not claim at any time to be buying the property. During re-examination by Mr Henskens, Mr Oberbillig gave evidence that prior to the signing of the contract for sale [by "Joy Barlow"], "Mr Barlow" had given the impression from the beginning that he himself was the potential buyer. This impression was said to be created in Mr Oberbillig's mind because "Mr Barlow" had been 'doing most of the talking' [T462:10].

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xxii. on 31 May 2005 Mr Edge travelled from Queensland to Sydney where he met at the offices of TDM with Messrs Hassanien Saleh, Mohamad Saleh, Andrew Watson, Saia - the latter persons being from the Bank. He outlined his plans to Mr Watson in terms of expanding into low voltage lighting and security systems and video surveillance. Mohamad Saleh discussed the business of TDM. Various matters concerning things such as the price structure of TDM products were discussed. After the meeting Mr Budai accompanied Messrs. Watson and Saia back to their car and returned advising Mr Edge that Mr Watson liked Mr Edge and had told Mr Budai to look after him with anything he needed. Mr Edge was delighted to hear what Mr Budai said and felt very confident that the Bank was acting in his best interests and would check thoroughly the information provided to them by Mohamad Saleh. At the meeting Mr Budai had said that he would go back to his Parramatta office to prepare further papers for Mr Edge to sign. Those papers required to be signed that very day or otherwise the deal would have to be put back a couple of weeks because one of the Bank's officer was going on leave. Mr Edge believed that Mr Budai was referring to Mr Placek. During lunch with Mohamad Saleh, the latter received a telephone call and then informed Mr Edge that Mr Petts had called to say that he had organised with Mr Budai to rush the bank forms through and said that Mr Edge would have to go over to Parramatta that afternoon to sign them. Mr Edge said that it was too late at that time of the afternoon as he was flying off to Queensland that night. Mohamad Saleh said that if he did not go over on that particular day the deal would be put back as one of their friends in the Bank was going overseas. Mohamad Saleh said that he would ring Mr Petts to see whether he could assist. Mr Petts was apparently contacted and arranged for Mr Budai to meet Mr Edge at North Ryde. Mohamad Saleh drove Mr Edge to North Ryde and Mr Edge signed the papers which Mr Budai had brought along in the presence of Mr Budai at McDonald's, North Ryde. At that time he signed the equitable mortgage, the deed of guarantee and the receivables facility agreement. [Mr Edge gave evidence that in fact the receivables facility agreement recorded the date 1 June 2005 which date he had not then recorded. He had no knowledge as to who had completed that date on the document.];

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xxxxi. Mr Edge left Mr Budai's office around 12.30pm. Just as he left, he received a call from Mr Petts who said to Mr Edge words to the effect "It looks like you've been conned also". Mr Petts confirmed he had intentions of going into business with Mohamad after the settlement and that he had known and worked with Mohamad for a long time. Mr Petts told Mr Edge that Mohamad had told him on the phone there had been a terrible mistake and that he would be returning on Friday week "to work everything out and to pay everybody off". Mr Petts said he believed Mohamad and that he would "make good on this". Mr Edge did not believe Mr Petts given that he was told by Mr Budai that the Saleh brothers were with the family in Beirut and were drawing out money from different banks. Mr Edge told Mr Petts that the situation looked like "you and the Bank [were] in on this scam". Assessing the reliability of the evidence given by Mr Edge 189 Mr Edge's evidence cannot be accepted as reliable save where corroborated by documentary evidence or by evidence given by witnesses whose credit was reliable. In truth Mr Edge would have to be one of the most unreliable witnesses who has ever given evidence before me. The close examination of him in relation to his history of providing fictitious addresses made quite clear that he has no credit whatever. His general habit of endeavouring to second-guess the cross-examiner and to give non-responsive answers [in the face of the direction to be responsive] was very noticeable. Under cross-examination his evidence was that his mind was a complete blank as to the income earning activities which he engaged in during the 2003 tax year and likewise in the 2004 and 2005 tax years. To the extent that the Court is entitled to have regard to the demeanour of a witness in terms of determining credit, it has to be said that his persistent habit in crisply and very audibly calling out the single word "denied" in answer to difficult propositions put to him and his prevarication with the cross-examiner were, it seemed to me, further clear indicators that he was about furthering his case at every possible opportunity. Even questions which only began towards a line of cross-examination which may have been somewhat sensitive were greeted with the word "denied": [there are 13 examples of his having used the one word answer "denied" to be found at transcript pp 1464-1465 alone]. Mr Edge is a person who is clearly shown by the entirety of the evidence to have been knee-deep in the fraudulent conspiracy practised on the Bank. The handwriting evidence given by Mr Westwood OAM 190 Before proceeding further it is convenient to refer to the handwriting evidence and in particular to that given by Mr Westwood. Mr Westwood is a forensic handwriting and questioned document examiner and is the managing director and principal document examiner of Forensic Document Services Pty Limited. Mr Westwood gave evidence of his analysis of the signatures of Messrs Edge, Mohamad Saleh, Hassanien Saleh and Qureshi. 191 Mr Westwood has extraordinary experience and expertise in relation to forensic handwriting evidence and associated forensic activities requiring specialised knowledge. To the extent that his evidence was sought to be contradicted by that of Mr Dale, also a forensic expert, the evidence of Mr Westwood is accepted. Mr Dale was a singularly unimpressive witness. Not only did he prevaricate with the cross-examiner and have considerable difficulty in even being able to be certain as to whether or not he had the New South Wales Experts Code of Conduct before him in preparing his report, but he also sought to express opinions outside of his acknowledged field of expertise. He was even content to accept specific instructions from the solicitors briefing him that he not pay regard to certain segments of documents furnished to him for examination. 192 The crucial issues to which the evidence given by Mr Westwood went, concerned:

[294]

iv. 252 East Kurrajong Road, East Kurrajong. [see T 1406:36 to 1414:21; T 1416:37 to T 1421:13; T 1263:4 to 1263:19.] 199 Mr Edge provided the address Lot 2, Martins Ridge Road, Conjola, New South Wales to representatives of the Bank on 28 June 2005 (Mr Barry Watson's 2 August 2005 affidavit at [5]). 200 The affidavit of Ms Neufeld [a legal assistant employed by the Bank's solicitors] sworn on 10 August 2005 discloses that there is no such address. When Mr Johnstone gave evidence, he gave his address as 25 Martins Ridge Road. 201 The address Mr Edge gives on his tax returns and on the ASIC records of TDM is 252 East Kurrajong Road [see PX 470-476; annex 'B' p 9 to Mr Barry Watson's 2 August 2005 affidavit]. 202 The affidavit of Mr McAlpine makes clear that no address of 252 East Kurrajong Road exists. 203 The account provided by Mr Edge to explain the change in street numbers at East Kurrajong Road following road changes in the 1960s was specious. Even if it were true, the account cannot explain Mr Edge's persistent use of that address in the years following that change (see his driver's licences which are Exhibits D10B, D10C and Ex P61 which show the use of that fictitious address by Mr Edge well after 2000). 204 Ultimately the evidence given by Mr Rankin [the very witness called by Mr Edge on virtually no notice at the end of his case] only serves to explode the falsity of the evidence given by Mr Edge on the address matter. This is because whilst there was a tiny kernel of truth in the evidence given by Mr Edge [that there had been a change effected to the former address 252 East Kurrajong Road] the burden of the evidence given by Mr Edge had been that the change took place in 2000 and that it had not been effected until 2002. Further he gave evidence that 252 East Kurrajong Road became part of Bull Ridge Road [T1263:10]. In actual fact, a change was effected in 1989 whereby 252 East Kurrajong Road became 1444 East Kurrajong Road. That the change took place in 1989 becomes all-important. The evidence given by Mr Johnstone 205 Mr Peter Johnstone gave evidence in 2 affidavits. As to the first dated 17 August 2005:

[298]

