Mahommed v Channel Seven Sydney Pty Ltd

Liberty Financial. 41 Liberty Financial was, as mentioned, one of the lenders used by Mr Mahommed. On 18 February 2002 his company, Vestecorp Financial Services Pty Limited ("Vestecorp"), entered a Standard Introducer Agreement with Liberty Financial. The Agreement identified the market which Liberty Financial hoped to capture. It required Vestecorp to fulfil the following, amongst other obligations: (Exhibit 2: Cl 1.3) "1.3 You agree to give your best endeavours to first referring to us any application, person or Applicant for home loan finance which has been, or is reasonably likely to be, declined by a lenders mortgage insurer ." (emphasis added) 42 The Agreement also required Vestecorp not to do the following: (Exhibit 2: Cl 3.2) "3.2 You must not: (f) encourage, advise on, or in any way assist, the refinancing or part refinancing of any Loan with another lender who offers finance to persons who have been, or are reasonably likely to be, declined by a lenders mortgage insurer ; ..." (emphasis added) 43 In Liberty Financial v Scott (No 3) [2004] VSC 490; (2004) 11 VR 621, Harper J said this: (at 1) (cf DS: para [76]) "Liberty Financial Pty Ltd ('Liberty'), the first plaintiff in this proceeding, is a money lender. It claims to be the first financier in Australia to serve a specialised market: borrowers who, because they are not sufficiently credit worthy, are not of much interest to conservative lenders such as banks. Lending in this market has its risks; but if you have carefully identified these, and are astute enough, and if your lending policies are sufficiently sophisticated and flexible, there is money to be made. Indeed, Liberty claims to have developed, through skill and hard work, all the attributes necessary to exploit the market to the full." 44 Weinberg J in Liberty Financial v Scott [2002] FCA 345, made a comment along similar lines. He said: (at [3]) "The first applicant, Liberty Financial Pty Ltd ('Liberty'), is a specialist lender in the business of providing tailored lending products to customers who are unable to obtain finance from traditional sources ('non-conforming loans')." 45 Vestecorp, under the agreement, also agreed "to use its best endeavours to ensure all information provided to Liberty was accurate (clause 3.1(a)); ensure that Vesecorp and the plaintiff acted at all times in good faith and with all due care, skill and diligence (clause 3.1(d)); and not to engage in any misleading or deceptive conduct (clause 3.2(b)); ..." (cf DS: para [68]). 46 Mr Mahommed acknowledged that, before signing the Agreement, he carefully read it (T 101). Nonetheless some aspects of the Agreement had no relevance to him, because of the nature of his business (T 102). He said he discussed this matter with the Area Manager (who's name he could not remember) (T 109/10). The Agreement contained a schedule which identified a number of "Loan Products". Some were loans to ordinary consumers, and attracted the Consumer Credit Code, and its protection. He did not transact such business, confining himself to business and investment loans because he believed it was in his financial interests to do so (T 104). From his perspective, the attraction of Liberty Financial was the short turnaround time, usually 24 hours, in contrast to a bank which may take as much as four weeks (T 32; 104). Business and investment loans did not require mortgage insurance (T 102). There was little by way of documentation. Indeed, the loans were referred to as "low doc" loans (T 102). Mr Mahommed explained what this phrase meant in these words: (T 32) "A. ... What that means is that the documentation that you had to provide was very limited because it was predominantly based upon the security of the asset taken by the lender as opposed to a consumer credit loan which is dealt for normal home loans to consumers which is regulated by the Consumer Credit Act."

The Smith-Steeles. 47 Doreen Sylvia Smith was born in August 1928 (Exhibit G). When she met Mr Mahommed in 2002 she was therefore 74 years old. She had a colourful past. In March 1952, she was convicted of false pretences. A three year good behaviour bond was imposed. Within a year she was called up for being in breach of that bond and bound over to be of good behaviour for 4 years (Exhibit B). 48 There followed, in 1956, convictions for various offences of dishonesty (goods in custody). A fine was imposed. On 9 December 1957, Ms Smith was convicted of larceny and sentenced to 15 months light labour, to be released after 3 months if her conduct in prison was satisfactory (Exhibit B). 49 In January 1959, Ms Smith was convicted of stealing and fined. In July the same year she was convicted of false pretences (12 counts). She was sentenced to 18 months imprisonment. She lodged an appeal and the sentence was deferred upon her entering a recognizance. She was ordered to report to a Probation Officer for supervision. 50 Ms Smith was again convicted of false pretences on 6 September 1960 (3 counts). She was fined, but called up for having breached the recognizance imposed some years earlier. She was sentenced to 12 months imprisonment. Psychiatric treatment was ordered, if the prison thought it appropriate. In 1964, Ms Smith was convicted of stealing (clothing) and fined. She was again convicted in May 1967 of obtaining money by false pretences. She was, on this occasion, sentenced to 3½ years imprisonment with a 6 month non parole period (Exhibit B). 51 In 1971, a newspaper article was published relating to a police investigation into an allegation of theft of 50,000 tons of low quality off-grade wheat, valued at $5 million. No-one was named. The wheat had been stolen from temporary storage in the west of New South Wales. It had been transported to the coast in large bulk carriers and sold to pig farmers in the outer Sydney metropolitan area. 52 Ms Smith (then married and known as Mrs Steele) sued the publisher, Mirror Newspapers. She gave evidence that she understood the article to refer to her. Since 1969 she had engaged in a large scale business of carting and cleaning wheat near Parkes. Although she obtained a verdict of $45,000, it was set aside on appeal and a new trial ordered (Steele v Mirror Newspapers Ltd [1974] 2 NSWLR 348). 53 The new trial, however, never took place. Ms Smith was charged shortly thereafter with the offences which were the subject of the article. In 1975, she was convicted of false pretences (6 counts) and sentenced to 6 years imprisonment with a non parole period of 3½ years. An appeal against that sentence was dismissed (20 August 1976). During the currency of that sentence, another charge of false pretences was dealt with. A term of 18 months imprisonment was imposed, concurrent with the sentence she was then serving. At the same time, Ms Smith was convicted of forging and uttering. She was sentenced to 6 months imprisonment in respect of each count, again concurrent (Exhibit B). 54 After her release, Ms Smith did not reoffend for some time. However, on 10 May 1989, she was convicted of dishonestly obtaining a valuable thing by deception (2 counts) and obtaining property by a wilfully false promise (Exhibit B). On this occasion she was sentenced to a minimum term of 2 years 6 months and 10 days, with a further term of 1 year 10 months and 5 days. She lodged an appeal which was dismissed (19 May 1990). When the sentence was imposed, the Judge was invited to take into account a number of other offences of dishonesty. 55 As will emerge below, during the years 1997 to 2001, Ms Doreen Smith secured a substantial contract with NorthPower, the energy authority in the Newcastle region. I will return to this aspect. 56 Ms Smith's son, Trevor Steele, was born in August 1952. In 1976, at the age of 24, he was convicted of assault with intent to rob. He was sentenced to 4 years imprisonment with a non parole period of 12 months (Exhibit B). On 30 May 1979, he was convicted of receiving. At the time of his offence he was on parole. He was sentenced to 2 years imprisonment, cumulative upon the unexpired sentence for his previous offence, which he was then required to serve. During the currency of that sentence, he was also sentenced for stealing and fined. 57 In June 1989, Mr Trevor Steele was convicted of obtaining a financial advantage by false pretences, the offence having been committed in 1985 (11 counts). He was ordered to serve 100 hours community service on each count and enter a 3 year good behaviour bond (Exhibit B). He was also dealt with in respect of 6 counts of obtaining property by wilfully false promises in 1990. He was required to enter a recognizance in respect of each count. 58 In 1993, Mr Trevor Steele was convicted of passing a valueless cheque and was fined. In September 1998, he was convicted of obtaining money by deception, the amount being, in each case, less than $2,000 (3 counts). He was sentenced in the lower court to a term of imprisonment. His appeal was allowed and a recognizance for a term of 2 years substituted. 59 In 1998, Mr Steele was convicted of high range PCA and sentenced to 6 months imprisonment with disqualification from driving for 18 months. On appeal, 9 months periodic detention was substituted for the prison term. In January 2002, he was convicted of low range PCA and disqualified from driving for a further period. 60 Let me then turn to the circumstances in which the Smith-Steeles met Mr Mahommed.

The first and second Smith application. 61 Mr Mahommed periodically inserted advertisements in the Newcastle Morning Herald in the hope of obtaining business. The advertisements were in the following terms: (Exhibit 1) AVAILABLE FINANCE BY PRIVATE LENDERS Minimum Loan $20,000 Real Estate security req. Financials not essent. Same day approval TAP Ph 02 4953 0755 Mon-Fri 62 Mr Mahommed explained what he meant by "Financials not essent.": (T 99) "Q. Meaning, thereby, you thought, what, financial statements, tax returns, that sort of thing? Is that right? A. Correct." 63 Mr Mahommed acknowledged that the advertisement did not state that the loan had to be for a business purpose (T 99). He said: (T 105) "A. Well the proposition in relation to the ad, it is a hook, so, my experience is people who call you in relation to what it says there usually are people who can't get a loan in relation to the consumer credit code and that was fine because I didn't work in that area. ... " 64 He added: (T 105) "A. To me it was quite simple, business investment loan, (if) it wasn't in that category, I didn't proceed, but what I am saying is that I did not get a majority of calls or calls in relation to consumer credit loans, because if they could have got a consumer credit loan they would have just went off to their bank. That was my assumption." 65 On 17 June 2002, Trevor Steele answered Mr Mahommed's advertisement. According to Mr Mahommed's affidavit in the Equity proceedings (24.1.05), their conversation was in these terms: (Exhibit 35: para [5]) "Trevor: 'I've seen your ad in the paper and wanted to enquire whether we can borrow some money.' I said: 'What's the purpose of the loan?' Trevor: 'We are starting up a business and need some funding.' I said: 'We only operate on real property security. Do you have real estate for security purpose?' Trevor: 'My mother does.' I said: 'Well, I will need to speak with her.'" 66 Doreen Smith phoned back the same day, stating: "We need a loan of $35,000 urgently for a new business" (Exhibit 35: para [6]). Mr Mahommed thereafter went to her home in Caves Beach, where he met Doreen Smith and her son, Trevor Steele. He had with him a copy of the questions which he would need to complete when submitting the application to Liberty Financial. They had a conversation sitting around the kitchen table (T 44). He asked questions and made notes in his handwriting (Exhibit 5). The conversation included the following discussion concerning the proposed business: (Exhibit 35: para [7]) "I said: 'What is your present occupation?' Doreen: 'My family and myself have set up a new business called Country Power Newspapers, we are in the process of obtain(ing) a contract to supply marketing services to Country Energy. I said: 'What is your business address?' Doreen: 'Swansea Arcade in Swansea.' I said: 'What did you do there?' Doreen: 'I will organise the promotional and marketing for the business.' I said: 'What is your income?' Doreen: 'Well, back then we had a turnover in excess of $5,000,000. That contract terminated late last year and I'm arranging for a new contract in the name of my son Trevor. Trevor and Tony, my other son, will operate the new business and that's what we need the money for.' I said: 'What's your personal income from the business at the moment?' Doreen: '$35,000.00.' I said: 'Do you have an Accountant who looks after your business dealings?' Doreen: 'Yes. Alan McKeown.'" 67 None of these conversations were challenged by Trevor Steele, who appeared for Doreen Smith in the Equity proceedings and who cross examined Mr Mahommed (Exhibit 19). Doreen Smith disclosed that she had previously been bankrupt and had been discharged on 20 March 2000 (Exhibit 35: para [8]). She furnished a copy of the Certificate of Title to her Caves Beach property (Exhibit G). The property was unencumbered. She also provided bank statements relating to her contract with NorthPower (also known as Country Energy). Mr Mahommed retained a copy of those bank statements (Exhibit G). They related to the first half of 2001, the latest being 12 months before this meeting. They showed significant sums of money passing through Doreen Smith's account with Westpac with a credit balance not less than $100,000 and, at times, $350,000 (Exhibit G). 68 Mr Mahommed returned to his office and completed the application on the internet (Exhibit 6). He spoke to the accountant, Mr McKeown. His affidavit related that conversation in these terms: (Exhibit 35: para [19]) "I said: 'Have you spoken to Doreen Steele about some requirements I need?' McKeown: 'Yes. I have. Can you tell me exactly what it is you need?' I said: 'We need confirmation that the funds that Liberty are advancing to her are for business or investment purposes. Can you confirm that with her and then send a letter to Liberty care of Vestecorp and I'll forward it onto them?' McKeown: 'Yes. I can do that. What's your fax number?' I said: '4927 5562.' McKeown: 'I'll get it to you as soon as possible.'" 69 Mr McKeown wrote a letter to Liberty Financial on 1 July 2002, in these terms: (Exhibit G) "SUBJECT: DOREEN STEELE I refer to the above and various discussions with our client. I advise our client's intention to establish a business requiring funds of approximately $50k to be outlaid for the purchase of equipment and other business assets. I further confirm that the interest on the proposed loan to finance this purchase will be tax deductible as it will be used to produce assessable income." 70 The typed application was then signed by Ms Smith. It included a declaration that she believed that the amount that she was seeking to borrow was tax deductible (Exhibit 6: p 87). 71 Liberty Financial considered Doreen Smith's application. There was a discrepancy between the name on the driver's licence which had been photocopied by Mr Mahommed and transmitted to Liberty Financial, and the name on the Certificate of Title. Liberty Financial therefore required a birth certificate, which Ms Smith provided to Mr Mahommed and which he passed on (Exhibit G). At the same time, Doreen Smith asked that the amount of the loan be increased to $50,000. 72 Liberty Financial thereafter agreed to advance $50,000. The property at Caves Beach was valued at approximately $330,000 (Exhibit 12: p 119). 73 About a month after the money had been provided, Doreen Smith again telephoned Mr Mahommed (4 August 2002). She wanted to borrow more money. Their conversation, according to his affidavit, was in these terms: (Exhibit 35: para [26]) "Doreen: 'Hello, Peter. We would like to borrow some more money to purchase a motor vehicle for the business. Can you arrange that?' I said: 'How much do you need?' Doreen: 'We would like another $40,000.' I said: 'That would mean that your total borrowing would be $90,000. The way it works is that we have to make application for a new loan of $90,000. Liberty will pay out the previous loan for $50,000.' Doreen: 'That's OK.'" 74 In cross examination, Mr Mahommed said this: (T 145) "Q. There is no way - this would be right wouldn't it - that Liberty would be interested in advancing her the fresh funds without refinancing the previous one, from your knowledge of Liberty? A. No. Only banks would do that on a short basis. Q. So this sort of lender, if there were going to be further funds advanced of a substantial amount they were going to use them to refinance the previous amount with the net difference going as an increase to the borrower? A. Yeah, I guess Mr Smark, in relation to anyone with a variable loan, fixed interest loan, in the marketplace, that is the case, and which necessarily fixes interest, so that is exactly right." 75 Mr Mahommed acknowledged that it would have been better and cheaper for Ms Smith had she made only one application. However, he added, plausibly and reasonably, the following: (T 146) "A. In hindsight it is always a wonderful thing but, at the end of the day, you know, she probably would have thought the same thing, but the fact is she requested it, she was aware of the fees, she signed off on it. It is not for me to dictate how she should run her business or plan her budgeting. I don't know." 76 Doreen Smith confirmed that nothing had changed in terms of her particulars (Exhibit 35: para [26]). Mr Mahommed thereafter prepared an application in which the only change was the amount which Doreen Smith had in the bank (which increased to $15,000) (Exhibit 9: p 110). The application included a declaration signed by Doreen Smith that the loan was "wholly or predominantly for business purposes" (Exhibit 9: p 113). Liberty Financial approved the loan and advanced the money. Mr Mahommed was paid his commission, which was $4,000 (Exhibit 12: p 121). 77 An attack was made upon Mr Mahommed in respect of each transaction. Indeed, the same attack was also mounted in respect of later transactions. Broadly, the defendant's criticism identified three matters. Each was said to be relevant to Mr Mahommed's honesty and therefore relevant to the defendant's case on justification and the contextual imputations. The three matters were: First, a comparison between Mr Mahommed's handwritten notes, from his interview with Doreen Smith and the application he submitted a short time later, revealed discrepancies. Mr Mahommed, according to the defendant, changed the figures to make the application more attractive and therefore more likely to be approved. He worked on a success fee, so that he shared the borrower's interest in the loan being approved (T 118). Secondly, Doreen Smith was a woman in her mid 70's. She was taking medication. She had been recently widowed. The defendant submitted it would have been obvious to Mr Mahommed that she was infirm (DS: para [133]). Thirdly, for many of the same reasons, it would also have been obvious, according to the defendant, that there was no prospect whatever of a business being established. The applications and those that followed were crafted as business applications in order to avoid the Consumer Credit Code (DS: para [74]). 78 Mr Mahommed answered the defendant's attack in a number of ways: First, he provided various explanations for the discrepancies. He denied that he had deliberately changed the applications to make them more attractive to Liberty Financial, so that they were more likely to succeed. Secondly, he said that he was greatly impressed by Doreen Smith. He had no reason to doubt her account in respect of which there was corroboration. Thirdly, he insisted that the criticism was based upon a mistaken assumption as to his role as a mortgage broker. He acknowledged that he was obliged to provide accurate information. Stated another way, he was obliged not to provide information that he knew was false or misleading. He claimed to have observed that requirement. Nonetheless, it was his expectation that Liberty Financial, as the lender and as a matter of due diligence, would check the details. He had no means of checking such matters and it was not his function. 79 Let me consider each of these matters, beginning with Doreen Smith and the impression she made upon Mr Mahommed.

