Elfar v Registrar General of New South Wales

Elfar v Registrar General of New South Wales - [2010] NSWSC 539 - NSWSC 2010 case summary — Zoe

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2008/279272 KARIM JOHN ELFAR V REGISTRAR GENERAL OF NEW SOUTH WALES JUDGMENT 1 This is an application brought by Mr Elfar for compensation from the Torrens Assurance Fund pursuant to s 129 of the Real Property Act 1900 (NSW) in respect of loss or damage suffered as a result of the operation of the Act by reason of the alleged fraudulent discharge in September 2005 of a registered second mortgage which he held over land known as Lot 11 DP708071 in Bowral, New South Wales. 2 The Elfar Mortgage, as I will call it, was discharged on 19 September 2005. Contradictory evidence was given by Mr Elfar as to how precisely he learnt that his mortgage had been discharged but in essence his position seems to be that he was informed of this by the solicitor who acted for him on conveyancing matters (Mr David Cummins of Wilkinson Throsby & Edwards) on or around 13 October 2005. Mr Elfar categorically denied signing the discharge of mortgage form which was lodged for registration in September 2005 (or any other discharge of mortgage in 2005), denied authorising anyone to sign such a form, and denied knowledge that settlement of a refinancing by the mortgagor was due to take place or was impending at that time. (He also denied that he appreciated as at that time that the only way he would be paid the moneys he was owed was if the proposed development of the property were to be completed and that for that it was necessary for the mortgagor's refinancing to take place - something which would perhaps explain why Mr Elfar might have been prepared to agree to a discharge of his mortgage.) 3 The effect of registration of the Elfar Mortgage was to deprive Mr Elfar of his security as second mortgagee (it being conceded by his Counsel, Mr Rickard, that it was probable that, despite the discharge of mortgage, Mr Elfar retained a claim in equity against the mortgagee (Masterline Developments Pty Ltd), for whatever that may have been worth, in relation to the moneys which had been secured by that mortgage). 4 Mr Elfar lodged his claim for compensation in May 2006, after a receiver had been appointed to Masterline. Until then, the steps taken by Mr Elfar following the discharge of the Elfar Mortgage were to lodge a caveat over the title to the property (claiming an interest under a contract for sale of one of the units then proposed to be built as part of a development of the property) in October 2005 and then to report the matter to the police in Sydney in February 2006.

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5 After correspondence in which further information was sought in relation to the claim, the Registrar General of New South Wales rejected Mr Elfar's claim for compensation on 4 December 2007, which has led to the present proceedings. 6 In these proceedings, the Registrar General has put Mr Elfar to proof as to the alleged fraud in relation to the discharge of the Elfar Mortgage. The Registrar General subpoenaed two of the solicitors involved in the relevant transactions surrounding the Elfar Mortgage to give evidence (those solicitors being Mr Cummins, who has already been mentioned and was Mr Elfar's long term solicitor in relation to conveyancing matters, and Mr Dean Groundwater, of Warren McKeon Dickson, who acted for Masterline on the refinancing of its loan facility in September 2005, in the course of which the Elfar Mortgage was discharged). Mr Elfar gave evidence himself but called no other lay evidence. (Some criticism was made by Senior Counsel for the Registrar General, Mr Sirtes SC, as to the fact that no evidence was adduced by Mr Elfar from the solicitor (Mr Martin Woods) who had advised him in late October 2005, and who it might be assumed could have shed light on any advice given to Mr Elfar after his discovery of the discharge of the Elfar Mortgage, even though that solicitor is still practising in Sydney and Mr Elfar admitted he had recently been in communication with him). Expert evidence was adduced by both parties as to the authenticity of the signature purporting to be that of Mr Elfar on the registered discharge of mortgage form. 7 The Registrar General says, in general answer to the claim, that, even if there has been a fraud in the registration of the discharge of mortgage, Mr Elfar has not suffered any loss or damage as a result of the operation of the Act as there was insufficient equity in Lot 11 to facilitate repayment of the loan which had been secured by the discharged mortgage. 8 In addition, in general answer to the claim, the Registrar General relies upon subsections s 129(2)(a) and (c) of the Act, asserting that any loss or damage suffered by Mr Elfar (which is denied) was a consequence of acts or omissions by Mr Elfar and accordingly not compensable under the Act and, in the alternative, that Mr Elfar has failed to mitigate his loss. 9 The defence based on s 129(2)(a) of the Act was not pleaded until after the close of evidence in the proceedings. At that stage, I gave the Registrar General leave to amend the Defence, over the objection maintained by Mr Rickard, on the basis indicated in the short oral reasons I gave at the time. In summary, it seemed to me that, until the emergence of evidence during the hearing (in particular, from Mr Cummins and Mr Groundwater) from which it might be inferred that Mr Elfar had acquiesced in, or had knowledge of, the provision to Masterline or to the then incoming mortgagee of a discharge of mortgage in registrable form containing a signature purporting to be his (so as to enable a discharge of the Elfar Mortgage to be registered), it could not be said that the Registrar General was aware of the factual basis for a defence under s 129(2)(a) properly to be pleaded. (In that regard, I understand that at least some of the subpoenaed solicitors' files may have been available only shortly prior to the commencement of the hearing and it cannot be assumed that the Registrar General's lawyers were able to procure statements in advance from the two solicitors they had subpoenaed to give evidence.)

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Facts 18 In forming a view as to the authenticity of the signature purporting to be that of Mr Elfar on the discharge of mortgage form as registered, it is necessary to consider in some detail the circumstances in which the Elfar mortgage came into being and was later discharged. 19 I should note at the outset that in evidence (from the file subpoenaed from Mr Cummins) was a collection of copies of handwritten file notes (for the most part written sequentially in a note book and date stamped, in accordance with what Mr Cummins said was his usual practice) prepared by Mr Cummins. All but one of the file notes was typed. (The reason for that may perhaps have been a concern on Mr Cummins' part to ensure a formal record of the advice there given, though if that was the case it is difficult to see why others of the notes would not have been typed). Mr Cummins did not suggest that there was any significance to be attributed to whether or not the notes were typed. In terms of contemporaneity, the handwritten notes seem to have been taken at the time of the relevant conversation. Most of the entries also had a handwritten note of the time of the conversation or attendance. I found these notes to be the most reliable contemporaneous record of events and, as will be seen, place considerable weight on them. 20 Turning then to the relevant facts which have given rise to this dispute, I note as follows. 21 Mr Elfar is a plumber by trade. He acknowledged in the witness box that he has had 30 years' business experience (T 33.34) and is "well aware of property matters" (T 99.9). The evidence of Mr Elfar's own solicitor of some 20-25 years (Mr Cummins), who had acted for him exclusively in such matters, was that Mr Elfar was quite experienced in conveyancing matters (T 87.46; T 88.30). Mr Cummins had no hesitation in agreeing (on the basis of his dealings over the years with Mr Elfar in a variety of property matters) that Mr Elfar understands various property concepts (such as the difference between registered and unregistered mortgages (T 87.41), what a deed of priority is (T 88.30) and how, in the situation of a second mortgagee an acknowledgement by deed of priority with the first mortgagee, might be necessary (T.88.33)); as well as that Mr Elfar has the experience himself to complete forms such as caveats and to lodge those on title (T 117.7/10). 22 In 2004, Mr Elfar was the owner of two adjacent lots of land in Bowral (Lots 10 and 11 of DP708071) in respect of which development consent had been obtained for a residential development comprising a number of dwellings. 23 Mr Elfar deposed to having met Mr Daniel Perkinson through an associate in the building trade in 2002 and having had discussions with him in 2002/2003 as to the proposed sale to Mr Perkinson or his company, Masterline, of the Bowral development site. It seems fair to say that, on Mr Elfar's version of events, one would think that the relationship between he and Mr Perkinson was not particularly close (T 37.50; T 46.16-26). Nevertheless, there was apparently a fair degree of trust and co-operation between them even at what seems to have been an early stage of what became, to some extent, a shared business venture. For example, Mr Elfar seems readily to have entered into an arrangement with Mr Perkinson for the provision of vendor finance in relation to the sale of the land, the ultimate repayment of which was largely linked to the outcome of the proposed property development, secured at the outset by an unregistered mortgage protected by way of caveat alone and Mr Perkinson for his part was also prepared to provide some short term finance to assist Mr Elfar. 24 The discussions in relation to the proposed sale of the Bowral property to Masterline at least seem to have been reasonably well advanced (and may already had been the subject of an agreement between Mr Elfar and Mr Perkinson) by March 2004. I say this because, at pages 174 and 175 of Exhibit 1, there are copies of what appear to be receipts dated 12 March 2004 and purportedly signed by Mr Elfar as vendor, each acknowledging receipt from Masterline of the sum of $150,000 by way of deposit on the sale of one of the two adjacent lots of land at Bowral. Mr Elfar acknowledged that he had signed those documents (T 33.20) but (as with almost all aspects of the property transactions about which he was asked to give evidence, other than the critical question as to whether he had signed the discharge of mortgage forms which were in evidence) said he did not know what they were and could not assist in how they had come about (T 33.16; T 33.30). The facsimile transmission imprint appearing at the top of each of these pages suggests that they were transmitted to Wilkinson Throsby & Edwards on 11 March 2004 (and to or from 'Vista de Mare', an unexplained entity or location, on 4 March 2004). There was no evidence of payment to Mr Elfar of such sums at that time and Mr Elfar did not accept that he had received any such payments (T 33.29). (Though he later seemed to agree that he had received amounts by way of deposits back in March 2004 (T 35.18), I am not confident that his "Yes" was more than an acknowledgement of what he then saw in front of him on the documents he was being shown.) 25 There was in evidence a typed file note, which Mr Cummins accepts he prepared, apparently recording advice given by him on 29 March 2004 to Mr Elfar as to whether there was in existence as at late March 2004 a binding contract between Mr Elfar and Mr Perkinson (in the context of which reference was made to a signed guarantee of 31 October 2003 but, curiously perhaps, no reference is made to the two separate acknowledgements of receipt of deposits from Masterline in respect of the two lots some two weeks earlier). Mr Cummins' note read: 29 March 2004 at 4.30 I phoned Elfar re contract with Perkinson. I advised I thought there was at least an arguable case that the contract which he had sent through with the fax dated 26 April [presumably either an error or the fax was a fax from the previous year] might be enforceable although I know that it was not dated on the face of the contract. There was a date but it was on the guarantee namely 31 October 2003 at the top of the guarantee and also beside the signatures. The question was whether the parties intended to be contractually bound by the contract rather than just by guarantee and I said I thought he could probably establish that was the case. He wants to sell the property to someone else and is thinking of giving Perkinson a notice to complete under this contract, and when he fails to complete, issuing a notice terminating . (my emphasis) I advised he should do nothing and wait and see what Perkinson does. Hopefully Karim will be able to sell the property to someone else without Perkinson realising. [As to this last sentence, Mr Cummins accepted it was a comment which he had made and not a comment by Mr Elfar; hence this does not suggest what might otherwise have been seen as an apparent willingness on Mr Elfar's part to dispose of the property behind the existing purchaser's back.] Karim is in discussion with Ellsmore, another prospective purchaser and hopefully that will bring forth a result. 26 In the witness box, Mr Elfar said that he could not really remember this and that he "was just probably at that time wanting him [Mr Perkinson] to purchase the property" (T 36.9). Mr Elfar did accept, however, that there were other "people floating around to buy the property" in 2003 (T 36.15). 27 Mr Cummins' file note nevertheless suggests more than that, namely that there had been an arrangement of some kind in place between Mr Elfar and Mr Perkinson, perhaps from as far back as October 2003, in relation to the proposed sale of the Bowral property (consistent with Mr Elfar's evidence that discussions had taken place in 2002/3). More relevantly, for present purposes, this note is consistent with Mr Elfar not only having an understanding (as someone who had been involved in property development) of how the legal aspects of property transactions worked (insofar as he is said to have been 'thinking' of giving a notice to terminate the contract at that stage) but also with him having a practice of dealing directly with Mr Perkinson (or others) in property negotiations and only referring to his solicitor on what might be described as an 'as needs' or ad hoc basis for advice as to what he was proposing to do (rather than leaving the conduct of property transactions in the hands of his solicitor to direct on a day to day basis). 28 This accords with the evidence of Mr Cummins, to which I will refer below, but is inconsistent with the manner in which Mr Elfar was at pains to suggest that he left property matters in the hands of his solicitors (mainly Mr Cummins') and that he did not understand the detail of what was occurring in relation to those matters. (In this regard, and without necessarily being exhaustive in my notation of relevant transcript references, I note the evidence given by Mr Elfar at T 32.38, T 33.31, T 36.23, T 38.6, T 39.36, T 47.45, T 52.23 - there, to the effect that "that is what I pay them [his solicitors] for"- T 58.17, T 69.45, T 97.25 - there, asserting that he had instructed Mr Cummins to keep in touch with Masterline's solicitors.) Mr Elfar denied that he had been kept informed by Mr Perkinson as to matters relating to the subsequent refinancing of the Masterline loan and denied that it was he who had kept Mr Cummins informed of this (rather than the other way around) (T 70.2, T 70.16). A constant refrain from Mr Elfar was to the effect that he left matters to his solicitors to look after his interests - such as that "All I know is Mr Cummins was looking after the matter, I was not in contact with Perkinson I can tell you that" (that being said as to the position as at 26 August 2005). Mr Elfar's evidence in this regard is inconsistent with the contemporaneous notes kept by his solicitor and, as will be apparent later, I prefer Mr Cummins' evidence to that of Mr Elfar wherever there is a conflict between them, as I found Mr Cummins a far more reliable witness. 29 Whatever be the status of the arrangements in respect of which Mr Cummins was asked to give advice in late March 2004, and the discussions which may have taken place with other purchasers around that time, by July 2004 Mr Elfar was apparently prepared to proceed with a sale to Mr Perkinson's company, Masterline. By contract for sale of land dated 12 July 2004, Mr Elfar agreed to sell to Masterline the two lots of land at Bowral for a total purchase price of $1,415,750. Completion of the sale was to take place within 60 days after the date of the contract. It in fact took place on 3 December 2004. There was no reference in the contract to there having already been payment of some $300,000 in total by way of deposit (as suggested in the March 2004 acknowledgements). 30 As noted, completion of the contract of sale had been due in about September 2004 in accordance with the contract. At that stage, however, it appears that Masterline was having difficulty arranging finance to complete the contract. By letter dated 9 September 2004 from Wilkinson Throsby & Edwards (on behalf of Mr Elfar) to Warren McKeon Dickson (on behalf of Masterline/Perkinson) (an unsigned file copy of which is at p 172 Ex 1), Mr Cummins noted that: Your client [Masterline] cannot pay the balance of purchase price but can only pay $800,000. Rather than insist upon the balance of purchase price on completion, and all of this is subject to the concurrence of the new mortgagee who is refinancing Westpac, our client has in principle agreed that: 1. Your client will enter into a contract to sell him proposed Unit 1 in the strata development of the property for a consideration of $478,000; 2. The contract will provide that your client will pay the purchaser duty; 3. As "security" for the performance of that obligation [presumably referring to the obligation to transfer the proposed unit in the development] your client will give a preferably second registered mortgage but if the first mortgagee's consent is not available, the second unregistered mortgage to be noted by caveat in terms of draft attached. 31 The reference to an incoming mortgagee 'refinancing Westpac' seems to be a reference to Mr Elfar discharging his mortgage with Westpac over the Bowral property (in the sum of $1.05 million) and an incoming mortgagee financing Masterline's acquisition and development of the property.

