GE Mortgage Solutions Limited v Jane Susan Fassos

The relationship between the plaintiff and Adelaide Bank Ltd 11In 2003 it was part of the business of the Adelaide Bank Limited ("ABL") to provide a service to the plaintiff, whereby ABL conducted the day to day management and administration of loans advanced by the plaintiff. 12The services provided by ABL included the receipt of loan applications from brokers or introducers, and the subsequent assessment and approval of applications. An assessment team within ABL served as the point of contact for any broker or individual, who would forward loan applications bearing the plaintiff's "brand", to that assessment team for approval.

Events leading up to the lodgement of the loan application 13In early 2003, the defendant's husband was employed by an organisation known as Streetwise Property and Projects Pty Limited ("Streetwise"). He gave evidence (at T 151 L15 ff) that his role with Streetwise was that of a "client adviser". In that role, he spoke with persons who were thought to be interested, or possibly interested, in investments, and having obtained information about prospective investors and their financial circumstances, he would provide that information to a "senior client adviser" within Streetwise who would then formulate "strategies" and prepare "investment proposals". 14The defendant gave evidence of a conversation she had with her husband in 2003 in relation to the subject of investment, to the following effect (at T 91 line 35 ff): Stephen came home from work, and he said to me: 'I have been talking about things with Co, and watching things happen at the company, and within clients I have serviced myself, going to something which is something called a joint venture, whereby X amount of parties, normally no more than four...four at the most, so the profit that would be shared at the end of it would be greatest for each of us. The basic idea of it was that four of us go into buy a particular property, and Streetwise makes the repayments on the loan for us, so it is not of our concern, and that at the end of the day, after the property is sold, the money that has been invested, we divide up the profits less the loan repayment amendments. ... Q As result of when your husband told you these things what do you say so far as you can recall in response? A It sounds like a good idea. Maybe we should do it, maybe we should try it. Q And your evidence which is already before his Honour, it is about a month after that conversation your husband returned home with various forms and documents? A That's correct. 15The defendant's husband gave evidence (commencing at T 155 line 30 ff) that he recalled giving Trevor Downs, an employee of Streetwise, information about the defendant's financial circumstances which he said included: (i) the fact that that there was a home available for security which was valued at around $900,000.00; (ii) the fact that the defendant's current income "was around $60,000.00 a year"; and (iii) the approximate values of other assets, including a motor vehicle, furniture and a business. 16The defendant's husband gave evidence that within a few days of providing this information, Mr Downs provided him with a loan application to take home to the defendant.

The loan application 17The loan application bears a date of 27 February 2003. An associated document headed "Additional Declarations" ("the declarations document") bears the same date. There is no dispute that each document was signed by the defendant. There are, however, a number of issues which arise concerning the information which was supplied in those documents.

The defendant's stated income 18The loan application made provision for the defendant to provide details of her income. Beside the printed words "Gross annual income" on the application is a handwritten figure of "$160,000". A significant issue emerged as to the circumstances in which that information was included on the application form. 19At paragraph (9) of her affidavit of 14 October 2009 the defendant stated the following: "9. I note that page 1 of the application form says that my "gross annual income" was "$160,000". I did not write this figure or ask anyone to do so. To the best of my recollection the figure of $160,000 was not on the application form when I signed it. A figure of $60,000 may have been on the application form when I signed it. 20Additional evidence in chief from the defendant included the following (at T92 line 33 ff): "Q. Did you read the form? A. I didn't read the entire form. I read the parts that were filled in, the information that was relevant to me such as name, age, address, income. Q. Can you recall at the time whether there was anything in the box which provided for income? A. Well, at the time, it was $60,000, I know that that was what was written there, it was there. It was $60,000 because that's all that I was getting in the rental income. There was no other income". 21When cross examined (at T 101 line 6 ff) the defendant agreed that she was aware that the information contained in the loan application would be relied upon by the plaintiff in determining whether or not to approve the loan. Later in the course of further cross examination (commencing at T 105 line 7) she gave the following evidence: Q. Please tell me if this is incorrect, what in a sense you're telling his Honour is, whilst you don't remember what was on the form about income when you signed it, you tell his Honour that you would only have made a truthful statement of that income and that was a very untrue statement, so you wouldn't have made it? A. Well, I am saying I actually can recall seeing 60,000 numbers there, definitely not 160,000. Q. So you can remember, can you, when you signed the form in February 2003, by way of some visual apparition in your memory with the written figures of 60,000? A. Yes, I can. Q. What other things on the application form do you claim to have a memory of? A. As I said the things that's stated, my name, my age my address my occupation and I know that from looking at the application form years later at some point I also wrote the name George Fassos and maybe even his address, which was the name of my father-in-law and I don't even remember writing that but I know that it was my writing. ... Q. I am just trying to understand, Mrs Fassos, what you say you presently have a visual recollection of seeing on the form when you signed it in February 2003. Now you told his Honour one of the things you say you have a visual recollection of seeing the figures 60,000 written alongside with the description of gross annual income, is that right, firstly just check? A. Yes. Q. And do you claim that you have a visual recollection of something that you observed in February 2003 about other things written on the application form, do you? A. Yes. Q. What else do you say, you have a visual recollection of seeing - and by visual recollection I mean your memory brings up a picture of what you saw at the time that you made the loan application in February 2003? A. I can't recall. All I can recall is what I have already told you. There could have been more, I can't recall. Q. Mrs Fassos, you can't really remember can you, seeing the 60,000 written on the form when you signed it? A. I can. Q. You have been uncertain, haven't you, about whether you wrote the figure 60,000 on the form before you signed it? A. I'm uncertain whether I wrote it or not but I'm not uncertain about what was there. Q. So you may have seen it written by someone else or you may have written it yourself? A. Either is a possibility I just recall seeing it. 22When it was directly put to her by senior counsel for the plaintiff, the defendant denied that the figure of $160,000 was on the application form when she signed it. 23The defendant's husband also gave evidence in relation to this issue. In his affidavit of 14 October 2009 at paragraph (26) and following, he said that the figure of $160,000.00 was not on the document when it was provided to him by Mr Downs, and that his wife had commented that the forms were "mostly blank" when he gave them to her to be signed. 24In the course of his oral evidence the defendant's husband said that it was not until he had received later communications from the plaintiff that he first saw a figure of $160,000 on the form, and he described a feeling of "shock" when this had occurred. He then gave the following evidence in the course of being cross examined (commencing at T 162 line 20): "Q. You knew in February 2003 if your wife's income disclosed to be only $60,000 the application would be unsuccessful? A. No, I didn't know that. Q. Your state of mind in February 2003 was you could not understand how the kind of borrowing you might need could be obtained on an income of only $60,000. Isn't that right? A. No. There were different circumstances involved with setting up loans. I do recall very clearly that when I originally inquired about investing, given that the property sector was going very well at the time and I had very successful clients, everything was going very well. I inquired as to whether or not we would be in a position to experience the same benefits as others in investment, and my first approach was to see if we could acquire a house and land package based on Jane's income and also the equity in the home, and that was all based on hoping that Streetwise could do something for us. No different for other clients I gathered information for them to have a look at it. And that was pretty much where I based my hope on something being able to be done. Q. That was a conversation you had with Mr Downs? A. Yes, I had that conversation with him initially. That was the first point of inquiry. Q. In any event, you didn't speak, you say, to Jade Caines or anyone else who submitted the loan application to find out whether you could be successful or not if you disclosed your true income? A. I don't recall speaking to Jade as to whether or not the application would be successful. I didn't care really who - as far as I was concerned it was Streetwise and once the information was submitted was pretty much hoping the outcome would be a positive one. Q. And you contemplated it would be a positive one if the disclosed income was $60,000, is that right, per annum? A. Yes." 25Mr Fassos (at T 171 line 26 ff) denied that he had provided false information to Mr Downs in relation to his wife's income because he thought it might assist in obtaining approval for the loan. 26Bearing in mind her evidence that she had seen, and indeed may have written, a figure of $60,000 on the loan application, the defendant was asked (commencing at T 132 line 45) about how she came to calculate that figure as representing her income. She said that it was a figure "derived from the rental income from the Tropicana". I have already noted that the monthly rent component (exclusive of GST) under the sublease was $5,633.33. That gives a total of $67,599.66 per annum, an amount somewhat in excess of that which the defendant said was her income at the time. It is also somewhat in excess of the figure of "around 60,000.00" which the defendant's husband maintained he had given to Mr Downs. 27In these circumstances, the defendant was asked (commencing at T 134 line 12): Q When you are completing the loan application, you appreciated that even if you declared $60,000 the prospects of the loan application being approved were at best slender, isn't that right? A Yes Q So if your actual income was not 60,000 but something like $67,500 you appreciated in February 2003 that that at least would be an improvement on the financial position that otherwise might be disclosed on your behalf? A Well, 67 looks better than 60. Q If you had really been thinking about the amount of the rent as your income when you completed this application form, can you offer any reason at all for why you would not have inserted or ensured the insertion of, at the very least, $67,500.00 as your annual income? A No because as I said previously, it was in my brain that the income was around $60,000 so that's what was there, that's what I had in my head. I didn't have a figure of 67,500, I had about 60,000. 28The defendant's assertion when cross examined was that she had a clear and precise recollection of actually seeing the figure of $60,000 on the application form when she signed it. If this had been the case, it might reasonably have been expected that her affidavit evidence would have been consistent with such assertion, particularly given the importance of this issue in the proceedings. 29However none of the defendant's affidavits contained any such assertion. As I have set out, paragraph (9) of her affidavit of 14 October 2009 was expressed in terms that a figure of $60,000.00 "may" have been on the document when she signed it. That is somewhat removed from her evidence before me that she had a specific recollection of seeing it. Similarly, the defendant's assertion, in the same paragraph, that a figure of $160,000 was not on the document at that time "to the best of (her) recollection" is not wholly consistent with her assertion in evidence before me that such a figure was definitely not there. 30I am also mindful of the fact that the defendant gave evidence (at T 132 line 18 ff) that both she and her husband had discussed the likelihood of obtaining the loan, and that they had agreed that it was "probably unlikely that it (would) happen because (they) only had $60,000 a year income". She later said (at T 132 line 40 ff) she believed that if she disclosed that her income was only $60,000, it was "highly unlikely" that the loan would be approved, and that she was "surprised" when such approval was forthcoming. 31The defendant's evidence in this respect was not consistent with that of her husband, who denied the suggestion (at T 162 line 20 ff) that he had a similarly pessimistic view. On the contrary, he gave evidence that he contemplated a positive outcome if the disclosed income was $60,000.00 per annum. Inconsistency aside, I find it difficult, to say the least, that a person in the position of the defendant's husband, who was in fact employed with Streetwise, could have held any reasonable belief that a loan of $750,000.00 would have been approved if only $60,000.00 in income was disclosed. I found his explanation for the basis of his asserted belief that such approval would be forthcoming (at T 162 line 27 ff) to be entirely unconvincing. 32I am satisfied that the defendant well knew, as did her husband, that if an amount of $60,000 was disclosed as income it was (as she conceded) "highly unlikely" that the loan would be approved. In these circumstances, the defendant must have realised that to submit an application for a loan of $750,000.00, whilst nominating an income of $60,000.00, would be likely to be a somewhat futile exercise. 33All of these matters, in my view, tend wholly against the conclusion that an amount of $60,000, representing the defendant's income, was on the loan application at the time it was signed by the defendant. 34It is also noteworthy that the amount of $60,000 which the defendant maintained was the figure she provided to the plaintiff, and which was also the approximate figure her husband said he had given to Mr Downs, did not accurately represent her income at all. Such income as she had at the time, which on the evidence before me was derived wholly from payments under the sublease, was almost $68,000.00 per annum. 35If one were to accept the defendant's evidence that she nominated her income as being $60,000, it would follow that in circumstances where she was less than optimistic about the prospect of the loan being approved, she somehow chose to provide an income figure which was in fact less than what she was receiving. Such a proposition, in my view, is contrary to common sense. A person in the defendant's position, as an applicant for a loan, would necessarily have wished to take any step which was legitimately open to her to improve the chances of the application being approved. 36In this regard, I do not accept the defendant's explanation that it was "in her brain" that the rental figure was $60,000.00 per annum. By the time of submission of the loan application, the defendant had been receiving rent payments under the sublease for a period well in excess of 12 months. Those rent payments substantially exceeded the amount of $60,000.00 over a 12 month period. 37In all of these circumstances, I do not accept the evidence of the defendant and her husband that a figure of $60,000 was stipulated in the loan application, at the time the application was signed by the defendant, as representing her income. The defendant was, as I have noted, obviously aware that it was most unlikely that the application would be approved if that amount of income were disclosed. 38I am satisfied that the amount of income which was stipulated on the loan application at the time at which the defendant signed it and later submitted it, was a sum of $160,000 and that the defendant knew this to be the case. I am satisfied that this representation was false, and was false to the knowledge of the defendant and her husband at the time.