Was Doreen Smith incapacitated? 80 At the same time as Channel 7 was making its programme, the subject of this action, the Office of Fair Trading was conducting an investigation based upon a complaint from Trevor Steele. On 21 June 2004, the Office wrote to Mr Mahommed seeking his response. The letter said this: (Exhibit J) "Mr Steele has informed Fair Trading that his mother's physical and mental health has deteriorated significantly since the death of his father 2 years ago and suffers from a chronic anxiety state and advanced dementia. He has provided a letter from the family doctor of 20 years which attests to her condition. ... " 81 The letter continued: "Mr Steele has alleged that a loan application for Mrs Smith was filled out by a representative of your company in which it was stated that she worked as a consultant and was earning $50,000 pa, when in fact Mrs Smith is 76 years old and receives the war pension and other Centrelink benefits as her only source of income. Mr Steele asserts that due to her state of mental health, his mother was not able to comprehend what was happening at the time. ..." 82 Mr Mahommed responded on 28 June 2004 (which was the day before the television programme). He drew attention to the contract held by Doreen Smith with NorthPower between 1997 and early 2001, where the turnover was in excess of $5 million (Exhibit 4). He added: (Exhibit 4: p 4) "During such meetings D Steele/Smith did not make it known to me (or any of the above parties) that she had the medical condition referred to in your correspondence. It didn't appear to me that D Steele/Smith had a major problem articulating minor details of events that had occurred during he(r) contractual period with Country Energy." 83 The Office of Fair Trading ultimately took no action on Mr Steele's complaint (Exhibit P). Mr Mahommed, in cross examination, said that when he met Doreen Steele she was "pretty impressive" (T 129). She had no tremor. She did not appear to be either dull or sedated (T 130). He added: (T 132) "A. ... When I first met Trevor and Doreen we sat around the table. Doreen advised me that she previously had a contract with Country Energy/NorthPower as we know and she turned over something like $5 million over a period of X amount of years. From my perspective, given what she was saying was true and I had no reason to doubt it, here is an elderly old lady and she has turned over this amount of money. I don't know too many clients who have done that. So they then produce some bank statements showing 600,000 gone into accounts or so over a very short period of time . So my impression is that she's switched on and then what they advise was that Country Power Newspapers, they had been negotiating to have her contract, which was terminated previously, and a contract with Country Power Newspapers." (emphasis added) 84 To my imperfect ear, Doreen Smith's speech did not appear slurred during the television broadcast (Exhibit C). The tremor exhibited by Doreen Smith also seemed somewhat exaggerated. Ms Smith's daughter, Mrs Denise Robinson, gave evidence. In the course of cross examination, the programme was replayed to refresh her memory. She was then asked the following: (T 448) "Q. Well, would you agree she seemed pretty articulate and coherent in that programme? A. Oh, she appeared to be." 85 There was no evidence, apart from the assertion by Trevor Steele, that Doreen Smith was in receipt of a War Veteran's Pension. Assuming that assertion to be accurate, there was no evidence that it had been disclosed to Mr Mahommed (T 61). 86 The letter from the Office of Fair Trading referred to medical evidence which had been provided by Trevor Steele (Exhibit J). The evidence was not identified. Dr Manners had been the family's treating doctor for several decades. He regularly saw Doreen Smith in respect of various physical and psychological problems (T 304/5). She did not suffer from dementia (T 306). Following the death of her husband (in February 2002), Endone was prescribed, which is a narcotic medication. She was registered as a narcotic user with the Department of Health (T 299). She also took Benzodiazepine, a Valium-type medication, a sleeping tablet. Dr Manners said that, were she to save up medication and take a larger than usual dose, her judgment may be affected (T 306). He saw her regularly during 2002/2003. According to his recollection, she had appeared confused on one or two occasions. When cross examined, Dr Manners was invited to examine his notes to identify any such entry. He said this: (T 300) "A. There was a consultation on 17 December 2003 where it was noted that she had had slurred speech and confusion for some 4 hours. However, by the time she saw me that had resolved. They would seem to be just that, on that occasion." 87 Two other witnesses were called, relevant to Doreen Smith's capacity in 2002/3. Her daughter, Mrs Denise Robinson, visited her mother occasionally after the death of her father. She lived in Sydney and her mother in Newcastle (T 449). She would not stay long. On three or four occasions in 2002/3 her mother would be asleep during her visit, having passed out because she had taken too many sleeping tablets. Mrs Robinson noticed her behaviour was erratic. On occasions she would phone and her speech would be slurred. Mrs Robinson inferred that she had taken too many pills (T 437). She last saw her mother in December 2004 or January 2005 (T 448). 88 The remaining witness called by the defendant was Ms Edith Maher. She cleaned Doreen Smith's home between 1999 and 2004. She was an unusual witness. She was very defensive and given to hyperbole. She had since qualified as a nurse (T 414). She said she began working for Doreen Smith one day a week (T 385). By 2002 she was attending her home three or four days a week, working one complete day and on the other days "popping in and out" (T 385). When she began work as a cleaner, Doreen Smith was working fulltime for NorthPower. She appeared to be an efficient and competent business woman who knew exactly what she was doing (T 417). Ms Maher described her as a "determined woman" (T 419). She later decided, however, that she would have nothing further to do with Doreen Smith. One gathers that Ms Maher regarded her as manipulative. She said: "She gets you in" (T 406). She added: "She just makes you feel sorry for her" (T 406). 89 Ms Maher said that after Doreen's husband died in February 2002, she became deeply depressed (T 387). She had previously injured her arm and was taking medication (T 387). Sometimes she appeared to be heavily medicated (T 390). Her speech would be slurred and she would dose off, sometimes holding a cigarette (T 392). When she woke up she would be cranky and irrational (T 392). She was very demanding (T 398). 90 Ms Maher recalled Mr Mahommed coming to the house. He sat at the table on the back patio with Doreen and Trevor Steele. The door was shut. She did not listen to what they were saying. She regarded it as none of her business (T 402). 91 Ms Maher also said that Trevor Steele was a drug addict on prescription drugs, who took tablets quite often (T 415). That evidence provided some confirmation of a statement made by Mr Mahommed in his letter to the Office of Fair Trading, answering the complaint of Trevor Steele. He made the following comment, in the context of the last loan he was endeavouring to arrange in April 2004: (Exhibit 4: p 2/3) "D Steele/Smith contacted me and apologised to me for the harassment caused by her son Trevor Steele. She also advised that her son Trevor had a gambling problem and has been in rehab for chronic alcoholism." 92 What finding should be made in respect of Doreen Smith and her capacity at the time Mr Mahommed was dealing with her? The defendant called Tony Steele, Doreen Smith's son. I will refer to his evidence shortly. It did not, however, call Doreen Smith or Trevor Steele. According to the plaintiff, their absence was the more surprising since the defendant had arranged a hire car to transport Doreen Smith (and Tony Steele) to Sydney (T 413). I infer that the evidence of Doreen Smith and that of Trevor Steele would not have assisted the defendant. 93 I accept that, after her husband's death in February 2002, Doreen Smith was depressed and periodically abused her medication. On such occasions it is likely that she slurred her words and slept more than usual. Ms Maher's evidence was very broad brush and her opportunities to observe were limited, as were those of Doreen Smith's daughter, Mrs Robinson. The best guide, I believe, to Doreen Smith's capacity is the evidence of Dr Manners, who saw her regularly. According to his notes, in the period 2002/3, there was one episode of confusion in late 2003 which had resolved by the time he saw her. The meeting with Mr Mahommed on 17 June 2002 took place four months after her husband's death. I infer that by that time she had recovered her equilibrium, although I do not doubt that she had good days and bad days. On 14 August 2002, she wrote a letter to NorthPower (for whom she had previously worked) in these terms, which I believe accurately reflected her capacity when Mr Mahommed was dealing with her: (Exhibit 16) "Due to the long term illness and recent death of my husband coupled with the three operations I have had to undertake during the past few years I was unable to address the issue of corroborating receipts and invoices in this matter any earlier. I am however, feeling much stronger these days and therefore have been able to attend to this matter therefore please find enclosed the following items: ... " 94 Mr Mahommed's account of his meeting with Doreen Smith and Trevor Steele was plausible. I accept that he was impressed. Doreen Smith's life in crime suggests that she was a good talker. Her recent track record with NorthPower was formidable. She had secured a contract with a substantial corporation when she was almost seventy years old (1997). Under the contract, the turnover was considerable. Her cash flow was confirmed by the bank statements which she produced. More than that, she had apparently accumulated significant assets since her bankruptcy or somehow had managed to retain them, notwithstanding her bankruptcy. She appeared to be a woman of substance. Her stated intention to establish a business was confirmed verbally and then in writing by her accountant, Mr McKeown. 95 Within weeks of meeting Mr Mahommed, Doreen Smith approached him in July 2002 for assistance. Her contract with NorthPower had been terminated on 23 August 2001 (Exhibit 15). She claimed that certain invoices had not been paid. She asked Mr Mahommed to undertake the task of reconciling her invoices with the payments revealed by her bank statements (Exhibit 4: p 3). 96 Mr Mahommed agreed to undertake that task. On 9 August 2002 an agreement was drawn up between Doreen Smith and Vestecorp appointing Vestecorp as Doreen Smith's agent for the purpose of "recouping" the money outstanding (Exhibit 14). It was agreed that Vestecorp would receive 15% of the amount recouped (Exhibit 14). Mr Mahommed assisted Doreen Smith in composing a letter to NorthPower dated 14 August 2002, which attached a schedule which he had prepared. The letter stated that Mr Peter Mahommed had been appointed as her agent. She expressed the hope that the matter would be finalised within 14 days. Mr Mahommed knew, of course, that such a hope was "fairyland" (T 183). NorthPower would plainly need to undertake the process of cross checking (T 183). 97 On 26 August 2002, Deacons solicitors sent a letter to Mr Mahommed. The letter provided mixed messages. It was in these terms: (Exhibit 17) "Our client is currently reviewing its records and we will contact you in due course. Until such time, our client strongly denies your client's claim." 98 Mr Mahommed responded the next day (27 August 2002). He objected to the suggestion that the solicitors would respond "in due course". He sought to introduce some urgency, stating the following: (Exhibit 17) "We assume that the accounting and administration system for your client are far more sophisticated than that of our client. Therefore once again we would be pleased if you could advise our office (by fax or email) of the anticipated timeframe for receiving the ' amount covering total payments for invoices' ." (emphasis in original) 99 I will come back to the issue of NorthPower in the context of subsequent loan applications. Mr Mahommed's actions, at least to this point, were consistent with Doreen Smith having made a strong impression upon him. It was reasonable for him to accept at face value her claim that she intended to establish a business, especially since that claim had been corroborated by her accountant. He had no knowledge of her criminal past. 100 What, then, of the discrepancy concerning the statement of personal effects? The handwritten notes in respect of the first loan give the value of personal effects as $55,000 (Exhibit 5: p 67). The typed application, prepared shortly after, provided the figure of $65,000 (Exhibit 6: p 81). That figure was repeated in the second application. There was, as will emerge below, a pattern of such discrepancies in the applications that followed. The assets of the borrower were represented to be slightly more than the instructions would allow. The explanations provided by Mr Mahommed for such differences were many and varied. He told Palmer J, when the first such discrepancy was drawn to his attention, that it was a mistake. He pressed the wrong button (Exhibit 19: T 160). In his evidence before this Court, he allowed for the possibility of mistake, but asserted that the most likely explanation was that he had telephoned the client, when typing the application, and had obtained a revised figure (T 141). 101 It is possible that some of these entries were mistranscriptions from his notes. I do not doubt Mr Mahommed did occasionally check issues with his clients and was sometimes provided with a revised figure. However, given the number of occasions upon which there were such discrepancies, and the pattern that they always appeared to show the applicant in a more favourable light, his explanations were improbable. I believe it likely that Mr Mahommed, for some reason, simply inserted a higher figure. Why he did so is less certain. It was a "low doc" loan, where "financials" were not required. The lender primarily looked to the real estate for its security. The amount borrowed on the first and second loan applications was modest in comparison to the value of the property. The higher figure was unlikely to have made any difference to the outcome, which Mr Mahommed would have realised. 102 I will return to this issue in the context of later loan applications. I accept that Mr Mahommed's function, as a mortgage broker, was not to verify each assertion made by the applicant for the loan. It was, as mentioned, a "low doc" loan, dependant primarily upon the real estate security. Mr Mahommed expected that the lender would make its own enquiries, which it did. It noted, for instance, the discrepancy between Doreen Smith's name on her driver's licence and her name on the Certificate of Title (supra para [71]). However, he had an obligation to the lender not to provide information to the lender which he knew to be false. He understood that obligation. Aside from adjusting the value of personal effects (from $55,000 to $65,000), I believe that he was not in breach of that obligation in the context of the first and second loan applications. As for the personal effects, he had, of course, been to Ms Smith's home at Caves Beach. He had seen the way in which the home was furnished. He made the comment in the course of his evidence before Palmer J that people really have no idea of the value of their belongings (Exhibit 19: p 161). They can only provide an estimate. Without undue charity, it is possible that he adjusted that estimate by reference to what he had seen. I will return to this aspect below.