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32 Of significance, in relation to Mr Cummins' letter, is that it records a preference (presumably that of his client, Mr Elfar, whose evidence in the witness box at T 37.10 was to the same effect, ie that he would have wanted a second mortgage) was for a second registered mortgage to be provided to secure the purchaser's obligations but that an unregistered mortgage protected by way of caveat was not out of the question. It also (in the absence of any correspondence from Warren McKeon Dickson initially adverting to the difficulty for Masterline in funding the settlement) is consistent with Mr Elfar and Mr Perkinson as between themselves reaching arrangements in relation to the shortfall (and Mr Elfar only then informing his solicitor of the deal which had been reached in that regard, so that it could be documented or actioned in some way). Relevantly, I note that Mr Elfar accepted in the witness box (at T 37.50) that he had reached agreement with Mr Perkinson in relation to vendor finance as between themselves (ie separately from his lawyers). 33 At or around this time it seems that there were discussions as to how Mr Elfar would be able to meet an anticipated shortfall, from the settlement proceeds of the Bowral properties, of $50,000 in relation to the discharge of the Westpac mortgage in order to clear the title to the two properties. By letter dated 16 September 2004 (only the first page of which was in evidence), Mr Cummins wrote to Mr Elfar setting out his understanding of the "altered contractual arrangements" which had been made between Mr Elfar and Mr Perkinson (again, seemingly recording advice given to him by Mr Elfar of the outcome of discussions directly between Mr Elfar and Mr Perkinson). (Mr Elfar was unable to recall this at first, then suggested that the money was coming from Mr Perkinson's mother - his conflicting evidence being at T 40.10, T 40.21, T 44.38, T 46.29, T 46.54.) 34 A file note from Warren McKeon Dickson's file (dated 25 November 2004) similarly records that there was a shortfall of $50,000 for the discharge on settlement of the Westpac mortgage and that Mr Perkinson agreed to lend Mr Elfar that amount on a short term loan (p 169, Exhibit 1). 35 By this time, it seems to have been understood that Mr Elfar's stated preference for a second registered mortgage was not being pressed and that there was simply to be an unregistered second mortgage and caveat. Mr Cummins was careful to ensure that Mr Elfar understood the risks of holding an unregistered (rather than registered) mortgage protected only by caveat and there was evidence of a handwritten note signed by Mr Elfar in which he acknowledges that he understood those risks (p 170 Exhibit 1). 36 As at late November 2004, it seems that Mr Elfar had been seeking additional finance in the amount of $645,000 'to assist with refinance of a second mortgage and pay down part-loan with Westpac Banking Corporation' (as noted in an indicative letter of offer issued on 29 November 2004 sent to Mr Elfar care of a Mr Michael Torpey at the Willow Group - pp 147/8 Exhibit 1). After some apparent confusion in the witness box, Mr Elfar said that this was in relation to an attempt to refinance properties at Daleys Point and Burradoo (T 42.2) to "try and put it all together". Of relevance, however, is the suggestion that a deed of priority might have been required by Westpac. (It may be that the need for refinancing as between Mr Elfar's various properties was in the context of the perceived shortfall in payout of the Westpac finance on the settlement of the sale of the Bowral properties, given the short term of the loan being proposed by the Bank.) Whatever the position in that regard, Mr Elfar was unable to recall anything in relation to this. He was taken to a copy of correspondence from Mr Cummins on 29 November 2004 (p. 146 Exhibit 1) attaching an indicative offer of loan for that purpose (T 42.6, T 42.38-48). Mr Cummins' letter stated, among other things, that "You have confirmed that the Deed of Priority by Westpac for $2.2 m is now not required and so we have not contacted them", again apparently recording instructions as to commercial matters being dealt with by Mr Elfar himself. 37 The relevance of this correspondence goes to the question of Mr Elfar's understanding of property matters (and his credit, in the face of his professed lack of understanding of such matters). At first, Mr Elfar denied having an understanding of what a deed of priority was at the relevant time (T 42.22), then he appeared to agree that he knew what one was (T 42.35) though not being 100% sure (T 43.37) and could not recall having given any instructions to Mr Cummins in relation to this (T 43.2, T 43.25, T 43.70). This must be seen in light of Mr Cummins' evidence that Mr Elfar understood what a deed of priority was; and the contemporaneous file note which indicates that that was indeed the case.

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41 Relevantly, therefore, although the Elfar Mortgage made provision to permit Masterline to satisfy its obligations as to the balance of the purchase price by means of the transfer of one of the units, this did not remove Masterline's underlying obligation to repay the sum of $478,000 plus interest on 30 December 2005. (This becomes relevant when considering whether Mr Elfar took reasonable steps to mitigate his loss once he discovered that the Elfar Mortgage had been discharged.) 42 The Elfar Mortgage was not initially registered. Here is a significant point at which the account given by Mr Elfar diverges from that of his lawyer (who has no apparent interest in the proceedings and gave evidence under compulsion by the court in the form of a subpoena ad testificandem). Mr Elfar has attested to the giving of instructions to Mr Cummins to register the mortgage granted to him. Mr Cummins' contemporaneous documents paint a very different story. Following completion of the sale, by letter dated 9 December 2004 (an unsigned copy of which is at p 138 of Exhibit 1) Mr Cummins advised Mr Elfar that: The shortfall of $478,000 owed by Perkinson to you and to be set off against the transfer of townhouse to you is evidenced by a mortgage which has been signed and a copy is attached. You have instructed us that this mortgage is not to be registered but is to be noted on the title to Ascot Road by registration of a caveat . For this to be done the mortgage must first be stamped - estimated at $1,853. Please give us that amount so we can attend to registration of the caveat. (my emphasis) 43 From receipt of this communication, Mr Elfar must have been aware that (whether or not those had in fact been his instructions) it was Mr Cummins' understanding that the Elfar Mortgage was not to be registered. There is nothing to suggest that Mr Elfar remonstrated with Mr Cummins or demurred from that proposition at the time. Mr Cummins noted that he had been so instructed. Mr Elfar denied having any recollection about such instructions (T 44.50) and denied that the letter accurately recorded such instructions (T 45.4). 44 Mr Cummins' file note is at first blush inconsistent with what Mr Elfar said about the registration of the mortgage in paragraph 12 of his affidavit in these proceedings (a matter on which he was, not surprisingly, challenged in cross-examination). Mr Elfar's response, when pressed, was that "Obviously" he had given the instructions to register the mortgage (T 10.45). In his affidavit, Mr Elfar deposed that "I instructed my solicitor to register the mortgage and I believed that he was in regular contact with the plaintiff's solicitors during that process". (He could not recall having said that he would not register the mortgage and did not think he would have done so (T45.21, T 45.25).) 45 The only reading of this paragraph in Mr Elfar's affidavit which would be consistent with the evidence given by Mr Cummins (and the acknowledgement signed by Mr Elfar on 23 November 2004 that the mortgage was to be unregistered) would be if the time at which those instructions were given and 'regular contact' took place was in around August 2005 (when the Elfar Mortgage was ultimately registered). (In that regard, I note that Mr Elfar's initial evidence in chief in the witness box was that he contacted his solicitor about registration of the mortgage in late 2005. Although he almost immediately corrected this and placed an early 2005 time frame on this evidence, the later date appears by reference to Mr Cummins' notes to be the correct one, though inconsistent with the import of Mr Elfar's affidavit). 46 If that was the purport of paragraph 12 (ie that the instructions were given around August 2005) then it is unfortunate that this was not made clear when the affidavit was prepared and sworn, since the impression conveyed by paragraph 12 as it stands (in the absence of any suggestion that for a time Mr Elfar had understood that the mortgage was to be unregistered) was that Mr Elfar had believed that he was always to obtain a registered mortgage and had so instructed his solicitors (and that his solicitor, Mr Cummins, was in regular contact with Masterline's solicitors to achieve that), when it seems from Mr Cummins' contemporaneous records that nothing could be further from the truth. 47 Mr Elfar was aware for quite some time that his mortgage was unregistered and had agreed that this would be the case. It was only in connection with Masterline's attempts at refinancing the loan in mid 2005 (to which I will refer shortly) that the issue of registration of the Elfar Mortgage was again raised. Even then, I doubt that there is any basis for the suggestion that Mr Cummins was in 'regular' contact with Masterline's solicitors in that regard. Rather, Mr Cummins seems to have corresponded, when instructed to do so, with Masterline's solicitors in accordance with requests or instructions from time to time by Mr Elfar on particular issues. 48 The mortgage was stamped in early March 2005 and a caveat was lodged at that time over both Lots 10 and 11 (DP335696), recording Mr Elfar's interest as mortgagee under an unregistered mortgage. DOH, meanwhile, had registered its first mortgage over the properties securing the moneys provided by way of finance for the acquisition of the Bowral properties. Under that loan arrangement, repayment by Masterline was due on 26 November 2005. The loan facility provided for payments during the course of construction to be made up to a total amount, including the acquisition amount, not to exceed two-thirds of the mortgagee's valuation of the subject property on an 'as completed' project basis. 49 By the end of March 2005, Masterline was seeking to refinance its DOH loan. (Mr Elfar conceded that Mr Perkinson had "maybe briefly" told him that - T 46.9 - and said "There would have been discussions probably because the people he was financed with were charging him exorbitant interest" - T 46.5). That knowledge was explained away by Mr Elfar as being that Mr Perkinson had not kept him informed of anything except for the fact that he was going to refinance (T 47.5) but that is again inconsistent with Mr Cummins' notes.

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Advised 88B means nothing. I to I. Search titles 2. Await call from Perkinson that he is refinancing 3. Secure for KE 2M or fixed & floating charge over Masterline Devs P/L. 55 The above succession of file notes suggests that there was ongoing discussion at that stage between Mr Elfar and Mr Perkinson as to the proposed refinancing of Masterline's loan facility with DOH and that Mr Elfar was the one responsible for negotiating his owncommercial position vis a vis Perkinson/Masterline. Mr Elfar seems to have been attempting to secure an agreement with Mr Perkinson (or any incoming financier) to allow a second registered mortgage over the properties or a fixed and floating charge over Masterline's assets in order better to secure his position in relation to the sum still owing to him in respect of the balance of the purchase price. 56 At p 107 of Exhibit 1 (as part of what appears to be a bundle of documents forming a facsimile transmission on 31 May 2005 from MJ Woods & Co to Warren McKeon Dickson referring to proceedings commenced by Mr Elfar seeking the extension of caveat) is a copy of a title search of Lot 11, Ascot Road dated 29 March 2005 at 3.35pm bearing the footer "Printed by Lawpoint on 29 Mar 2005 at 03.33pm for DJC Ref Elfar", which records the first registered mortgage to DOH. In priority as to the time of recording on the title of Mr Elfar's caveat was another caveat to Crown & Gleeson Securities Sydney Pty Limited. (Interestingly, there is a handwritten note at the bottom of that page with Mr Cummins' typical date stamp of 30 March 2005, which was left unexplored and unexplained, with the words "Ph KJE. Advised above. He will get even with Perkinson".) 57 By letter dated 1 April 2005, a copy of which is at p 128 in Exhibit 1, the lawyers acting for DOH served upon Mr Elfar, in his capacity as caveator, via his solicitors a copy of a Notice of Default of Mortgage by Masterline. Mr Elfar did not remember this (T 48.15) but says he did know there was a problem with DOH at some stage (T 48.46). (Looked at in hindsight that seems to be quite an understatement since DOH was pressing in mid-2005 for repayment of the loan and seeking to exercise rights as mortgagee to sell the property.) 58 On 4 May 2005, DOH filed a statement of claim in the Possession List seeking judgment for possession of the Bowral properties and leave to issue a writ for possession. On 10 May 2005, Mr Elfar was served, via his solicitors, with a notice to caveator of proposed lapsing of caveat application. Again, Mr Elfar did not recall this in the witness box but thought 'something' was done through the solicitors (not through him) (T 49.3, T 50.28). 59 By letter the following day, stated to be at Mr Elfar's request, Mr Cummins referred the matter to MJ Woods & Co in Sydney, noting his understanding that Mr Elfar would give instructions to seek an order extending the operation of the caveat. Mr Elfar (consistent with his lack of memory on most other matters to this point and his stated recollection that he left everything to his solicitors) could not remember this but then said "I know I approached Martin Woods about this matter, because he was doing some other matters for me at the time, I just left it in his hands I suppose I didn't fully understand what was going on, but anyway" (T50.35). 60 By letter dated 17 May 2005 (p 119 of exhibit 1) DOH's lawyers enclosed by way of service on Mr Elfar, via Wilkinson Throsby & Edwards, a copy of a Notice of Default of Mortgage pursuant to s 57(2)(b) of the Real Property Act which had been issued to Masterline. Mr Elfar did not recall receiving this (T 50.48) but remembered that DOH were trying to take the property "under the mortgagee whatever it was" (T51.3) and Mr Cummins thought that consistent with his usual practice he would have conveyed this to Mr Elfar. 61 In Mr Cummins' file there is a note dated 25 May 2005, which Mr Cummins identified as being in the handwriting of from his secretary, Ethel, which recorded a message from Masterline's solicitors in relation to the refinancing: Peter McKeon rang Perkinson - refinance

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62 Mr Karim accepted that he travelled overseas a lot ("all the time" - T 51.13), which was consistent with the last note. 63 On a separate page and lined paper (the former note being on unlined paper) is what appears to be a redacted handwritten file note, in Mr Cummins' handwriting, date stamped at the top 25 May 2005, reading as follows: - has been advised by Counsel not to pursue objection to caveat lapsing notice - 1st caveator has been paid out. * KE will provide W/X [withdrawal of caveat]in return for registration of new 1M. 64 By facsimile transmission on 26 May 2005, presumably acting on the above instructions, Mr Cummins advised Masterline's lawyers that Mr Elfar had instructed he would provide a withdrawal of caveat in return for the new first mortgagee consenting to the registration of the Elfar Mortgage as a second mortgage and enclosed a copy of the 3 December 2004 mortgage which had been stamped on 8 March 2005. This was, of course, a mortgage over both Lots 10 and 11. Mr Elfar did not recall if those were his instructions (T 51.21), but it seems inconceivable that Mr Cummins would have acted otherwise had he not understood them to be his instructions and his file note provides support for this. 65 On 30 May 2005, Mr Elfar's Sydney solicitors (MJ Woods & Co) filed a summons in the Equity Division of this Court (they, or Mr Elfar, seemingly not having accepted the advice of Counsel to which reference was made in the handwritten file note of Mr Cummins on 25 May 2005) seeking an order extending the operation of Mr Elfar's caveat. Mr Elfar, somewhat sarcastically, said that it was 'obvious' that he must have given the instructions to commence those proceedings, though seemingly avoiding acceptance of that proposition in cross-examination at first (T 51.40). In support of that summons, Mr Elfar affirmed an affidavit in which he deposed to the fact that there had been no repayments of his mortgage. 66 Resolution of the dispute in relation to the caveat seemed thereafter to be speedily resolved. Mr Elfar said he did not know what had happened other than that Masterline had sorted something out with DOH (T 52.5). At the time, however, it appears that Mr Elfar both knew how the proceedings had resolved and had conveyed this to Mr Cummins, since Mr Cummins made a handwritten file note on 31 May 2005 of a telephone conversation with Mr Elfar: Ph K Elfar By agreement [with] Donovan Oates Hannaford yesterday KE now allowed to register 2M by Martin Woods M Woods to attend forthwith to this. KE wants prin [presumably an abbreviation for principal] sum owed by Perkinson reduced by $100K but he will defer telling Perkinson this until McKeon replies to my letter . (my emphasis) Mr Cummins' understanding was that this note recorded his understanding (as on its face it does) that Mr Elfar wanted Mr Perkinson to pay $100,000 in partial reduction of the principal sum owing to him and that he would then accept that his mortgage could be registered as a second mortgage behind the mortgage to DOH - T 114.11. It is not clear to what letter Mr Cummins is there referring, though it would seem likely to be the letter of 26 May 2005 in which Mr Cummins advised that Mr Elfar would consent to a withdrawal of caveat in return for the first mortgagee's consent to registration of the second mortgage. Nevertheless, it seems that steps were being taken for the removal of the caveat in advance of any confirmation as to the position of the incoming mortgagee in relation to registration of the second mortgage (which suggests that Mr Elfar was prepared to rely on whatever undertaking or agreement had been given by Masterline in that regard). (For completeness, I note that the handwritten note at p101 of Exhibit 1 also includes some boxed figures but it is not clear to me that they have any relevance.)