The defendant's occupation 39The loan application also required the defendant to provide information in relation to her occupation. In that regard the application included the following information (the left hand column representing the printed content of the application, and the right hand column representing the handwritten information provided in response): Employer Restauranteur - self employed Employer's address 296 - 298 Victoria Street Darlinghurst 2010 Employer's telephone number 9310 0901 Length with current employer 4 months Occupation Restauranteur

40The declarations document which accompanied the loan application (and which I have noted, was also signed by the defendant) contained the following statement: "I am self employed as restauranteur (occupation)." 41The evidence establishes that the defendant ceased the conduct of the restaurant in late 2001. After that the defendant was not employed, a fact established by paragraph (16) of her affidavit of 29 March 2012 which is in the following terms: "As I was no longer involved in the running of the restaurant business, I attended to house duties on a full - time basis and looked after our two children". 42It follows that at the time of submitting the loan application in February 2003, it had been more than 12 months since the defendant had been employed in any capacity. 43Bearing these matters in mind, the following evidence was given by the defendant in cross examination (at T 137 line 7 ff): Q. In February 2003 you weren't a restauranteur, were you? A. I think we still had the business going then, so technically, yes I was. Q. Sorry, you had leased out or sublet the premises, had you, in December 2001? A. Yes. HIS HONOUR Q. You were not operating a restaurant in 2003, were you? A. No. SIMPKINS Q. You were unemployed weren't you, from December 2001? A. Yes. Q. You certainly weren't self employed as a restauranteur, were you, in February 2003? A. Well I was technically because we were intending to go back into the business once the sublease was over. Q. But the restaurant hadn't operated since December 2001, had it? A. It had been operated by the Tropicana. Q. I'm not asking about Tropicana, you had not operated the restaurant business since December 2001, had you? A. No. Q. You had, since that time, occupied yourself with home duties; isn't that right? A. Yes, that's correct. Q. Looking after the family and the children? A. Yes, that's correct. Q. And you weren't looking for work? A. No. Q. You had no occupation; isn't that right? A. Well I believe that I was still a restauranteur. That was what I had done, that was what I intended to probably keep doing as well. Q. Even if it was something you intended to do in the future, you certainly weren't self employed in a restaurant business were you, in February 2003? A. I wasn't physically working there though, but I still believe that's right, I would have put that today if I was doing it and the situation was the way it was. Q. I want to put to you that when you signed this form, the words "restauranteur self-employed" were on this form and you read them before you signed; isn't that right? A. I believe so, yes. Q. And it's the case isn't it, when you signed the form, you knew that in February 2003, it was wrong to describe yourself as a restauranteur or self employed? A. I didn't think that it was wrong. Q. You'll see a couple of items down, there's another item "length with current employer: 4 years". Do you see that? A. Yes. Q. The "4 years" was written on the form was it, when you signed it? A. I can't recall. Q. You don't remember whether you saw the "4 years" or not? A. I can't recall. Q. Did you have a current employer in February 2003? A. As in myself and still collecting rent from the restaurant. Q. You were collecting rent from the subtenant, but you didn't have employment, did you? A. Not in that strictest sense, no. 44The defendant had earlier agreed that she had signed the declarations document but said she could not recall whether or not it was completed when she did so. She also agreed that she appreciated that a document such as this was important because it would be relied upon by a lender to determine whether or not to approve the loan. Senior counsel put directly to the defendant that when the document was signed by her it was completed so as to describe her as a restauranteur (at T 141 line 10 ff): Q. You're not seriously suggesting are you, that you might have signed this form without the completion of what was required in paragraph numbered 1? A. Sorry could you repeat the question. Q. Let me ask the question more directly. When you signed this form, it was completed so as to state that you were self-employed as a restauranteur? A. I can't recall whether it was filled out then or not, but as I said previously, in my mind the words restauranteur were correct, so I don't understand what you're trying to get at. Q. Let me ask the question again. When this form was signed by you, completed so as to describe you as a self-employed restauranteur, wasn't it? A. I don't know whether it was completed or not, I can't recall, but there was nothing - if there had been anything there, there was nothing that jumped out as being a lie or wrong. Q. You were not self-employed as a restauranteur were you, at that time? A. At that time, no". 45There were a number of aspects of the defendant's evidence in relation to this issue which I found to be most unsatisfactory. 46Firstly, the defendant's evidence that she and her husband "still had the business going" in 2003 was, on the evidence before me, palpably wrong. As the defendant ultimately conceded, she was not operating a restaurant in 2003. She was unemployed, and had been so since ceasing her restaurant business in 2001. To the extent that the business of Tropicana was operating, that was a business in which the defendant had no direct interest whatsoever. Her only interest was as the sub-lessor of the premises from which that business operated. 47Secondly, the defendant's assertion that she was, in 2003, "technically" a restauranteur had two bases. In my view, those bases do not withstand close scrutiny. 48The first basis was the defendant's evidence that she and her husband "still had the business going". For the reasons I have already outlined, that assertion was, in itself, wrong. 49The second basis was her evidence that she and her husband "were intending to go back into the business once the sublease was over". I do not accept that evidence and in this respect two matters are significant. To begin with, the defendant gave evidence (at T 134 line 36 ff) that her business was loss making and that she "imagined" that by early 2003 it was worth considerably less than the amount of $80,000.00 which she had paid to acquire it (at T 125 line 22). This is consistent with paragraph (19) of her affidavit of 29 March 2010 in which she stated that upon the sale of the business she received a sum of $50,000.00 which represented the value of the fixtures and fittings. I do not accept, in circumstances where such business had been less than successful, that she intended to return to it once the sublease had expired. 50Further, not only is there no support in any of the defendant's affidavits for her assertion that she intended to return to her restaurant business at the expiration of the sublease, such evidence as is contained within those affidavits tends very much against that proposition. In particular, in paragraph (17) of her affidavit of 29 March 2010 the defendant deposed to falling ill in or about 2000, as the result of a (then) unspecified and undiagnosed ailment, which saw her "experiencing an aching pain all over (her) body and most particularly in (her) back, knees, ankles, neck, upper back, thighs and hips" which resulted in her becoming "very tired". She deposed to the fact that the disease became "progressively worse" following its onset, leading to a diagnosis of fibromyalgia in 2006. The defendant's assertion that she was intending to return to the conduct of a restaurant business in early 2003 is inconsistent with the deteriorating state of her health as she described it. 51In my view, the defendant's answers in cross examination in which she sought to maintain that in 2003 she was a restauranteur, were answers of convenience. They were, in my view, given in an attempt to explain, and to justify, information which she had provided in relation to her employment status in support of her application for the loan and which, in my view, was clearly incorrect, and incorrect to her knowledge. 52At the time of signing and submitting the loan application, and the declarations document, the defendant was not a restauranteur. I am satisfied that in stating the contrary in the loan application, the defendant did so knowing that she was providing false information. I do not accept her evidence that she did not think that such information was incorrect. It was clearly incorrect, and I am satisfied that she knew it to be so. I am also satisfied that she provided that information in an effort to enhance the prospects of the loan being approved.

The value of the defendant's business 53A further aspect of the loan application upon which there was some focus in the evidence was that part of it which required the defendant to provide information as to her assets and liabilities. In particular, and under the columns respectively headed "assets" and "value", were the following handwritten entries: "Bus value $200,000" 54The defendant accepted that the reference to "Bus value" was to be read as meaning "Business value". I have already made reference to the evidence concerning the defendant's cessation of her restaurant business and the amount for which that business was sold. It is also significant that at paragraph (30) of her affidavit of 29 March 2010 the defendant stated: "The information on page 2 of the Application Form regarding my assets and liabilities correctly approximates my assets and liabilities as at February 2003 to be best of my recollection". 55In cross examination, the defendant's attention was drawn to the amount of $200,000 which was the stated value of the business. She agreed (commencing at T140 line 15) that the business had not operated since December 2001 and that its value as at February 2003 was not $200,000.00. 56The defendant's husband was also cross examined in relation to this issue. He agreed (commencing at T170 line 36 and following) that he had provided the figure of $200,000.00 to Mr Downs at Streetwise as representing the value of the business. He also agreed that the business had no such value in February 2003. However, he denied that he had provided false information to Mr Downs in an effort to assist the defendant's application. I do not accept that denial. In my view, the only cogent explanation for the provision of such false information was that the defendant's husband thought that it would enhance the prospects of the loan being approved. 57The representation in the loan application that the defendant had a business, the value of which was $200,000.00, was plainly incorrect. The defendant had no business at all at that time, much less one valued at such a significant sum. 58I am satisfied that this information was contained in the loan application when the defendant signed it, and that she was aware that it was incorrect.