The first application of Tony Steele. 103 It will be remembered that the process of arranging a second loan for Ms Doreen Smith began on 4 August 2002. On 28 August 2002, Ms Smith rang Mr Mahommed again. Mr Mahommed, in his affidavit in the Equity proceedings before Palmer J, recounted the conversation in these words: (Exhibit 35: para [47]) "Doreen: 'My son, Tony needs a loan of $80,000 for working capital in his business . Would you be able to assist him?' I said: 'I would need to meet with him and obtain details from him.' Doreen: 'Alright. You can meet at my house.'" (emphasis added) 104 Mr Mahommed, when giving evidence before Palmer J, corrected Doreen Smith's opening words, substituting "the business" for "his business" (Exhibit 19: p 99). 105 Later the same day, there was a meeting at Doreen Smith's home at Caves Beach. Mr Mahommed said that he, Doreen Smith and Trevor Steele sat at the kitchen table with Tony Steele, discussing the application (T 44). He had met Tony Steele previously, but only in passing (T 45). He said he addressed questions to Tony, which were generally discussed by those at the table before he would respond (T 46). He would give a quick and direct response after dialogue with his mother and brother (T 199). He denied that Doreen Smith and Trevor Steele provided each answer. He said: "Tony had input" (T 204). Tony wished to borrow money for business purposes (T 41; 203). The business was connected to the prospective contract with NorthPower. Mr Mahommed did not regard such a contract as remote (T 207). 106 Mr Mahommed wrote down Tony Steele's responses. He recorded his occupation as that of Sales Manager and his annual gross income as $30,000 (T 209). He claimed that he was sitting next to Tony when he wrote these things down and that he believed him capable of such work (T 210). 107 Mr Mahommed then returned to his office and typed the application. He returned to Caves Beach the following day, handing the application to Tony Steele with these words: (Exhibit 35: para [50]) "Here is the application which I've completed from the information you gave me yesterday. Check the information to see that it is right and then you need to initial and sign on the bottom of each of the pages where indicated." 108 Mr Mahommed said that he observed Tony Steele read the application. Indeed, he made two corrections, one being the amount of the loan (which was $80,000 not $70,000) and the other being the address of the property. Tony Steele owned an unencumbered property at 1/151 Bowman Street, Swansea (not 1/51) valued at $185,000 (Exhibit 27). Mr Mahommed made the amendments (Exhibit 35: para [50]). He observed Mr Steele initial each page, signing the application and certain declarations forming part of the application (Exhibit 35: para [50]; cf Exhibit 21). 109 The typewritten application submitted to Liberty Financial does incorporate each of the changes identified by Mr Mahommed (Exhibit 21: pp 157, 159). There was no entry in the handwritten notes concerning the value of "household/personal property" (Exhibit 20: p 153). The typewritten application included the sum of $15,000 for that item. The value of Tony Steele's motor vehicle was recorded as $4,000 in the notes, but $5,500 in the application (Exhibit 20: p 153; cf Exhibit 21: p 159). The amount in the bank was $2,500 in the notes, compared to $3,500 in the application. Mr Mahommed, at various stages, provided three explanations for these differences. He said before Palmer J that he had made a mistake, "hit the wrong button" (Exhibit 19: T 160). He said, in his evidence in chief in this Court, that he changed the value of the motor vehicle after looking up Glass' Guide (T 49). When cross examined, he said he made the change after a phone conversation with Tony Steele (T 220). When his attention was drawn to the contradiction, he reverted to his explanation given in chief, saying that his evidence was an honest mistake (T 222). His evidence on this aspect was wholly unconvincing. I believe that, for some reason, he increased the amounts, even though he believed that it hardly mattered (since the real estate was the security). 110 Mr Mahommed's fee for the transaction was $2,000 (Exhibit 20: p 144). Liberty agreed to provide the loan. Settlement took place on 19 September 2002. Mr Mahommed was paid on settlement the sum of $7,500. The difference was said to be the repayment of a loan he had made to Ms Doreen Smith (T 245). 111 Mr Mahommed said that he made a number of such loans, each documented and signed by Ms Smith and himself. The money was provided by his wife (T 152), although repaid into his account (T 156). The documents were destroyed after the loan had been repaid, apart from one loan on 20 November 2003 (Exhibit 11). The defendant relied upon these loans, and the apparent failure to include the interest in his personal tax returns, as matters damaging Mr Mahommed's credit. I will return to that issue below. It was also submitted that it would have been obvious to Mr Mahommed on settlement, if it were not obvious beforehand, that Doreen Smith was using Tony Steele's money for her own purposes (DS: para [185]).

The second application of Tony Steele. 112 Later the same year, a second loan application was made by Mr Tony Steele. On 24 October 2002, shortly before the application, the solicitors for NorthPower wrote to Mr Mahommed, providing a preliminary response to Doreen Smith's claim for the unpaid invoices. It was a much stronger letter, although it left the door open. It said this: (Exhibit 25) "From the material that we have seen to date it would be both inappropriate and premature for CE to take any position (other than the current one) in relation to settlement of your client's account. Our analysis at this time also indicates that recovery action against your client and investigation by external authorities might be warranted and we are presently reviewing this aspect in more detail. The following table illustrates both duplications and inconsistencies in aspects of the material provided by your client. Please note this is only a small sample of the matters that have been identified so far." 113 The letter included a table which gave examples of invoices which appeared to duplicate the same work. Somewhat ominously, the solicitors added these words: (Exhibit 25) "On its face it looks like your client has duplicated charges and the seriousness of these inconsistencies with respect to your client and the possible implications for her should not be underestimated." 114 Two requests were then made, the first to provide authority allowing all "service providers" to furnish information, and the second, seeking all records in the possession of Doreen Smith. The letter then stated that the review was continuing. 115 On 21 November 2002, Doreen Smith telephoned Mr Mahommed, foreshadowing a further loan application: (Exhibit 35: para [53]) "Doreen: 'Tony wishes to increase his loan to $129,000. Can you come around and fill out the application form with him.'" 116 Mr Mahommed, according to his affidavit, went to Caves Beach the following day. He said he saw Tony Steele and had the following conversation: (Exhibit 35: para [54]) "Tony: 'No. My income is $38,500. Is that what it was the first time?' I said: 'I'll check. What's the purpose of the loan?' Tony: 'To help with the business.'" 117 A further loan application was submitted. It was in the same terms as the previous application, except that the annual gross income of Tony Steele was increased from $30,000 to $38,500 and the value of his household items and personal effects was increased from $15,000 to $25,000. 118 It was submitted by the defendant that Mr Mahommed's account of his conversation with Tony Steele concerning his income was patently false (DS: para [190]) and that there was no basis for increasing the value of his household items. They were, it was suggested, further examples of his dishonesty (DS: para [190]). I will defer that issue for the moment.

Mr Mahommed's perception of Tony Steele's capacity. 119 The television programme and the letter from the Office of Fair Trading sent the day before the programme, asserted that Tony Steele was a chronic schizophrenic who could not work. It was said that he was in receipt of an Invalid Pension (Exhibits F, J). Mr Mahommed dealt with that suggestion in his affidavit in the Equity proceedings, in these terms: (24.1.05) (Exhibit 35: para [57]) "In all my dealings with Tony Steele and my meetings with him, I was not advised that he suffered any illness or mental disability nor did I observe him to suffer from any illness or mental or learning disability. Mr Steele seemed to me perfectly capable of understanding the loan arrangements being organised for him and was able to provide me with the information requested from him to complete the application forms without difficulty." 120 Mr Mahommed gave evidence before Palmer J on 31 March 2005. Before he gave that evidence, he saw Mr Tony Steele give evidence in the same proceedings. He said that he hardly recognised him. His head was shaved. He looked like he had not had a bath for a week. He was dressed in dirty shorts, a shirt and thongs (T 48). His appearance was in marked contrast to the way he looked when he had seen him dressed to go to a local club (T 48). He was incoherent. 121 Mr Mahommed said before Palmer J that he had spent somewhere between ten and twelve hours with Tony Steele (Exhibit 19: T 136). He did not notice anything unusual about the way he spoke (Exhibit 19: T 137). He sat next to him and read the loan document with him (Exhibit 19: T 101). Examining the questions he had to ask to fill out in the loan application, Mr Mahommed recounted their conversation in these terms: (Exhibit 19: T 107) "A. Yes. On p 558 I asked Tony, 'Are you currently under any form of bankruptcy or are you aware of anyone currently petitioning for your bankruptcy?' I explained that in terms and I remember saying to him, 'Simply what that may mean is have you got any current liabilities, debts that have been through the courts or an estate that you haven't paid, they've got a judgment or a notice that they're going to bankrupt you?' He said, 'No, I haven't.' I asked him, 'Have you been advised to seek bankruptcy or have you been petitioned for your bankruptcy in relation to the first question?' He acknowledged, 'No, I haven't'. I asked him, 'Have you ever been a shareholder or an officer of a private company of which an administrator or a liquidator has been appointed?' I remember asking him or saying to him that, 'Are you a company director of a company?', because I was aware that Country Power was not a pty limited company. He said, 'No, I wasn't.'" 122 Mr Mahommed insisted before Palmer J that he had a clear recollection of their meeting and could replay it in his mind (Exhibit 19: T 102/3). He repeated that there was nothing unusual about him. Nothing struck him about his physical appearance or his manner of speech (Exhibit 19: T 165). 123 The evidence of Mr Mahommed before this Court was to the same effect. He said the first application, where they all sat around the kitchen table, may have taken a couple of hours (T 218). He never spoke to Tony Steele alone (T 45). Doreen Smith and Trevor were usually present (T 45). He walked with a limp and his speech was slow. However, there were no signs of intellectual impairment (T 45). Mr Mahommed said he simplified some of the issues, as he did with a number of clients, but he did not do so because he believed Tony Steele was simple (T 216/7) (cf DS: para [179]).