iv. He then deposes that present at the time, were Mohamad Saleh, Mr Edge, Hassanien Saleh as well as himself. 206 The second affidavit made on 6 October 2006 deposes that Mr Johnstone had known Mr Edge for many years and that they are friends. He further deposes that in late 2004 Mr Edge told him of an electrical business that he was considering buying. He deposes that he later came to know the business to be TDM. He deposes that he offered Mr Edge some advice and bought some product from TDM. 207 He then deposes that in April 2005 Mr Edge asked him to accompany him as a witness to his handing over to Hassanien Saleh, the sum of the $1.2 million as the deposit for the purchase of the business. On his evidence in this affidavit he and Mr Edge went to TDM's premises where they met Hassanien Saleh and Mohamad Saleh. There was some discussion about the conditions of sale, the installation of new computers and extra pallet racking to be supplied by Hassanien Saleh on settlement. He also recalled some discussion about vehicles that came with the business and stock. On his evidence Mr Edge said to Hassanien Saleh that he had the deposit money and needed a receipt. His evidence was that prior to going to the premises, Mr Edge and he had counted the money which added up to $1.2 million. His evidence was that it was in a black bag that Mr Edge handed over to Hassanien Saleh. His evidence was that Mohamad Saleh then went to a computer and typed out a document which receipted the handover of the moneys and that he had read it. His evidence was that the document looked to be acceptable and that then Mr Edge and Hassanien Saleh signed the document and that he witnessed the document. He annexed a copy of the document to the second affidavit and gave evidence in that affidavit that a contract document was also signed by the parties. 208 There were a number of difficulties with his evidence and with his recollection. During the course of his giving evidence in chief in the witness box he was shown a number of documents to be found in Exhibit P68 behind tab 17, namely the contract for the sale of business, the document entitled Terms and Conditions for the Contract of Sale, the list of electrical componentry, and the warranties and conditions document. In each case his evidence was that he had witnessed the signing of the documents, wherever his signature appeared. 209 Under cross-examination it eventuated that prior to swearing his first affidavit he had had a conversation with Mr Edge's then solicitor over the telephone and had never seen Mr Edge's affidavit. In that circumstance it was clear that he had not seen the document referred to in paragraph 3 of his first affidavit as "Annexure A to Mr Edge's Affidavit". The circumstance does not suggest that he was careful in what he did. Under cross-examination his evidence was that he had spoken to the solicitor at length but had only been sent a collapsed version of what he had told the solicitor and had simply signed and returned it. 210 He had further difficulty in that there had been no mention in the second affidavit about any document being signed other than Annexure A to that affidavit. Under cross-examination his evidence was that he was certain that he signed the particular documents to which he was taken in chief, on 22 April 2005. When he was shown that there were two versions of the signature page of the Warranties and Conditions document [the first being annexure C to Mr Johnstone's first affidavit (paginated during the cross-examination for convenience as page 3 and being dated 31st May 2005) and the second being that found behind tab 17 in Exhibit P68 which is dated 22 April 2005] he became confused as to how it could possibly be that what he said was his signature appeared on both documents. He had no explanation for this. He accepted [transcript 1574] that they were not the same document.

[301]

[I specifically then asked Mr Johnstone whether he saw Mr Edge hand over an amount of cash which looked like $1.2 million or a bag containing cash and he said: "No, certainly not. I don't even know where Bill would get that sort of money from. I can promise you I didn't ever see any cash change hands, certainly no bags of cash either"] 212 This circumstance mandates a holding that the evidence given by Mr Johnstone cannot be regarded as reliable. With the passage of time his recollections are so vague as not to be able to be relied upon. Clearly Mr Atkins' file note is reliable. Mr Johnstone is an elderly gentleman as it appeared to me. The manner in which his instructions for his affidavits had been taken does not fill the court with any special confidence as to the evidence given in the affidavits. Even if somehow the Court was able to accept as reliable, his evidence in relation to having seen the money counted and having been present when some signatures were appended to some documents, it is always possible that he was simply himself innocently duped by a carefully played out charade of some type. In all of the circumstances the evidence given by Mr Johnstone is simply so unreliable that it provides very little assistance to the Court in determining what actually happened. His friendship with Mr Edge appears to have been likely the reason why he was prepared to make affidavits in the above-described fashion. At the very least it is absolutely plain that if Mr Johnstone did attend his signature as a witness to the above described documents, they have since been tampered with. 213 Further Mr Johnstone gave extensive evidence of a very significant and unfortunate medical condition from which he had suffered at material times such that from time to time his memory would be severely affected. It is not necessary to speculate as to whether the problems with his evidence and his recollection essentially stemmed from these difficulties. It may even be that during the times when he was in this state he was susceptible to being manipulated into thinking that events had occurred which had not in fact occurred. The short position is that his evidence on the significant matters which he was called to prove, cannot be accepted as reliable. Mr Edge's attempt to conceal the receipt of the proceeds of the fraud

[307]