Additional evidence bearing upon the defendant's credit 59It will be apparent from some of the matters to which I have referred above that the credit of the defendant, and to a lesser extent the credit of her husband, were issues at the hearing. Generally speaking, and having had the opportunity of observing each of them giving evidence, I did not find either of them to be reliable or truthful. I have already set out my reasons for concluding that the defendant acted dishonestly in a number of specific respects in relation to the application. I am fortified, in reaching these views, by other evidence given in the proceedings, and which included the following. 60On 19 February 2001 the defendant made application to the Wizard Mortgage Corporation Limited ("Wizard") for finance. The form of application was tendered and became Exhibit C in these proceedings. Part of that document required the defendant to submit information as to her financial affairs, including the value of any business. On this occasion, it was stated that the defendant's business was valued at $300,000.00. 61The defendant said in evidence (at T 143 line 44) that although she did not specifically recall, she "presumed" that she had been presented with a completed form containing this (and other) information, and had been asked to sign it. She gave the following evidence commencing at T 144 line 37): "Q. Do you agree if the business value of $300,000 was on this document when you signed in February 2001, that you had no personal belief that the business was remotely worth that value? A. At that stage, I don't know. Q. You're agreeing with me? A. I don't know. Q. Do you think you might have thought the business had a value of $300,000 as at February 2001, do you? A. Possibly. Q. What makes you think that might have been a thought that you then entertained? A. I've got no idea why. Maybe because I don't know, I don't know. Q. A belief that the business had a value of $300,000 would be irreconcilable wouldn't it, with everything you've told his Honour about the way the business was operating and the losses it was making? A. Yes but as I said, I didn't read through all of the papers. I just signed here. This man, Jim Kiaris, who organised the loan, was a school friend of my husband's. I trusted my husband completely and I didn't think he would do anything wrong, so I signed here where I was told." 62The suggestion that the defendant held any honest belief in 2001 that the value of her business was $300,000.00 is, as she conceded, inconsistent with the tenor of the entirety of her evidence before me. Her explanation that she simply "signed where she was told" was, once again in my view, an answer of convenience. 63The same document stipulated an address at which the defendant stated she would be residing following the settlement of the loan transaction. The defendant said in cross-examination (at T110 line 37 ff) that there was never a time prior to the loan application being lodged with the plaintiff in 2003 at which she had contemplated not living in the property which was offered as security for the loan made by the plaintiff. The information provided to Wizard in this respect was also false. 64The defendant was also cross examined in relation to the completion, and lodgement, of her Income Tax Returns which are Exhibit 1. It is appropriate that I make reference to two matters emanating from that evidence. 65The return for the year ending 30 June 2002 (that being the taxation year in which the defendant ceased the restaurant business and entered into the sublease with Tropicana) disclosed business income of $98,678.00, and deductible expenses of $81,583, giving a taxable income of $17,095.00. The income from the sublease, which had been received for at least 6 months of that year, was not declared. That amount would necessarily have exceeded $33,000.00. 66A similar position exists in relation to the defendant's Income Tax Return for the year ending 30 June 2003. During that taxation year, the defendant received in excess of $67,000.00 in rent payments under the sublease. Those payments were not declared in that return. Moreover, both of these returns were lodged with the Australian Taxation Office some years after their due date. 67The defendant maintained (commencing at T 124 line 22) that although she had some recollection of attending a Tax Agent, she had no recollection of signing the documents because she was "very sick" at the time. She also said that her husband "handled all of that information". Again, I regard these answers as answers of convenience. 68In my view, the defendant's dealings in relation to the loan application, her dealings with Wizard, and her dealings with the Australian Taxation Office exhibit a pattern of dishonest behaviour. For the reasons I have previously expressed, I found the defendant to be less than honest in some of the evidence she gave before me. Overall, I am left to conclude that the defendant is someone who is prepared to tell untruths on those occasions when it suits her purposes to do so. 69It was submitted on behalf of the plaintiff that in the event that I found (as I have done) that the defendant had misrepresented her income in the loan application, I should conclude that this, of itself, disentitled her to relief under the Act. 70In response, it was submitted on behalf of the defendant that disentitlement did not follow in the event of such a finding, but that such a finding (if made) was one of a number of matters which would weigh in the balance of my evaluative process in determining whether or not relief ought be granted. It was further submitted that in the circumstances of the present case, I would be satisfied that the plaintiff's conduct was unjust and that the gravity of such conduct materially outweighed any misrepresentation of the defendant. This, it was submitted, would give rise to a situation where it would remain open to me to exercise my discretion in favour of granting relief. 71For the reasons I have set out in detail below, a determination of whether or not relief should be granted under the Act involves a series of steps, the last of which (assuming a finding has been made that a contract or a provision of a contract is unjust) involves a determination of whether, in the exercise of a discretion, relief should be granted. 72In my view, having made the findings I have made in relation to the defendant's credit generally, and part of the contents of the loan application in particular, the proper approach would be to have regard to those matters in the consideration of any discretionary exercise I might be required to perform. In my view, that approach is consistent with the observations of Allsop P (with whom Bathurst CJ and Campbell J agreed) in Fast Fix Loans Pty Ltd v Samardzic [2011] NSWCA 260 where his Honour referred (at [50]) to the fact that a determination of whether relief ought be granted under the Act required "an overall evaluation in determining both unjustness and the justness of granting relief, which involves a consideration of all of the relevant circumstances of the case".

The purpose of the loan 73The plaintiff submitted that having regard to the provisions of s 6(2) of the Act, and in light of the evidence concerning the purpose of the loan, the Act did not apply and that, as a consequence, the defendant was not entitled to the relief sought. It is therefore necessary for me to set out the evidence specifically relating to that issue. 74In her affidavit of 29 March 2010 the defendant deposed (commencing at paragraph (21)) to having had a conversation with her husband in early 2003 in the following terms: "...Stephen said words to the following effect to me: Stephen: "I think a joint venture with Streetwise would be a good option for us to look into. What happens is that we take out a second mortgage with three or four other people. We put all our money in together and at the end of the two year period we divide up the profit in accordance with how much money we put in at the beginning. We don't have to worry about monthly repayments because Streetwise looks after that. After two years the profit would be from the sale of the property less the interest payments. Me: Sounds like a good idea. This way we can hopefully make $30,000 or $40,000 which we can pay into our mortgage. Hopefully we can keep doing this. Stephen: So what do you think? Me: If this is what you think we should do, that's fine. Let's give it a go." 22. I recall that, when I had this discussion with Stephen, I thought that a joint venture might be a good way to earn some profit which could be used to pay down our mortgage. I had no intention to become a 'property trader' or anything like that. Rather, I intended the 'joint venture' to be very much a 'once off' which Stephen and I could use to try and pay down our existing debts." 75The defendant then gave the following further evidence in chief (at T 91 line 28 ff): "Q. Doing as well as you can now, trying as well as you can to use the language that what your husband said to you, and what you said to your husband, can you recall, what can you recall of that conversation or conversations? A. It was along the lines of, Stephen came home from work, and he said to me: 'I've been talking about things with Co, and watching things happen at the company, and within clients that I have serviced myself, going to something which is called a joint venture, whereby X amount of parties, normally no more than four.' ... Q. X amount of parties, no more than usually four? A. Four at the most, so the profit that would be shared at the end of it would be the greatest for each of us. The basic idea of it was that four of us go in to buy a particular property, and Streetwise makes the repayments on the loan for us, so it is not of our concern, and that at the end of the day, after the property is sold, the money that has been invested, we divide up the profits less the loan repayment amendments. HIS HONOUR Q. Is everything you've just said in answer to that question, something to the effect of what your husband said to you? A. Yes, yes, your Honour." 76The defendant then said in cross examination (at T131 line 35ff): "Q. And so, you were, may I take it, as a result of what your husband had told you, interested in obtaining a loan for the purposes of making an investment by way of joint venture with Streetwise? A. Yes. " 77In further cross examination (at T147 line 40 and following) she said: "Q. When you borrowed the money from GE for the purposes of going in to the joint venture with Streetwise, you intended didn't you, to see how that joint venture went, that is whether it produced a profit that it was suggested it would make for you? A. Of course, yes. Q. And your plan was that if it did produce that profit, that you would continue to do joint ventures and make further profits? A. We had discussed, my husband and I, that that would hopefully be the case and therefore, be able to reduce our existing mortgage a lot faster." 78The defendant's evidence in cross examination as to her hope of a profit, and her intention to continue to engage in joint ventures to make further profits, was consistent with the contents of paragraph (21) of her affidavit of 29 March 2010 in which deposed having said to her husband that she hoped that they could "keep doing this". However, it appears to be somewhat at odds with the contents of paragraph (22) of the same affidavit, in which she deposed to having intended that the joint venture arrangement be a "one off". 79The loan application made provision for the defendant to state the purpose of the loan. In the present case, the following was stated: "Re finance existing loan - investment". 80Consistent with that statement, a letter from the defendant of 26 March 2003, prepared in response to a request for further information following the application for the loan being initially declined, stated the following: "To whom it may concern, This letter is to confirm the current loan of $350,000 has been for the purpose of funding my business known as Baccio Restaurant. My property at 16 Roberts Avenue Randwick is used as security against this loan. I further wish to advise that the current application for additional finance is for the purpose of continuing business investments that I am pursuing"(emphasis added). 81Evidence was also given by the defendant's husband in relation to this issue in his affidavit sworn on 14 October 2009 at paragraph (8): "Joint Venture One of the "financial strategies" presented by Streetwise to some clients was described as "joint venture". The "joint venture" "financial strategy" involved multiple investors (including Streetwise itself) acquiring and developing residential and then selling it with the proceeds of the sale distributed to the investors. Finance for "joint ventures" would be arranged by Streetwise by way of mortgages against property owned by the investors with Streetwise paying the interest on those mortgages for the duration of the "joint venture". Investment by Jane Fassos In early 2003 I said words to the following effect to my wife Jane: Me: "Real estate is experiencing strong returns at the moment. I have been thinking of the possibility of investing with Streetwise. Clients of Streetwise are making money. We should do it ourselves." 82In addition to this evidence, the defendant tendered what were referred to as the "joint venture agreements" which became Exhibit 5. No evidence was given by the defendant or her husband in relation to these documents and it is necessary for me to summarise certain aspects of them. 83The document in Exhibit 5 is entitled "Deed of Investment Joint Venture". The front of the document bears a date of 22 May 2003, but the "Deed of Investment" which appears on page 3 bears a date of 14 May 2003. Under the heading "Agreement" there is reference to a "property investment vehicle" which is not defined but which is said to be "responsible for servicing the interest on the capital raised ..... until the project is completed or the capital returned, whichever is the sooner". Under the same heading, Streetwise is nominated as the "Project Manager". 84Under the heading "Background" the following appears: "Mrs Fassos wish (sic) to enter into a joint venture with Streetwise Property and Projects Pty Ltd to acquire & develop residential property for the purpose of resale ultimately resulting in profit". 85Under a further heading of "Framework" there are references to the property investment vehicle being "a Limited Liability Company, duly incorporated with the pro rata Stakeholder(s) being Mrs Fassos or as determined by Mrs Fassos", and that the Directors and Secretary are to be "a duly authorised person(s) solely determined by Streetwise". 86The "Framework" heading also contained the following: "Mrs Fassos are (sic) to raise capital via a mortgage (refinance/redraw) from the equity of their (sic) property(ies) viz: the sum of two hundred and sixty two thousand, five hundred and one dollars [$262,501.00] (capital). 87The same document also set out the role of Streetwise in terms which included the following: "Streetwise Property and Projects offer a complete professional project management service for clients interested in becoming involved in small property development projects ... For those looking to make significant capital gains over a 12 to 24 month period, Streetwise Property and Projects make the ideal strategic partner". 88Annexed to the document was a further document headed "Project Feasibility" which set out the costs of the construction of a property at a nominated address, along with the expected profit upon the sale of that property. Plans for the development were also annexed. 89Exhibit 5 also contains a letter to Streetwise of 27 February 2004 under the hand of the defendant's husband. In short, the letter is one in the nature of a complaint about an alleged failure to "absorb" interest rate rises into the loan which was advanced to the defendant. Another letter to Streetwise of 22 September 2004, again under the hand of the defendant's husband, raises further issues regarding interest payments. 90There follows a letter of 1 October 2004 addressed to the defendant from Kovelan Bangaru of Streetwise, the effect of which is to confirm that Mr Bangaru "personally guarantees ..... the sum of $262,501.00 to the investor - Jane Fassos ....." 91Exhibit 5 also contains a letter of 18 November 2003 from Streetwise to the defendant, under the hand of Trevor Downs, which is in the following terms: "Please find enclosed two copies of revised Deed of Investment as requested for signing and return to Streetwise Property and Projects. Upon the return of one signed copy, this deed supersedes all other Deed (sic) of Investment you have signed with us. We will include you in the development known as 7a Battle Boulevarde, Seaforth proportionate to your investment upon receipt of same. Please sign and return one copy at your earliest (sic) to insure (sic) your inclusion in the development". 92A second "Deed of Investment Joint Venture" dated 27 October 2003, the parties to which were again stated to be Streetwise and the defendant, is also part of Exhibit 5. That document similarly notes the defendant's desire to enter into a joint venture agreement with Streetwise "to acquire and develop residential property for the purpose of resale ultimately resulting in profit". The document identifies the same property as was identified in the previous Deed, and also identifies the same amount of capital contribution on the part of the defendant. Under the heading "Framework" the following additional matters appear: "Mrs J Fassos would share on a pro-rata basis of the profit or loss of the respective development. Mrs J Fassos understands that their (sic) capital is locked in until the conclusion of the development, with a minimum commitment (sic) of 24 months is (sic) agreed to ensure maximum realisation of the investment(s), however, this may vary by mutual agreement in writing by the parties. All parties agree to appoint Streetwise Property & Projects Pty Ltd to act as project managers and coordinates for the development". 93The document then makes reference to a "Property Investment Vehicle" being responsible for servicing the interest on the capital raised. It also makes provision for a fee payable to Streetwise in its capacity as the Project Manager. Finally, although this second document bears a signature on behalf of Streetwise, the provision on the document for the signature of the defendant has been left blank. 94As I have noted, the defendant gave no evidence about any of these documents. Her affidavit evidence refers to the fact that she did receive payments from Streetwise for a period of time.