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69 It is relevant to note that, despite Mr Elfar's lack of recollection of much of the events chronicled above, the submissions served by Mr Rickard on Mr Elfar's behalf in these proceedings themselves state that over that two month period there had been 'extensive negotiations and correspondence' between Mr Elfar's solicitors and Masterline's solicitors which resulted in the withdrawal of Mr Elfar's caveat and the registration on the title of Lot 11 of the Elfar Mortgage as a second ranking mortgage on 21 July 2005, which suggests that Mr Elfar had at some stage given instructions to that effect or at least confirmed that was his understanding of events. 70 Given Mr Elfar's initial preparedness to accept an unregistered second mortgage protected by caveat, it seems reasonable to assume that his later requirement in mid 2005 that the mortgage be registered stemmed, at least in part, from the commencement of proceedings for possession by DOH and a desire to improve his security. 71 Mr Rickard characterised this 'to'ing and fro'ing' in the months of June and July 2005 to achieve registration of the mortgage as evidence of Mr Elfar having gone to considerable trouble to have the second mortgage registered - T 150.31, a proposition which Masterline's solicitor, Mr Groundwater, readily accepted; and that this indicated that Mr Elfar had placed a lot of value on the mortgage interest over lot 11, which Mr Groundwater also accepted - T150.38. (It was therefore suggested that it would be commercially unrealistic for Mr Elfar, having gone to such trouble to have his second mortgage registered, would so shortly afterwards have been prepared just to give it up. I consider this proposition later but simply note that there was a respectable commercial rationale for this, which formed the basis of Mr Groundwater's understanding as to why the discharge was being proffered.) 72 Meanwhile, DOH, still apparently pressing to recover its loan to Masterline, arranged to list the properties for auction, first on 2 July 2005 and then subsequently to re-list them for auction on 6 August 2005. Mr Elfar said that he did not know "fully" what Mr Perkinson was up to with refinancing at the time (and initially suggested that Mr Cummins may no longer have been looking after the matter at that time T 52.22, though shortly after correcting that at T 52.30).

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75 Mr Elfar professed no recollection of this (T53.2, T 53.17), even though Mr Rickard's submissions (the accuracy of which Mr Elfar ultimately conceded T 53.47) referred to negotiations for the discharge or postponement of the second mortgage for a sum of $30,000 - para 13. Mr Elfar then suggested that he just could not recall the date or what that was about. Mr Elfar staunchly maintained that he had no recollection of anything to do with a $30,000 payment or a postponement fee and initially expressed considerable confusion as to what was meant by postponement (T 54.39 - T 55.10) (again being at pains to point out that he was paying solicitors to look after his interests - T 55.25, T 56.15, T 57.16). However, overnight he appeared to have reconsidered his evidence on that aspect of the matter and on the second day of the hearing he confirmed that he did understand what was meant by postponement (and remembered that there had been discussion about $30,000 sum 'as a guarantee'). 76 Mr Cummins, in the witness box, could not recall whether his file note had recorded the instructions or instead the intention of Mr Elfar in relation to the $30,000 postponement sum (T 115.1), though the language of the note would seem to me to indicate the former, but said that he read this as having been important for him to note that Mr Elfar wanted the principal sum reduced by $30,000 for agreeing to a postponement of his mortgage (T 115.13). Relevantly, in the period from late May to August, Mr Elfar's monetary demand in relation to the price for acquiescence in the steps required or thought to be required for the refinancing (namely postponement of his security) had considerably reduced (from $100,000 to $30,000, which perhaps is an indication of Mr Elfar's belief that his best prospect of recovery was through the refinancing and then the development proceeding, as to which I say more later). 77 By letter dated 3 August 2005, Mr Cummins wrote to Warren McKeon Dickson advising that Mr Elfar's mortgage was now registered over Lot 11 and stating that: Our client is prepared to consider postponing his mortgage to the new first mortgagee, provided the terms of new first mortgage are approved by your [sic] client. You might let us have this information. Alternatively, our client's mortgage should be paid out at settlement of the refinancing. 78 I note that although Mr Elfar was adamant in the witness box, when questioned as to his position in relation to the postponement of his mortgage interest, that he would not have agreed, and did not agree, to weaken his position in any way (T 56.18, T 56.38) and that he was sure that his solicitor would have known that, by this he seems to have not regarded the replacement of DOH as first mortgagee by an incoming first mortgagee as a weakening of his position (T57.16, T57.26). Rather, in that context, he seems to have been concerned to maintain a second ranking secured position. This is relevant when considering what would have been the position had the discharge of mortgage form (assuming it was a forgery) not been registered. The likelihood seems to be that ultimately Mr Elfar would have been prepared at the very least to permit his mortgage interest to be postponed to that of the incoming mortgagee (albeit seeking to secure a relatively small payment as the price for so doing) rather than to risk the development failing at that point. 79 Proceedings were instituted in this Court by Masterline, by summons in August 2005, in which orders were obtained restraining DOH on an interlocutory basis from proceeding to a mortgagee auction on 6 August 2005. Mr Elfar swore an affidavit in those proceedings on 4 August 2005 for Masterline (which he initially suggested had been drafted by Martin Woods - T57.44) but which seems to have been prepared as part of the evidence for Masterline in those proceedings and hence seems more likely to have been prepared by someone at Warren McKeon Dickson. In that affidavit, Mr Elfar deposed that prior to July 2005 he became aware that DOH had appointed an agent and listed the property for public auction scheduled for 2 July 2005; that out of concern he rang the Managing Director of DOH, Peter Hannaford, two times on 1 July 2005; and that in the first conversation he said words to Mr Hannaford to the effect that he had spoken to Daniel Perkinson and that he (Daniel) was arranging to pay $100,000 that day and then asked Mr Hannaford if he was going to stop the auction (and, in response to Mr Hannaford's question as to whether he could guarantee it, said "no, I cannot, but I understand that it's going into your account in cash so it will be cleared funds today"). This indicates a much closer level of involvement in the refinancing than Mr Elfar was prepared to concede. 80 Mr Elfar said in paras 6-8 of that affidavit: I am concerned that if the property is auctioned on 6 August 2005 that I will be severely financially disadvantaged. The Mortgagor [Masterline] informs me that the First Mortgagee [DOH] is owed approximately $1.1 million. My mortgage secures a loan to the Mortgagor of $475,000. I was informed by the agent appointed by the First Mortgagee to sell the Property, that the estimated selling price at the First Mortgagee's auction will be between $145,000.00 to $150,000.00 per site which equates to a total price for the Property of $1.150 million to $2 million. I do not know what the reserve has been set at but if the Property sells at that price, I will loose [sic] $350,000 to $375,000. If the Mortgagor retains and develops the Property I will be repaid in full . (my emphasis) [Therein, it would seem lies the motivation for Mr Elfar agreeing in due course to a discharge of his mortgage and/or not taking any steps to prevent registration of a discharge of mortgage form.] 81 Mr Perkinson also swore an affidavit in the proceedings instituted by Masterline, estimating that if the development were able to be completed a sale price of $5m for the property was expected. 82 In the witness box, Mr Elfar said that he could not remember any of the detail of that application but that "it didn't go anywhere" (by which I can only assume he means that the proceedings were resolved before a final hearing) (T 58.35). He said that he could not even remember speaking to Mr Hannaford (but 'probably' did) - T 58.43, and could not remember what the amount of the Masterline loan was or what Mr Perkinson was doing in relation to the loan - T 59.7. He made a point of emphasising that he did not know where this had 'gone to' (although ultimately accepting that when he swore that affidavit he had done so believing in the truth of its contents) - T 60.1, T 61.6, T 61.16, T 61.28. 83 At p 62 of Exhibit 1 is a handwritten file note of Mr Cummins (which appears to be stapled to a telephone message slip dated 8 August 2005 "To DJC from Karim"), which reads: Ph: Perkinson Auction stopped, must settle soon . …. Ask $30,000 for trouble from Perkinson . (my emphasis)

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89 Mr Elfar accepted that he could have been going to Tonga at the time (he had a business partner there) (T 64.16) but said that he did not remember the particular conversation - T 64.30. Again he deflected the issue by placing responsibility onto his solicitors "All I know is at the time he [Mr Cummins] was looking after the matter. All that mattered to me was that it was getting looked after. I keep seeing $30,000. I don't know what that is about" - T 64.30. 90 Mr Cummins, however, was quite clear that he would not have known the date of settlement but for a communication of that information from someone to him - as he did not make any enquiries of his own (T 117.31). That is inconsistent with Mr Cummins having any understanding that he had been instructed to keep up regular contact with Masterline's solicitors as to the refinancing (as Mr Elfar had suggested) or had any other particular role to play on Mr Elfar's behalf in the refinancing. I accept Mr Cummins' evidence (consistent with his file notes) that Mr Elfar had provided him with information in relation to the refinancing from time to time (and not vice versa) - T 117.40. 91 At this point, the question as to how a discharge of mortgage in respect of the Elfar Mortgage came to be registered arises. 92 The records of Warren McKeon Dickson disclose an understanding on their part (derived it would seem from Mr Perkinson) that the second mortgage and Mr Elfar's caveat would be removed on settlement. Mr Groundwater confirmed in the witness box that this was his understanding. At p 41 of Exhibit 1 is a copy of an internal "Time Task Report" in the Warren McKeon Dickson records, prepared by the solicitor having the conduct of this part of the transaction (Rebecca Flynn, now a partner of the firm). The matter reference is "Perkinson/Masterline Developments loan from Bank of Western Aust Ltd". The note states, relevantly: 2 [as in 2 billable units] - Telephone call …Karim Elfar will agree to discharge the 2 nd mortgage. Discuss consequence of the discharge of mortgage and the fact that Karim may not then be able to lodge a further caveat to protect the mortgage which will have been discharged. Daniel will not raise this issue with Elfar yet . (my emphasis)

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E at the foot of which there is a handwritten note by Mr Cummins: Karim threatens to come in on Mon to sign D/M over Ascot Road Please prepare D/M I think its only on one lot (ie 10 or 11) Ta D" 94 Mr Cummins said that the first time he was told that Mr Elfar was going to sign a discharge of mortgage was in the above conversation - T 118.16. He gave no advice in relation to this - T 119.26 (had he done so he says he would have recorded this - T 119.22). Significantly, in my view, Mr Cummins said that he had no concerns about the prudence of what Mr Elfar had informed him he was intending to do - T 119.42. (Given that Mr Cummins had much earlier seen the need to record in writing an acknowledgement by Mr Elfar of the advice he had been given in relation to the risks of an unregistered mortgage, the lack of concern on Mr Cummins part as to what Mr Elfar was proposing to do, or as to any need to give him advice on that topic, is consistent at the very least with Mr Cummins not considering that he was in a position of adviser in relation to this part of the transaction and perhaps also as to an awareness of Mr Elfar's commercial ability to weigh up the risks and benefits of such a course.) 95 In cross-examination by Mr Rickard, Mr Cummins explained the reference to Mr Elfar "threatening" to come into the office (to sign the discharge), on the basis that over the years Mr Elfar had often said that he was going to come in and then not turned up to the office (T 138.24). There is no explanation as to whether any discharge of mortgage was actually prepared by Mr Cummins' office (and perhaps there would have been seen to be no hurry to do so if it was thought likely that Mr Elfar might not turn up to collect it). Mr Cummins does not recall any discharge being prepared and believes there would have been a record if one had been prepared and either sent out or collected. Mr Cummins was able to confirm that neither of the two forms in evidence was prepared in that office (by reference to the licence user details at the top left hand corner of the form). 96 Mr Elfar again said that this file note meant nothing to him. He suggested that in the normal course Mr Cummins would have to contact him to tell him to come in and sign a discharge because the matter was settling (T 65.47). Whether that had been the case in Mr Elfar's 'normal' property dealings in which Mr Cummins was instructed, it certainly seems unlikely to have been the case in this one (particularly when Mr Cummins had no role in relation to the refinancing and his file notes indicate that he was simply being informed from time to time as to matters in relation to the refinancing by Mr Elfar). 97 Mr Sirtes places reliance on the fact that there was not a categorical denial by Mr Elfar that he had agreed (albeit for payment of a sum of $30,000) to give a discharge of his mortgage and the evasive nature of his responses in that regard (from T 64.39) - ranging from "Why would I do that?", "I don't know", "I doubt it very much unless he paid me or whatever. But I doubt. No I'm sorry". Nor was there a categorical denial that Mr Elfar had instructed his solicitors to prepare a discharge of mortgage (T 66.18) despite him being pressed on that question. Mr Elfar's evidence as to the sum of $30,000 was initially to deny any recollection of what it was about (T 66.25, T 67.13, T 67.20, T67.15), saying at one point "It keeps popping up everywhere in someone's notes" (and, as Mr Sirtes pertinently pointed out, also popping up in the very submissions served on Mr Elfar's behalf). Mr Elfar said in this context again that he did not "fully understand postponement. Postponement of what?" - T 66.31. (Ultimately, however, Mr Elfar appears to have conceded that there was discussion about a payment of $30,000 by way of some additional security or guarantee and, similarly, overnight his understanding as to what was meant by postponement appeared to improve.) 98 On 31 August 2005, Warren McKeon Dickson forwarded to Kemp Strang various executed documents in relation to the proposed refinancing and confirming the appointment for settlement at 2 September 2005. There was no reference in that list of documents to an executed discharge of mortgage being provided. However, the draft office memo in the Warren McKeon Dickson file of that date contains instructions for the registration clerk to hand to Kemp Strang on settlement, among other things, a discharge of mortgage in relation to the mortgage lodged by Mr Elfar (p 32 Exhibit 1). Mr Groundwater gave evidence that in the ordinary course a document would not be included on such an instruction list unless the firm already held the document or was confident that it would be available for the settlement. 99 There was then an exchange of communications between Warren McKeon Dickson and DOH's lawyers as to the whereabouts of the certificate of title for Lot 11, in the course of which it was noted by the latter that on the discharge of their client's mortgage DOH would be required to provide the certificate of title to Mr Elfar as second mortgagee. 100 Settlement of the refinancing took place on 16 September 2005. BankWest advanced $1.3 million of which $1,121,785 was paid to the outgoing first mortgagee (DOH). 101 On 19 September 2005 a Discharge of Mortgage form in relation to the Elfar Mortgage was lodged for registration with other mortgage documents. By virtue of the order in which the documents were recorded on the title, it would seem that the form was handed to Kemp Strang, at the latest, on completion (as would be expected in circumstances where the incoming mortgagee was expecting to register its mortgage as first-ranking but where there was an existing second registered mortgage on the title). 102 This brings me to what was one of the most curious features of the matter, namely that there are in existence two copies of signed Discharge of Mortgage forms in relation to the Elfar Mortgage. Mr Elfar denies signing either of them. (Apart from his evidence that he would not 'weaken' his position, the only matter on which Mr Elfar was adamant in the witness box, and the only documents to which he was taken on which he expressed a definite view, were these two documents and, in particular, his denial that he had seen or signed either of them - T 68.7.) 103 From my perspective, there is a marked difference between the signatures appearing on the respective discharge forms. I will refer to the forms as P38 and P42, respectively, those numbers corresponding with the page at which a copy may be found in Exhibit 1. 104 P38 is a copy of the discharge of mortgage form which was registered in September 2005. However, on the files of Warren McKeon Dickson (which I understand were subpoenaed by the Registrar General and only inspected shortly before the hearing itself) there was found to be a copy of a different signed discharge of mortgage form (P42). Unfortunately, perhaps, the forensic expert called for Mr Elfar was not asked to comment on (nor provided with a copy of) P42. 105 Both P38 and P42 are standard Real Property Act Discharge of Mortgage forms. Both are dated (in handwriting) 26/8/05. Both seem to have been witnessed by the same person, whose surname is not legible but was suggested might be "Johns". (Mr Rickard conceded that there was an obvious similarity in the handwriting of the witness such that it is reasonable to conclude that the same person completed both forms as witness to the execution of the form by the mortgagee.) I am informed that no "Peter Johns" at the address in Coogee has been able to be located. 106 P42 bears a facsimile imprint at the top of the page, from which it seems that it was either faxed to or from Warren McKeon Dickson at 3.46 pm on 26 August 2005. (Mr Groundwater, who gave evidence in the proceedings, was unable to enlighten me as to whether this was a fax received by or faxed from the firm but accepted that it must be one or the other.) The photocopy of this form which is in evidence (P42) has superimposed a copy of what seems to be a 'Post It' note, obscuring part of the details of the form, on which is written in hand the words "2nd copy". If this was on the original of the document as it appeared in the Warren McKeon Dickson file, then it might suggest that Masterline's lawyers were aware that there were two versions or copies of the discharge form. However, the evidence as to the provenance of this note was not clear. (Mr Groundwater confirmed that it was in Ms Flynn's handwriting.) 107 As noted, Mr Elfar in the witness box categorically denied that this was his signature on P42 - T 166.39 (and denied that he had authorised anyone to sign this document - T 166.42). He said that the first time he had seen this document was when it was put to him in court - T 166.46. 108 There are a number of differences between the two forms (not the least being the purported K Elfar signature to which I will return shortly). On P42 the title and other details, where completed, on the top half of the form are typed; on P38 they are handwritten. On both, the date is handwritten (in what seems to me to be very similar handwriting) and the name and address of the witness seem to be broadly the same and in very similar handwriting although there are minor differences (in the space for the name of the winess in P38, the Christian name is spelt "Petr" and the address "Arden St" has a capital R; in P42, there is a second 'e' in "Peter" and a lower case 'r' in "Arden".) Nevertheless the witness' details seem to have been completed in very similar handwriting (with the same misspelling of "Coogee" in both), though on P38, the address reads "Cooge Beach" not just "Cooge" as on P42. 109 There is much more space under the heading (G) on P42 than P38 (and the former does not include the instructions "dd mm yyyy" under the space for the date to be inserted). Those differences may well be due to the different licence numbers under which the documents in question were produced (P42 being under a licence from Midware Systems with the words "Warren McKeon Dickson" subscribed thereto; P38 being under a licence from Aust. Forms P/L with no further identification). 110 The signature of the mortgagee as appearing on P42 is, to my eye, much closer to the specimen signatures admitted to be those of Mr Elfar than the signature appearing on P38. As I indicated in the course of submissions, I was somewhat surprised to hear Mr Elfar's denial that the signature on P42 was his, when that document was put to him in cross-examination. At that stage, of course, I had only had the opportunity to take a cursory view of the relevant document but the signature had seemed to me to be like others which he had admitted to be his. Having since had the opportunity to review it more closely (and to compare it with the variety of specimen signatures in evidence - including those at pages 67,136, 141, 142, 143, 144, 145, 170, 174 and 175 to which my attention was drawn by Mr Sirtes) I remain of the view that the signature on P42 looks sufficiently like Mr Elfar's admitted signatures to be more likely than not his signature. (I note that there was at least one signature initially denied but later conceded by Mr Elfar to be his - Exhibit 2 - which looks nothing like any of the other signatures, but I do not take that signature into account for comparative purposes as Mr Elfar explained in the witness box that this was a signature he scrawled on a document while leaning across the car to do so when he was in a hurry one day). Mr Elfar said that he sometimes scribbled his signature.