Tony Steele's capacity. 124 Dr Seth Manners said that he had treated Tony Steele since the mid 1980s. He had been diagnosed as schizophrenic at the age of 17 years (T 297). On seven or eight occasions he had been admitted to psychiatric hospitals. His psychotic symptoms had, with treatment, disappeared in about 1990 (T 297). He had been involved in a number of motor vehicle accidents, suffering severe fractures of both femurs. The fractures had healed, but had left him with significant deformity in both legs and a degree of pain (T 300). He now walked with a limp. He had been continuously on medication for schizophrenia for more than two decades. He attended the surgery every three weeks for tablets and an anti-psychotic injection (T 296). He had been generally stable for the last ten years (T 298). At one point methadone had been prescribed because he had developed problems with narcotic medication, prescribed for pain (T 298). He had a short period of agitation lasting days, associated with withdrawal (T 298). Dr Manners described him as suffering from a "very mild chronic mental illness" (Exhibit L). His intellectual capacity had been reduced to a slight degree (T 298). Dr Manners described the way in which he presented in these words: (T 297) "A. ... his speech is often slow and stilted, he doesn't necessarily follow a logical course in a conversation, he'll interrupt a conversation and go off in another direction. I'll just refer to - he does not have much conversation other than pleasantries because he doesn't volunteer information, you have to seek information from him." 125 Dr Manners believed that Tony Steele had never been employed. He could not work (T 298). He was in receipt of a Disability Support Pension. Indeed, in the context of that pension, Dr Manners said this: (T 298) "Q. Did you as a result of having met with him, had you observed anything about the tasks that he could or could not do? A. From time to time we had to fill out forms to support his ongoing disability support pension. He was unable to fill those forms out without complete assistance of myself or someone in the family." 126 Dr Manners stated that Tony Steele was very much under the influence of his brother Trevor (T 302). If he were asked to sign a document, he probably would do so (T 303). The following was put in cross examination: (T 303) (cf Exhibit M) "Q. That is a simple document authorising payment of any monies due to him (through) his solicitors, he would be quite able to, if that document was read and explained to him he would be quite able to sign that? A. If it was explained to him. Q. On the condition it was explained to him? A. Umm, well, he expressed a desire in the past that he would like more money so if it was explained that you may receive more money, he would agree to sign it. Q. And he could have no problems with that? A. No." 127 However, there were limits to his comprehension. On 12 April 2005, in the context of the Equity proceedings, Tony Steele gave a Power of Attorney to a solicitor, Ms Pamela Young (Exhibit N). The following was put to Dr Manners: (T 304) "Q. And if you look at page 2, it appoints Pamela Young, his solicitor as power of attorney, in other words to act and attend to matters on his behalf. If that document - I want you to assume that is his signature. If that document was explained to him you would have no problems with that? A. I think it is extremely unlikely that he would understand that." 128 At the same time, Tony Steele signed a document appointing Ms Pamela Young, solicitor, as his "Enduring Guardian" (Exhibit O). Again, Dr Manners thought he would have a great deal of difficulty understanding that concept (T 304). He said that Tony Steele had a limited degree of literacy (T 298). 129 The following question was put in cross examination as to the way he presented: (T 301) "Q. If you were to look at him, without knowing anything about him, leaving aside a limp, if he walked into this court and you didn't know anything about him, he would appear normal? A. Initially yes, although he has some side effect from this long term anti psychotic medication that leaves his face somewhat frozen, but that may or may not be apparent. Q. Apart from a sometimes frozen face, he would appear normal? A. Yes. Q. If you didn't know? A. If you didn't know. He often has a rash on his face, again, a side effect of medication, but no." 130 Tony Steele's sister, Mrs Denise Robinson, was asked to describe her brother. She said this: (T 435) "A. He has always been Tony, I guess. He is not very talkative. You find it very difficult to have a conversation with Tony. On those occasions when I did visit the home he would stay in his room. He would probably say five or six words to me the whole time I was there." 131 She added: (T 435) "A. Tony cannot work. Tony cannot hold a proper conversation for any length of time. He could answer telephone, but not hold a conversation. He would always answer a telephone and just get my mother or father. He can use his VCR to change videos, make himself a cup of coffee. That's pretty much Tony. He doesn't do much else." 132 Mrs Robinson also said this: (T 435) "Q. What about understanding things, how would you describe talking to him over the years, what's his level of understanding, to your observation? A. I don't think Tony has a very good understanding. I don't know that I can engage Tony for long enough to make him understand, he won't listen. Q. What about business matters, does he have an understanding, to your observation, of business matters? A. No, none whatsoever." 133 Mr Tony Steele was called to give evidence. He walked with a marked limp. He was dressed normally. His head had not been shaved. Indeed, he presented well. As Dr Manners remarked, at first he appeared to be reasonably normal. His answers were limited, but generally responsive. Within a relatively short time, however, the limits of his comprehension and the quirkiness of his reactions were apparent. I accept that he may have been able to correct the address on the loan document from 1/51 to 1/151, because he was no doubt familiar with that address, and had seen it many times. Nonetheless, I believe that the limits of his literacy would soon have been obvious, had time been spent with him, and especially if documents had been placed in front of him. I cannot accept that Mr Mahommed spent one and a half hours interviewing him, without recognising that he suffered from a mild mental illness. I reject as false Mr Mahommed's evidence that he spent ten to twelve hours with him and regarded him as normal. That evidence, I believe, was false to the knowledge of Mr Mahommed when he gave it. 134 Mr Mahommed acknowledged that, on 29 August 2002, that is before the first loan application on behalf of Tony Steele, he became aware of the Trust that had been established for Tony. He also became aware of the Trustee Company, Maxwell Developments Pty Limited (T 270/1). The defendant attached some importance to these concessions (DS: para [156]). It was submitted that it would have been obvious to Mr Mahommed, within minutes of meeting Tony Steele, that he was unable to protect his own interests and needed independent advice. I will return to this aspect below. 135 Tony Steele identified Mr Mahommed in Court. He said that he saw him only to sign papers, although he could not remember when he had seen him, nor whether he signed papers on more than one occasion (T 372). He denied that he had a conversation with Mr Mahommed (T 372). He also denied telling him that he had a job (T 374). He denied having been asked questions about how much money he earned (T 374). He said that, since leaving school, he had done nothing. He had never had a job (T 370). Tony Steele said that Mr Mahommed did not ask him a thing (T 374). 136 However, Mr Tony Steele also said in cross examination that his memory had gone (T 374). It was really bad (T 374). Indeed, he could not remember having given evidence in court before (T 374). 137 What happened, in the context of these applications, as a matter of probability? There are obvious difficulties in making any finding of fact. The four participants in these events are either absent or unreliable. Tony Steele's account of his interaction with Mr Mahommed is unreliable because his memory is so poor. Trevor Steele and Doreen Smith did not give evidence. I cannot accept Mr Mahommed's version that he interrogated Tony Steele and obtained answers from him. 138 There are, I believe, two possibilities. One is that, when completing each loan application, Doreen Smith and Trevor Steele sat with Mr Mahommed supplying answers to questions, with Tony being called in for a short time to sign his name. The other possibility is that they all sat around the same table with Doreen Smith and Trevor Steele providing the information whilst Tony Steele remained mute, or almost mute. The evidence of Tony Steele would suggest the first of these alternatives. There is some support for that version in the evidence of Ms Edith Maher, Doreen Smith's cleaner. Ms Maher said this: (T 394) "Q. Did you ever see Mr Mahommed with Tony Steele? A. Yes, only once. And that was out on the back verandah where Doreen came in and asked me to go out and get Tony from his bedroom and take him - and I just said they needed him out the back verandah and took him out there. Q. Who was on the back verandah once you took Tony Steele out there? A. Doreen and Mr Mahommed. Q. How long, to your observation, was Tony Steele out on the back verandah with Mr Mahommed and Doreen Smith? A. Less than five minutes." 139 If Tony Steele were only called upon to sign his name, that may explain why Mr Mahommed thought him "normal", although it should be noted that his initials and signature were written in a childlike hand (cf Exhibits 21 and 24). 140 There is a further matter which, arguably, supports this conclusion. It will be remembered that the Office of Fair Trading wrote to Mr Mahommed on 21 June 2004, that is, a week before the television programme. Reference has been made already to that letter (supra para [80]). The Office's letter stated that, according to the family doctor, Tony Steele was a chronic schizophrenic, opiate dependant and a long term recipient of the Invalid Pension (Exhibit J). Mr Mahommed responded by letter dated 28 June 2004. His response made no reference to Tony Steele's medical condition (Exhibit 4). When cross examined concerning that omission, he said this: (T 127) "Q. The reason why did didn't respond to those allegations or issues about the condition of Tony Steele is you had nothing to say about them? A. I honestly don't know why I didn't respond to them." 141 However, Mr Mahommed wrote a covering letter to the Office, which included the following paragraph: (Exhibit 4) "3. Allegations made by Trevor Steele and Doreen Steele/Smith that are not covered in the attached report are simply not covered as I have no knowledge or have no information on file regarding those allegations. Therefore should you have any documented information that may assist me in assessing such allegation I would be pleased if you could forward a copy to me." 142 The failure of Mr Mahommed to notice the obvious limitations under which Tony Steele laboured is consistent with his only having interacted with him for a short time, obtaining his signature upon documents. 143 I will shortly describe two further applications which concerned the property of Tony Steele (the third and fourth Steele applications). They were made in July and October the following year (2003). They provide insight into the power of Doreen Smith and her attitude to the property of her son, Tony Steele. 144 There was, in the context of the first and second Steele applications, dishonesty on the part of Mr Mahommed in two respects. First, as with the Smith applications, he adjusted upwards the assets of the applicant, even though ample security was being offered and the adjustment was unlikely to make any difference. 145 Secondly, and importantly, Mr Mahommed gave on oath a false explanation of his dealings with Tony Steele in his affidavit and evidence before Palmer J. He then repeated the same false explanation to this Court. I am not persuaded, however, that his dishonesty extended to an absence of belief concerning the business that Ms Doreen Smith intended to pursue, in which she would usefully employ her sons. I have the strong impression, at least during 2002, that Mr Mahommed was, to some extent, under the spell of Doreen Smith, a practiced fraudster who, I infer, was very plausible. 146 Indeed, I should note in passing, that there was more than a whiff of fraud (at least with hindsight) in the recovery action that Ms Smith persuaded Mr Mahommed to pursue on her behalf. The whiff was to grow stronger in time, as I will describe. I should also note in passing that, on 18 May 2007, well after these events, unrelated fraud charges were laid against her. She was charged with four counts of obtaining money by deception. In June 2008, she was given a six month suspended sentence after entering into a bond. She was ordered to pay compensation of $53,500. The third Smith application. 147 After the second Steele application (21.11.02) and before settlement (6.12.02), the solicitors for NorthPower sent a further letter on 2 December 2002. The letter, on this occasion, was unambiguously hostile. It included these words, referring to the request for further documentation made in their previous letter: (Exhibit 29) "In view of the lack of a response from you we have today advised our client that it ought not to entertain any further dealings with your client. We also confirm that our client on our advice, has informed the Independent Commission Against Corruption in accordance with section 11 Independent Commission Against Corruption Act 1986 (NSW)." 148 Mr Mahommed maintained that, notwithstanding that letter, he still had confidence in Doreen Smith. He said this: (T 258/9) "A. Thank you your Honour. In response to those questions why, well there was no question why I believed, Doreen Steele advised me from day one in relation to this Country Energy matter that she assisted in getting the Country Energy/NorthPower general manager his job. Now, prior to that, we had some, several conversations and she would tell stories to me about her association with predominant business persons in Australia, Kerry Packer, Alan Jones, and that involvement came out of the NorthPower John Singleton in relation to the NorthPower stadium down there and she would tell stories about functions and the like and so when she indicated to me about the Country Energy matter in, and the raising of questions and invoices, I was comfortable from the point of view in relation to the obtaining of the contract, her words were 'we will get the contract, I assisted in getting the general manager at Country Energy his job' so I had no reason to disbelieve that, given the conversations and the stories that she would tell me about the associations with prominent business people. Now I had no way of checking that out but by the same token I had no way of knowing whether it was true. I believed her." 149 There was a discussion between Mr Mahommed and Doreen Smith concerning the reference to ICAC. She said she regarded it as "bluff and pressure" (T 261). Mr Mahommed said that they needed to go to another level and involve actuaries (T 261). 150 On 30 December 2002, Doreen Smith again contacted Mr Mahommed, seeking a further loan secured on Caves Beach. Their conversation, according to Mr Mahommed in his affidavit, was in these terms: (Exhibit 35: para [30]) "(Doreen): 'I would now like to increase my existing loan for the business.' I said: 'How much do you need?' Doreen: 'Another $80,000, making a total of $170,000.' I said: 'We will need to go through the application process again.' Doreen: 'OK, nothing's changed concerning my details.'" 151 A further application was submitted to Liberty Financial, again on the basis that it was a business loan. Doreen Smith's "employer" was again identified as Country Power Newspapers, where she was "Sales Manager" (Exhibit 28: p 191). This was a reference, once more, to the prospect of a contract with NorthPower. Her assets, as described in the previous application, were reproduced, although the previous application was made for the purpose of purchasing a motor vehicle for the business, which was not then reflected in the application. The loan was duly approved (Exhibit 30). 152 It was put to Mr Mahommed in cross examination that he did not believe, by this time, that Doreen Smith would secure a contract with NorthPower, or alternatively, that he was wilfully blind. Mr Mahommed rejected these suggestions (T 260). 153 By January 2003, Doreen Smith had instructed Ms Pamela Young, a solicitor of Warners Bay, to pursue her action against NorthPower (Exhibit 31). She was boldly pressing ahead with her claim. It is reasonable to infer that Mr Mahommed was taken in by her confidence, encouraged by the belief that he might also profit, as her agent. However, it is one thing to accept Doreen Smith's assertion that she had been short changed in respect of her previous contract. It is another for Mr Mahommed to believe that she would still obtain a new contract in circumstances where she was contemplating suing NorthPower, and NorthPower had reported her to ICAC. Ordinarily, the threat of court action may be regarded as an act of hostility, more likely to rupture relations with a company than lead to a new contract. 154 However, it was still relatively early in their relationship. By December 2002, Mr Mahommed had been dealing with Doreen Smith for six months. She repeatedly expressed confidence that she would secure a new contract. On balance, I accept that, at least at this point, Mr Mahommed believed that she may yet pull it off. I am not persuaded that there was dishonesty or wilful blindness in respect of the third Smith application. Nor do I believe there was dishonesty in relation to the statement of Doreen Smith's assets. 155 Before dealing with two further loan applications made later that year (2003) involving the assets of Tony Steele, I should refer to certain matters of history. On 7 March 2003, the property of Tony Steele at 1/151 Bowman Street, Swansea, was sold. The loan to Liberty Financial was discharged ($133,868.18) (DS: para [200]). In his letter to the Office of Fair Trading on 28 June 2004, Mr Mahommed asserted that the loan had never been in default (Exhibit 4: p 5). He was not cross examined to suggest otherwise and no evidence was tendered from Liberty Financial. It was also said that the property had been sold at a significant profit. Tony Steele, on the other hand, said that he did not receive the proceeds of the sale (T 373; 378), although very little weight can be given to that (infra para [175]). 156 On 20 March 2003, the solicitors for NorthPower (Deacons) wrote to Pamela Young, solicitor (Exhibit 31). They indicated that, upon receipt of the claim, the matter had been referred to KPMG Forensic for investigation. They added: (Exhibit 31: p 1) "This investigation found that the documentation accompanying your client's claim did not reconcile with NorthPower's records. KPMG Forensic found several instances where the documentation provided by your client indicated duplicate payments, quotations claimed to be invoices and other anomalies. KPMG Forensic's investigation supports our client's view that no monies are owed to your client by NorthPower (now Country Energy). However, if your client is able to provide any further documentation in support of her claim, then your client may be assured that any new information will be thoroughly investigated ... " 157 The letter repeated that the matter had been referred to ICAC, although it added: (Exhibit 31: p 2) " ... This should not be taken as an indication that our client alleges any corrupt conduct on the part of your client or NorthPower. Our client has simply complied with the ICAC Act." 158 Doreen Smith was not deterred, although it should be remembered that she had boldly pressed ahead with a defamation action in 1975, in circumstances where she was later convicted of the crime which was the subject of the report about which she complained (supra para [53]). Mr Mahommed, at this point, knew nothing of her criminal past. He said that, as her agent, he attended a number of conferences in Sydney with a QC and instructed actuaries (T 265). It is reasonable to accept that Mr Mahommed, without the insight provided by Doreen Smith's past, was carried along by her confidence and believed that there was some prospect of recovery. 159 Against that background, let me then deal with the further applications made in respect of the property of Tony Steele.