The lodgement and processing of the loan application 95The completed and signed loan application was forwarded by Streetwise to ABL by facsimile on 14 March 2003 under the hand of Jade Caines who was described as "File Manager" at Streetwise. The covering facsimile included the following: "Client is applying for a Low Doc loan. Is self employed and has been for the last 4 years. Clients CRAA is good with only few inquiries for both hers (sic) and her companies. Client has signed an income decleratiion (sic)". 96Michael Hatchard, an employee of ABL, gave evidence as to the general process which was undertaken once a loan application was lodged. He said that the progress of any loan application included: (a)loading the details of the application into ABL's computer system; (b)reviewing the loan application and supporting documents; (c)requesting a credit report; (d)obtaining any further credit reports along with a reference check regarding any credit that may have been previously provided by the plaintiff; (e)checking the loan application so as to ensure that it complied with the lending policy and credit guidelines in ABL's internal credit manuals; and (f)checking the serviceability of the loan taking into consideration income, expenses and the proposed loan repayments. 97Mr Hatchard confirmed that the defendant's application was for a "split loan" for two separate sums of $360,000 and $390,000 respectively, making a total amount of $750,000. He also gave evidence, from the case notes which were available, that the defendant's application was initially declined. The reasons for that were set out in a facsimile sent to Streetwise on 18 March 2003 which was in the following terms: "The above facility has been declined - due to the following reasons: Applicant fails GE Mortgage Solutions serviceability policy; GE Mortgage Solutions will however give consideration to the application for a reduced loan amount of $630K subject to the following: Confirmation that the original loan purpose of the loan being refinanced was for investment purposes. What does the applicant intent (sic) to invest in with the additional funds being borrowed. CA report shows that the applicant's employer is "Baccio" - is this the applicant's restaurant's name - if it is please provide ABN number". 98Mr Hatchard confirmed that on 28 March 2003 a response was received from Jade Caines of Streetwise, along with attachments, confirming the purpose of the loan. That facsimile was in the following terms: "In reference to your fax regarding the above mention (sic) reference, please acknowledge the reduced loan amount of $630K, and proceed with the new limit. Also please find a letter confirming the loan Beig (sic) re financed was for investment purposes. Also showing the ABN # for the business. I hope this will assist in completing the application." 99The confirmation letter to which the facsimile referred was that to which I have referred in paragraph [80] above. 100Upon receipt of that facsimile and the accompanying material, the defendant's application was referred for approval in a sum of $630,000, subject to a satisfactory valuation and title search of the property being offered as security.

The Credit Manual 101Mr Hatchard's evidence was that it was his practice, when assessing and reviewing a loan application, to ensure that it met the relevant criteria set out in the Internal Credit Manual ("the Manual"). He said that he would not have referred the defendant's application for approval had he known or suspected that any information contained in it, or in any supporting document, was not correct. 102The relief sought by the defendant pursuant to the Act arises, in part, from the contents of the Manual and an alleged failure on the part of the plaintiff to act in accordance with its terms. It is therefore necessary for me to set out some of its provisions in full. 103Chapter 2 of the Manual, headed "Lending Policy and Guidelines" contained the following provisions: 2.1 Borrowers 2.1.1 Age requirements Minimum age: 18 years A borrower(s) age must be considered to ensure they can repay the total debt within the agreed term. Proof of future income must be substantiated at the time of application. 2.2 Income