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111 Leaving aside for the moment whether either of the signatures on P38 and P42 was a genuine signature of Mr Elfar, the curious feature of this evidence is why there would be two such documents in existence at all. 112 If Mr Perkinson (or some other third party, although the only person likely to have an interest in forging the discharge, other than Mr Elfar, seems to be Mr Perkinson) had intended to forge a discharge of mortgage form for the purposes of effecting a discharge of the Elfar Mortgage, why create two documents for that purpose and why give both of them (if that is the inference to be drawn from the fact that the one remaining on the Warren McKeon Dickson file is different to the document as in fact registered) to his solicitors? The provision of two differently executed signatures would seem inevitably to invite suspicion. 113 Given that there seems to have been no query raised by Warren McKeon Dickson as to the discharge of mortgage document provided for the purpose of settlement, it may be that the explanation is that what they were given was the P42 document (and that they retained a copy of that document on their file as a record of what had been handed to Kemp Strang on settlement) but, if so, there is a mystery as to how a different version of the document (P38) came to be registered. It seems to be conceded, which seems to me to be a reasonable concession in the circumstances, that what Kemp Strang lodged for registration was the document they were given on settlement. If so, then any substitution of P38 for P42 would seem to have occurred prior to the settlement (unless there was a substitution en route to the registry, so to speak). Alternatively, perhaps, in the course of completion arrangements another discharge (P38) was handed over and the P42 document was no more than a document, which had earlier been provided to Warren McKeon Dickson and retained on the file. (In that regard, it would have been of interest whether the document as found on the files was an original or a copy but there is no evidence of this.) 114 The relevance of this seems to me to be that the only plausible explanations for there to be two forgeries in existence (which would be the case if Mr Elfar's denial that he signed both documents is correct) would seem to be if one had been mislaid (and it was therefore necessary to create a second forged document), as to which there is no evidence of any such document being mislaid at Warren McKeon Dickson's end, or if, after the first forgery, there was an attempt to create a more suspicious looking document so as to enable a charge of fraud (and a claim on the assurance fund) more readily to be made in due course. The latter scenario would squarely implicate Mr Elfar in the fraud, since he is the only one who has an interest in claiming on the Fund. 115 If, on the other hand, the document at P42 is a document bearing the genuine signature of Mr Elfar and was given to Mr Perkinson in return for his promise to pay the sum of $30,000 (as suggested by Mr Cummins' notes), then the reason for creating and procuring the registration of a second (and this time forged) document (P38) can seemingly only be for the purpose of enabling a claim on the Fund to be made (since otherwise there would be no reason not to use the first discharge of mortgage form - and, if that had been mislaid, to obtain another one from Mr Elfar himself.) Again, this scenario seems to me directly to implicate Mr Elfar. 116 In either case, there remains a mystery as to why (with P42 already on their file) the version which is P38 was provided by Warren MsKeon Dickson to Kemp Strang on completion of the BankWest refinancing. Mr Groundwater was unable to shed any light on that. (I hasten to add that there is no suggestion that Masterline's solicitors were knowingly privy to any fraudulent discharge of the Elfar Mortgage.) 117 Mr Groundwater's understanding (gleaned admittedly from information received from his partner, Ms Flynn, who had the responsibility for this aspect of the transaction) was that Mr Perkinson had asked that a discharge of mortgage document be prepared and said that he was going to meet with Mr Elfar for that to be executed (T 144.24). (In passing I note that if Mr Elfar was in Sydney at the time, and Mr Perkinson had produced his own discharge of mortgage form to him for signature, then that might explain why Mr Elfar did not follow up on the proposed attendance at the Bowral office in order to collect the discharge form he had asked Mr Cummins' office to prepare, but this is speculation on my part.) 118 Mr Groundwater said that Mr Perkinson had returned the signed discharge of mortgage form and that it was handed over on settlement to the incoming mortgagee's solicitors. Mr Groundwater confirmed that P42 had been generated by his firm (T 144.14). 119 I consider further below the implications for the present case of the existence of two signed discharge of mortgage forms (and noting that Mr Rickard conceded that if the P42 document were a genuine document signed on or about 26 August then any loss of Mr Elfar due to a non-compliance by Mr Perkinson to pay the sum of $30,000 would not be comensable under the Act - T 175). Suffice it at this stage to note that the document which was registered (P38) is one which was not prepared by either Warren McKeon Dickson or Wilkinson Throsby & Edwards, so I can only assume it was prepared by one (or both if they were acting in concert) of Mr Elfar and Mr Perkinson or at the direction of one or both of them (they being the parties with an interest in the refinancing proceeding). (Mr Cummins' evidence was to the effect that Mr Elfar was familiar with the preparation of Real Property Act forms and would have been capable of attending to such a discharge if necessary.) 120 The evidence as to the circumstances of Mr Elfar's discovery of the discharge having been registered was also contradictory, to say the least. 121 Mr Elfar's first account of the relevant events (other than as indicated in the brief file note of Mr Cummins which I consider shortly) can be found in the report he made to the police in February 2006 (Exhibit D), namely that his solicitor (Mr Cummins) had contacted him and told him that his second mortgage had been discharged. Mr Elfar told the police that he had no knowledge of this. There is no suggestion in this account that Mr Cummins' advice might have been instigated by an earlier discussion between Mr Cummins and Mr Elfar. 122 Mr Elfar subsequently affirmed a statutory declaration, for use in his application for compensation, on 2 August 2007 in which he gave more detail of the events and said that during the middle months of 2005 he had been approached by the Managing Director of Masterline (Mr Perkinson) who had said to him words to the effect: I am refinancing. I need to have your mortgage lifted off the title as part of that refinancing. I will pay you out.

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(a version of events not consistent with the instructions given to Mr Cummins around that time) and to which he said that he responded by saying that he would instruct his solicitor. Mr Elfar went on to state that he had instructed his solicitor, Mr Cummins, to act on his behalf in relation to the discharge of the mortgage (seemingly inconsistent with his refusal in the witness box to accept that he had given instructions in relation to the discharge of the mortgage), and then says: Some time in the first two weeks of October 2005 I was passing the subject land and noticed that work was being undertaken of a building there. I then became suspicious that something had happened in relation to the finances of the registered proprietor. Then I contacted my solicitor and had certain discussions with him. As a consequence of those discussions he undertook a search of the title and we discovered that my mortgage … had been discharged. (my emphasis) 123 When cross-examined as to what was suspicious about the work, Mr Elfar said that it was not suspicious as such but it was the fact that the work had resumed after having stopped for some time (that factseems to have led him, understandably, to infer that some finance had been obtained). Mr Elfar's evidence on this was, to use the vernacular, all over the place. He was not sure whether it was he or perhaps Mr Cummins who had driven past the site and noticed the building works; he was not sure who had phoned whom; he was not sure about when the conversations he had earlier deposed to took place or what was said (see eg T 72.44. T 74.6, T 75.9, T76.6, T76.11, T 76.15, T 76.26, T 77.15, T 96.6, T 96.24). It seemed to me that what Mr Elfar was struggling with (apart from his asserted general lack of any recollection of events pertaining to any dealings with Mr Perkinson) was how to reconcile the various versions of events to which he had previously deposed so as to come up with a consistent story of what had occurred. 124 Mr Cummins' recollection was that he became aware of the discharge of mortgage after Mr Elfar had contacted him about it on 12 October 2005 and that he had recorded in his note of that date what Mr Elfar had told him - including that Mr Elfar held a search of the title and what was on it - T 121.25/28. At p26 of Exhibit 1 there is a handwritten file note of Mr Cummins dated 12 October 2005 at 5.30pm which reads as follows: Ph K Elfar Copy of D/M Has search of Lot 11 Caveats by Lot 11 has 2 reg'd caveats X by Warren McK Dixon

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Fax [and there the note specified a fax number which Mr Elfar was unable to confirm was or was not his fax number at the time] for Karim Bondi 125 The wording of this note (brief as it is) suggests to me that Mr Cummins was recording advice from Mr Elfar that the latter had already obtained a search of the title (by reference to the words "Has search", as opposed to earlier notes where Mr Cummins had noted that he was to obtain a title search for Mr Elfar); that Mr Elfar had noted (and was conveying to Mr Cummins the information) that there were additional caveats on the title; and that Mr Elfar was asking that Mr Cummins obtain and fax to him a copy of the discharge of mortgage. 126 Mr Cummins' reading of the note, when taken to it in the witness box, was that there were two possibilities in relation to the reference contained in it to a discharge - either that Mr Elfar already had a copy of it and was referring to it or that Mr Elfar was asking Mr Cummins to obtain a copy of it and fax it to him. Mr Cummins accepted that the former was less likely than the latter to be the correct reading of the note (since otherwise there would have been no need for him to note the fax number to which a copy was to be sent ) (T 121.36-42) but in any event it seems that his recollection was that it was Mr Elfar who had rung him. That Mr Elfar knew about a discharge and was asking Mr Cummins to obtain a copy of the document seems to me to be more consistent with the wording of the note and with what Mr Cummins thereafter did than Mr Elfar's account of events. 127 Relevantly, Mr Cummins' file note does not suggest that any outrage had been expressed on the part of Mr Elfar at the idea that a discharge of mortgage might have been registered. Nor is it consistent with the version Mr Elfar gave (either in his affidavit in these proceedings or in earlier evidence) as to how he discovered the discharge of mortgage when informed of it by his solicitor. There is nothing in Mr Cummins' note to refer to a suspicion deriving from Mr Elfar's observation that construction works had resumed or were being carried out on the site. More significantly, Mr Cummins' note records Mr Elfar as (already) having a search, not an instruction that Mr Cummins should himself undertake a search.