220 Further, the affidavit of Mr Oberbillig attaches the contract for sale document which identifies the purchaser as Joy Barlow and gives the address as PO Box 247 Kurrajong 2758. Annexure "J" to Mr Oberbillig's affidavit is a letter to Joy Barlow at PO Box 247 Kurrajong dated 2 June 2005 enclosing a copy of the contract. 221 The disguising of the receipt of funds through conveyancing transactions in a false name and through corporate entities, makes clear that Mr Edge intended to conceal his participation in the fraud and his receipt of its ill gotten fruits. The evidence given by Mr Qureshi 222 As has occurred with the approach to Mr Edge's case, I have approached the question of the endeavour to ascertain whether or not Mr Qureshi was a knowing participant in the fraudulent conspiracy, endeavouring wherever possible to give him the benefit of the doubt and closely appreciative of the heavy burden of proof which requires to be discharged by the Bank. One parameter of the exercise which must be taken as a given is that on my own assessment, Mr Qureshi is a very intelligent and well-qualified person [indeed this is conceded by Mr Qureshi]. He had obtained a Masters of Commerce degree from the University of New South Wales and a Masters of Applied Finance from Macquarie University. Of course when there is absolutely no doubt but that the Bank has been the subject of a carefully planned fraud in which Mohamad and Hassanien Saleh appear to have been the principal wrongdoers, it must be recognised that even a person as intelligent as Mr Qureshi may also have been duped. It has to be said that he certainly has engaged in highly suspicious conduct since the event, and has not made the task of the Court any easier by so doing. But in essence the evidence mandates a finding of his knowing participation in the fraud. 223 Mr Qureshi gave evidence in affidavit form and was cross-examined. 224 Without being exhaustive the substance of his evidence in affidavit form was as follows:

[412]

i. An examination of the level of contact between those alleged to have been the fraudulent conspirators during May and June 2005 and continuing, to a lesser degree, into July 2005 discloses telephone records exhibiting a level of telephone contact that cannot be innocently explained. With regard to the several phone calls Mr Qureshi made to Mr Edge in May, June and July 2005, Mr Qureshi stated that [according to the phone records produced by the plaintiff Ex P33] approximately three quarters of the calls went to Mr Edge's message bank. However, as the plaintiff submits, the evidence of the phone records which identify which calls go through to a message bank and which are actually picked up by the receiver [read with the aid of the table starting at p1 of Exhibit P70 which identifies those calls which went through to a message bank], shows that there were a number of calls [of varying duration] made which were inconsistent with Mr Qureshi's submission. Of note, there were several lengthy phone calls of approximately 3-5 minutes duration between 8 June 2005 and the remainder of that month. Mr Qureshi in final address maintained that one of these lengthy phone calls made to Mr Edge on 8 June 2005 was for the purpose of congratulating him on the purchase of TDM and to offer his accounting services for TDM [MFI D3]. With respect to the calls made by Mr Qureshi to Mohamad Saleh, Mr Qureshi stated [with reference to the phone records] that the vast majority of those calls went to Mohamad Saleh's message bank, with only one or two phone calls getting through to Mohamad Saleh in person. Leaving aside the calls that were not answered [but went to a message bank] the phone records reveal several lengthy calls made by Mr Qureshi and Mohamad Saleh on 8 and 9 June 2005. The plaintiff submitted that the frequency and length of the phone calls during this time was inconsistent with Mr Qureshi's evidence that on or about 7 June 2005 he felt that he had offended the Salehs, received payment for his services and that the Salehs had collected all their TDM records from Mr Qureshi. Further, the plaintiff submitted that it was plainly inconsistent with the account provided on oath by Mr Qureshi that he spoke to Mr Edge on only two or three occasions in May and June 2005 [T 1044:49 to 1045:1] or that he had no contact with the Salehs after 7 June 2005 [T 1036:17 to 1036:20]. Mr Qureshi in final address maintained that the volume of phone activity to Mohamad Saleh after the Salehs were said to have picked up their records for TDM, were for the purpose of maintaining or improving his relationship with a client he was unhappy to lose. This explanation is rejected. The timing and frequency of calls between these individuals is consistent with a collaborative effort by those persons to mislead and deceive the Bank. [Indeed and even though this, by itself, could not affect the conclusion with respect to Mr Qureshi, if one may return to the evidence given by Mr Edge, it may be seen that he was so evasive in his evidence as to the frequency of communications that he was prepared to "pluck" a number out of thin air after giving a overly broad estimate of 7 to 35 communications (T 1404:39 to 1404:54).]

[420]