• Minimum Income: Total gross income must not be < $20,000 pa
• Income for all borrower(s) must be established to be sustainable and adequate to repay the full debt plus interest and fees within the agreed term.
• The serviceability ratio for the borrower(s) must not be <1.10 for the application to pass the net surplus income method. Applications that fail these serviceability criteria will be declined or will need to be carefully reviewed to establish whether we can proceed on a revised basis. Eg: Reduced loan amount or consolidation of other debts, reduction or clearance of credit card debts etc. ... 2.2.5 Self Employed The borrower(s) must have been operating their current business (in a profitable manner), for at least 2 years. If the borrower(s) are self employed and wish to use the Full Income verified loan product, they must provide:
• Their last year's personal taxation returns (if applicable).
• Current year financial statements (profit and loss, balance sheet, company tax returns, if a company)
• Notes accompanying the financial statements. Self - employed borrower(s) that are to be considered outside of this criteria are subject to a formal review. From time to time we may have doubts that the applicant has been self-employed for more than 2 years as is required - eg: a company search that has been conducted may indicate the company has been incorporated less than 2 yrs. Whilst we would agree that there is good reason to ask the introducer for an explanation, it does not necessarily follow that the application should be automatically declined as the applicant may very well have been operating as a sole trader or as a partnership before incorporation. Accordingly, the assessment team should treat each case on its merits and ask the introducer to provide additional information/explanation only where it is considered necessary. ... 2.2.8 Net Surplus Income Gross Income (Taxable Income) The following items are acceptable in determining the gross income (taxable income) figure: Loans to sole traders / partnerships / directors Sole traders / partner's / director's salary Net profit figure from profit and loss statement (borrower(s) share) Borrower(s) share of abnormal expenses (items not likely to occur in future years, such as formation expenses incurred in establishing a new business) Income derived from any of the sources detailed in s 2.2.11, pages 13, 14 and 15. Director's/guarantor(s) salaries are acceptable income but are taxed at personal tax rates. ... 2.2.9 Income Verification Not applicable if self certification feature used Evidence of income for each borrower(s) must be obtained, copied and held on the borrower(s) file in all circumstances. In order to comply with the Privacy Act all tax file numbers must be deleted from any documentation provided by a borrower(s). The following document(s) are acceptable evidence of income. A copy of the document(s) will be held in the loan file. If sufficient documentation is not provided or if any doubts exist regarding the information provided, contact the source of the document, eg employer, accountant, etc to confirm details of income. 2 current payslips with the year to date (YTD) figures. The prior year group certificate plus one current payslip. A letter from the employer (on company letter head and signed by an authorised person i.e. paymaster or personnel officer). If original not cited or provided then one other document is also required eg payslip, group certificate etc. A current taxation return and one current payslip if PAYG salary earner. Tax return must have been lodged and accepted by the ATO. Current statement of benefit from a Government Department as evidence of pension, benefit, allowance, entitlement, etc 3 months' bank statements showing regular credits of family payments/parenting allowance if secondary income. Prior 2 years' financial statements plus company directors, guarantor(s) and beneficiaries taxation returns, prepared by an accredited accountant, must have been lodged and accepted by the ATO. Rental verification in the form of a tenancy agreement, rental appraisal from a licensed valuer, sales contract with expected rent listed, rental statements from property manager or personal taxation return (if existing rental). ... Income Self-Certification Feature This product feature is only available to self-employed applicants, where the funds are being used for the business or investment purposes. If a borrower wishes to use this feature, confirmation of income must be via an income declaration form signed by the borrower(s), which confirms the borrower(s) gross income and business net income, ie: total profit before tax but after deduction of all other expenses. When reviewing an application for self-certified applicants, the assessor should consider whether the declared income is reasonable in relation to - the type of business the applicant derives the income from, the net asset position of the applicant, the length of time in the business, the credit history of the applicant. If inconsistency or doubts are clearly evident, we should be asking the introducer to obtain an explanation or justification of the declared income. This may, in some cases, mean that we will want to see full verification of income. In the case of joint applicants the primary borrower must be self-employed. The joint borrower may be a PAYG employee, however, full verification of the PAYG applicant must be obtained. ... 2.4.2 Business Purpose (Not applicable if Self-certified feature used) Loans for business purposes will be considered and can be approved where funds form <20% of the total facility or $40,000 whichever is the lesser figure. Business purpose loans outside this criteria will be considered by exception. Note: The purpose of the funds must be disclosed at the time the application is submitted, and approval for the loan purpose is at the absolute discretion of GE Mortgage Solutions. Note: When assessing business loans the purpose of the funds must be within GE Integrity Guidelines, i.e. loans must not be for illegal, immoral, unethical or unsound environmental concerns. 104Mr Hatchard was taken to a number of these provisions in the course of cross examination. Having specifically agreed (at T16 line 38) that the Manual was what guided the assessment of a loan application, he said (at T 18 line 15 ff) that in circumstances where the defendant was aged 39 at the time of making the application, and where the period of the loan was 40 years, he was not able to point to anything which indicated that any consideration was given to the defendant's capacity to repay the total debt within the agreed period of time. Having accepted (at T 18 line 41 ff) that in 2003 there was a climate of rising house prices which resulted in the plaintiff having funds to lend, he also gave the following evidence: Q. And no consideration could I suggest to you was given at all to the capacity of this person to re-pay this loan at, within time, or at all, other than that it was assumed that the rising asset price would eventually deal with the debt in any event. What do you say about that? A. It's not something I thought about." 105He was then cross examined as to the provisions of paragraph of 2.2 of the Manual in relation to income (commencing at T19 line 36). Having agreed that the only information he had in relation to the defendant's income was her statement in the loan application that her income was $160,000.00 and that she was a restauranteur, he gave the following evidence: Q. Well, how could that possibly establish that her income was sustainable and adequate to re-pay the full debt plus interest and fees within the agreed term, and I remind you that the agreed term was 40 years? A. (No answer). Q. It can't, can it? A. No. 106Mr Hatchard was then taken to paragraph 2.2.5 of the Manual which related to self employed applicants (commencing at T 21 line 23). He agreed that there was no evidence which enabled him to be satisfied that the business nominated in the application had been operating in a profitable manner for 2 years. He then confirmed that the product for which application was made was a "lo doc loan" and said: Q. But this was not one of those, ultimately it was a what was known in the trade in those days as a low doc loan? A. That's correct, self-certified. Q. Self-certified? A. Or low doc, yes. Q. And the short point is that if the self-certification matched, if the information in the self-certification matched your criteria, in other words, if the boxes were all ticked and assuming the security existed as well, they got the loan. Right? A. That's correct. 107Mr Hatchard was then taken to the provisions of the Manual relating to income verification (commencing at T 23 line 17). In particular, he said: Q. You see, isn't this right? Go back, if you would, please, to 319. You cannot attribute could I suggest to you anything sensible to "gross annual income $160,000" unless you are aware of the outgoings, whatever they might be, so that you can work out then what is the cost, if you like, of having a gross of 160,000? A. (No answer). Q. You see, what has happened could I suggest is that that figure of gross annual income has been applied as if it was the net taxable income. Isn't that what has happened? A. I don't know what's happened. 108He was then taken to those parts of the Manual which related to the issue of serviceability (commencing at T 25 line 24). His evidence in relation to that issue included the following: Q. So the only way to look at it with this passage of time and without all of that information to hand is one has to look at what would 160,000 net out at and see if that could be supported by a - when I say net out, after tax, and see if that income would support this loan. Right? A. (Witness nodded). Q. But the thing you can't do now, and could I suggest could never have done upon that application, is work out what the real net income was because nobody was telling you, isn't that right? A. Could I have the question again? Q. Sure. Sitting there today we all have to rely upon the information that is in front of his Honour? A. That's right. Q. What one could do today is get out the tax tables and work out what the tax was in 2003 on that income and then work out the net income and then look and see whether that net income would have supported a loan of $160,000 -I'm sorry, would have supported a loan of $630,000, we could do that. What we can't do today, and could I suggest never do, is work out what in fact the person's income was net of tax because there is nothing in that document that tells you what the business expenses were? A. That's true. Q. In any event, rightly or wrongly, you relied upon that figure and certified that the loan was serviceable. Right? A. Based on everything we keyed into this programme. ... Q. But the system didn't include, did it, what would be the business expenses of running a restaurant at Randwick with a gross income of $160,000 a year? A. I don't know if that was a part of the programme. Q. It would be a brilliant programme if it did, wouldn't it? A. It would be exceptional. Q. And so it didn't, did it? A. I don't know. I honestly do not know. Q. But you would be highly surprised if it did. Correct? A. I don't know what to think. Q. So, so far as the first vital issue of approving a loan is concerned, serviceability, it was approved so far as that part of it was concerned upon the certification by the, by Mrs Fassos. Correct? A. That's correct. Q. And it was accepted that what she said about her income was true. Correct? A. Correct. Q. And no requirement of any kind to test the accuracy of that assertion. Correct? A. Correct. 109Mr Hatchard was then cross examined as to the plaintiff's requirement for adequate security (commencing at T27 line 17). He agreed that in addition to income sufficient to service the loan, the plaintiff required sufficient security and that the value of the security property, unlike the information provided as to income, was not accepted without verification by way of a valuation. He also agreed that the loan would not have been approved had an appropriate valuation of the security property not been obtained. 110It is relevant to note that at paragraph (44) of his affidavit of 19 August 2011 Mr Hatchard made reference to "case notes" compiled in the course of considering the defendant's application. He specifically deposed to the fact that the application was initially declined because it "failed serviceability". That is consistent with the terms of the case notes which are in evidence.