The third and fourth Steele applications. 160 On 21 May 2002, that is some months after the death of Doreen Smith's husband, a Deed of Trust was executed by Tony Steele and his sister, Denise Robinson (Exhibit 34). Denise Robinson held one share in a company, Maxwell Developments Pty Limited ("Maxwell Developments"), in trust for Tony Steele. The remaining shares were the property of Tony Steele (Exhibit 34). A property was purchased by Maxwell Developments at 2/2 Mankilli Street, Blacksmiths. It was valued at approximately $300,000 and was unencumbered. 161 Mr Mahommed, in his affidavit in the Equity proceedings in 2005, said that Doreen Smith telephoned him on 6 June 2003 concerning a fresh business loan in the sum of $50,000 on behalf of Tony Steele. Since he had Tony Steele's particulars on file, he was able to complete the application and attend Caves Beach later the same day to have it signed. The papers included an application in the name of Tony Steele, initialled and signed by him (Exhibit 33: p 238-249). Mr Mahommed said that, shortly after he completed the application, Tony Steele telephoned him in his office and made the following request: (Exhibit 35: para [60]) "Tony: 'Can we increase the Maxwell Developments loan to $70,000.' I said: 'You will need to write to me with that request.' Tony: 'Type up what you need and send it to me. I will sign it and send it back to you.'" 162 The defendant submitted that such evidence was patently false (DS: para [205]). Tony Steele denied having telephoned Mr Mahommed or having requested money from him (T 374). Mr Mahommed, in his evidence to this Court, was much less certain concerning the sequence by which the loan was increased (T 279). 163 I accept that Tony Steele did not telephone Mr Mahommed and did not request an increase in the loan. There are fragments of the conversation recounted by Mr Mahommed in his affidavit in the Equity proceedings which I believe are probably accurate. I think it likely that Doreen Smith telephoned Mr Mahommed to arrange the further loan for $50,000, secured by the property at Blacksmiths which she said belonged to Tony Steele (cf Exhibit 4: p 6; Exhibit 35: para [58]). However, she did not, in this conversation, disclose that the property was held in the name of Maxwell Developments as Trustee for Tony Steele (cf Exhibit 35: para [58]). The request having been made, Mr Mahommed then completed the application in Tony Steele's name and went to Caves Beach where it was signed by Tony Steele. The information in the application did not come from Tony Steele, but combined information given by Doreen Smith in her original telephone conversation with information which Mr Mahommed had on file as a result of the previous loan applications in the name of Tony Steele. 164 At some point Doreen Smith produced the Certificate of Title. There was a copy of the certificate in Mr Mahommed's file (Exhibit 33: p 236). It was apparent from the certificate that the property was owned by Maxwell Developments. I think it likely that the following conversation took place at the house, rather than on the phone as suggested by Mr Mahommed's affidavit: (Exhibit 35: para [58]) "Doreen: 'That property is actually owned by the family company, Maxwell Developments Pty Limited.' I said: 'Is Tony a Director of that company?' Doreen: 'No, the Director is Denise Robinson. She's my daughter.' I said: 'Well if Maxwell Developments Pty Limited owns it then that company and Denise Robinson will have to complete the application for the loan. I will have to send her the application.' Doreen: 'Denise holds her share in the company on trust for Tony.'" 165 The terms of the conversation are instructive. Doreen Smith regarded Maxwell Developments as a "family company". She established the trust and her actions suggest that she regarded herself as entitled to deal with the property. It was clear that a fresh application had to be prepared in the name of Maxwell Developments. I think it likely that, in that context, Doreen Smith, not Tony Steele, asked for more money, namely $70,000. Mr Mahommed asked that the request be put in writing, which it was, signed by Tony Steele (Exhibit 36: p 250; cf Exhibit 35: para [60]). I believe it likely that, at the time Mr Mahommed swore his affidavit in the Equity proceedings, he was well aware that Doreen Smith, not Tony Steele, sought the increase. I reject Mr Mahommed's evidence that, having presented the original application to Tony Steele (the one that was aborted) he saw Tony Steele read that application (T 282). 166 Mr Mahommed telephoned the trustee, Denise Robinson, who lived in Sydney. Doreen Smith had already spoken to her daughter, telling her that Mr Mahommed would phone and asking her to sign the documents that would be presented (T 451). Denise Robinson offered no resistance. She appeared not to understand her duties as trustee. She provided Mr Mahommed with the information he required. A fresh application in the name of Maxwell Developments was then prepared. Mr Mahommed sent that document to Denise Robinson, who duly signed the application and returned it to him. The loan was then made. 167 Settlement took place in respect of the loan on 10 July 2003. Mr Mahomamed received $5,500, paid into his personal account (T 273). That sum was in excess of the fee he had initially proposed ($4,000) (Exhibit 33: p 235). There was no invoice, although Mr Mahommed said he recalled faxing an invoice to Denise Robinson and giving a copy to Doreen Smith (T 272/3, 276). He said that the difference between the fee paid and the original fee was the repayment of a personal loan to Ms Smith. Mr Mahommed also said that he had no knowledge of the account from which payment was made because he had no access to the Steele business accounts (T 273). 168 A little over a month later, a request was made to increase the amount borrowed against Mankilli Street, Blacksmiths, from $70,000 to $220,000 (and finally to $225,000). In his letter written to the Office of Fair Trading on 28 June 2004, Mr Mahommed said that it was Doreen Smith who began the process of increasing the loan. His letter included these words: (Exhibit 4: p 6) "Doreen Steele/Smith contacted me advising that the family needed to arrange a loan increase on property 2/2 Mankilli St Blacksmith NSW. I spoke with Denise Robinson Director for Maxwell Developments Pty Ltd and she confirmed a total loan of $220,000 of which during the loan process this amount was increased to $225,000." 169 Mr Mahommed's affidavit in the Equity proceedings (in 2005), suggested however, that it was Denise Robinson, rather than Doreen Smith, who rang him (Exhibit 35: para [64]). Denise Robinson gave evidence that she did not she telephone Mr Mahommed at any stage. He telephoned her (T 437). 170 The defendant submitted that this aspect of Mr Mahommed's affidavit was false to his knowledge when sworn. Whilst that was a distinct possibility, mistake cannot be excluded in view of Mr Mahommed's letter to the Office of Fair Trading, acknowledging that it was Doreen Smith who made the request. There were many applications and many phone calls. I accept, however, that the application to increase the loan was initiated by Doreen Smith. 171 Both applications declared a business purpose. However, the purpose was identified as an investment property, which had a rental income of $220 per week (Exhibit 37: p 271). 172 Was there dishonesty on the part of Mr Mahommed in dealing with Doreen Smith in circumstances where he knew that the property was held by a company in trust for Tony Steele? The following questions were put to Mr Mahommed: (T 271) "Q. ... Now, it was pretty obvious to you, I suggest, on that day one, meaning the day in August 2002 when you went around to Caves Beach, why it was that there was a trust in relation to Tony Steele, wasn't it, it was pretty obvious? A. No it wasn't obvious. Q. I suggest to you that you well understood when you met Tony Steele, that by reason of his limited capacities it was understandable that his sister had been made trustee of the property in question, do you agree with that? A. No. Q. I suggest to you that at all material times after you became aware of the deed of trust you well understood that the trust was in place and was necessary to be in place to protect Tony Steele's interests, what do you say to that? A. No." 173 Mrs Denise Robinson, the Trustee, gave her understanding of the purpose of the trust. She said this: (T 452) "Q. Well, did you know actually what Maxwell Developments was and what your functions were with it? A. It was my understanding Maxwell Developments was set up so that if something should happen to mum and dad, which eventually did, there would be a property there for Tony to live in; and the reason that I had a trustee over that was so that Trevor couldn't sell those properties. Q. That's your other brother? A. Yes. He would need my signature." 174 Mrs Robinson clearly regarded her mother as having the right to direct her to sign the loan applications. She said this: (T 454/5) "Q. Right, would this make it easier for you, did your mother ask you to sign these documents? A. Yes. Q. And would you agree that your mother was pretty much in control of all borrowings and mortgages on properties and that sort of thing, she was the boss? A. She - yes. Q. What? A. Yes. Q. And you did what she asked? A. Yes. Q. And, to your recollection, other members of the family also did what she asked? A. Yes. Q. She seemed to run the family? A. Yes. Q. I meant business - she seemed to run the family business-wise? A. Yes." 175 Mrs Robinson said that she signed "to get her mother off her back" (T 454). Once the loan money had been deposited in the St George Bank account of Maxwell Developments, Doreen Smith instructed her daughter to transfer the proceeds to her personal account via the internet. Mrs Robinson then did so, usually recording on the transfer "as per Mum's instructions" (as appears on the bank statements) (Exhibit 44). Within a relatively short time, the money from each loan was transferred to Doreen Smith (Exhibit 44). There was no evidence as to what became of the money. Tony Steele said he did not receive it. However, you would not expect him to receive it directly. In the absence of Doreen Smith, one really does not know what became of it, and whether any of it accrued to the benefit of Tony Steele. One suspects not, but the evidence is inconclusive. 176 I therefore return to the question whether, in the circumstances of a trust, and the circumstances of these loans, there was dishonesty on the part of Mr Mahommed in facilitating such dealings. The establishment of a trust is, of course, often associated with a person who is under a disability. However, that is not always the case. Mr Mahommed, at one time, worked in the superannuation industry (supra para [36]). However, there was no evidence that he had any particular understanding of or expertise in trusts. Doreen Smith acted as though she had the right to deal with the property. Her daughter accepted that she had that right. Since, contrary to the evidence of Mr Mahommed, I think it unlikely that he had any substantial exposure to Tony Steele, Mr Mahommed may not have had a full appreciation of the extent to which Tony Steele was disabled. Plainly, Doreen Smith was a forceful personality. She was also the mother of Tony Steele. She had set up the trust in May 2002, after the death of her husband. Her actions appeared to have the blessing of the trustee. I do not believe, in these circumstances, that dishonesty on the part of Mr Mahommed can be imputed. 177 There was a further aspect that I should deal with. It concerned the circumstances in which Mr Mahommed was paid his commission in respect of the loan to Maxwell Developments of $225,000 (the fourth Steele loan). On 3 September 2003, Mr Mahommed drove Doreen Smith to the St George Bank (T 332). He was paid the sum of $20,000 and signed a receipt which was also signed by Doreen Smith (Exhibit 40). The letter from the Office of Fair Trading (21.6.04), which repeated the complaints of Trevor Steele, referred to this payment and the signed receipt (Exhibit J: p 1). Mr Mahommed, in his response on 28 June 2004, sought to explain that payment in these terms: (Exhibit 4: p 6) "We note that the following amounts: 1. Vestecorp brokerage fee payable in this instance was $7,000 payable plus 2. Part fee payment for administration and compilation of invoices and documentation for NorthPower (now Country Energy) $9,500. 3. Personal Loan repayment (to me) $4,000 (of which $500 paid in cash) were paid by Doreen Steele/Smith by way of deposit of $20,000 to Peter S Mahommed/St George Bank." 178 The defendant submitted that Mr Mahommed's explanation did not bear close scrutiny (DS: para [213]). First, no invoice was rendered in respect of the $7,000 fee. Secondly, there was delay in sending an invoice in respect of the fee of $9,500 in respect of NorthPower. There was, moreover, reason to doubt the authenticity of the invoice, since Mr Mahommed wrote a letter on 26 May the following year (2004) which included these words: (Exhibit 39) "I was in agreement with your approach to defer your Listing, given that our fees in this matter would also be deferred." 179 Thirdly, the personal loan referred to by Mr Mahommed in his letter to the Office of Fair Trading was dated 20 November 2003, and was unrelated to the transaction of 3 September 2003. 180 Dealing with these submissions, it should be said that Mr Mahommed's evidence concerning the payment on 3 September 2003 was not entirely convincing. Nonetheless, there were too many loose ends to draw any definite conclusion. Nothing much turns on the absence of an invoice. There were many such examples. Mr Mahommed's paperwork was sometimes deficient. However, he had a small business which he ran himself. He was fond of saying that mistakes did happen. The letter of 26 May 2004 was not inconsistent with the earlier payment of fees. Under the agreement, Mr Mahommed had a stake in the action so that its deferral affected him. What was more puzzling was why Doreen Smith should have agreed to make payment in advance when, under the agreement, she was not obliged to do so until money was recouped (Exhibit 14: cl 4.1). Here, no money had been recouped. Mr Mahommed said that he privately reached an agreement with Doreen Smith to make payment (T 325). Doreen Smith was not called to contradict that assertion. 181 The final aspect of Mr Mahommed's explanation included an assertion that the payment he received on 3 September included the repayment of a loan privately made to Doreen Smith. Mr Mahommed's letter to the Office of Fair Trading did make reference to the loan document of 20 November 2003 (Exhibit 11). However, it did so in the context of a number of such loans. The loan of 20 November 2003 was but one (Exhibit 4: p 4). Although his evidence in respect of the loans made to Doreen Smith was not entirely satisfactory, in the absence of Doreen Smith no adverse inference is available.