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135 Mr Cummins' evidence was that Mr Elfar did not respond to his facsimile of 13 October 2005. I see no reason not to believe him. Although, in the witness box, Mr Elfar said that he retained a different solicitor at the suggestion of Mr Cummins, that suggestion seems to have been one made later in the year (on 20 December 2005) in the context of Mr Elfar's suggestion that he wished to make a claim on the assurance fund in relation to the matter (and the day after Mr Cummins, presumably at Mr Elfar's request, had re-faxed the copy of the discharge of mortgage form to him). 136 Mr Sirtes relies on the absence of any complaint about the fraud being made to Mr Cummins, following the 13 October 2005 facsimile transmission, as post-settlement conduct inconsistent with fraud and consistent with acquiescence in the discharge of the mortgage. I am inclined, however, to think this is at least equally consistent with Mr Cummins' evidence that Mr Elfar contacted him only sporadically (and seemingly only when Mr Elfar had something in particular on a conveyancing aspect of the matter to which he wished Mr Cummins to attend), though I note that Mr Elfar's characterisation of Mr Cummins' role was markedly different from this. 137 (I should add though that if Mr Elfar did believe that Mr Cummins was responsible for protecting his interest and was involved on a day to day basis in communications with Masterline's solicitors on his behalf, as Mr Elfar suggested, then the lack of any response by Mr Elfar to Mr Cummins' 13 October communication seems extraordinary unless, as Mr Sirtes suggests, Mr Elfar did not seek to raise any objection to the discharge of mortgage.) 138 What does, however, seem to me more likely to be post-settlement conduct, consistent with Mr Elfar having acquiesced in the discharge of mortgage in the first place (and inconsistent with a fraud having been visited upon Mr Elfar), is that if (as Mr Elfar suggested - T 106.36 and as Mr Rickard seemed to accept was the case - T 187.29) the matter was referred by Mr Woods to Mr Elfar's present solicitor due to a conflict (in that Mr Woods also acted for Mr Perkinson, as noted in Mr Cummins' 20 December 2005 file note), then I have difficulty accepting that Mr Elfar could have raised the issue of fraud with Mr Woods until some time towards the very end of 2005 or early 2006. I say this because once the issue of fraud was raised, in the context of the discharge of the Elfar Mortgage which had been granted to Masterline, it must have been obvious to anyone who was acting both for Mr Elfar and Mr Perkinson that there was or might be a conflict of interest yet the matter was not transferred to Mr Pope until early 2006. I think it unlikely that once a very serious allegation of fraud had been made, a solicitor in Mr Woods' position acting for both Mr Elfar and Mr Perkinson would have continued to do so for 2-3 months without at least raising the issue of any potential conflict. There was, of course, no evidence from Mr Woods to enlighten me as to the position, though Mr Elfar would surely have been in a position to subpoena him to give evidence. In the absence of further evidence as to what Mr Woods' role was in relation to the relevant matters, I do not place any weight on this aspect of the matter. However, I do note that although Mr Elfar gave evidence as to the legal advice he had obtained from Mr Woods, it seems to me that advice as to registration of a caveat would be consistent with Mr Elfar simply having asked how best to protect his position after discharge of the mortgage (without having raised the issue about fraud in connection with the mortgage) and I therefore cannot be confident that Mr Elfar's conduct in instructing Mr Woods to act for him after the discharge involved instructions being given as to any allegation of fraud. 139 In any event, there is no evidence as to anything happening in relation to the alleged fraud until 31 October 2005, when Mr Elfar lodged a further caveat over both Lots 10 and 11, this time identifying his interest in the land as pursuant to the sale contract for the proposed Lot 1. By this time, various parties (including Warren McKeon Dickson in respect of two separate claims) had lodged further caveats on the title, apparently claiming interests under loan arrangements to a value of in excess of $200,000 (as per a BankWest credit note reference). (In that regard, it appears that a fraud report was notified by Warren McKeon Dickson on 20 October 2005 in relation to an alleged forged withdrawal of caveat said to have been lodged with the Land and Property Information office to procure the withdrawal of one of the Warren McKeon Dickson caveats which related to a loan made by the firm of $90,000 to Masterline. Mr Groundwater confirmed in the witness box his belief that Mr Perkinson had been involved in the lodgement of that forged withdrawal of caveat form.) 140 In mid December 2005, BankWest issued a default notice to Masterline (and in late March 2006 appointed a receiver to the company). 141 On 20 December 2005, Mr Cummins made a handwritten file note of a telephone conversation with Mr Elfar in which he notes that Mr Elfar informed him that Martin Woods acted for Mr Perkinson and notes that "KJE wants to pursue LPI insurance fund" and then noted what appeared to be Mr Elfar's instructions that DOH had consented to a second mortgage over Lot 10 (presumably an error) and that on refinancing his second mortgage got discharged fraudulently (instructions that would seemingly have been unnecessary had Mr Elfar been keeping Mr Cummins up to date on this matter in the interim). Mr Cummins' note records that he advised that Mr Elfar may have a claim against the insurance fund but that he must get a solicitor in Sydney to act. 142 It was not until 3 February 2006 that Mr Elfar reported the alleged fraud to the police (see Exhibit D) (though his affidavit suggests that he had reported the matter shortly after having been contacted by his solicitor, ie not nearly 4 months later). (In that regard, it is perhaps of interest that Mr Elfar's suggestion that there could be a claim on the fund appears to pre-date his report of the fraud to the police, which might suggest that this was as a precursor to making the claim and not for any other purpose. However, this was not put to Mr Elfar and I place no weight on the timing of the notification to the police in this regard.) 143 Also in evidence was a handwritten file note of Mr Cummins (on a piece of paper to which a telephone message slip was attached, the message being dated 7 March 2006 "to DJC from Karim"). In Mr Cummins' handwriting on the message slip are the words "Perkinson refinancing again - in discussion with Perkinson" followed by notes on the attached page, reading "for about $100,000 now & rest in return for Lot 1 Villa at front. Deed being drafted by Martin Woods. I to check on Ascot Rd progress" (p19 Exhibit 1). These discussions with Mr Perkinson (a man whom Mr Elfar described as elusive) appear to have been taking place within a month after Mr Elfar had reported the alleged fraud to the police. 144 Mr Sirtes submits that Mr Elfar's conduct was inconsistent with someone who had realised for the first time in mid-October 2005 that he had been defrauded (and seemed to suggest that Mr Elfar's response to questioning in that regard was disingenuous, referring to the cross-examination at T 101.10ff). I think there is some force in that submission, particularly having regard to the fact that there was no notification to Masterline of any claim by Mr Elfar in relation to the discharge (nor any claim by Mr Elfar in relation to the loan which was repayable by Masterline under the original vendor finance arrangements by the end of 2005). 145 It seems to me that the real explanation for Mr Elfar's delay in taking action after the discharge of the mortgage is likely to be that which was given by Mr Elfar himself in the witness box, namely that he had made a commercial decision that it was in his best interests for the development to proceed. Mr Elfar had earlier (in the context of the Masterline proceedings) deposed to the likelihood that if the property were sold he would lose a substantial amount of money but that if the property was redeveloped he would be repaid in full. He said in cross-examination (from T 109.23) that when he sought advice from Martin Woods in 2005, after discovery of the discharge of mortgage: In 2005 the first thing he advised me to do was to get the caveats whacked on the property as quickly as I could and because it's - this has all just blown up and taking - sitting back basically didn't want to rock the boat too much if the project was going to get finished finalised or whatever that's probably the reason why I made the commercial decision to sit back and wait to see what happened on the whole deal. That's probably - that's as best as we would have got that's why the only reason - well I took the caveats up to protect my interest, that's all. They were lodged and I was - basically if he can get through his little problem get through his little problem. He's got through before and that's about as high - it was a commercial decision for me not to rock the boat too much because obviously work had been done on the site and I would have discussed with Martin. He was my solicitor on matters at the time. (my emphasis) 146 At some point Warren McKeon Dickson served a statutory demand on Masterline in relation to the debts they claimed were owing by it. Mr Groundwater believed that those were paid out. 147 After the appointment of a receiver, the property was in due course sold on 15 June 2006 (for $1.2 million excluding GST), the sale completing in late November 2006. Shortly prior to completion, Mr Elfar acceded to a request to withdraw his caveats. 148 Mr Elfar subsequently lodged his claim for compensation with the Registrar General in May 2006. It is not suggested that he has failed to comply with the administrative requirements of the Act in relation to the making of a claim. The claim was formally rejected on 4 December 2007.

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Handwriting experts 149 Expert handwriting evidence was adduced by both parties. 150 Tendered for Mr Elfar was an expert report dated 4 October 2007 of Mr Stephen Dubedat, a copy of which was annexed to an affidavit sworn by Mr Dubedat on 24 September 2008. Mr Dubedat was cross-examined on that report. 151 Provided to Mr Dubedat were a variety of specimen signatures (which he reproduced in his report and numbered S1 through to S31, together with the questioned signature (being that appearing on the discharge of mortgage form at p 38 of Exhibit 1). The summary of instructions notes that the specimen signatures provided to him (other than the questioned signature) were signatures attributed to Mr Elfar. In fact, however, it would appear that the signatures on documents S26 to S28 did not, on the face of the documents on which they appeared, purport to be signatures of Mr Elfar. Not surprisingly, therefore, Mr Dubedat formed the view that they had not been signed by Mr Elfar but by somebody else. That conclusion is not disputed. 152 Mr Dubedat formed the view that the signatures on the balance of the specimen documents (S1 to S25 and S29 to S31) could reasonably be taken to be the work of the one writer. He noted that the signature on document S29 appeared to be in a different style to the remaining specimen signatures, though bearing some resemblance to the specimen signature on document S22. In cross-examination he suggested that the signatures at S22 and S29 were in a different style by which I understood him to mean, in effect, that they were in cursive writing rather than a signature as such ("Well, I believe S29 and S22 are a separate entity, in that I think it is more handwritten rather than signed" - T 18.3). 153 Mr Dubedat noted various similarities and differences between the questioned signature and the specimen Elfar signatures. The similarities were to be found in the broad pictorial appearance of the questioned signature, its apparent complexity of construction and slope. Mr Dubedat also noted that the form of the letter "k" as between the respective signatures was similar, with the exception of the height of the retrace on the staff of that letter. 154 The differences identified by Mr Dubedat included: (a) the presence of an initial letter form, assumed to be either the letter "j" (attributed to a more formal style of signature) or to another person reproducing an entry not related to the genuine signature, such as the pencil entry "X" to locate where a signature on a formal document should be signed; (b) the lower retrace on the staff of the letter "k", which he considered could be contributed to the initial form connecting to this letter; (c) the angular form of the letter "e"; (d) the slightly different slope of one of the terminal loops; (e) the form and position of the last change of direction before the terminal stroke; (f) the flatter slope and length of the terminal stroke; and (g) the general proportions of the signature. 155 Mr Dubedat noted that the reproduction nature of the questioned signature (ie the fact that it was a copy) did not enable him accurately to determine the line quality and fluency of execution of the questioned signature but considered that it appeared to have been written at speed. Mr Dubedat was unable fully to determine the construction of the questioned signature. 156 Mr Dubedat said that "the differences between the specimen signatures and questioned signature showed many of the gross forms of the specimen signatures, but appear to lack similarities in the finer or more subtle features, with the possible exception of the letter 'k'". He considered that those observations were consistent with the proposition that another person had simulated or traced a genuine "K Elfar" signature and that this would support the hypothesis that the questioned signature was written by a writer other than the writer of the specimen signatures, either attempting to reproduce a genuine "K Elfar" signature by a tracing method or by freehand to produce what he referred to as a 'simulated forgery'. 157 However, Mr Dubedat also noted that the presence of the initial letter form, the closeness in the execution of the letter "k" and the apparent similarities in the complexity of the construction of the questioned signatures did not enable Mr Dubedat to exclude the possibility of two other hypotheses - those being either that the questioned signature was written by the writer of the specimen signatures (ie Mr Elfar) and the differences noted were due to natural variation, accidental formations or some other factor or that the questioned signature was written by the writer of the specimen signatures (Mr Elfar) and the differences noted were due to it having been deliberately written illegibly or in an unusual manner so as to afford the signatory some plausible ground for later disavowing it. 158 Having noted that those alternative hypotheses could not be excluded, Mr Dubedat's ultimate conclusion (based, he said, on his experience in examining signatures with a view to determining whether or not they were genuine and taking into account both the similarities and differences) was that it was more probable than not that the questioned "K Elfar" signature on the registered discharge of mortgage form was not a genuine signature. 159 The difficulty I confess that I have in relation to Mr Dubedat's conclusion in this regard is that it is not clear to me what factors were ultimately persuasive in Mr Dubedat's mind so as to cause him to place more weight on the differences rather than the similarities between the respective signatures or otherwise to prefer the hypothesis of forgery by a third party to either of the two alternative hypotheses (which he had said he was unable to exclude). 160 Mr Dubedat accepted in cross-examination one but not all of the limitations noted by the defendant's expert witness, Mr Gary Storey, deriving from the fact that the original document was not available, namely he agreed that it was not possible to determine whether the "J-like feature" was in fact part of the signature (T 10.44). However, he considered it was possible to determine from this copy (which he described as a moderate sort of quality reproduction - T 11.46) the line strokes, speed and fluency of the signature (T 11.47-48) and the sequence of strokes (T 12.31). 161 Mr Dubedat was asked in cross-examination to accept the proposition that there was a great variation of signatures by Mr Elfar (by reference to documents at pp 136, 144 and 145 of Exhibit 1). Mr Dubedat seemed reluctant to express opinions on documents taken in isolation, explaining that one needs to examine the whole range of specimen signatures in order to get a natural variation and then to compare this range to a particular questioned signature (T 18.25-27). Mr Dubedat noted that a one on one comparison would always result in differences being found and that it is very difficult, on a one to one comparison, to make a determination (T18.28-29), later confirming his opinion that it is necessary to compare the signatures collectively (T 19.14). Mr Dubedat did nevertheless accept (T 19.6) that Mr Elfar did have a significant range of signatures, from which I surmise that Mr Dubedat is satisfied that there is a reasonably broad range of gradations or variances which may be found as between different samples of genuine signatures from Mr Elfar (and hence that it cannot be assumed that any particular signature would display close uniformity with other genuine signatures) . 162 For the defendant, Mr Gary Storey provided expert evidence, annexed to his affidavit of 21 October 2009. He was not cross-examined on that affidavit. 163 Mr Storey was satisfied that the one had person signed the Karim Elfar signatures appearing on documents itemised at specimens 2 to 20 of the specimens submitted to him for examination. He noted that there were a number of individual characteristics, with variation, in the execution of the signature, some of those being that the signature consisted of two parts, part one being the stand alone letter "K" which was written as one pen stroke terminating with a small rising dip to the right, and part two commencing with an epsilon-like formation and then a series of longer strokes and loops completing the illegible formations of "lfar"; and that the writer had a good degree of speed, pressure and pen control when signing his name. 164 Mr Storey noted that the questioned signature (P38) was a reproduction and that this introduced limitations to the examination. (As mentioned above, Mr Dubedat agrees in part with this qualification.)