The approval of the loan application 111The defendant's loan application was ultimately approved in an amount of $630,000.00 by Mario Lorenzi who also gave evidence. In his affidavit of 19 August 2011 (at para. (25)) Mr Lorenzi stated: "Whilst I was not required to independently verify the information provided in a loan application, it was also my practice to review a loan application for any red flags that indicated the loan application warranted further investigation (ie by comparing a borrower's employment to their income details, overall net worth and credit history). If I had concerns in relation to a loan application I would either seek additional information and / or explanations to satisfy those concerns, or err on the side of caution and decline a loan application." 112He further said (at paragraphs (33) - (34) of the same affidavit): "In deciding to approve the Fassos Application, I: (a) relied on the declarations provided by Ms Fassos in the Fassos Application in relation to the accuracy of the information provided in the Fassos Application; (b) relied on the acknowledgments provided by Ms Fassos in the Fassos Application, including the acknowledgment that the Approved Introducer (Streetwise) was not an agent of GEMSL; (c) relied upon Ms Fassos' self-certification of her income; and (d) formed the view on the basis of the information set out in set out in (sic) the Fassos Application, the credit reports supporting documents and the ABL GEMSL assessment teams submissions that Ms Fassos was able to service a loan of $630,000. If I had of (sic) been aware of anything that suggested the information in the Fassos application was incorrect or that raised doubt concerning the declaration and acknowledgments made by Ms Fassos in the Fassos Application, I would have declined the Fassos Application". 113In the course of additional evidence in chief, Mr Lorenzi was taken to a number of the provisions of the Manual (commencing at T51 line 34). Having had his attention drawn to paragraph 2.1.1 (dealing with the issue of an applicant's age) he said he had no particular recollection of what specific consideration he may have given to that provision in determining the defendant's application. However, he said that his practice was to look at an applicant's age, and net worth position according to the information provided, and then "make a call" as to whether the proposed loan application was suitable for acceptance. 114Mr Lorenzi was referred (commencing at T 57 line 30) to the provisions of a service agreement dated 23 October 2000 between the plaintiff and ABL. Schedule 4 of that agreement provided (inter alia) as follows: "Dollar Limits The Managing Director, GEMSL, has approved the following delegations. These delegations will be reviewed periodically by the Managing Director GEMSL and VP Portfolio Management and adjusted where appropriate with any movement in the loan quality or risk". 115The schedule then set out a list of individual names (which did not include Mr Lorenzi) along with corresponding monetary amounts representing the limit of the lending authority of each individual. One of those persons named was Michael Sullivan, the limit of whose delegated authority was $750,000.00. 116The same provision in the schedule went on to state the following: "Individual officers will be advised separately, in writing, of the maximum dollar limit under their DLA. The Credit Leader will do this, under advice from the Managing Director, GEMSL. The Credit Leader will maintain a register of all officers with a DLA. Individuals within Adelaide Bank will be awarded a DLA in line with their experience, ability and current job role, which will allow them to approve loans up to a maximum dollar limit under their DLA. The Credit Leader will do this, under advice from the Managing Director, GEMSL". 117Mr Lorenzi deposed (at paragraph (23) of his affidavit) that he was able to assess and approve the defendant's loan application because the loan amount of $630,000.00 was within his delegated authority, although he was not able to recall the exact upper limit of that authority in 2003. 118When cross examined (at T 59 line 5 ff) Mr Lorenzi identified Michael Sullivan as one of the persons to whom he would have been required to refer applications that were in excess of his delegated authority. He also accepted that it would be a serious error, indeed a "sackable offence", if a loan was approved by a person in an amount which exceeded his or her authority. However, Mr Lorenzi rejected the suggestion that his approval of the defendant's loan was in excess of his authority. He stated that he had received a letter confirming the limit of his authority, although that letter was not in evidence. 119Mr Lorenzi confirmed (at T 61 line19 ff) that in carrying out his duties he used the Manual as a guide, and that he had no contact with either the borrower or the broker. His attention was drawn to that part of the Manual which related to proof of income, and having agreed (commencing at T 62 line 7) that the information available to him in the case of the defendant was limited to that contained in the application, he gave the following evidence: Q. You were relying upon the application. Can you help us with how that enabled you to be able to say, as the lending policy required you, that proof of future income is substantiated when the application was made? A. Okay, well, if I can explain a little bit. Q. Of course. A. That terminology, "proof of future income", noone can provide proof of future income, but my basic assessment of these type of applications is to look at the application as a whole, so in this case, I would have noted that as you mentioned, the applicant was 38, 39 years of age, had good equity in her home, had a reasonable net worth position, showed through her serviceability calculations that she could afford the application, and was already paying a mortgage, a substantial mortgage, of 360,000. We were asked to refinance and had conducted that satisfactorily, and was looking for additional funds for future investment purposes in itself, gave me, or looking at it now, gave me the impression that yes, she's not borrowing the money for spending willynilly on anything that is going to be just lost. Obviously, we looked at the future investment, that portion of the debt that she wished to take on, and in an overall picture, assume, or were reasonably, was comfortable in approving the application. ... Q. *How, from that, if you were taking that into account, did that give you comfort, that at the age of, by over the next 40 years, the applicant would be able to maintain her income and pay it? A. Well, as I said, that's partly the cause of these types of applications in that HIS HONOUR: I don't think you were being asked that, Mr Lorenzi. Without wanting to cut you off, I don't think you were being asked that question, Mr Lorenzi. Would you like to put the question again? QUESTION MARKED * READ BACK WITNESS: I really don't know how to answer that one. MENZIES Q. Isn't the answer: "It doesn't help me. It doesn't help me work out how this person, for the next 40 years, is going to be able to pay out this debt, because it tells me nothing"? A. Other than from investing those funds, additional income, one would assume would be generated. Q. That's a pretty generous assumption, isn't it? Regrettably, the world is littered with failed investments? A. Yes. Q. Isn't the real purpose of getting this information, is so that you are able to gain or the lender is able to gain exemption from the Uniform Consumer Credit Code? A. No. 120Mr Lorenzi was then taken to the declarations document and agreed (commencing at T66 line 10 ff) that he accepted the defendant's acknowledgment as to the correctness of the information which had been provided, as well as her opinion that she could meet the necessary obligations associated with the loan. He agreed that he did not accept a similar self assertion in relation to the value of the property. 121He was then taken to the provisions of the Manual in relation to income and gave the following evidence (commencing at T67 L1): Q. Well, you had no information, could I suggest to you, from which you could say that the income is established and demonstrated to be sustainable and adequate to repay the full debt plus interest and fees within the agreement term; there is just no information from which to make that assessment, is there? A. Other than, as I mentioned before, looking at the application over all, her previous credit history, payment history, current mortgage, her credit advantage report. HIS HONOUR Q. How do those matters establish income? A. Well, they establish a track record or an indication that the borrower's able to support the sale, the repayments that she had previously committed to. Q. How does that establish their income at the time of making the application? A. I agree. It doesn't help with the future income that I was using to support this application. MENZIES Q. Of course what you were looking at was a past history on a $360,000 debt? A. Yes. Q. And satisfying yourself for a proposed new debt which was $630,000, almost double? A. Correct. Q. The simple proposition is this, isn't it: You took the amount in the form first, the $160,000, self assessed income first? A. Yes. Q. You interpreted gross income to mean net income before tax? A. Well, yes. Q. And then you simply applied an arithmetical formula to those facts? A. Yes. Q. And that's all that was done, wasn't it? A. To confirm that it met serviceability requirements, yes. 122Mr Lorenzi agreed (at T 70 line 29 ff) that prudent lending practice demanded being satisfied, firstly of an applicant's ability to service the loan and secondly, of the availability of security. He expressly disagreed with the proposition that providing that there was adequate security, and providing that there was a document containing an assertion of income, the plaintiff took no further interest in satisfying itself whether the income existed and whether it could have satisfied the loan. He also expressly rejected the proposition that the plaintiff was engaged in what was described as "bare asset lending". 123Mr Lorenzi was then provided with the taxation returns of the defendant which are in evidence but to which he did not have access at the time of approving the loan. He agreed (at T 77 line14) that had he been given those returns he would not have approved the application. 124Mr Lorenzi rejected the proposition that all that was required in order to secure a loan of the kind for which the defendant had applied was a document which showed a figure of income. However, he agreed (commencing at T 79 line 47) that he accepted, as correct, the income figure stipulated in the application form, and applied that figure to his determination of the approval of the application. 125I found Mr Lorenzi to be a truthful witness. He obviously took his responsibilities seriously, and impressed me as someone who discharged those responsibilities carefully and methodically.

The loan agreement 126There is no dispute that following the approval of the loan, the parties entered into an agreement dated 7 April 2003, pursuant to which the money was advanced to the defendant. There is also no dispute that this advance was secured by Mortgage 9592510, registered over the defendant's residential premises.

The relevant statutory provision 127The first question for determination is whether or not the Act applies. In that regard, s. 6 of the Act is in the following terms: 6 Certain restrictions on grant of relief (1) The Crown, a public or local authority or a corporation may not be granted relief under this Act. (2) A person may not be granted relief under this Act in relation to a contract so far as the contract was entered into in the course of or for the purpose of a trade, business or profession carried on by the person or proposed to be carried on by the person, other than a farming undertaking (including, but not limited to, an agricultural, pastoral, horticultural, orcharding or viticultural undertaking) carried on by the person or proposed to be carried on by the person wholly or principally in New South Wales.

The submissions of the parties 128On behalf of the defendant, it was submitted that in the circumstances of the present case, s6(2) had no operation. It was submitted, in particular, that consideration of the contents of Exhibit 5 demonstrated that the property development, being the relevant business for these purposes, was to be carried on by a trustee and not by the investors themselves and that the only obligation on the defendant was to raise capital to be invested in the venture. This, it was submitted, took the matter outside the operation of s6(2). Reliance was placed in this regard upon the decisions in Toscano v Holland Securities Pty Limited (1985) 1 NSWLR 145 and Australian Bank Limited v Stokes (1985) 3 NSWLR 174. 129In Toscano, the plaintiff and his wife had originally conducted a business in partnership, following which the business was transferred from the partnership to a company of which they were the sole shareholders. After that transfer, the plaintiffs guaranteed the company's performance of certain obligations to a particular entity, and at the same time gave a mortgage to such entity in order to secure advances made to the company for the purposes of its business. McClelland J observed (at 149) as follows: "Therefore, as at 25 March 1981, neither Mr Toscano nor Mrs Toscano was carrying on a business, in the course of or for the purpose of which it could be properly be said that the transactions of that date were entered into, and I do not think that it could legitimately be said that the transactions of 25 March 1981 were entered into by them "for the purpose of" a business which they had ceased to carry on sometime before, notwithstanding that those transactions arose out of that business and more particularly out of a contract entered into in the course of their carrying on that business. It follows that neither Mr Toscano nor Mrs Toscano is precluded by the provisions of s 6(2) from being granted relief under the Act". 130In Stokes, the facts were that the defendants had engaged in the conduct of a business through a company of which they were in control and which carried on the business of a trading trust. The plaintiff had loaned monies to the company and the defendants had granted mortgages to the plaintiff, over property owned by them personally, to secure repayment of the money lent to the company. At p.176 Rogers J observed: "It has been the established principle since the decision of the House of Lords in Salomon v Salomon & Co [1897] AC 22, that the law draws a clear distinction between the individual and the legal entity utilised for the purpose of carrying on a business. It is right to recognise that in more recent years there has been a steady erosion of that separation by piercing the corporate veil. However, on the face of it, the exclusion in s 6(2) does not seem to apply to the defendants...There are difficulties, if one approaches the provision along the lines suggested by council for the plaintiff, of working out what is meant by the expression "carried on by him". Does it mean that the person in question has to hold 100 per cent of the shares, 50 per cent of the shares, or a controlling interest? Does it mean that the person has to have a beneficial interest in the entity at all? The trading trust which may be carried on for the benefit of discretionary beneficiaries is but one example of the difficult type of situation which one would have to confront if one were to depart from the strict separation of entities commanded by the decision in Salomon v Salomon & Co." If I may so with the utmost deference, these difficulties do not seem to have troubled or found a reflection in the judgment of McClelland J in Toscano v Hollands Securities Pty Limited (1985) 1 NSWLR 145. His Honour was apparently content to accept the view that in circumstances such as the present and those which obtained before him, if the business is carried on in the name of the company then that is the end of the matter." 131In Ring Tread Systems (Australasia) Pty Limited (Receiver and Manager Appointed v Tubb [1998] NSWCA 186 Mason P, in reference to the decisions in Toscano and Stokes, observed that the principles stated in those two decisions had not been doubted in any later case (see also Perpetual Trustees Victoria Limited v Longobardi [2009] NSWSC 654). 132It was submitted on behalf of the plaintiff that firstly, the relevant time for determining the application of s6(2) was, consistent with its terms, the time at which the relevant agreement was entered into. It was submitted that the evidence established that at that time, the defendant entered the agreement for the purposes of a business of investment that she proposed to carry on. In these circumstances, it was submitted that the documents in Exhibit 5 were of no consequence, given that they were dated after the date of the loan agreement. Further, and apart from what was submitted to be the confusing nature of the documents, the plaintiff also relied upon the fact that there was no evidence adduced from the defendant that the type of joint venture contemplated by the documents was ever considered by the defendant at the time of entering into the loan agreement. 133It was further submitted that even if I was to have regard to the documents in Exhibit 5, and even if I concluded that either or both of the joint venture agreements contained in the Exhibit were entered into, the circumstances were distinguishable from the authorities relied upon by the defendant, because the documents evidenced agreements between the defendant personally and Streetwise.