Other issues relevant to credit. 182 I should in this context deal with two matters, said to be relevant to Mr Mahommed's credit. Mr Mahommed received fees in his personal account which had plainly been earned by Vestecorp. Whilst such receipt was odd, an investigation of Mr Mahommed's tax affairs was not possible and not undertaken. How the payments were ultimately treated for tax purposes cannot be determined. The same is true of the interest paid by Doreen Smith, again received by Mr Mahommed in his personal account, although supposedly belonging to his wife. For many of the same reasons, I do not believe that an inference adverse to Mr Mahommed's credit can be drawn. There was simply not enough information (cf DS: para [230]ff). 183 The second issue related to gambling and whether Mr Mahommed was a problem gambler, using poker machines. The issue developed during an exploration of the plaintiff's financial position, that being relevant to whether he charged outrageous fees. Mr Mahommed produced the taxation returns for Vestecorp for the financial years 2002, 2003 and 2004 (Exhibit 3). His income, according to these returns, was very modest indeed (cf DS: para [59]). He was also required to produce his personal returns. He gave evidence that he had not filed any personal returns because his income in those years was, in each case, below $6,000 (T 88). Nonetheless, Mr Mahommed denied that during this period he was under financial pressure (T 111). He explained that his wife had a property which she had sold (T 88). He was also in partnership with an accountant, spending a deal of his time creating an unlisted public company to pursue a particular business opportunity (T 111). His partner provided funds which became a contingent liability against future profits (T 112). 184 In cross examination, Mr Mahommed was taken to his bank statements (Exhibit 18: the statements of Vestecorp with NAB; and Exhibit 47: his personal account with the St George Bank). There were many entries, sometimes repeated entries on the same day, where cash was withdrawn from a number of outlets. Many such withdrawals were made either from the Kent Hotel, or the Hotel Delaney. It was put to Mr Mahommed that these withdrawals had been made in order to play poker machines. He denied that that was so and denied that he had a problem with gambling. He acknowledged that he played poker machines occasionally, although in company with his wife and mother (T 189; 191). He also stated that the ATM machine was on the corner of the Hotel Delaney and convenient to his business (T 190). He made cash withdrawals, but not for the purpose of gambling. 185 Counsel for the defendant returned to the issue the following day. Mr Mahommed then said this: (T 186) "Q. Just remind me of your response? A. My response was my wife's situation, and also my mother's situation although I didn't give that yesterday, right, and a similar situation, one that I didn't unveil this yesterday, and my wife suffers from depression and my mother, she has bouts of depression, so, and that was added to what I said yesterday." 186 There followed an exploration of Mr Mahommed's habits in relation to loaning his wife or his mother his bank card. Whilst the plaintiff, in his denials, was not altogether convincing, the evidence was inconclusive. In that context, the plaintiff then called his mother. I have referred to her evidence already (supra para [40]). She was a most impressive woman. She gave the following evidence: (T 290/1) "Q. '02 and thereabouts, they've got some bank statements that looks as though amounts of money are taken out of $80 here and $80 there, amounts like that out of, sorry, not a bank account but out of an ATM account, I think, near a hotel. And it was suggested to your son when he was in the witness box that he had been gambling on poker machines. What actually is the true position? A. All right. It wasn't Peter gambling, it was me. I had access to Peter's card and I was going through fits of depression, my husband had passed away and I was lonely and depressed. And Peter has always been there and he just said 'Get what you want, mum. If you want to buy something you go and buy it, or take yourself out and do what you want to do.' And I didn't realise I was developing a gambling problem. A few years after that Peter got me to a doctor and I was on antidepressants and have been for quite a while. Q. So are you saying that it was you who took the money out of the bank account? A. I did. Well as far as I know I took it. But not only - he had two cards and I went with his wife many times and occasionally - quite often I went by myself. Q. Well did his wife also indulge in the poker machines? A. Yes. We didn't sit together, she sat at one end of the machine room, place, and I sat at the other. Q. Now all this is true; you are not just saying this to-- A. Would I admit in a court full of people that I was a gambler at one stage? No. It has to be, it's the truth." (emphasis added) 187 There was no cross examination by the defendant. I inferred, at the time, that the defendant had abandoned the issue, since I would have expected cross examination had it not been abandoned. Mrs Mahommed was not taken to the bank statements and the occasions where withdrawals were made, or the amounts withdrawn. She was not questioned as to the basis of her belief that her son was not gambling. 188 The defendant however, later pursued the issue. It called Mr Jason Archer, the Bar Manager at the Kent Hotel. He began working at the hotel in January 2002 (T 420). He did not see Mr Mahommed play poker machines during his first year (T 429). He said that, in November 2003, he noticed him playing alone on about three occasions (T 430). He saw him more frequently playing alone in 2004. Mr Mahommed was then recalled in a case in reply. He denied Mr Archer's account. 189 Although Mr Archer appeared to be a straightforward witness, doing his best to provide his honest recollection, I believe in the end that the evidence is too sparse to allow an adverse finding in respect of Mr Mahommed's credit (Briginshaw v Briginshaw (1938) 60 CLR 336) (cf DS: para [9(r)]). 190 It remains for me to deal with a further loan contracted by Doreen Smith in late 2003 and an attempt to raise yet another loan in April 2004.

The fourth and fifth Smith loans. 191 On 27 October 2003, Doreen Smith telephoned Mr Mahommed seeking to increase her existing loan ($130,000) on Caves Beach to $300,000 (Exhibit 41). Liberty Financial had, by this time, introduced a new form. It required additional information. The applicant was obliged to state his or her current and previous earnings. Mr Mahommed completed the application upon the basis of information given by Ms Smith. She said that she had a business, Hunter Directory. It was run by a former employee of NorthPower (T 349). Mr Mahommed said that he had seen calendars and directories produced by this company at her home (T 349). He gave evidence that, when he asked about the income earned by that business, Doreen Smith said that she would speak to her accountant (T 348). At a later conference, where Trevor Steele was also present, Doreen Smith and her son had figures written on a piece of paper (T 35-). Mr Mahommed completed the form upon the basis of that information, setting out the following in the application: (Exhibit 41: p 300) Financials for Gross Income: $185,340 Current Year (estimated) Interest Expense: $13,164 Depreciation: $1,540 Financials for Gross Income: $172,311 Previous Year Interest Expense: $6,750 Depreciation: $1,750 Gross Salary to Owner $75,000

192 When cross examined on this material, Mr Mahommed said this: (T 350/1) "Q. So they had a piece of paper in front of them with some handwritten figures on them, is that what your evidence is, with these handwritten figures on it in substance? A. Yes. Q. And on the basis of that say so, you say, you believed that Doreen Smith was, amongst other things, in receipt of a salary of $75,000 a year, do you? A. Well that was the information they gave me. Q. I am not asking you that. I am asking you whether you believed it? A. I believed the information they gave me. Q. What I am suggesting to you is that, even if it were right, and let's assume it were right, that this 74 year old lady sitting there with her son Trevor with some handwritten figures on a piece of paper, these figures, the notion that they represented, the actual reflection of the business struck you, must have struck you as fantasy, what do you say to that? A. No." 193 It was fantasy. I believe that Mr Mahommed, by that time, would very likely have recognised that fact. First, Mr Mahommed had carried out considerable work reconciling Doreen Smith's invoices and her bank statements. The invoices were not in evidence. Nonetheless, the letter from NorthPower terminating Doreen Smith's services was addressed to her at Hunter Directory. It included these words: (Exhibit 15) "Accordingly, I advise that Country Energy hereby terminates all previous arrangements, both implied and in writing, with you and Hunter Directory." 194 Mr Mahommed saw that letter (T 180). One infers that the contract which Doreen Smith was confident of obtaining from NorthPower concerned the same business she had previously operated, which she now claimed she was still operating, employing her at a salary of $75,000 per annum. If Mr Mahommed recognised the name, Hunter Directory, and its connection with the previous contract with NorthPower, he would surely have recognised the falsity of Doreen Smith's account. 195 Secondly, even assuming, charitably, that he did not make that connection, the account provided by Ms Smith stretches one's credulity. Mr Mahommed had been dealing with Ms Smith since 17 June 2002, that is, almost eighteen months. She had, in that time, borrowed significant sums of money. None of the previous applications had made reference to the business of Hunter Directory or the income she derived from it. They relied upon the prospective income from the contract that she was confident of obtaining from NorthPower. It must surely have struck Mr Mahommed as odd that Ms Smith had not previously adverted to this matter. 196 There was a further aspect of the evidence given by Mr Mahommed in the context of this application, which was unsatisfactory. Ms Smith's contract with NorthPower had been terminated on 23 August 2001 (Exhibit 15). In June 2002, when Mr Mahommed first dealt with her, Ms Smith had expressed confidence in obtaining the further contract. He said, and I accept, that he believed her. However, no such contract had been awarded by 4 June 2003, when she commenced her action in the Supreme Court against NorthPower (Exhibit 32). By October 2003, Doreen Smith had determined that she would defer that action. That being the context, Mr Mahommed gave the following evidence in answer to a question from me: (T 348) "Q. Mr Mahommed, you have been taken in the context of these late applications by Doreen Smith to various statements you made in respect of her gross income in the form that you completed on her behalf; do you remember that? A. Yes, your Honour. Q. And it was put to you that you had no belief at that point that she had any prospect of a contract with NorthPower, and I think you accepted that? A. Correct." 197 Yet not long after, in cross examination, Mr Mahommed then gave the following contradictory evidence: (T 351) "Q. ... You knew there was no real prospect of future commercial business between Doreen Smith and NorthPower by this time, didn't you? A. No. Q. That's contrary to your previous evidence, isn't it? A. Well, she indicated her association with the general manager, which I previously gave, so I had no reason to disbelieve her." 198 There was evidence that Doreen Smith got on well with Mr Mahommed. He said that he regarded her as a friend (T 161). She went out socially with him and his wife (cf Exhibit 35: para [36]). I infer that, in the context of the fourth Smith application, although not really believing her account concerning her income from Hunter Directory, or being wilfully blind by not making obvious inquiries, Mr Mahommed was prepared to submit the application to Liberty Financial on her behalf, no doubt conscious of the fact that the primary determinant would be the real estate security on offer. 199 The fifth Smith application arose out of an enquiry by Doreen Smith on 8 April 2004. She wanted to borrow a further $75,000, secured on Caves Beach. Mr Mahommed told her that it was not possible within the previous valuation to obtain that increase from Liberty Financial. She would need to approach a different lender and refinance (Exhibit 35: para [44]). Ms Smith asked Mr Mahommed to make enquiries on her behalf. 200 Mr Mahommed then completed a short enquiry directed to Pepper Homeloans (Exhibit 42). He stated that Ms Smith's gross annual income was $75,000, reproducing the figure in the fourth Smith application. For the same reasons, I do not accept that Mr Mahommed believed, at that time, that Doreen Smith was earning that sum. 201 A further aspect had emerged by April 2004, although it was not explored in evidence. Mr Mahommed had written to Doreen Smith on 26 May 2004, describing events in October 2003, and adverting to a book which Doreen Smith was then writing. The letter said this: (Exhibit 39) " ... You also advised me that you were considering your current efforts in the writing and the hopeful publication of your book and therefore you believed your best strategy was to leave your Listing in the above matter and proceed at a later date ... " 202 The matter was made more explicit in a letter written by Mr Mahommed to the Office of Fair Trading on 28 June 2004, when he said this: (Exhibit 4) "2. In late December 2003, Doreen Steele/Smith advised me that she had employed a ghost writer to write her auto biography and that this auto biography predominantly profiles how she helped change the processing of 'women in custody' within the NSW prison system ... " 203 The terms of that letter may suggest that Mr Mahommed, at least by December 2003, knew of Doreen Smith's criminal past, or at least some aspects of it. The statement attributed to Doreen Smith is, however, ambiguous. It does not necessarily suggest that she had knowledge of the New South Wales prison system based upon her experience as an inmate. 204 Against that background, let me turn to the defendant's case of justification in respect of imputations 11 and 12 and the Defence (in New South Wales) of Contextual Truth.

Outrageous fees? 205 It will be remembered that the first imputation the defendant seeks to justify was in these terms: 11. The Plaintiff charged Doreen Smith outrageous fees. 206 The defendant submitted that, even if the imputation was styled as involving an element of opinion, it was still susceptible to the truth defence (DS: para [12]). There was implicitly a matter of characterisation. The fees charged in respect of each transaction may not be outrageous, but the total may be (DS: para [13]). 207 Here, according to the defendant, the charges made by Mr Mahommed in three areas were relevant: First, the fees charged for arranging mortgages with Liberty Financial. Secondly, the practice of Mr Mahommed loaning Doreen Smith money at "remarkable interest rates". Thirdly, the charges made for the work performed to assist in the recovery action by Doreen Smith against NorthPower in respect of unpaid invoices. 208 There is no question that the interest charged ($1,500) on the two week loan of $2,500 made by Mr Mahommed to Doreen Smith on 20 November 2003 was outrageous. Ms Smith was obliged to repay $4,000, an interest rate of 1,560% or thereabouts (Exhibit 11). Mr Mahommed insisted that Doreen Smith in fact suggested the figure (T 161). Other loans, according to his testimony, were at significantly lower rates, sometimes $500 and sometimes interest free (T 154) (DS: para [91]). 209 What is the meaning of the word "fees" in the imputation? The imputation must be understood in the context of the defamatory publication and by reference to considerations of practical justice (Greek Herald Pty Ltd v Nikolopoulos [2002] NSWCA 41; (2002) 54 NSWLR 165 at paras [8] and [21]-[22]). In my view, the word "fees" in not apt to refer either to interest or the work done in the context of the recovery action. If I am wrong in respect of the third category (the $9,500), the fees charged by Mr Mahommed were not outrageous on the evidence, having regard to the work he performed and the agreement of Ms Smith to pay that sum (notwithstanding the terms of the Agency Agreement). 210 Returning to the terms of Imputation 11, the reference to the fees Doreen Smith was charged suggests that any analysis should exclude transactions relating to Tony Steele and Maxwell Developments. On the other hand, since Doreen Smith arranged all loans, the fees charged overall should perhaps be examined. Both the plaintiff and the defendant approached the matter upon the latter basis. I will therefore do the same. I should add that it probably does not matter one way or the other. Further, I do not think it matters whether you look at each loan individually or look at all the loans together. 211 The defendant essentially relied upon two arguments. First, attention was drawn to the fact that Mr Mahommed charged a fee based upon the loan sought. In many cases, that loan was in addition to amounts previously borrowed. Liberty Financial would only lend upon the basis that previous loans were repaid and a new loan taken out for the higher amount (supra paras [74]-[75]). However, the defendant argued that the fee charged by Mr Mahommed ought to have been calculated by reference to the increase, not the amount of the loan. It was outrageous to do otherwise (DS: para [85]). 212 The second argument was based upon the amount of work required in respect of each loan. 213 Let me deal with the first argument. Mr Mahommed gave the following evidence concerning the industry practice in respect of charges made by a mortgage broker: (T 29/30) "Q. What were your fees with any one as a percentage? A. Could range between 2 to 4 percent. Q. 2 percent to 4 percent, of what? A. Of a loan amount. Q. If you borrowed $100,000, your fee would be between $2,000 and $4,000? A. Correct. Q. Is that fee standard in the industry or not standard? A. It's standard. Q. Standard fee? A. Yes. Q. In addition to that, is that fee payable when the loan goes through? A. Correct. ... They might vary between 1 percent and a trailer fee of a quarter or a half a percent. Q. The 2 to 4 percent, is that paid by the borrowing client? A. Correct." 214 Mr Mahommed was not cross examined to suggest otherwise and no other evidence was tendered on that issue. The plaintiff prepared a table calculating the average fee charged which, it was submitted, was well within the industry standard and certainly not outrageous. The table was as follows: (Exhibit U) Borrower Amount Invoiced broker fees Fees as % of loan First Smith appn $50,000 $1,815 3.63% Second Smith appn $90,000 $4,000 4.44% First Steele appn $80,000 ($2,000 on later invoice) 2.50% Second Steele appn $129,000 $2,030 1.57% Third Smith appn $170,000 $5,000 2.94% Third Steele appn $70,000 ($4,000 ref on checklist) 5.71% Maxwell Develops Fourth Steele appn $225,000 ($7,000 ref on checklist) 3.11% Maxwell Develops Fourth Smith appn $300,000 $6,500 2.16% Total $1,114,000 $32,345 2.90%