vii. Mr Qureshi also has admitted on the pleadings to providing a budget analysis for TDM. It is difficult to accept that a budget could be prepared without the need to get into the records of the company, getting a feel for the customers and understanding the business. Returning to the letter of 16 May 2005 241 There is significance in the letter of 16 May 2005 [PX 946] which Mr Qureshi clearly prepared and in which he confirmed that TDM's quarterly BAS forms and payments were handled by his office and that TDM's GST commitments were up to date. In fact, TDM lodged monthly BAS forms rather than quarterly forms but had not lodged any BAS forms after March 2004 (cf Mr Parbery's 24 May 2007 affidavit at [24]). Mr Qureshi's evidence that he prepared cheques in respect of the GST payments made payable to the Australian Taxation Office and provided those cheques to the directors of TDM [T 1239:15 to 1239:33] is inconsistent with the cheque reconciliation prepared by Mr Parbery which discloses no evidence of cheque payments to the ATO and the fact that no BAS forms had been lodged after March 2004. Hence there arises a high question mark in respect of the evidence given by Mr Qureshi of preparation of the cheques. 242 Ms Smith had given evidence that she had checked what now turns out to have been the fraudulent bank statements against the BAS forms. In advance of her spot-checking she checked that the bank statements showed payment of the BAS amounts and she crossed checked the BAS forms against the bank statements. She had seen a problem which she took up with Mohamad Saleh. It is true that only cheques which were in fact presented were in evidence and that from time to time there were a limited number of gaps. However upon close examination of all of the cheques of TDM which were in fact in evidence, it may be seen that none are for the payment of BAS. 243 Plainly enough properly read, the above described letter of 16 May 2005 represented that Mr Qureshi's firm handled TDM's quarterly BAS forms and GST payments. Indeed the letter stated that the "completed form and cheques for the net GST were forwarded to the Australian Taxation Office". I do not see that any of these anomalies were properly clarified by any of the evidence given by Mr Qureshi. The letter which was written clearly suggested his office's involvement in the supervision and payment of GST by TDM. 244 Ultimately applying the s 140(2) Evidence Act 1995 dicta set out early in these reasons, the detailed cross-examination of Mr Qureshi, assessed in the light of all of the evidence from the many witnesses called by the Bank including the documentary evidence, as well as the evidence of Mr Wills and Mr Westwood, has satisfied the Court that Mr Qureshi was a knowing participant in the fraudulent conspiracy. The question is one of fact. The decision is certainly aided by the materials extracted by Mr Wills from the deep memory of Mr Qureshi's computer. The comparison of documents referred to in the reasons are of considerable assistance to the termination of the question. The notion that Mr Qureshi was himself no more than a victim of a conspiracy engaged in by Mohamad Saleh, Hassanien Saleh and Mr Edge is inconsistent with the evidence now before the court viewed as a whole. 245 Indeed the evidence which Mr Qureshi gave in terms of the circumstances in which he initially permitted Mohamad Saleh to have the use of an office within his firm and in respect of the whole of his relationship with Mohamad Saleh is very strongly suggestive that he was not frank with the Court in truly explaining the parameters of that relationship. Nor is it possible to speculate as to what if any other discussions or arrangements may have been entered into between himself and Mohamad Saleh with respect to the proceeds of the frauds committed on the Bank. 246 From beginning to end Mr Qureshi has sought to extricate himself from the frauds by contending that Mohamad Saleh in particular was responsible for fabricated documents and for achieving total access to Mr Qureshi's computer without Mr Qureshi's knowledge or consent. This contention is rejected. There are far too many anomalies in Mr Qureshi's evidence to permit the Court to uphold this "I know nothing" claim. Indeed almost every indicator in Mr Qureshi's behaviour relating to this litigation speaks volumes in terms of his endeavours to 'cover up' the realities of what occurred. To name but one matter, why would he have fabricated his own memoranda of fees, had he been innocent of wrong doing. 247 In Cross on Evidence (7 ed), Heydon sets out (at [3275]) types of conduct that are indicative of a consciousness of guilt, almost all of which apply to the conduct of Mr Qureshi:

[422]

The broad approach to cross-examination 248 Before turning to the evidence given by the many other witnesses called by the Bank it seems convenient [without being exhaustive] to very shortly endeavour to thumbnail sketch some of the principal topics with which Mr Newman and Mr Qureshi treated in the cross examination of witnesses called by the Bank. 249 Mr Newman often sought to test the veracity of evidence given by the many witnesses of the Bank: as for example asking why they had carried out a particular function or failed to carry out some other function or failed to carry out some other enquiry. Sometimes for example he would question whether or not the Bank offered a disclosed receivables facility. He would test whether or not a particular witness was present at a particular meeting. He would test how a particular witness came to be in a position to recall what was said at a meeting. He had a special focus upon the facsimile machine which had been at TDM's premises when the receiver was appointed and which had been donated to charity along with other items of seemingly such little value as made it appropriate for the receiver to take similar action. Mr Newman asked a number of witnesses many questions about facsimile machines and their knowledge thereof, seemingly on a quest to establish if he could, that there was something untoward about the way in which the TDM facsimile machine had been given away. He also cross-examined wherever he could in relation to the facsimiles which were sent from the Bank to the Emerald Post Office late in the afternoon of 3 June 2005 and which were later sent from that Post Office to the Bank. 250 Whilst from time to time as may be expected a Bank officer being closely questioned on his or her recollection of the documents which came into existence at the time may have been mistaken or may have mis-recalled a particular section of a particular document or a particular date, by and large Mr Newman's cross-examination simply failed dismally in seeking to expose some form of material unreliability in any significant evidence given by any of the Bank's witnesses. 251 Mr Qureshi tended to ask questions as to whether or not the Bank witness then in the witness box had ever seen him or had ever spoken to him prior to 3 June 2005 or had received any communication [addressed specifically to them] from him at or prior to that date.