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165 Mr Storey noted that the questioned signature compared to the specimen signatures revealed both features in common and some inconsistencies, those being: i. the initial letter formation had the appearance of the letter "j". It may or may not be connected with the adjacent letter formation which is similar to the "k" formations on the specimen signatures. The "j" formation was unusual and appeared to be outside the usual manner in writing with specimen signatures. ii. the k-like formation and the epsilon-like formation from the reproduction had similar movements to the formations on the specimen signatures even though the epsilon might have more angular changes and pen direction than observed on the specimen signatures; and iii. the biggest inconsistency lay in the two looped formations which tended to be longer and narrower on the specimen signatures whereas on the questioned signature they were slightly more rounded and not as long. 166 Mr Storey formed the opinion that the j-like formation was more like a feature added to the signature for the purposes of disguise rather than a feature introduced by a person attempting to copy a genuine signature. (It seems to me that there is an inescapable logic flowing from that - surely, if one were seeking to forge a signature one would not do so by adding a significantly different element to the signature; and if the process was by way of tracing, or 'simulated forgery' to use Mr Dubedat's words, this would be even more unlikely.) Mr Storey further suggested that the fact of the pictorial similarity between the questioned and specimen signatures if the "j-like" character was ignored, meant that the person who wrote the signature had knowledge of what the genuine signature looked like. 167 Mr Storey said that without being able to examine the original of the questioned document it was not possible to determine whether the j-like feature was in fact part of the signature as it appeared to be; properly to assess the line quality, speed and fluency of the questioned signature; or to determine the sequence of strokes forming the family name part of the signature. 168 Mr Storey's conclusion was that, on the material available, it was not possible to determine whether the questioned signature had been written by the specimen writer but outside the usual manner the person signed his name so as now to afford an opportunity for disavowal or that the inconsistencies were evidence of the writing of another person. In his opinion only an examination of the original document would resolve the issue. 169 That said, Mr Storey did seem to have excluded the hypothesis that the questioned signature was simply a normal variation of the usual signature of Mr Elfar. 170 What neither expert was apparently asked to examine (whether this was a matter of deliberate choice or otherwise I do not know) was the signature appearing on the other signed discharge of mortgage form (P42), being the form found on the file of Warren McKeon Dickson but which was not lodged for registration (and, although Mr Dubedat was taken in cross-examination by Mr Sirtes to a number of other documents bearing a purported signature of Mr Elfar, Mr Dubedat was not asked to express a view on that particular document). 171 I do not draw any inferences from the fact that neither expert was asked to opine as to the signature on P42. It is not clear to me on the evidence whether Mr Elfar's lawyers (or for that matter the Registrar General's) had a copy of this document at the time that their respective experts were retained to provide an opinion. As to the fact that Mr Dubedat was not taken to this particular document in cross-examination, I do not think anything of significance attaches to that - rather, it seemed to me that the focus of cross-examination on this point was as to the wide variety of signatures emanating from Mr Elfar's own hand (as to which this particular document was but one of a number). 172 Nevertheless I do consider there to be some force in Mr Sirtes' criticism that the specimen signatures provided to Mr Dubedat seemed to have been were 'cherry-picked' in order to provide him with a fairly consistent range of specimen signatures (assuming the non-Elfar signatures and those in cursive writing are ignored). Given that Mr Dubedat explained the importance of comparing a questioned signature with a collective range of signatures, in order to form a view on the signatory's natural variations, it is unfortunate that the broader range of signatures which Mr Elfar accepted were his were not available for use by Mr Dubedat in his comparative pool. Credit of witnesses 173 Not surprisingly, Mr Elfar's credit was an essential issue in the proceedings. Mr Sirtes submitted that the court should find that Mr Elfar was a person of little credit or reliability in that he had engaged in evasion (T 33.5; T 43.7; T 61.16; T 66.5), prevarication (T 50.37; T 58.21; T 62.16), opportunistic revision (T 46.20; T 54.23ff; T 59.25; T 61.47; T 70.1ff; T 128.44ff), studied carelessness (T 42.24), convenient memory lapses (T28.35 cf his later explanation at T68.34ff) and that his evidence was incomplete and characterised by internal inconsistencies (T 28.35ff and the evidence as to the giving of instructions to register the second mortgage and as to the version of events surrounding the instructions apparently given for preparation of a discharge of mortgage and the manner in which the alleged fraud was discovered). 174 In particular, Mr Sirtes points to the evidence given by Mr Elfar as to matters on which Mr Cummins' notes record the giving of instructions (T 43.7; T 61.16) but which Mr Elfar was not prepared to accept and to what Mr Sirtes describes as the evasive evidence in relation to instructions to prepare a discharge of mortgage (T 66.5). Mr Sirtes submits that the evidence given by Mr Elfar to the effect that he did not know the detail of what was going on in this transaction and that he did not have much involvement with Mr Perkinson should not be accepted (pointing to Mr Elfar's answer at T 44.36 which indicated a knowledge of Mr Perkinson's personal situation). 175 Mr Sirtes submits, and the evidence from Mr Cummins indicates, that Mr Elfar was an experienced property investor who had engaged in numerous property transactions over the years and who was familiar both with property concepts and with the documentation of property dealings (including prior knowledge of the existence of the statutory insurance fund to which he suggested he make a claim, rather than being advised by Mr Cummins as to this avenue for relief). Mr Sirtes submits (and the evidence in my view establishes) that Mr Elfar had an intimate involvement in the Masterline refinancing transaction, to the extent that he contacted the mortgagee directly to intervene in the proposed mortgagee auction sale and had kept Mr Cummins appraised of relevant dates in relation to the refinancing. 176 Mr Elfar's complaint in the witness box that he did not know of the caveats and other documents lodged by Mr Perkinson and therefore could not be said to have been kept in the loop, seems to me to go to what transpired at the end of their association in relation to the property. Moreover, it seems that on both sides, Mr Elfar and Mr Perkinson demonstrated a willingness not to tell each other the complete story of events as and when it suited them - as evidenced by comments in their respective solicitors' file notes, indicated above, of matters to be kept from each other until some later time. 177 Mr Cummins' file notes (being a contemporaneous record prepared by someone who struck me as thoughtful and measured in his evidence in the witness box) I regard as unquestionably more accurate and reliable than Mr Elfar's recollection of events, which was scanty and inconsistent to say the least. Where there is a conflict between them, I accept Mr Cummins' evidence. 178 Relevantly, I find that the evidence establishes that, rather than Mr Cummins having the role where he was responsible for the day to day conduct of the matter with regular contact with the solicitors involved for the mortgagee leading up to the refinancing in September 2005, he had a very limited role - largely responding to ad hoc requests for advice on the various property transactions. Mr Elfar's practice, as evident from Mr Cummins' file notes and his recollection of events, was to seek specific advice or assistance on parts of the transactions from time to time from Mr Cummins or to keep him informed from time to time but otherwise to deal directly with others (such as Mr Perkinson and Mr Hannaford from DOH) in order to negotiate business arrangements with them. 179 Mr Rickard submitted that I should not draw any adverse inferences from Mr Elfar's failure to recall matters in the witness box or from the revision of answers given by him (such as his initial denial of any understanding of what postponement of a mortgage meant and his evidence the following day to the contrary) due to the state of Mr Elfar's health. There was no evidence before me as such as to Mr Elfar's health, although he did answer a question as to the document which became Exhibit 2 by reference to the time at which he had found out he was very ill and I note that the resumption of his cross-examination on the second day was deferred in order to enable him to attend the hospital for a blood transfusion. 180 My observation of Mr Elfar in the witness was that he looked frail and pale; that he moved with considerable difficulty and that he appeared to be in pain from time to time when giving his evidence. His manner was wearied (whether being that of someone weary of the whole process of litigation or otherwise due to his medical condition, I do not know). It may well be that the effect of any medication that he was taking was such as to affect his memory of the events in question and on occasion I did consider him to be genuinely confused by the questions put to him (though I say this without any disrespect to his cross-examiner). Mr Elfar's disdain for and distrust of Mr Perkinson seemed to me to be genuine and I have no difficulty accepting Mr Elfar's evidence that he wished he had never met him but I do not suggest that this coloured Mr Elfar's evidence in any material way.

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181 Ultimately, however, it seems to me that it is not necessary for me to form a view as to the extent to which, if any, Mr Elfar's ability to give evidence was affected by his present medical condition, because I do not base my conclusions on the fact that Mr Elfar was not prepared to accept the accuracy of matters recorded in Mr Cummins' file notes (or that he reconsidered and amended some of his evidence overnight). 182 Rather, it seems to me that the apparent difficulty that Mr Elfar had in giving reliable evidence of what had occurred (whatever the reason for his memory failures and whether that difficulty was genuine or not) and the numerous inconsistencies between his recollection of events and that recorded in Mr Cummins' contemporaneous file notes means that I can have no confidence that Mr Elfar's memory at this stage of what occurred back in 2004-2006 accords with what in fact occurred. 183 In fairness to Mr Elfar, Mr Sirtes took Mr Elfar through each of the relevant file notes of Mr Cummins in order to give Mr Elfar an opportunity to put his version of events, knowing what had been said in relation to those events by his solicitor, and quite properly gave Mr Elfar every opportunity to explain apparent inconsistencies between his evidence in these proceedings and that given by him in other contexts. At times Mr Elfar seemed to be confused by that process and that seemed to me to account for some of the inconsistent evidence that he gave. However, at the very least what this confirmed was the unreliability of his evidence. At other times, Mr Elfar seemed inclined to adopt a wearied or dismissive response to questions on which his evidence was at odds with the documents or where there was a suggestion that his conduct was inconsistent with his present claim, and gave the appearance that he was seeking to avoid the issue (such as the cross-examination going to his reaction after he discovered the alleged fraud - T 101.10). 184 On critical issues, such as the level of Mr Elfar's involvement with Mr Perkinson, the role Mr Cummins played in the transaction and how Mr Elfar learnt of the discharge of mortgage, Mr Elfar's version of events is clearly inconsistent with the notes of Mr Cummins and with Mr Cummins' recollection of events and that, together with the varying versions of what Mr Elfar has said in his affidavit, in his earlier statutory declaration and in the witness box causes me to have serious doubts as to the general reliability of his evidence. 185 I have given examples earlier of aspects of Mr Elfar's evidence which were inconsistent with the available documents or with Mr Cummins' recollection. Evidence such as Mr Elfar's assertion that he instructed Mr Cummins to "keep in contact with Masterline's lawyers to ensure money would be paid to him" are so far from the evidence of what in fact occurred as to be little more, in my view, than an attempt to avoid the consequences of Mr Elfar's decision (unfortunate as it turned out to be) to continue to do business with Mr Perkinson. (See also T 97.25.) At T 128.39-46, Mr Cummins gave evidence in cross-examination which seems to me to be wholly consistent with the documentary evidence before me:

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Q. Are you able to discern from anything that you have been shown today, in terms of your file notes, letters, or facsimiles, or indeed by reference to your independent recollection, whether you had received at any stage instructions from Mr Elfar to keep in contact with Masterline's solicitors to ensure that the monies owed would be repaid to him? A. It seems to me, as I recall, that Mr Elfar was in touch with Mr Perkinson on a more regular basis than I was in touch with Mr Perkinson's solicitors, and that I was being advised by Mr Elfar of the progress of that. 186 It is in the context of the general views I have formed of the credibility of Mr Cummins versus that of Mr Elfar, and accepting the evidence given by Mr Cummins as to Mr Elfar's agreement or intention to give a discharge in favour of Masterline (albeit for payment of the sum of $30,000), that I have weighed Mr Elfar's denials as to the signing and knowledge of registration of the discharge form. 187 Briefly turning to the other lay witnesses, I note that both Mr Cummins and Mr Groundwater were subpoenaed by the Registrar General to attend and to give evidence. They were independent of the defendant and called to shed light on the events surrounding the claim in circumstances where the Registrar General was not satisfied on the information provided by Mr Elfar that the claim was well-founded. 188 Mr Cummins, as noted above, gave his evidence in a thoughtful and measured way. He is an accredited specialist mainly practising in property and first started acting for Mr Elfar some 20-25 years ago, exclusively on conveyancing matters. He considered the questions put to him and answered them succinctly and with obvious care to ensure that his evidence was correct (see for example T 91.21). Where questions were asked which went beyond his own involvement in the matter or his recollection of matters he stated simply and with clarity that that was the case (for example, T 88.40, T 89.9, T90.50, T 93.25). He explained his standard practice when taking file notes of attendances on clients and there was no reason to think that the documentation produced from his files did not represent an accurate record of those attendances. 189 I considered Mr Cummins to be an honest and reliable witness (to use Mr Sirtes' appellation, an impeccable witness). I accept his evidence without reservation. (In so doing I note that Mr Cummins confirmed that particular file notes and letters to which he was taken recorded his understanding of instructions given to him by Mr Elfar - and I would not readily conclude that where he had conveyed information to Masterline's solicitors he had done so without holding the relevant instructions - see for example T 86.18, T 86.32, T 86.36, T 88.26, T 92.1, T 113.11, T 113.32). I also note Mr Cummins' his response, given without hesitation, that it was "certainly" the case that his experience and dealings with Mr Elfar were that Mr Elfar commonly dealt directly with persons such as Mr Perkinson and had informed Mr Cummins from time to time as to those dealings. This belies much of the evidence given by Mr Elfar of his dealings in relation to the matter. 190 Mr Groundwater's evidence was less precise and his manner more discursive. He was relying largely on what Ms Flynn had told him in relation to events such as the evidence he gave as to the circumstances in which the discharge of mortgage was provided. Nevertheless there was nothing to cause me to question his truthfulness or reliability as a witness as to matters within his own knowledge or as to his understanding of the basis on which the refinancing transaction was to proceed. Issues

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(i) Forgery/acquiescence 191 To maintain a claim under s 129(1)(e), Mr Elfar must establish on the balance of probabilities that he has suffered a loss arising from the fact that he has been deprived of an estate or interest in land as a consequence of fraud. The estate or interest claimed to have been lost as a result of the registration of the alleged forged discharge of mortgage form is the security comprised by the second mortgage over Lot 11 (there being no doubt that Mr Elfar never held a registered interest over Lot 12). 192 It is submitted by Mr Sirtes that this requires Mr Elfar to establish not simply that someone else signed P38 in his name but, further, that Mr Elfar was not complicit in that conduct. It is submitted that if Mr Elfar allowed some other person to sign the discharge of mortgage form, with full knowledge that this would give rise to the mortgage being discharged, this is not a situation of fraud (but, rather, is one where the discharge occurred with knowledge, acquiescence and/or approval of Mr Elfar as second mortgagee). (In that regard, while Mr Rickard accepts that the onus lies on Mr Elfar to prove the forgery it seems that on his case this is said to be sufficient to establish fraud.) 193 (If a forgery amounting to fraud were to be established, by the Amended Defence, the Registrar General's alternative position is that the case falls within s 129(2)(a) and that compensation is not payable as any loss or damage is a consequence of Mr Elfar's own acts or omissions, those, in essence, being the provision by him of a signed discharge of mortgage to Mr Perkinson or his acquiescence in allowing Mr Perkinson to provide a forged discharge of mortgage to Masterline's solicitors, knowing that it would or could be used to facilitate a discharge of the mortgage and failing to take any step to stop that occurring.) 194 Mr Elfar clearly bears the onus of proving that, as a consequence of the existence of fraud, he is deprived of an interest in land which causes him loss or damage (Behn v Registrar General [1979] 2 NSWLR 496, at 509, this issue not being questioned on appeal in Registrar General v Behn [1980] 1 NSWLR 589; (1980) NSW ConvR [55-002], nor Registrar General v Behn (1981) 148 CLR 562; (1981) 35 ALR 633). 195 There is authority (Brott v R (1992) 173 CLR 426; (1992) 105 ALR 189; [1992] HCA 5; R v Forbes (1835) 7 Car & P 224; 173 ER 99; R v Beard (1837) 8 Car & P 143; 173 ER 434; R v Parish (1837) 8 Car & P 94; 173 ER 413; R v Beardsall (1859) 1 F & F 529; 175 ER 839; R v Hartshorn (1853) 6 Cox CC 395) to the effect that there can be no fraud or forgery where the alleged victim is complicit in or consents to the alleged forgery, on the basis that the necessary elements to establish the forgery will not have been made out. 196 As Mr Elfar's complicity or consent to the "forged" discharge of mortgage speaks to the existence of fraud itself, as opposed to operating as a defence once the existence of fraud is established, Mr Elfar bears the onus of proving not only that the document was forged but that he did not consent to the forgery and was not complicit in the fraud, to the extent this is necessary to establish the existence of the fraud in the first place. 197 "Fraud" has been interpreted broadly for the purposes of s 129, in Parker v Registrar General [1977] 1 NSWLR 22, Glass JA (with whom Street CJ agreed) stated, (at 25-26): In my opinion, the section should be construed so as to embrace all frauds within the ordinary legal meaning of that term. I can see every reason why some might think it undesirable that, whenever the fraudulent party absconds, dies or becomes bankrupt, the assurance fund should bear the brunt of the many varieties of moral turpitude normally encompassed by the word fraud. But I can see no warrant for reading down the language of the section so as to restrict it to forgery or quasi-forgery. 198 Relevantly, in Brott v R, Brennan J sets out a comprehensive explanation of the common law elements of forgery (at 193) (which I have extracted below) and importantly indicates that there will be no forgery when a signature is placed on a document by a person having the purported signatory's authority to do so (at 192, citing R v Forbes; R v Beard; R v Parish; R v Beardsall). 199 Brennan J goes on to note (at 192) a ruling by Crompton J sitting in the Staffordshire Assizes in R v Hartshorn, and explains it as follows: There, a statute provided that illiterate voters should place their mark on a ballot paper and have the mark attested by a witness. The witness placed his signature on the voting paper when the mark had been placed on it not by the voter but by another person, albeit with the voter's express or implied consent. His Lordship ruled that there was no forgery, saying ibid., at 402: "There is no false statement implied, and the essence of the crime of forgery is making a false entry or signature, knowing it to be without authority and with intent to defraud."