215 The defendant prepared an alternative table, isolating the increase involved in each loan and calculating the fee charged by reference to that increase. The defendant's table originally included the fifth Smith loan. It was acknowledged, however, that since the loan did not proceed, it was inappropriate to include it. The defendant's table, with amendments by the plaintiff, was as follows: (Exhibit V) Loan Application Amount of increase Invoiced fees % of increase 1st Smith $50,000 $1,815 3.63% 2nd Smith $40,000 $4,000 10.00% 1st Steele $80,000 $2,000 2.50% 2nd Steele $49,000 $2,030 4.14% 3rd Smith $80,000 $5,000 6.25% 3rd Steele $70,000 $4,000 5.71% 4th Steele $155,000 $7,000 4.51% 4th Smith $130,000 $6,500 5.00% Total 4.95%

216 Mr Mahommed, in evidence, explained that only banks will refinance a loan by "topping up" an existing loan. Other lending institutions, including Liberty Financial, insisted upon the previous loan being discharged and a fresh loan being taken out (T 145) (supra para [74]). 217 I believe the approach of the plaintiff is appropriate. By that measure, Mr Mahommed's fees could not be considered "outrageous". If that were wrong, and the correct approach were that suggested by the defendant, I still do not believe that the fees could be described as "outrageous". In reaching that view, I am conscious of the fact that there were successive loans and that the industry standard had been exceeded by slightly less than one percent overall. 218 Moving to the second argument, based upon the time taken to complete each loan, it was submitted on behalf of the plaintiff that such an approach was inappropriate because it failed to take account of experience and expertise, as well as the time taken in travelling. I accept that submission and also note that such a measure does not take account of the cost of running an office. Where, as here, there was an industry standard, it seems to me that is the appropriate measure in determining whether the fees charged by a mortgage broker can be characterised as "outrageous". As I have stated, by that measure, Mr Mahommed's fees were not "outrageous". The defendant, in my view, has not established the substantial truth of Imputation 11.

A dishonest Financial Adviser and Mortgage Broker? 219 It will be remembered that Imputation 12 was as follows: 12. The Plaintiff is a dishonest financial adviser and mortgage broker. 220 The imputation reproduced the words of the reporter, when he said this: (Exhibit F) (supra para [19]) "DAVID RICHARDSON: Really? He calls himself a financial adviser and mortgage broker, but Peter Mahommed's so-called advice has seen an elderly woman lose everything. Where's her money? She's lost all of her properties because of you sir." 221 Proving the substantial truth of the imputation involves proof of the following elements:

3. That in both capacities, he was dishonest. 222 It was submitted on behalf of the plaintiff that he was not a financial adviser. He gave no financial advice. He was a mortgage broker who arranged loans upon request. The provision of financial advice required a licence, issued by ASIC. He had no such licence. In the absence of a licence, it would be an offence to give financial advice (supra paras [37]-[39]). 223 The defendant responded that the words of the imputation were ordinary words, to be given their ordinary and natural meaning. The phrase, "financial adviser", was not a term of art (DS: para [9(h)]). Despite the plaintiff's denials, it was, according to the defendant, apparent that he gave advice to those who sought his services, answering his advertisement. Such persons, it may be inferred, were advised as to which financial product would best suit their needs, based upon his knowledge and experience. His response to them, in ordinary parlance, was "financial advice" (DS: para [9(h)]). 224 The defendant submitted in the alternative that, were it not accepted that the plaintiff was a financial adviser, the imputation would be shown to be substantially true if the Court were to find that the plaintiff was a "dishonest mortgage broker" (DS: para [9(i)]). 225 I reject the alternative submission. The defendant must show the plaintiff was dishonest in both capacities. The phrase "financial adviser" in present day usage has perhaps reached the point where it is a recognisable group or profession in the same way as a lawyer, a doctor, an engineer or an architect. Nonetheless, I will approach the phrase "financial adviser" upon the basis of the ordinary meaning of those words. 226 I accept the evidence of Mr Mahommed that he did not provide financial advice. He was a mortgage broker who provided a service in one area only, business and investment loans (T 104) (supra para [46]). He did not provide advice as to which product would best suit those who approached him, as suggested by the defendant's submissions. Rather, he arranged business and investment loans upon request. He said this: (T 105) "Q. Is this your evidence, I would ask you to cast your mind back to the period over which you were placing these ads, a number of years, are you saying that people would call you up, hooked by the ad, and you would engage in a syphoning process whereby you would what, knock people back on the basis that what they were seeking wasn't business finance? A. What I am saying is, yes, because that wasn't, you would have the odd call now and again but my first question to them 'What is the purpose?'" 227 I accept that Mr Mahommed knew that a licence was required in order to provide financial advice, that he had no such licence, and that he refrained from giving advice because he was unlicensed (T 33/4) (supra para [38]). 228 The defendant has not proved the substantial truth of Imputation 12.

The defendant's contextual imputations. 229 It will be remembered that the defendant pleaded back Imputations 11 and 12 as contextual imputations. Having not demonstrated the substantial truth of either, they can be put to one side. The remaining contextual imputations were as follows: (supra para [7]) 15. The Plaintiff had, in his business of financial adviser and mortgage broker, knowingly taken advantage of a man he knew to be significantly disabled. 16. The Plaintiff took advantage of Doreen Smith by exploiting her age and infirm state to secure payments for his company. 17. The Plaintiff was unfit to be a financial adviser or mortgage broker. 230 Contextual Imputation 15 required the defendant to prove the substantial truth of conduct by the plaintiff "in his business of financial adviser and mortgage broker". The focus therefore is not upon the actions of Mr Mahommed (whether he gave advice), but upon the nature of his business. The plaintiff's business was that of a mortgage broker. He did not have a business as a financial adviser. Further, I am not satisfied, for the reasons given, that the plaintiff knew that Tony Steele was significantly disabled. I believe it probable that he dealt principally with Doreen Smith (and to a lesser extent, Trevor Steele), spending little time with Tony Steele beyond obtaining his signature. 231 It is convenient, in this context, to deal with Contextual Imputation 17 which also incorporated the phrase "financial adviser". There were three difficulties with this imputation. First, for the reasons given, Mr Mahommed was not a financial adviser. Secondly, it may be acknowledged that Mr Mahommed was unfit to be a financial adviser because he was unqualified. The fact that he was unfit would not lower him in the esteem of right thinking members of the community. If that be right, the imputation was not defamatory (cf Radio 2UE Sydney Pty Ltd v Chesterton [2009] HCA 16; (2009) 83 ALJR 654). Thirdly, objection was taken to the imputation on the basis that it was rhetorical. The Defence to the Third Further Amended Statement of Claim (as ultimately pressed) simply relied upon the particulars of truth previously provided in respect of each of the other imputations it sought to justify. According to the plaintiff, the imputation added nothing. It did not differ in substance from the other contextual imputations. Reference was made to Morris v Newcastle Newspapers Pty Ltd (supra para [8]) per Hunt J at 272/3; Hepburn v TCN Channel Nine Pty Limited (unreported, 8.10.82) p 21; Australian Broadcasting Corp v Hodgkinson [2005] NSWCA 190, per Hodgson JA, esp paras [37]-[39]. 232 I need not go beyond the first difficulty, although it seems to me the other matters also have substance. The defendant has not proved the substantial truth of Contextual Imputation 17. 233 I come finally to Contextual Imputation 16 which, for convenience, I repeat: 16. The Plaintiff took advantage of Doreen Smith by exploiting her age and infirm state to secure payments for his company. 234 The imputation was obviously carried and is defamatory. Doreen Smith was shown as an elderly feeble woman with a marked tremor. She was described as "a pensioner, suffering from dementia". The introduction to the programme included these words: (Exhibit F) (supra para [17]) " ... Doreen Smith suffers from dementia, an illness her mortgage broker seized upon and he's been able to swindle a forgetful Doreen out of everything she owns. ... " 235 Later, Trevor Steele was shown making the following statement: (Exhibit F) (supra para [25]) "The money come through from Liberty, whether it was 80, or 100, or $150,000. Three minutes later he had tran - money transferred to his own personal account." 236 Certainly Doreen Smith was elderly at the time that Mr Mahommed dealt with her. However, she did not suffer from dementia. Nor do I believe she was infirm (supra paras [80]-[94]). On the contrary, I accept that Mr Mahommed was impressed by her. He found her to be "sharp" (T 54). His impression conformed to the description provided by Doreen Smith's daughter (supra para [174]). 237 The defendant submitted that the sheer irrationality of the financial behaviour of Doreen Smith must have been evident to Mr Mahommed. Her actions were financial madness, making repeated applications in close proximity to each other (DS: para [24]). However, I am not persuaded. The defendant arranged for Doreen Smith to come to Sydney. She was available to give evidence and yet was not called. The defendant relies upon inference. In drawing inferences from the evidence, one must be wary of the advantage of hindsight. Mr Mahommed, on the evidence, was confronted by a powerful and successful woman. She had been bankrupt and yet had survived with substantial assets. She owned her own home unencumbered. She had even established a trust for the benefit of her son, Tony, which had then purchased assets, which were likewise unencumbered. She was, for five years, the head of a substantial business which had a contract with a large organisation. The contract had concluded ten months before Mr Mahommed's first meeting with her. Her bank statements showed a substantial turnover and a very substantial credit balance. She claimed to be owed a significant sum in unpaid accounts and recruited Mr Mahommed in the recovery of that money. I have no doubt that she appeared confident that she would secure a further contract with that corporation through her connections. I think it likely that she had all the confidence and persuasion of a practised fraudster. 238 In these circumstances, the defendant has not established the substantial truth of Contextual Imputation 16. It follows that the defendant has not established the defence of contextual truth in respect of the programme. It is unnecessary for me to consider the facts, matters and circumstances said to establish the truth of any of the contextual imputations and to weigh such matters against the plaintiff's imputations separately (John Fairfax Publications Pty Limited v Zunter [2006] NSWCA 227 at paras [34]-[35]). The defendants submitted, nonetheless, that such evidence was relevant in mitigation of damages. I will return to that submission in the context of damages.

" Polly v Peck " (justification outside New South Wales). 239 The Amended Defence to the Third Further Amended Statement of Claim relied upon the "Polly v Peck" defence in respect of the publication of the matters complained of outside New South Wales (para [12]). The defendant acknowledged that John Fairfax Publications Pty Limited v Zunter (supra) determined that such a defence was not available and that I was bound by that decision. It formally submitted that Zunter had been incorrectly decided. 240 The defendant has failed to establish a defence to any of the publications. The plaintiff is entitled to a verdict in respect of each. I now turn to the question of damages.