[425]

258 Under cross-examination by Mr Newman about the 3 June 2005 direction to pay [PX 1366] received via fax by Mr Budai at the Bank's Parramatta office, Mr Watson stated that the Bank had a practice of acting not only on original documents, but also on directions received in faxed documents [T217:15]. These faxed directions did not have to be signed by a witness and upon receipt by the Bank, the Bank would act on the directions if the signature in the fax reflected the signatures kept in the Bank's records [verification of the signature's authenticity] and if the instructions were consistent with the Bank's understanding of the customer's requirements [T217:26 and T220:35]. 259 Under questioning by Mr Newman of the Bank's procedure after a fraud was suspected of having been committed, Mr Watson stated that once such an event occurs, the file is usually transferred to his recovery department and he takes over the work from that point onwards. In the case of the suspected TDM fraud, Mr Watson took over the file immediately before it had even been reported to his department. He had instructed Mr Budai to send the files to him straight away [T 229:6], files delivered include MFI P11, P11a, P12]. The evidence that exists outside of the Bank's control, such as documents and equipment found at the TDM premises is not quarantined by the Bank itself, but rather the receivers appointed by the Bank took possession of and secured whatever company assets where available at the TDM premises [T 231:42]. Mr Watson could not materially assist Mr Newman's line of questioning on the present whereabouts of the fax machine found by the receiver at the TDM premises on or about 24 June 2005 [T 235]. Ms Salameh 260 Ms Salameh is a solicitor employed by Henry Davis York, the solicitors for CBA. Ms Salameh gave evidence about Federal Court proceedings involving Mr Edge and a company called Needlework Warehouse Pty Limited, a discussion with Mr Edge on 29 September 2005 during which Mr Edge admitted deceit in relation to his alleged travels to China [14 October 2005 affidavit], notices to admit facts and authenticity of documents served on the active defendants.

[426]

Mr Atkins 261 Mr Atkins, referred to earlier, is a partner of Henry Davis York, solicitors for CBA. Mr Atkins annexed company searches of [among others] JB Enterprises International Pty Limited and Korilli Pty Limited. Mr Atkins also gave evidence of his conversation with Mr Peter Johnstone on 4 October 2005 where Mr Johnstone explained his dealings with Mr Edge and says that he did not witness Mr Edge handing over any cash at the premises of TDM. Mr Ayres 262 Mr Ayres was an employee of PPB Chartered Accountants and Business Reconstruction specialists, the receivers of TDM in June 2005. Mr Ayres gave evidence of his visit to TDM's premises on 24 June 2005 when he found the premises vacant. Mr Ayres also gave evidence of his visit to the offices of Mr Qureshi and discussions with Mr Qureshi and his assistant in relation to the books and records of TDM. Mr Ayres gave evidence of the meeting on 28 June 2005 between Messrs Edge, Robinson, Hicks, Watson and Tilley. Mr McCoy 263 Mr McCoy is a bank manager employed by Arab Bank Australia Limited. Mr McCoy gives evidence of the receipt of $3,450,000 into Hassanien Saleh's Arab Bank account on 7 June 2005 and the subsequent transfer of funds from that account to the accounts of other members of the Saleh family. Mr McCoy also gives evidence of the transfer of funds from Arab Bank back to CBA on 23 and 27 June 2005. [ ] 264 [ ] Mr John Williams 265 Mr Williams is a chartered accountant and a partner of PPB Chartered Accountants. He provided opinion evidence [in the form of an expert report dated 1 June 2007] as to the records and documents required to be kept by an accountant conducting a practice of the type similar to Mr Qureshi's practice. 266 Mr Williams, during his examination in chief, gave his opinion on the additional documentation and records an accountant would require to prepare financial statements assuming the client only maintained records of its list of receivables and creditors in electronic form [T 602-3]. He gave a description of the process of coding bank statements and the creation of a general ledger to summarise all the transactions that had taken place for the client in the relevant financial year. 267 He explained that the working papers produced are kept and used by the accountant to enable him or her to reconcile the numbers in the financial statements with those documents supplied by the client. They reflect the workings of how the accountant came up with each figure in the financial statements and any tax returns. Copies of bank statements used to reconcile figures and with the accountant's own workings would form part of these working papers [T 605:21]. 268 As referred to in paragraph 25 and 26 of Mr William's report of 1 June 2007, Mr Williams provides evidence of the documents that would be retained by a prudent accountant after termination of the retainer by a client - namely records, client and third party correspondence and working papers that belong to the accountant and reflect the work carried out. Mr Williams gives evidence of a common accounting profession standard that no documents or records are to be destroyed prior to 7 years.