Consideration of the issue 134The question of the application of s 6(2) must be viewed as a matter of substance and not form (see Ford v Perpetual Trustees Victoria Limited [2009] NSWCA 186; 75 NSWLR 42; Agricultural and Rural Finance Pty Limited v Atkinson [2010] NSWSC 635). The words "trade, business or profession" are necessarily very wide and cover the whole gamut of professional and commercial activity (see Bank of Western Australia Limited v Primanzon [2010] NSWSC 862 at [84]-[85], citing Ford (supra); Agricultural and Rural Finance (supra) and Ellison v Vukicevic (1986) 7 NSWLR 104). 135The words "for the purpose of" have the meaning that the contract was entered into as an ordinary incident of the carrying on, or the proposed carrying on, of a particular trade, business or profession (see Ellison (supra at 111). Further, in approaching the matter, there is no warrant for qualifying the term "business" by the use of terms such as "primary" or "predominant" (see Primanzon at [90]). 136The plaintiff drew my attention to the judgment of Hunter J in Commonwealth Bank of Australia v Roubas [1997] NSWSC 475 where his Honour made reference to a number of the authorities regarding the meaning of the term "business", before applying the relevant principles to the matter which was before him. Facts necessarily differ from case to case. I am necessarily required to make a determination of the issue of whether or not the Act applies having regard to those facts as may be established by the evidence which is before me. 137In my view, the loan agreement which was entered into by the defendant with the plaintiff was one which was entered into for the purpose of a business that the defendant proposed would be carried on by her, namely a business of investment in property. There are a number of reasons which lead me to form that view. 138The loan application itself stipulated that the purpose of the loan was one of "investment". The subsequent letter of 26 March 2003 from the defendant went further, and stipulated that the purpose of the loan was for "continuing business investments" which the defendant said she wished to pursue. That letter was sent in response to a specific query from the plaintiff as to the purpose for which the loan was sought. 139I am satisfied on the whole of the evidence, including that of the defendant herself, that at the time of entering into the loan agreement she intended to use the money advanced by the plaintiff to pursue an arrangement which, amongst other things: (i) she described in initial conversations with her husband as being a "joint venture "; (ii) involved multiple investors, each of whom invested a capital sum; (iii) included Streetwise as the Project Manager, for which it was to be paid a fee; (iv) involved the acquisition of an investment property; (v) contemplated the resale of the property at a profit, and the subsequent distribution of such profit to the investors. 140Further, I am satisfied that the defendant did not intend that this would be a "one off" investment. She agreed when cross examined that, on the assumption that her investment produced the profit that had been suggested, she hoped to be able to continue to make similar such investments with a view to deriving further profits in future years. 141I accept the plaintiff's submission that the documents in Exhibit 5 are not material to the determination of this issue, given that they post date the relevant agreement. In my view, the relevant time at which to consider the application of the Act is the time at which the agreement was entered into. However, even if I were to have regard to the documents in Exhibit 5, and even if I were to accept that one or both of them were actually executed in the form in which they have been tendered, their terms are in my view, distinguishable from the facts considered in Toscano and Stokes. In particular they are, on their face, agreements to which the defendant herself was a party. Had the parties to each of the joint venture agreement been Streetwise and a corporate entity over which the defendant had some control, then the situation might well be different. However, the defendant was nominated as a party to each of those agreements in her own right.

Conclusion as to the application of the Act 142For the forgoing reasons, I am satisfied that the loan agreement of 7 April 2003 was entered into by the defendant for the purposes of a business which she proposed to carry on, namely a business of investment. 143It follows that the Act does not apply.

THE RELIEF SOUGHT BY THE DEFENDANT 144Notwithstanding the view I have reached regarding the application of the Act it is appropriate for me to consider the remaining issues between the parties. 145Section 7 of the Act is in the following terms: Part 2 - Relief in respect of unjust contracts 7 Principal Relief (1) Where the Court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made, the Court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, do any one or more of the following: (a) it may decide to refuse to enforce any or all of the provisions of the contract, (b) it may make an order declaring the contract void, in whole or in part, (c) it may make an order varying, in whole or in part, any provision of the contract, (d) it may, in relation to a land instrument, make an order for or with respect to requiring the execution of an instrument that: (i) varies, or has the effect of varying, the provisions of the land instrument, or (ii) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the land instrument. (2) Where the Court makes an order under subsection (1) (b) or (c), the declaration or variation shall have effect as from the time when the contract was made or (as to the whole or any part or parts of the contract) from some other time or times as specified in the order. (3) The operation of this section is subject to the provisions of section 19. 146The term "unjust" is defined in s. 4 of the Act in the following terms: "Unjust includes unconscionable, harsh or oppressive, and 'injustice' shall be construed in a corresponding manner". 147A consideration of whether or not relief should be granted pursuant to s7 involves the taking of the following steps: (i) making primary findings of fact; (ii) determining whether a contract, or a provision of the contract is unjust; and (iii) determining whether, as a discretionary exercise, relief should be granted. (see Perpetual Trustee Co. Limited v Khoshaba [2006] NSWCA 41 at [106] - [109] per Basten JA). 148In engaging in the second of those steps, s9 provides as follows: 9 Matters to be considered by Court (1) In determining whether a contract or a provision of a contract is unjust in the circumstances relating to the contract at the time it was made, the Court shall have regard to the public interest and to all the circumstances of the case, including such consequences or results as those arising in the event of: (a) compliance with any or all of the provisions of the contract, or (b) non-compliance with, or contravention of, any or all of the provisions of the contract. (2) Without in any way affecting the generality of subsection (1), the matters to which the Court shall have regard shall, to the extent that they are relevant to the circumstances, include the following: (a) whether or not there was any material inequality in bargaining power between the parties to the contract, (b) whether or not prior to or at the time the contract was made its provisions were the subject of negotiation, (c) whether or not it was reasonably practicable for the party seeking relief under this Act to negotiate for the alteration of or to reject any of the provisions of the contract, (d) whether or not any provisions of the contract impose conditions which are unreasonably difficult to comply with or not reasonably necessary for the protection of the legitimate interests of any party to the contract, (e) whether or not: (i) any party to the contract (other than a corporation) was not reasonably able to protect his or her interests, or (ii) any person who represented any of the parties to the contract was not reasonably able to protect the interests of any party whom he or she represented, because of his or her age or the state of his or her physical or mental capacity, (f) the relative economic circumstances, educational background and literacy of: (i) the parties to the contract (other than a corporation), and (ii) any person who represented any of the parties to the contract, (g) where the contract is wholly or partly in writing, the physical form of the contract, and the intelligibility of the language in which it is expressed, (h) whether or not and when independent legal or other expert advice was obtained by the party seeking relief under this Act, (i) the extent (if any) to which the provisions of the contract and their legal and practical effect were accurately explained by any person to the party seeking relief under this Act, and whether or not that party understood the provisions and their effect, (j) whether any undue influence, unfair pressure or unfair tactics were exerted on or used against the party seeking relief under this Act: (i) by any other party to the contract, (ii) by any person acting or appearing or purporting to act for or on behalf of any other party to the contract, or (iii) by any person to the knowledge (at the time the contract was made) of any other party to the contract or of any person acting or appearing or purporting to act for or on behalf of any other party to the contract, (k) the conduct of the parties to the proceedings in relation to similar contracts or courses of dealing to which any of them has been a party, and (l) the commercial or other setting, purpose and effect of the contract. (3) For the purposes of subsection (2), a person shall be deemed to have represented a party to a contract if the person represented the party, or assisted the party to a significant degree, in negotiations prior to or at the time the contract was made. (4) In determining whether a contract or a provision of a contract is unjust, the Court shall not have regard to any injustice arising from circumstances that were not reasonably foreseeable at the time the contract was made. (5) In determining whether it is just to grant relief in respect of a contract or a provision of a contract that is found to be unjust, the Court may have regard to the conduct of the parties to the proceedings in relation to the performance of the contract since it was made. 149Consideration of the factors in s9 is not to be undertaken in a way which amounts to some form of calculation, such that the power to set aside the contract is engaged when one criterion is satisfied, and should be exercised when a number of criteria are satisfied. Rather, the exercise requires an assessment of the relevant circumstances in relation to a broad concept of what is unjust: see Perpetual Trustee Company Limited v Khoshaba [2006] NSWCA 41 at [113] per Basten JA). 150In the present case, not all of the specific matters enumerated in s9 were relied upon. The defendant put her case for relief on the following bases: (i) the plaintiff failed to provide the defendant with an opportunity to obtain independent advice; (ii) the plaintiff failed to make enquiry as to the purpose of the loan, or as to the defendant's income, in breach of its own lending guidelines; (iii) the plaintiff engaged in imprudent lending practices, in particular, in asset lending; (iv) the plaintiff otherwise breached its own lending guidelines by failing to have regard to the defendant's age, and by failing to obtain proof of future income; and (iv) Mr Lorenzi approved the loan in excess of the limit of his authority.

The Plaintiff failed to provide the defendant with an opportunity to obtain independent advice 151Paragraph (13) of the defendant's affidavit of 14 October 2009 is in the following terms: "Prior to executing the documentation in connection with the loans ... no one: ... (j) recommended that I seek independent legal or other advice. 152This is at odds with the terms of a declaration which was included at the conclusion of the loan application signed by the defendant and which was in the following terms: "The Applicant: ... (8) Understands and acknowledges that (the plaintiff) recommends that each of them seeks independent legal or other financial advice prior to entering into any credit contract that (the plaintiff) may offer to the applicant as a result of this application or any related guarantee". 153Paragraph (3) of the declarations document signed by the defendant was in the following terms: "I have carefully considered by financial position and, in accordance with your recommendation, have sought and obtained such financial and other advice as I consider appropriate in connection with the proposed loan". ... 154Further, Exhibit D was a document headed BORROWERS ACKNOWLEDGEMENT which was signed by the defendant and was in (inter alia) the following terms: "GE Mortgage Solutions STRONGLY RECOMMENDS that you obtain legal and financial advice regarding your loan contract and any securities granted by you BEFORE you sign them. If you choose NOT to obtain legal advice you must complete and sign the acknowledgement below" (emphasis in original in each case). 155The acknowledgement was signed by the defendant in (inter alia) the following terms: "WE ACKNOWLEDGE THAT: ... We have been given the opportunity to obtain legal advice on the nature and effect of the Documents but have chosen not to do so of our own accord". 156Contrary to the contents of the defendant's affidavit, and on the basis of the evidence I have outlined, I am satisfied that there was an express recommendation contained in the loan application that independent advice be sought. I am also satisfied that the declarations document contained an acknowledgement by the defendant that she had sought and obtained such advice as she thought appropriate. I am further satisfied that the defendant acknowledged in writing that she had been given the opportunity to obtain legal advice and had chosen not to do so. 157I do not accept the submission advanced on her behalf that there was any relevant failure on the part of the plaintiff in this regard.