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201 Mr Elfar denies having signed the discharge of mortgage (P38) (and denies having signed the other version of the discharge of mortgage form in existence (P42)). The expert forensic evidence is equivocal to a large extent. Both experts accept that there are limitations on the conclusions which can be drawn in the absence of an original document. Both identify similarities and differences between the signature on P38 and other signatures of Mr Elfar. Neither seems to suggest that the signature on P38 falls within the range of what might be expected by way of usual variations in signatures (even accepting that Mr Elfar's signature seems to have varied more than is evident from the collection of specimen signatures given to his expert for comparison). 202 Of the signatures which Mr Elfar accepted were his, there is a variation between what I might describe as his 'ordinary' signature; the one or two occasions when he seems to have written his name in cursive writing rather than appending a signature as such; and the one instance where he did nothing more than 'scribble' something illegible on the page (which led to an enquiry from the LPI to establish that this was indeed his signature - Exhibit 2). Set within that range, it seems to me to be clear, and the experts confirm this, that the signature appearing on P38 is outside the range of his usual signatures and therefore, if genuine, it must be an anomaly. (In that regard, although Mr Sirtes suggested there was no reason why this could not simply have been a scribble of the kind Mr Elfar acknowledged he had made on Exhibit 2, there seems to be to be a vast difference between the scribble at Exhibit 2 and the purported signature at P38.) 203 Both experts seem to accept that the most likely explanation for the divergence in appearance between the signature on P38 and Mr Elfar's usual signature is that the former was either signed by someone else or signed by Mr Elfar but deliberately altered to make it look like someone else had signed the document. Where they differ is in reaching a conclusion as to which of the two is the more likely. 204 Mr Storey says that, without access to the original, it is not possible to determine which of those alternatives is most likely to be the correct one (though his report did suggest to me that, insofar as the main difference between the respective signatures was the addition of the 'j' like component at the start of the signature, this would be more likely to be the product of Mr Elfar deliberately altering his own signature than someone trying to copy it). 205 Mr Dubedat nevertheless was able to form a conclusion as to which of the two alternatives was the more likely - he says this is based on his experience and on an assessment of the similarities and differences. With all due respect to him, it is not apparent to me how exactly he formed that conclusion. It may be that ultimately it was a matter of impression. However, it is difficult for me to assess the weight to be accorded to his opinion when I do not know what it was which caused him to come down in favour of this being a forgery. And if it comes down to a matter of impression, then that may affect the weight to be placed on his conclusion when considered with the surrounding facts. 206 Mr Sirtes submits that I should follow the approach advanced by Chan PJ in Nina Kung v Wang Din Shin [2005] HKCFA 54, to which reference was made by Young CJ in Eq (as his Honour then was) in Vella v Permanent Mortgagee Pty Ltd [2008] NSWSC 505, at [245] - [248], namely to decide this issue not solely based on the expert evidence alone. There Chan PJ noted that the evidence on handwriting cannot and should not be considered as if there were no other evidence and (at [12]) that the crucial question to be decided was whether the witness' evidence could safely be accepted in the light of all the evidence including the handwriting evidence. Reference was made to cases in which, despite clear evidence from experts to the effect that the handwriting in question was forged, courts had refused to accept that evidence and favoured other pieces of direct evidence. 207 In his supplementary submissions, Mr Sirtes, with some force in my view, describes the conclusions of Mr Dubedat as "relatively ambivalent". (Somewhat less kindly, he had earlier described them as 'tepid'.) In my view, given that Mr Dubedat has (quite properly) noted in his report that he cannot exclude the possibility of hypotheses (i) and (ii) (each of which postulated that the signature was that of Mr Elfar, whether a natural variation or a deliberate alteration to afford some plausible means for disclaiming it), it is open to me to form the view that one or other of those hypotheses is more likely than the hypothesis he ultimately favoured. Given that Mr Dubedat seems to have reached his ultimate conclusion as a matter of impression (based on his experience and taking into account the stated similarities and differences but without telling me the particular aspects of that experience to which he had regard or how he did take those similarities and differences into account), the weight that I can safely place on that conclusion is not great. 208 I accept that the signature on P38 is not the normal or usual signature of Mr Elfar. However, if I cannot be satisfied on the balance of probabilities that it was placed on the document by someone else (as opposed to having been signed by him in a deliberately unusual way) then Mr Elfar will have failed to establish that a fraud has been perpetuated. (Even if I were satisfied that it is more likely than not that the document was signed by someone else, there will still be no 'fraud' vis a vis Mr Elfar if I am not satisfied that he did not acquiesce in the placement of that signature on the document or its provision to the incoming mortgagee.) 209 In order to assess those matters I need to take into account the chronology of events leading up to the refinancing of the Masterline loan in September 2005, which I have set out in detail above. 210 What seems to me to be significant is that from the outset Mr Elfar seems to have demonstrated a tendency to assert a position or demand and then a willingness to negotiate with Mr Perkinson a less favourable position if that was one which would preserve the prospect of the development proceeding (with a view to obtaining a benefit from the property as ultimately developed). So, for example, Mr Elfar sought to press for Mr Perkinson or his company to pay the purchaser's stamp duty on the sale at a time when the arrangements were being agreed for vendor finance of the shortfall in purchase price but did not insist thereon. Mr Elfar's negotiating position was a preference for a second mortgage but he did not insist thereon (and the manner in which this was proposed as a preference was hardly a forceful negotiating stance). Mr Elfar's evidence that he had instructed his solicitor to register the mortgage, if that related to the time at which the mortgage was taken out (which in context it seemed to do) was clearly false. Although Mr Elfar suggests that he fought hard to obtain a registered mortgage, this is not borne out by the facts and, instead, it seems that Mr Elfar only pressed for registration of the mortgage after he found out that another caveat had been lodged on the title (and seemingly at a time when he had the intention of 'getting even' with Mr Perkinson). Mr Elfar on various occasions sought to obtain a payment for withdrawal of his caveat and, later, postponement of his mortgage (for sums varying from $30,000 to $100,000) but ultimately was willing to contemplate a discharge of mortgage (for a relatively small sum of $30,000) and went so far as to contact Mr Cummins for him to prepare such a document. All of that suggests a willingness of Mr Elfar to compromise his position in order to preserve the prospect of successful completion of the project which was in his interest (consistent with Mr Elfar's explanation as to why he did not rock the boat in October 2005). 211 I accept that Mr Cummins was told by Mr Elfar (who knew the difference between a discharge of mortgage and a postponement) that he had agreed to discharge the mortgage for a payment of $30,000. Mr Elfar, far from being troubled by the prospect of the mortgage being discharged in that fashion, sought no advice from Mr Cummins as to any other means of securing the moneys owing to him (unlike earlier when he had been contemplating a fixed and floating charge over Masterline's assets in lieu of a second registered mortgage). 212 When it was put to Mr Cummins in cross-examination that it was unlikely that Mr Elfar would have agreed to a discharge rather than a postponement, Mr Cummins (at T 137.6-11) confirmed in an understated but quite categorical way his understanding that this was precisely what Mr Elfar had agreed to do:

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Q. I put it to you that doesn't sound realistic that Mr Elfar would just give up $478,000 just like that, does it? A. It doesn't sound commercially. When I say I can't recall the specifics insofar as him giving it up but that there'd been some arrangement it would be dealt with in some other way. I just can't remember the specifics of what was to happen certainly as far as discharging the mortgage. If that's what you mean by giving it up, that's right. 215 Mr Elfar's conduct after discovery of the discharge of mortgage does not seem consistent with someone who considered that he had been defrauded; rather it seemed that Mr Elfar was prepared to accept that his mortgage had been discharged in circumstances where that would facilitate the development (and consistent with the fact that some two to three months before he had expressed the view in an affidavit in proceedings in this Court that unless the development proceeded he stood to lose a considerable sum). 216 It seems to me that the most likely explanation for events is that Mr Elfar and Mr Perkinson did in fact agree (as Mr Cummins' notes record he was advised) that the Elfar Mortgage had to be discharged if the refinancing, and hence the project, was to go ahead; that Mr Perkinson agreed to make a payment of $30,000 to secure Mr Elfar's agreement to this (though apparently choosing to keep to himself the prospect that Mr Elfar might have difficulty lodging another caveat when the existing caveat was withdrawn); and that, at a time when Mr Elfar was about to head overseas on business, he either signed one (or possibly two) discharge of mortgage forms and gave them to Mr Perkinson or allowed Mr Perkinson to do so in his name in order to facilitate the settlement of the refinancing taking place while he was overseas, on the basis that he understood he would receive a $30,000 payment for so doing. (If so, then the fact that Mr Perkinson may not have complied with his part of the agreement is immaterial to the present claim, since nothing was done by Mr Elfar to prevent or restrain the presentation of the signed discharge form for registration before it was registered in September 2005.) 217 A factor which supports the above conclusion is the fact that not only did Mr Elfar contact Mr Cummins to ask that a discharge of mortgage form be prepared, but it also appears that Warren McKeon Dickson prepared such a form and, on the face of the document (P42), it seems to me that this bears Mr Elfar's signature or one sufficiently close to it to be likely to fall within the usual range of variations to his ordinary signature. The preparation of a handwritten discharge of mortgage (P38) seems more likely to have taken place by someone other than a solicitor (since there is no suggestion that Warren McKeon Dickson or Wilkinson Throsby & Edwards were in the habit of handwriting property documents) and there is evidence that Mr Elfar was capable of preparing his own property forms (T 117.05). 218 If so, then the likely explanation for the handwritten discharge form being used in preference to the signed typewritten form seems to me to be to permit a subsequent disavowal of the signature on that form. The only party likely to gain an advantage from that subterfuge would be Mr Elfar and it was he who first seems to have suggested the idea of a claim against the assurance fund to Mr Cummins. (In that regard, although it might be said that the only party likely to benefit from the actual discharge of mortgage - and hence to have forged Mr Elfar's signature if it were forged - would be Mr Perkinson, the evidence makes it clear that from as early as the Masterline proceedings to restrain the mortgagee sale, Mr Elfar was of the view that the only way that he would recoup his moneys was if the development were to proceed. The commercial benefit of that course of action was the reason that Mr Elfar said he took no step to "rock the boat" in late 2005 after the discharge of the mortgage. I think it is also likely to be the reason that he was prepared to agree to a discharge of the mortgage back in August 2005.) 219 Finally, I should note that Mr Sirtes submitted that the deficiencies and inconsistencies in Mr Elfar's evidence (in particular the false assertion that Mr Cummins was instructed to register the second mortgage, when the facts disclose that Mr Elfar's instructions were to accept an unregistered mortgage protected by caveat, the failure of Mr Elfar to disclose matters such as the instruction for preparation of a discharge of mortgage which was given to Mr Cummins and the inconsistencies in relation to the evidence given as to discovery of the discharge of mortgage) were such as to impugn Mr Elfar's honesty and the veracity of Mr Elfar's recollection of events and that this calls for a careful assessment of the whole of his testimony. 220 In Malco Engineering Pty Limited v Ferreira & ors (1994) 10 NSWCCR 117, Handley JA said that where the veracity of part of a witness' evidence is not accepted (or is in doubt), a careful assessment of the rest of that evidence is required in order to determine its honesty and reliability (that being a case where a finding of perjury had been made on one part of the evidence). Though this does not mean that the balance of that witness' testimony can never be accepted without corroboration (per Heydon JA, as his Honour then was, in Makita (Australia) Pty Limited v Sprowles (2001) 52 NSWLR 705, at 719), it does mean that the remaining evidence should be closely scrutinised. 221 The import of my finding as to the unreliability of Mr Elfar's recollection of events (such as the instructions given to Mr Cummins in relation to registration of the initial mortgage); more particularly, the inconsistency between Mr Elfar's evidence and the version of events (which emerged through Mr Cummins notes) and the attempt by Mr Elfar (which I do not accept can be sustained on the evidence) to characterise Mr Cummins' role as a hands-on role in relation to the overview of the transaction and to protect his position as opposed to what seems to me to have been the case (which is that Mr Elfar and Mr Perkinson were together working to try and ensure that the project stay up and running) means that I must exercise caution in assessing the balance of Mr Elfar's evidence and in particular his denial that he signed the relevant discharge of mortgage or was aware that it had been signed. This is even more so when the experts themselves cannot exclude the possibility that Mr Elfar himself deliberately altered his signature (and where the manner in which the alteration was done seems to point towards Mr Elfar trying to disguise his handwriting rather than someone trying authentically to reproduce his signature). 222 Having regard to the above, I cannot accept Mr Elfar's disavowal of the P38 (or P42) signature(s) at face value. (On the face of P42 I think it far closer to Mr Elfar's admitted signatures than not, which is of significance since that signature was apparently witnessed by the same person and on the same day as P38). 223 I am not satisfied that the signature on P38 was forged (nor, on the evidence before me, if I had been satisfied that P38 had been signed by someone other than Mr Elfar, would I have been satisfied that this had occurred without Mr Elfar's knowledge, consent or acquiescence). 224 I note that, for the purposes of a claim under s 129, a failure to prove a forgery does not necessarily result in a failure to prove an entitlement where, on the facts as pleaded, it can still be found that the loss of the interest in land was a result of some other fraudulent acts, as noted in Behn, where Holland J said (at 509-510): Counsel for the Registrar General contended that, if the plaintiff failed on the issue of forgery, she should be held to have failed altogether. His first argument was that, in bringing these proceedings, she had committed herself to the case that she had been deprived of her land by the registration of a forged memorandum of transfer and that she was restricted to that case. In my opinion, she was not so restricted. The forgery alleged was but one factor in the course of events by which she became deprived of her land. Inherent in her original claim were allegations that Bodiam, without her knowledge or consent, had fraudulently caused Cornic to become registered as the proprietor of the land, so as to deprive her of her title and, thereafter, to give a mortgage to the bank. In my opinion, the plaintiff was entitled to rely upon facts proved at the hearing which amounted to deprivation of her land in consequence of fraud practised upon her by Cornic through that company's agents, even though forgery was not proved to have been one of the fraudulent acts. … Even if it be assumed that Mrs. Behn knowingly signed and handed over to Bodiam a memorandum of transfer of the land to Cornic, the delivery of that instrument, before payment of the contract price, would mean that the instrument was delivered in escrow: see Chang v. Registrar of Titles (Vic.) (2) , per Barwick C.J. Such delivery did not carry with it any authority from the plaintiff to register the instrument. Cornic and Bodiam would have been bound to hold the instrument in escrow, until completion of the contract. I have found that Bodiam gained possession of the certificate of title and the memorandum of transfer by deceit as to his real intentions, namely, to use them to enable Cornic to give a registered mortgage to the bank; and that registration was obtained and the mortgage given without the plaintiff's knowledge or authority. In my opinion, the facts establish that, throughout, Bodiam acted dishonestly with intent, through Cornic, to benefit Mainway Management Pty. Ltd. and his other companies at the expense of the plaintiff. In my opinion, this is a clear case of fraud within the meaning of the law. The consequence of such fraud was that the plaintiff was deprived of her title to the land, and the land became charged, by the mortgage, with liability to the bank for advances made to Mainway Management Pty. Ltd. 225 Here, it was not suggested for Mr Elfar that there was any fraud other than by reference to the forgery. In any event, it seems to me that the facts (even apart from the question of who actually signed the discharge of mortgage form) do not otherwise establish the existence of any fraud. (At most, they might establish a claim by Mr Elfar against Masterline or Mr Perkinson for breach of an agreement to pay the price demanded for the discharge of mortgage.) 226 I am satisfied that there is evidence from which I can conclude that Mr Elfar was prepared to agree to discharge his mortgage (uncommercial though that decision is painted by his Counsel now as having been) and from which I can infer that he provided a signed discharge of mortgage form (in the form of that which I find him to have signed as P42) to Mr Perkinson. I consider that on the balance of probabilities he did sign the document which is P38 or else he knew and did not object to this being done in his name. There is no evidence to support a conclusion that Mr Perkinson dishonestly intended all along to induce Mr Elfar to consent to discharge of mortgage with the false promise of a payment of $30,000 (thus distinguishing this case from the situation in Behn).