[464]

"If exemplary damages are to fulfil their threefold purpose, they must not merely irritate, they must sting. It is the gravity and character of the defendant's conduct which guides the court's discretion as to the proper amount to award by way of exemplary damages. That is why there is "no necessary proportionality" between the amount awarded as compensation for the damage suffered by the plaintiff and the amount of exemplary damages awarded against the defendant… A minimal amount of damage inflicted on a plaintiff may, if the wrongdoing was outrageous, nevertheless require heavy exemplary damages to be visited upon the defendant..." 283 Clearly enough an award of exemplary damages is appropriate to be made as against each of Mohamad Saleh, Hassanien Saleh, Mr Edge and Mr Qureshi. The above described principles merit this approach to damages. A quite extraordinary fraud was committed. Each of these persons have been found to have been complicit in that regard. 284 There is no evidence as to the net worth of any of these persons. For obvious reasons it is extraordinarily difficult to differentiate between persons who are jointly complicit in a major fraud by reason of the different parts which were played by each of them. It being obvious that Mohamad Saleh, Hassanien Saleh and Mr Edge were central participants in the fraud, in my view the principled exercise of the relevant discretion is to order exemplary damages to be paid by each of these persons in the sum of $150,000. 285 Notwithstanding that in some cases [as for example James v Hill], the Court has regarded the reprehensibility of the conduct of a professional as increased by reason of such a person misconducting himself or herself in the course of the practice of his profession, it seems to me that in this particular case the principled exercise of the discretion is also to order that exemplary damages be paid by Mr Qureshi in precisely the same amount. This is simply because in truth there is no way of discerning as between those who participated in the fraud, precisely what part they played at inception of the fraudulent plan or through the execution of that plan. 286 This is not to minimise the seriousness of Mr Qureshi's conduct. He was content to allow his professional standing to be utilised for the purposes of the fraudulent conduct. He stood by whilst the Bank acted upon correspondence sent by him to TDM which was plainly intended by him to be seen by the Bank, and acted upon by it. 287 I proceed in non-exhaustive fashion to note many of the orders which are appropriate, reserving for submissions:

[484]