The plaintiff failed to make enquiry as to the purpose of the loan, or as to the defendant's income, in breach of the relevant lending guidelines 158The plaintiff's guidelines are contained in the Manual. At the commencement of the Manual, under the heading "Lending Policy and Guidelines", the following appears: "The following lending policy and credit guidelines are provided as general guidelines for the GE Mortgage Solutions Credit Unit ...". 159Consistent with the evidence of Mr Hatchard (at T 16 line 38) the Manual was a guide only (and see Permanent Mortgages Pty Limited v McFadyen [2012] NSWSC 130 per Johnson J (at [121]). 160I am satisfied having regard to the evidence of Mr Lorenzi that no external or other enquiry was made by him, or by anyone else on behalf of the plaintiff, for the purpose of verifying the defendant's income. I am also satisfied that Mr Lorenzi did not make enquiry as to the purpose for which the loan was sought. However, it is evident from the evidence of Mr Hatchard that enquiry was in fact made about the purpose of the loan before the matter was referred to Mr Lorenzi (see paragraphs [80] and [97] above). 161To the extent that the Manual made reference to loans for business purposes in Clause 2.4.2, that provision was expressed not to apply to self certified loans of the kind for which the defendant applied. Clause 2.2.9 of the Manual set out various steps in terms of income verification. Once again however, those provisions did not apply to a self certified loan. In these circumstances, I am not satisfied that there was any breach of the lending guidelines set out in the Manual, either by failing to make enquiry about the defendant's income, or by failing to make enquiry as to the purpose of the loan. 162Moreover, leaving aside the provisions of the Manual, I am not satisfied that the absence of such enquiries would otherwise have supported a conclusion that the loan agreement was unjust, so as to entitle the defendant to discretionary relief. 163In Khoshaba (supra) Basten JA concluded (at [124]) that in the circumstances of that case, the absence of any attempt on the part of the lender or its agent to verify the accuracy of the income figure stipulated in the loan application should lead to the conclusion that the lender should be taken not to have relied upon the ability of the borrowers to make instalment repayments on time, in accordance with the terms of the contract. 164In Khoshaba the evidence established that incorrect information had been provided in the loan application, including information as to income, but that the borrower was not aware of that fact. In the present case, as far as the latter issue is concerned, I have found to the contrary. The present is a case in which, in my view, the defendant provided information in the loan application which she knew to be false. That information included, but was not limited to, a substantially inflated figure which was said to represent her income. 165Further, this was not a situation in which there were apparent inconsistencies in the information provided by the defendant in support of the loan application, and which might have served to put the plaintiff on notice that some particular enquiry was warranted (as to which see Perpetual Trustees Australia Limited v Schmidt [2010] VSC 67 esp. at [207]). I am satisfied on the basis of Mr Lorenzi's evidence that had this been the case, (or, using his words, had he seen any "red flags") these matters would have been pursued. 166In MacFadyen (supra) Johnson J observed ([at [119] - [120]): "Central to the defendant's submissions is the issue of the serviceability of the loan. The Plaintiff (through La Trobe) relied on certifications as to income provided by the Defendant. I am satisfied that all certifications as to income were provided with the full knowledge of the defendant as to their contents. There is no relevant inconsistency between parts of the documentation provided by the defendant. [120] Aspects of the defendant's submissions come perilously close to an argument that a borrower may submit inaccurate or incomplete information to a lender (because that is what may serve the interests of the borrower) and that the lender is under a duty to investigate the documents provided by the borrower, despite the contents of the documents which have been furnished. I reject this submission". 167I respectfully adopt those observations in the circumstances of the present case. I do not regard any failure on the part of the plaintiff to make enquiry into the accuracy of the information provided by the defendant in the application form, or to make enquiry as to the purpose of the loan, to have given rise to any injustice.

The plaintiff engaged in imprudent lending practices, in particular asset lending 168The defendant submitted that the plaintiff advanced money without regard to her ability to repay the amount owed, in the knowledge that adequate security was available in the event of default. It was submitted that in such circumstances, and having regard to the fact that the security property in the present case was the sole residence of the defendant, public interest considerations supported the conclusion that the contract was unjust. The defendant's submission amounted to the proposition that the plaintiff was engaged in "asset lending". 169Care must be taken when using such shorthand expressions. In Samardzic (supra) Allsop P observed (at [43]) that the term "asset lending" was not a legal frame of reference, but rather a convenient expression to describe "a form of lending where the lender has little, if any, regard for the capacity of the borrower to repay and rests satisfied with the security to protect itself". Subsequently, his Honour observed in Tonto Home Loans Australia Pty Ltd v Tavares; FirstMac Ltd v Di Benedetto; FirstMac Ltd v O'Donnell [2011] NSWCA 389 at [2] that terms such as "asset lending" and "lo doc loans" should be "eschewed as determinative of legal reasoning". 170In Khoshaba (supra) at [128] Basten JA observed: "To engage in pure asset lending, namely to lend money without regard to the ability of the borrower to repay by instalments under the contract, in the knowledge that adequate security is available in the event of default, is to engage in a potentially fruitless enterprise, simply because there is no risk of loss. At least where the security is the sole residence of the borrower, there is a public interest in treating such contracts as unjust, at least where the borrowers can be said to have demonstrated an inability reasonably to protect their own interests, for the purposes of, for example, s9(2)(e) or (f). That does not mean that the Act will permit intervention where the borrower has been foolish, gullible or greedy. Something more is required: see Esanda Finance Corp. Limited v Tong (1997) 41 NSWLR 482 at 491 (Handley JA) cited with approval in Elkofairi (above) at [77] by Beazley JA". 171In the present case, the security offered was the defendant's sole residence. However, there is no suggestion in the present case that the defendant demonstrated an inability to protect her own interests having regard to the provisions of s9(2)(e) (which deals with issues of age and physical and mental capacity) or s9(2)(f) (which deals with economic circumstances, educational background and literacy of an applicant). 172Moreover, this was not a case where the benefit of the loan was for someone other than the defendant, and the plaintiff was indifferent as to any improvidence of the loan as far as the defendant was concerned (as to which see Commonwealth Bank of Australia v Munro [2011] NSWSC 128 at [186]. This was also not the first occasion on which the defendant had been a party to large borrowing. 173Quite apart from these matters, central to the concept of asset lending is relevant conduct on the part of the lender which fails to have regard to the ability of the borrower to repay the loan. In my view, in the present case, a conclusion that the plaintiff acted in that way is not supported by the evidence. 174Firstly, Mr Lorenzi expressly denied that in approving the defendant's application, he had engaged in a form of asset lending. I accept his evidence in that regard. His denial is, in my view, supported by his evidence that in deciding to approve the amended application he had regard to the various factors to which he referred in his evidence. These included the defendant's age, her net worth, the level of equity in her home and the stated purpose of the loan. 175Moreover I am satisfied, having regard to the evidence of Mr Hatchard, and the case notes which are in evidence, that the defendant's application was initially rejected. Importantly, the basis of that rejection, on the evidence, was her failure to meet the relevant requirements as to serviceability. In order to reach that conclusion the issue of serviceability was obviously considered. 176In my view, all of this evidence tends against the proposition that this was a case of asset lending, in which the plaintiff simply rested in a state of satisfaction with the valuation of the security property. I am satisfied that this was not the case.

The plaintiff otherwise breached its own lending guidelines by failing to have regard to the defendant's age, and by failing to obtain proof of future income 177Mr Lorenzi said he had regard to a number of matters, including the defendant's age. In relation to proof of future income, he pointed out, in my opinion correctly, the inherent difficulty in a person providing proof of what might happen at some future time. I am satisfied however that he made no specific enquiry in that regard although as I have pointed out, the provisions of the Manual pertaining to verification of income did not apply to a loan of the type for which the defendant had made application. 178The requirement in the Manual that there be proof of future income appears to have applied to all applications. In these circumstances, Mr Lorenzi did not adhere to the Manual. However, for the reasons I have previously outlined, the Manual is to be viewed as a guide. The observations of Grove J in RHG Mortgage Corporation Limited v Baira [2011] NSWSC 520 at [128] are important in this respect: "..... it must be remembered that guidelines are just that. Non-adherence to a guideline does not corrupt a transaction". 179I do not regard Mr Lorenzi's failure to give particular consideration to proof of future income as one giving rise to any injustice of the kind to which the provisions of s7 are directed. In my view, it was a failure of an inconsequential nature, and not one which entitles the defendant to the relief she seeks.

Mr Lorenzi acted in excess of his authority 180It was submitted on behalf of the defendant that I should find that Mr Lorenzi acted in excess of his authority. Clearly, his name was absent from the schedule to the services agreement to which he was taken in cross examination. However, in my view, that does not inevitably lead to the conclusion that he acted in excess of his authority. 181Mr Lorenzi was adamant that notwithstanding the absence of his name in schedule 4, he had been provided with a letter of authority. The terms of schedule 4 specifically contemplated that individual officers, over and above those specifically named, would be advised of the limits of their authority in that way. I have already recorded my observations of Mr Lorenzi as a witness. I am satisfied that he acted within the limits of the authority given to him.

CONCLUSION 182I have found that in making the application for the loan, the defendant acted dishonestly. She provided, in a number of material respects, information to the plaintiff which she knew to be false. In my view, she did so to enhance her prospects of the loan being approved. On her own admission, she was aware of the unlikelihood of the loan being approved if her true position was disclosed. 183It is clear on the evidence that the false information provided by the defendant, particularly as to her income, led the plaintiff to agree to advance a substantial sum of money. 184For the reasons that I have expressed I am not satisfied that the majority of the defendant's complaints about the plaintiff's conduct have been made out. Even had I come to a contrary conclusion, and found that those complaints were made out in their entirety and productive of some injustice within the meaning of s7 of the Act, I would have declined to exercise my discretion in favour of a grant of relief to the defendant. In that event, and adopting the approach set out by Allsop P in Samardzic (supra) the defendant's dishonest conduct towards the plaintiff would, in my view, have substantially outweighed any other consideration. 185Finally, I should note that there were submissions made to me in relation to the issue of whether Streetwise should be regarded as the plaintiff's agent for the purposes of the loan application. However, in view of the fact that I am satisfied that it was the defendant who provided false information in the loan application, it has not become necessary for me to consider the question of agency. 186I make the following orders: (i) I enter judgment for the plaintiff; (ii) I direct the parties to prepare Short Minutes of Order giving effect to the conclusions I have reached in this judgment. (iii) I stand the proceedings over for further directions before me on Monday 10 December 2012 at 9.15 am.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 04 December 2012