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229 Had it been necessary to determine the alternative defence pleaded by reference to s 129(2)(a), I would have been inclined to the view that any loss suffered by Mr Elfar had P42 itself been registered would have been a consequence of his own acts or omission, since I am satisfied on the evidence before me that (contrary to his denials in these proceedings) it is more likely than not that Mr Elfar was aware in late August 2005 that there was an imminent refinancing in the context of which a discharge of his mortgage would be required and had signed the document which is P42 and provided that to Mr Perkinson in order to facilitate that taking place. Thereafter he took no step to prevent that occurring. (Mr Sirtes relies for the submission that Mr Elfar had intimate knowledge of the progress of the refinancing by reference to documents at pp 35, 45, 60, 66/67, 71, 72, 117, which I have considered when setting out the factual background above). 230 However, it was not P42 which was in fact registered and Mr Rickard relies upon the fact that it was registration of the forged document (and not some other document) which caused the loss of Mr Elfar's proprietary interest as second mortgagee. (It was in the context of discussion of this issue that he conceded, as I understand it, that if P42 were to be a genuine document then any loss must have been referable to breach by Mr Perkinson of his agreement with Mr Elfar, not registration per se.) 231 The complicating factor in this case is therefore that it was not P42, but rather it was P38, that was registered. If (which I have not) I had found on the balance of probabilities that P38 was a forgery (ie a document not signed by Mr Elfar and not one signed by someone else with his knowledge and consent and/or registered with his acquiescence), then the fact that Mr Elfar had put into the hands of Mr Perkinson another means of effecting a discharge of the Elfar Mortgage (ie P42), which means was not ultimately employed, does not logically lead to the conclusion that by so doing Mr Elfar had caused the loss which occurred by reason of the registration of a completely different form (of which, on this hypothesis, he was not aware). (Indeed, it is the possibility of a response of this kind which it might be suggested was part of the motivation for the creation of a second discharge of mortgage.) 232 Mr Sirtes recognised the interplay between the elements required to satisfy the plaintiff's claim of fraud and those relied upon for the defendant's defence under s 129(2)(a) and seemed in final submissions to tie the acquiescence claim to an awareness of what was occurring in connection with the registration of the discharge of mortgage in the context of the refinancing rather than the provision of one or other of the discharge forms as such. 233 As I understood his submission, the claim pleaded in paragraph 24.3 of the Amended Defence was one flowing from whatever findings of fact might be made to fill the gap if it were to be the case that I were to find that the signature had been placed on the document not by Mr Elfar but in circumstances where Mr Elfar was aware of what was going on and acquiesced or had knowledge of that. Mr Sirtes' primary submission is that this would not amount to a fraud and Mr Elfar's case would fail at that point. I agree. Mr Sirtes relies on the s 129(2)(a) defence only in the event that the document is found to be both a forgery and a fraud (in the sense that Mr Elfar was not complicit in the forgery) and only then does Mr Sirtes rely on Mr Elfar's acquiescence in allowing someone else to sign it and not preventing it from being registered, as a defence to the claim for loss occasioned as a result of the registration. 234 The difficulty I have with that submission is in seeing how acquiescence of that kind, ie which would be sufficient to amount to an act or omission causative of the loss, would not (at least on the facts of this case) amount to complicity giving rise to a finding that the loss was not caused by fraud in the first place. 235 Therefore, I am not satisfied that (had I found in favour of Mr Elfar on issue (i)) the Registrar General would have established a defence under s 129(2)(a). (iii) Loss suffered as a result of registration of the discharge of mortgage 236 Although this issue does not arise in light of the findings I have made above, I briefly address the question of loss. 237 Registration of the discharge of mortgage deprived Mr Elfar of his interest, as secured mortgagee, in the land. Reliance was placed by Mr Rickard on Challenger Managed Investments Pty Ltd v Direct Money Corp Pty Ltd [2003] NSWSC 1072; (2003) 59 NSWLR 452 in that regard. 238 The Registrar General contends that no loss has been suffered as a result on the basis that there was insufficient equity in Lot 11 to facilitate repayment of the loan. 239 As Mr Rickard notes, the principle in cases of this kind is clear - if Mr Elfar establishes an entitlement to compensation under s 129(1)(e), then the extent of Mr Elfar's loss must be determined and that he is entitled to that amount of money that would place him in the same position as if the wrongful act had not taken place (Registrar of Titles v Spencer [1909] HCA 9; (1909) 9 CLR 641). 240 It is said that there are three possible scenarios as to what would have happened had the discharge by reason of the registration of P38 not occurred: (i) no refinancing would have taken place;

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241 I consider each of the enumerated three scenarios in turn, noting at the outset that of which Mr Elfar was relevantly deprived, by reason of the discharge of mortgage, was his security over Lot 11 (not Lots 10 and 11). Mr Elfar never had more than an unsecured mortgage over Lot 10. Mr Sirtes therefore submits that if any first ranking mortgagee (in this case DOH) was entitled to claim on a mortgagee sale an amount greater than $229,875 (half of the vendor finance) against Lot 11 this would have depleted the equity available in Lot 11 to satisfy the Elfar Mortgage. Mr Rickard submits that for all practical purposes the two lots were treated as a single parcel of land by all parties in a commercial sense, since without both lots the development could not proceed and without clear title to both lots a purchaser would not be in a position to progress with the transaction. I accept that this would be so for any purchaser seeking to develop both lots in accordance with the development approval (and that this may well have been the highest and best use of the property). In any event, given the findings I make below it is not necessary to explore this issue further. 242 I also note that in considering the various scenarios Mr Rickard relies upon the August 2005 letter of offer from BankWest which had indicated that the bank placed a value on the two lots together at $2.055m. Mr Rickard submits that as only $1.3m was advanced at settlement, and the bank had been prepared to allow drawdown on settlement for up to 70% of the valuation, total funds of $1.4385m were available to be drawn down, at the time of the Masterline refinancing the parties therefore had in mind that there was equity of at least $755,000 in the combined lots (or, after, Mr Elfar's debt was taken into account, $277,000). The amount which BankWest was apparently prepared to advance in August 2005 is certainly an indicator of the value of the property at that stage, although there may be differences in lending criteria or valuations as between financiers which would lead to a different conclusion if there were now to be a formal valuation with hindsight of the property. The only other evidence of value is to be found in what Mr Elfar himself told this Court back in August 2005 in the Masterline proceedings (namely that it was worth in the order of $1.5-$2m as is) and in the amount for which the receivers ultimately sold the property under contracts exchanged in mid 2006. 243 Mr Rickard puts the plaintiff's loss at somewhere in the range from $317,000 to roughly $500,000 and submits that the most appropriate sum is that which represents Mr Elfar's debt ($478,000). (i) No refinancing 244 Mr Rickard submits that had P38 not been registered, the likelihood is that DOH would have sold as mortgagee in possession. Given the strenuous attempts DOH was taking in 2005 in order to achieve a mortgagee sale, this seems to me to be a not unreasonable assumption. Mr Rickard submits that such a sale would probably have occurred before the end of the year and that, after paying out to itself an amount of about $1.2m, allowing for extra interest and sale costs, any sale of $1.7m would have seen Mr Elfar paid out in full. On this scenario, Mr Rickard contends that the loss suffered is therefore $478,000.

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247 In any event, it is submitted by Mr Sirtes that the evidence strongly supports the conclusion that Mr Elfar would ultimately not have stood in the way of a refinancing, reliance being placed on the evidence Mr Elfar himself put before this Court in the Masterline proceedings in that regard. 248 I accept Mr Sirtes' submission that scenario one is not a realistic scenario. (ii) BankWest refinancing with Elfar Mortgage in place 249 It seems to be accepted that this is the most realistic scenario. The BankWest documents did not suggest that consent would be unavailable for a second mortgage, simply that it would be necessary for there to be an acceptable priority agreement in place. 250 Again, Mr Rickard concedes that there is an element of speculation about what would have occurred at that point but submits that in this scenario, the development would probably have proceeded and construction finance drawn down; Mr Elfar would have received the sum of $30,000 from Mr Perkinson or Masterline "and in all probability would have obtained either a transfer of Lot 1 or repayment of the loan amount". (Mr Rickard notes that the subsequent developer sold Lot 1 in about August 2009 for $420,000). On this scenario, Mr Elfar's loss is said to be in the order of $500,000. 251 Mr Sirtes accepts that had the second mortgage remained on the title and been postponed to the interest of the first mortgagee, the court could conclude that Mr Elfar would have received the sum of $30,000 (though as I understand it this is not loss for which Mr Rickard contends is compensable out of the Fund). However, Mr Sirtes submits that in that event Mr Elfar would have had to wait for the property to be redeveloped in order for his debt to be paid out and that all that would have happened would have been that BankWest as mortgagee in possession would have sold the property (as it ultimately did with the sale completing in November 2006) as mortgagee in possession and paid itself out first. The mortgagee sale (which surely is the best indication of what the property could have achieved on this scenario) was for $1.32m. As this was the amount lent under the first drawdown, it is submitted that there would have been no equity left in the property to satisfy the Elfar Mortgage. (On Mr Elfar's own calculations put before this Court in August 2005, a sale at that stage, even at the higher end of the posited range, would have produced no more than a portion of his debt - about $100,000; at the lower end of the posited range there would be no recovery out of a mortgagee sale even had his second mortgage remained on the title.) 252 It seems to me that it is unrealistic to assume (in circumstances where it was not Mr Elfar's attempts to recoup the Elfar debt which caused the collapse of Masterline and where there is no reason to think that Masterline would not have incurred the debts the subject of the additional caveats in any event) that, but for the alleged fraudulent discharge of mortgage, the project would have continued up to completion of the development so as to enable Mr Elfar to recoup the benefit of his loan (or to take a transfer of the proposed lot 1). 253 Accordingly, on the scenario accepted as most likely to have occurred had there been no mortgage fraud, I am not satisfied that any loss has been proven as Mr Elfar would be unlikely to have recovered his money irrespective of the second mortgage security position. (ii) BankWest refinancing but only after discharge of Elfar Mortgage 254 Mr Rickard submits that on this scenario the sum of $316,715 would have been available to pay out Mr Elfar if the loan had been drawn to the maximum. He accepts that it is unknown whether Mr Elfar would have accepted this amount or some lesser amount (in the knowledge that if he did not the property would probably have been sold by DOH). 255 Mr Sirtes points again to the speculative nature of this scenario and invites me to conclude that this is inconsistent with what Mr Elfar had himself been prepared (at least as at 26 August 2005) to accept (namely a discharge of his mortgage in the hope that the development would proceed and that he would recoup his moneys through a transfer of Lot 1). 256 There is no evidence from Mr Elfar as to what he would have done in this scenario. I see no reason to conclude that Mr Elfar would not have adopted the course he seems to have been prepared, even after the discharge to contemplate, namely not to 'rock the boat' but to allow the refinancing to proceed without a discharge of his debt and to hope for the development to proceed. 257 Accordingly, on none of the above scenarios has Mr Elfar suffered a loss caused by the discharge of the mortgage (though he has obviously suffered a loss by reason of his dealings with Mr Perkinson).

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260 In Kirkland v Quinross Pty Ltd [2008] NSWSC 286, on the other hand, delay in the sale of property in question was held by Austin J (at [78]) to amount to a failure to mitigate resulting in loss of an entitlement to compensation from the fund for lost interest (and recovery of interest only for the period up to when it was seen as reasonable for the plaintiffs to have mitigated their loss by selling the property). 261 I note in this regard that there is no basis for a claim of contributory negligence in this context, as explained in Behn (at 512) by Holland J: The essence of fraud is that the plaintiff has been dishonestly deceived and cheated; and it is difficult to see how the rules of contributory negligence could be adapted to apply to a case of loss suffered by fraud. Counsel's argument seemed to me to be an attempt to deny a defrauded party's right to recover on the ground that he contributed to his loss by his own gullibility in allowing himself to be taken in by the fraud. It was pleaded in the Registrar General's defence that any damage or deprivation alleged by the plaintiff was caused or contributed to by the plaintiff's negligence, consisting of the plaintiff's failure to ensure that the document evidencing her title to the land was brought, and thereafter remained, within her own possession and control, and her failure to protect her estate and interest in the land during "the material period of time" by the lodgement of a caveat. In argument, it was said that the material period of time was from the date of handing over the certificate of title and/or the memorandum of transfer up to the date when the bank's mortgage from Cornic was registered. Even if, as claimed, a defence of contributory negligence was open to the Registrar General, and I think it is not, the failures on the part of the plaintiff upon which the Registrar General seeks to rely were induced by her trust and confidence in Bodiam and the deceit he practised upon her. The argument is like saying that she should not have let herself be deceived into trusting Bodiam, and that in doing so she caused or contributed to her own loss. It is plain that the law would not permit the fraudulent party to rely on such an argument in defence of his own liability for the fraud. I fail to see how the Registrar General can be in any better position. 262 As to what would be necessary as a matter of general principle by way of mitigation, in Segenhoe Ltd v Akins (1990) 29 NSWLR 569, Giles J (as his Honour then was), there considering whether there was a failure to mitigate by reason of the fact that litigation had not been commenced, noted that (at 582); In fulfilling its obligation to mitigate its loss, Segenhoe is only required to act reasonably, and the standard of reasonableness is not high in view of the fact that DHS is the wrongdoer: see Banco de Portugal v Waterlow and Sons Ltd [1932] AC 452 at 506; Sacher Investments Pty Ltd v Forma Stereo Consultants Pty Ltd [1976] 1 NSLWR 5; McGregor on Damages , 14th ed, Sweet & Maxwell, 1980, para 233.

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267 I am of the view that the delay in taking action against Masterline to recoup the debt owing to Mr Elfar was not a failure to mitigate in circumstances where it seems highly unlikely on the facts as they turned out that this would have enabled Mr Elfar to recoup the amount owing to him - at most it seems likely that this would simply have resulted in Masterline going into receivership at an earlier time and it is not suggested that if that had happened Mr Elfar would have had a greater prospect of recovery of his debt. 268 Insofar as Mr Elfar sought legal advice and acted in accordance with that legal advice, that would seem to me to have been a reasonable stance to take (the only question, perhaps, being as to whether the advice he sought, at least from Mr Woods, was advice which took into account any claim in relation to the alleged fraud - for the reasons I have set out earlier, I doubt whether advice was sought as to how to address the alleged fraud at that stage). However, in the absence of evidence from Mr Woods as to what advice he gave, I have some hesitation in accepting Mr Elfar's version in this regard. 269 On balance, had it been necessary to determine this issue, I would have been inclined to the view that the Registrar General had not established the defence pleaded under s 129(2)(c). Conclusion 270 I find that Mr Elfar has not suffered a loss that is compensable out of the Torrens Assurance Fund, for the reason that I am not satisfied that the loss of Mr Elfar's interest in the land as a registered second mortgagee was as a consequence of fraud. 271 I am not satisfied that Mr Elfar's signature on the discharge of mortgage was forged nor would I have been satisfied on the evidence before me that, if it had been forged, that any such forgery was one in which Mr Elfar was not complicit. Any loss suffered by Mr Elfar by reason of the discharge of his mortgage (and I do not consider there was any loss in fact caused by reason of that event since I accept that on the most probable scenario there would have been insufficient equity in the property to pay out his debt even had the second mortgage remained in place) was therefore not loss caused as a consequence of fraud for the purposes of the Act. 272 I therefore dismiss Mr Elfar's claim with costs.

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