Identifying the critical misleading documents provided to the Bank 289 Reference was made earlier in the judgment to the efficient approach being to identify the critical misleading documents provided to the Bank in a table at the end of the reasons. I proceed accordingly to list those documents and references to certain of the evidence in respect of them: Date Document Evidence Ref 11/4/04 Front page of Contract for sale of business - 2004 edition for $17 million sale of TDM to Edge Budai (14/6/06) - OB21, pg 117 [but provided on 25/5/05] 4/5/04 to 3/5/05 Forged St George Bank Statements for the period 4 May 2004 to 3 May 2005 Budai (14/6/06) - OB32, pg 216-227 [but provided on 1/6/05] 30/6/04 Financial Statements for TDM for the year ended 30 June 2004 Budai (14/6/06) - OB2, pg 2-15 [but provided on 13/5/05] 30/6/04 Taxation return for Edge for year ended 30 June 2004 Budai (14/6/06) - OB4, pg 38 [but provided on 13/5/05] 28/2/05 TDM Bas form for the period 1 to 28 February 2005 Smith (9/6/06) - LMS1, pg 7-9 [but provided on 1/6/05] 31/3/05 Financial Statements for TDM for 9 months ended 31 March 2005 Budai (14/6/06) - OB2, pg 16-29 [but provided on 13/5/05] 31/3/05 Aged Payables for TDM as at 31 March 2005 Budai (14/6/06) - OB2, pg 30 [but provided on 13/5/05] 31/3/05 TDM Bas form for the period 1 to 31 March 2005 Smith (9/6/06) - LMS1, pg 10-12 [but provided on 1/6/05] 31/3/05 Aged Receivables for TDM as at 31 March 2005 Budai (14/6/06) - OB2, pg 31 [but provided on 13/5/05] 30/4/05 Aged Receivables [Summary] as at 30 April 2005 Budai (14/6/06) - OB9, pg 56A [but provided on 17/5/05] 30/4/05 Aged Payables [Summary] as at 30 April 2005 Budai (14/6/06) - OB9, pg 57 [but provided on 17/5/05] 30/4/05 TDM Bas form for the period 1 to 30 April 2005 [but identified to Smith as the BAS form for March 2005] Smith (9/6/06) - LMS1, pg 4-6 [but provided on 1/6/05] 30/4/05 TDM Bas form for the period 1 to 30 April 2005 Smith (9/6/06) - LMS1, pg 13-15 [but provided on 1/6/05] 13/5/05 Statement of Assets and Liabilities of W Edge as at 13 May 2005 Budai (14/6/06) - OB4, pg 37 Letter from Qureshi to TDM confirming: 16/5/05 · Accountant for TDM Budai (14/6/06) - OB9, pg 58 [but provided on 17/5/05] · He handles TDM's BAS forms and GST payments; · TDM's GST commitments are currently up to date 17/5/05 TDM budgeted cash flows for 12 months to 31 May 2006 Budai (14/6/06) - OB9, pg 54-55 [date provided] 17/5/05 Handwritten Trading Analysis for TDM showing receivables balances and payments for the period May 2004 to April 2005 Budai (14/6/06) - OB9, pg 56 19/5/05 approx Facsimile from "Mo" to Morris and Budai detailing TDM debtor information from May 2004 to April 2005 Budai (14/6/06) - OB16, pg 100 Letter from Qureshi to TDM confirming: 20/5/05 · TDM's 2004 accounts are correct Budai (14/6/06) - OB17, pg 101-102 · TDM's debtors as at 30 June 2004 and for the 10 months to 30 April 2005 were as per the schedule attached to the letter · There was a one off event in the June 2004 quarter when several customers paid their accounts in 60 rather than 30 days 31/5/05 TDM Aged Receivables [Summary] as at 31 May 2005 Smith (9/6/06) - LMS1, pg 3 [but provided on 1/6/05] 31/5/05 TDM Receivables Reconciliation [Detail] as at 31 May 2005 Smith (9/6/06) - LMS2, pg 26-28 [but provided on 1/6/05] Letter from Qureshi to TDM confirming: 3/6/05 · The purchaser of TDM plans to utilise the services of an experienced accountant who will be responsible for the efficient management of various accounting issues; Placek (14/6/06) - WRP 10, pg 110-111; Cook (9/6/05) - Annexure "B" · In terms of the difference between the July and October debtors, the details in TDM's debtor ledger is correct; · Qureshi will reconcile the year end accounts with the ledger details to ensure the accounts for the 2005 financial year properly reflect the details in TDM's ledger 3/6/05 TDM Receivables reconciliation [Detail] as at 3 June 2005 Placek (14/6/06) - WRP 11, pg 112-115

[489]

The Court's attention has been drawn to a matter which is appropriate to be corrected under the 'slip rule' : Rule 36.7 of the Uniform Civil Procedure Rules 2005. I refer here to paragraph 264 of the judgment delivered today. As the transcript [at 1682.53-1683.5] records leading counsel for the Bank in closing the Bank's case in reply observed that the Bank had not read the document behind tab 35 of the affidavits folder and sought for that material to be returned to the bar table. That request was immediately actioned so that the material was no longer before the Court. This was the evidence of Ms Planic. In fact to the best of my recollection I have never read that evidence. The mistake which crept into the judgment [in the form of paragraph 264] appears to have occurred when some sections of the judgment were taken from the Bank's dramatis personae [MFI P 6]. The whole of what appears in the judgment at paragraph 264 was simply copied verbatim from that dramatis [as is apparent from page 9 of the dramatis]. In all of the circumstances what occurred may fairly be described as a clerical mistake or error arising from an accidental slip or omission in the judgment. In that circumstance the principled exercise of the discretion is to correct the mistake or error. Making that correction does not alter the substance of the reasons nor interfere with any finding. Even prior to the advent of rule 36.17 it was clear that prior to final orders being handed down the court may correct typographic errors and further may correct obvious inaccuracies as long as the substance of the reasons is not altered and no finding is interfered with. If authority for this proposition be required it is to be found in Todorovic v Moussa (2001) 53 NSWLR 463 at [46]-[48] per Beazley JA, with whose judgment Powell JA agreed and Sperling J substantially agreed. I therefore order that the judgment be corrected by the removal of the heading to paragraph 264 and by the removal of paragraph 264 itself.

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