The reputation of Mr Mahommed. 241 Mr Mahommed, at the time of the publication in June 2004, was a man aged 48 years. He had been self employed as a mortgage broker since 1989. Reference has been made to the evidence given by his mother concerning his reputation (supra para [40]). She said, without challenge, that her son had an excellent reputation before the programme, specifically as a mortgage broker within the finance industry (T 287). He had a reputation for being trustworthy, hard working and very honest (T 288/9). 242 Damage from each publication is presumed. The defendant acknowledged that the plaintiff must be awarded some damages. An award of general damages serves three purposes, the first being to compensate the person defamed for the harm to his reputation. The second is to compensate for the hurt to his feelings, and the third is to vindicate his reputation, by showing the falsity of the allegations made against him (Carson v John Fairfax & Sons Limited (1993) 178 CLR 44 at 60/1). The amount awarded operates simultaneously in respect of all three purposes (Carson, per Brennan J at 72). 243 Here, the programme, Today Tonight, had a very significant audience. The defendant's estimate, according to interrogatories, was 1,532,000 viewers throughout Australia (Exhibit Q). The audience in New South Wales was estimated to be 442,391 (Exhibit Q). No estimates were made of the audience in respect of each of the promotions. I infer that, in each case, it was substantial. Some viewers would have seen all three matters. Hurt to feelings. 244 Mr Mahommed said that the reporter from Channel 7, Mr David Richardson, approached him as he came out of a post office in the Newcastle area where he lived and worked (T 66). The reporter was accompanied by a film crew. The programme contained the following exchanges with Mr Mahommed: (Exhibit F) (supra para [18]) "DAVID RICHARDSON: Peter Mahommed, David Richardson from Today Tonight. Can we ask some questions about some rather dubious mortgages you've set up for Doreen Smith and her illiterate son, Tony. PETER MAHOMMED: Oh, is that right, is it? DAVID RICHARDSON: Yeah. PETER MAHOMMED: Well, I think you've got all that wrong." 245 A further exchange was in these terms: (Exhibit F) (supra para [19]) "DAVID RICHARDSON: ... Where's her money? She's lost all of her properties because of you sir. PETER MAHOMMED: She hasn't. DAVID RICHARDSON: Yes she has." 246 The final exchange, towards the end of the programme, was as follows: (Exhibit F) (supra para [30]) "DAVID RICHARDSON: ... What about the withdrawals? The money goes into her account, $20,000 here, $25,000 to you. PETER MAHOMMED: You see you need to check your facts. DAVID RICHARDSON: I have checked my facts. PETER MAHOMMED: Well you haven't -" 247 Mr Mahommed was taken to the transcript of the programme, line by line. He said the assertions made by Doreen Smith and Trevor Steele were false, as was the commentary of the reporter, which assumed the truth of each assertion (T 54-65). Each imputation was false (T 65). Mr Mahommed said that he immediately returned to his office and rang Channel 7. He asked to speak to the Production Manager and ultimately spoke to Mr Frank Pangallo (T 68). He said that, if he wanted the truth, he should send a reporter to his office straight away (T 69). About an hour later the reporter, Mr Richardson, came to his office. Mr Mahommed described what happened in these terms: (T 69/70) "A. He walked in and I told him to sit down 'If he wanted to see the truth; if not, leave.' So he said he was here to find out the truth. So within that hour I prepared the documents in relation to Steele, pulled them out of the files, had them there. And I sat down, and I said to him, 'Okay, what is the allegation?' He said, 'Oh, that they rang you in regard - in relation to a $1,000 Christmas loan of Trevor Steele.' So I pulled out the application showing Trevor Steele's details et cetera. I said, 'That's not correct.' He said that they didn't operate a business, and they never had a business. So I pulled out the accountant's letter, which confirmed that they required the funds, the $35,000 for business, plant and equipment. Q. Did you tell him that? A. I showed - I showed the document to him. Q. Did you explain the documents to him as you were showing them to him? A. Absolutely. Q. Yes, go on? A. So over a period, I think he was probably there for over an hour, his demeanour had totally changed; he was slouched back in his chair, and he made the statement in relation to, 'Well, we've chased a lot of old - crooked old women around the world. We really need to go back and have a chat to the Steeles.' Now ... " 248 Mr Mahommed added: (T 70) "A. Yeah. And during this conversation my wife kept coming downstairs, because she was, you know, wasn't real - wasn't really happy, and she was in on parts of the conversation. Now, when he was about to leave, she came down, shook our hands, and said, 'Well, thanks for that' and, you know, 'I promise', because my wife said, you know, 'Will you come back to us?' He said 'I promise I (will) come back to you' - 'I won't run anything until I come back to you. We need to go and check out this story.'" 249 Mr Richardson asked for the telephone number of Liberty Financial, which Mr Mahommed later provided to him. At the same time as he gave this information, he sent what he considered to be the key documents which gave the lie to the allegations against him. One document was the letter from the accountant confirming that funds were required to establish a business (Exhibit G) (supra paras [68]-[69]). Mr Mahommed also provided the Trust Deed in respect of Tony Steele (T 70). It appears that this material was sent on Wednesday 24 June 2004, that is, about five days before the programme (29.6.04) (T 70). 250 Mr Mahommed said that he was in the habit of watching Today Tonight (T 84). He saw both promotions (T 83). He described his reaction and that of his wife in these words: (T 83) "Q. And what was your reaction when you saw the program? A. Just absolutely mortified. You know, here I am on national TV and being accused of stealing, of being a thief, lying, and they've got me driving off in a Mercedes, a black Mercedes and an old lady speaking with a cup of tea, that's going to be devastating. And my wife was emotional, she started crying. And she was privy to the conversations with David Richardson in my office. And she said to me, you know, he lied, he said he would come back to us. He wouldn't do anything until he came back to us." 251 Mr Mahommed immediately phoned Channel 7 and again spoke to Mr Pangallo. Their conversation was in these terms: (T 82) "A. I said, 'I previously had a meeting with your reporter Dave Richardson and I've faxed him information, certain information, in relation to the allegations that he made with me in my office.' And, 'You need to stop this.' I said it's incorrect. And he said, 'Have you got any more information or evidence?' I said yes I had. 'I have.' So he said, 'Look, can you send it down to me? I'll read it overnight and I'll come to you in the morning.' I said, 'I will on the proviso that you come back to me in the morning.'" 252 At 7.24 pm on 28 June 2004, that is the day before the programme, Mr Mahommed sent a fax to Channel 7, attaching 158 pages, being the papers he had accumulated in relation to the Smith/Steele loan applications. The fax had a covering letter which included these words: (Exhibit G) "I note that I previously met with your reporter Mr David Richardson who was to allow me the common courtesy in advising me of your response prior to airing any matter. I phoned Mr Richardson and faxed correspondence to him earlier today which further refutes the allegations made by the above and your reporter. As agreed, you are to contact me tomorrow regarding the attached which irrefutably disproves those allegations." 253 Mr Mahommed was not challenged in respect of any of these conversations. Mr Pangallo from Channel 7 was not called. I accept that Mr Mahommed was attempting to be transparent and believed that the documentation in his files refuted the allegations made against him. He said that his objective was to stop the programme and the damage to his reputation caused by the promotion (T 78). 254 At 11.40 pm that evening he sent a further fax. It enclosed a copy of the letter of the Office of Fair Trading of 21 June 2004. His covering letter to Channel 7 included these words: (Exhibit J) "You should take note, the allegations made by your show (as aired tonight) during the promo for your program tomorrow, is vastly different from the alleged amount indicated in the attached Correspondence. Further to the above, we note that your reporter David Richardson once again didn't bother to state the alleged 'Million Dollar Rip Off' and in fact only (stated) roughly a similar amount as indicated in the attached Correspondence. Needless to say no documented evidence regarding either of the alleged amounts was tabled by your reporter at our meeting. Having previously discussed this matter with your reporter David Richardson, it is apparent that a 'Honest and Balanced Report' is not on his agenda." 255 Mr Mahommed explained his reasons for sending the fax late on the evening of 28 June, in these words: (T 81) "A. Well after viewing the first promo, the allegations of stolen, stolen and stolen, and he's ripped off 800 to 1.2 million, he should spend a lot of time in gaol, there was 'stolen' and 'stolen' three properties and 800 to 1.2, there is no complaint about that in the Office of Fair Trading. So I was indicating to him that what you ran has got added, you know, it's additional to what the complaint was, their complaint to the Office of Fair Trading." 256 Channel 7 did not get back to him the next morning, as promised. Mr Mahommed then contacted his solicitors who telephoned Channel 7 and put them on notice that, were they to screen the programme, litigation would ensue. 257 The programme then went to air. Mr Mahommed watched it at home with his wife. He provided his reaction in these words: (T 83/4) "Q. What was your reaction when you saw the ultimate program? A. Well, it was just sheer devastation. Given what I had sent these people, they still had ran this program. And my wife became hysterical and, you know, it was just mortifying. I could see any future business dealings and current business dealings just ceasing. Q. Just what? Ceasing? A. Ceasing. Yeah. Any business opportunities, clients that I've been working on, advertisement, you know, I saw this, this direct attack on my - not a corporation and my reputation and honesty is my business. And I've spent 37 years building that up over an extensive period of time and during that time I've met a majority of accountants in Newcastle, probably 60 per cent of the lawyers in my days of restructuring and consulting superannuation and their clients. So you know I predominantly knew hundreds and hundreds of people, if not thousands of people that I've managed and associated with, did business with over a period of time. And I could see that just having an enormous impact on me emotionally, psychologically, and my clients and my family and that's exactly what it did. Q. I take it you mean an adverse impact? A. An adverse impact." 258 It was, he said, a matter of some significance to him that the programme was screened on Channel 7. He said this: (T 84) "A. Yes. It's a program that we always watched and most of my friends watched and business colleagues watched so I knew the impact. It was going to be, you know, I think one of the top-rated programs in its time slot so it was maximum exposure. It wasn't like it was on SBS." 259 He also attached significance to the fact that the telecast was Australia wide (T 84). He said he dealt with accountants and lenders in other states. 260 Mr Mahommed gave evidence that, after the promotion, he received a dozen or so phone calls that evening. Friends rang, as did relatives. His sister was in tears. Each member of his family called (T 85). He said that the anguish on the face of his wife was heartwrenching (T 85). 261 After the programme itself, he again received many phone calls. A longstanding client rang the next day to cancel a loan application (T 85). He also received anonymous abusive calls. He was told by a friend that his name had been "bandied about" at a function. Those at the function had talked about the programme and referred to Mr Mahommed as a person who "rips off old ladies". 262 Mr Mahommed gave evidence about the reaction of people within his neighbourhood when he met them face to face. He said this: (T 87) " ... When you walk into the butcher's the first time you've seen them after this promotion runs and all of a sudden he goes red in the face. And you go into the post office and you know that they've seen it. And the communication between you isn't as cordial and responsive as it was previously. Now, that steps over into the business world and my business dealings with people. So you don't get invited to functions where you can actually build your resource of people, canvass for business. And in relation to the professional world because my attitude is if I believe - and honestly if I was them and I believed what was shown, I would probably react the same way. So I'm not blaming them but this is just a consequence of those allegations. When I'm not working I wear a baseball cap. And for a period of time after these allegations I grew a beard. Now -- Q. Why did you do that? A. Well, so people wouldn't recognise me. It's a pride thing. I'm not happy to admit it in the court but that's the truth. But that probably aptly describes my inner emotions." 263 Mr Mahommed ultimately moved house because of the level of discomfort with his neighbours (T 87). He later separated from his wife in 2007 (T 84). He is now divorced. The reasons for the separation were not explored. There is no evidence that the programme caused the separation, but one would infer that it did not help. 264 No claim was made for special damages. Nonetheless, the plaintiff gave the following evidence as a matter relevant to his reputation: (T 88) "Q. Have you yourself been able to continue in your profession or occupation as a mortgage broker since this program? A. No." 265 He added: (T 89) "Q. I take it that - if I just lead this to avoid any problems - people weren't queuing up to hire you as a mortgage broker or your company after the program? A. No. In reality what happens is advertisements were still going, phone calls were still coming in predominantly because there is no name on the advertisement. But once I mentioned Vestecorp or Peter Mahommed I would get no response in relation to a positive response for applying for a loan, and then some of those on which I did get a positive response to pursue an application pulled out and didn't proceed. Q. So the work for mortgage broking dried up for you and Vestecorp? A. That's right. Q. Is that correct? A. Correct." 266 Mr Mahommed said that, since the programme, he had suffered from anxiety, worry and nerves (T 89). He has lost ten kilograms (T 90). In the five years that have elapsed since the programme, Mr Mahommed has certainly aged and presented as a person much less confident than he appeared on the screen. 267 Mr Mahommed's mother saw her son on the night of the programme. She described his reaction in these words: (T 289/90) "A. Distraught, devastated, and I've never seen my sons crying and he was crying that night. Peter's a very solid-faced man and he was crying. I was absolutely wrecked. And his wife was crying, all of those things. It hit us so hard. Q. Did he say anything or -- A. He said, 'Mum, I didn't. It's not right, mum.' And of course being Peter I trust him. Q. Now, how has he progressed up to the present time? A. Well, he had it hard for a while. He didn't wish to meet his friends, he didn't wish to do anything. He had to keep working. Slowly he got back a lot of his personal self and personal self-respect. It took him a long time. He used to go out and he used to - he grew a beard.

Q. He grew a beard? A. Yes, he grew a beard and he used to wear baseball caps. Q. Did he tell you why he did that? A. Yeah. He said that he couldn't bear anybody else to ask him - so many people would ask him over a period of time. I couldn't bear to go out either." 268 Many people later approached Mrs Mahommed and spoke to her. She said this: (T 290) "A. Oh, hundreds of them. I've been in Maitland for 56 years and we are quite well known there. And everybody that we knew and many others have asked me and him. Q. Can you just tell us one or two conversations - first of all what people said to you. This is after the program. A. Yes. My neighbour knocked on the door as I was going out to the car and said, 'Is Peter alright?' And I said, 'Yes. I don't know. I'm going now.' And then later on not very long ago somebody asked me, 'Is he going to go to gaol?' And I said, 'No.' What answer do you give to these things? Q. Did you tell your son about these conversations? A. Yes. Q. How did he appear to react when you told him about them? A. Well, he's distraught again, he was crying again and I'm not used to seeing my sons cry." 269 The defendant made no apology. Mr Mahommed was obliged to come to court for two weeks to vindicate his reputation. These are matters which, no doubt, contribute to the plaintiff's hurt to feelings.

Aggravated damages. 270 To justify an award of aggravated damages, the aggravating conduct of the defendant must be improper, unjustifiable, or lacking in bona fides (Triggell v Pheeney (1951) 82 CLR 497). Such conduct justifies an increase in the damages awarded. The damages are compensatory in nature. To justify such an award, the misconduct must have caused additional harm to the plaintiff. Sometimes the harm will be in the nature of an increase in the emotional distress caused to the plaintiff by the publication. It may, in addition, enlarge the reputational damage suffered. 271 A claim for aggravated damages is made in the Third Further Amended Statement of Claim, para [54]. The only matter particularised was as follows: "The Plaintiff claims the damages for which he has been entitled have been effected (sic) by his knowledge that the imputations are false." 272 During the course of argument, counsel for the plaintiff identified aspects of the defendant's conduct in the trial, which were said to be unjustifiable and therefore meriting an award of aggravated damages (T 640/1). In respect of matters which were not central and, indeed, were peripheral, Mr Mahommed was repeatedly called a liar. Specifically, he was called a liar when he denied that he had a gambling problem. He was also called a liar when he said he had been unsuccessful in getting his estranged wife to come to court as a witness. Such accusations, according to the plaintiff, were unjustifiable, such that aggravated damages should be awarded. 273 I accept the plaintiff's evidence that he knew the imputations were false. Indeed, he went to great lengths before the programme to refute the allegations. He repeatedly spoke to the manager at Channel 7. He faxed voluminous material which he believed demonstrated that the accusations were false. He was assured by Channel 7 that they would get back to him before the programme was shown. They did not do so. The falsity of the imputations in these circumstances, I believe, increased the hurt caused by the publication, such that aggravated damages should be awarded (Rigby v Associated Newspapers (No 2) [1969] 1 NSWR 729 at 738 per Walsh JA). 274 Coming, then, to the second matter relied upon, I do not believe that the defendant's conduct of the case can be described as "improper" or "unjustifiable". The findings I have made make it clear that Mr Mahommed, especially in the context of the Equity court proceedings (and repeated in these proceedings), gave a false account of his dealings with Tony Steele and the time he spent with him. The strong challenge to his evidence by the defendant in these circumstances, including on issues which were not central, was not improper or unjustifiable.

Exemplary damages. 275 Section 46(3)(a) of the Defamation Act 1974 (NSW) provided that damages for defamation shall not include exemplary damages. However, exemplary damages may be awarded, where appropriate, in all states other than New South Wales (John Pfeiffer Pty Limited v Rogerson [2000] HCA 36; (2000) 203 CLR 503). 276 The circumstances in which an award of exemplary damages is appropriate were described by the Privy Council in Australian Consolidated Press Ltd v Uren (1967) 117 CLR 221 (quoting from Mayne and McGregor on Damages, 12th ed. (1961)), in these terms: (at 236/7) "Such damages are variously called punitive damages, vindictive damages, exemplary damages, and even retributory damages. They can apply only where the conduct of the defendant merits punishment, which is only considered to be so where his conduct is wanton, as where it discloses fraud, malice, violence, cruelty, insolence or the like, or, as it is sometimes put, where he acts in contumelious disregard of the plaintiff's rights … Such damages are recognized to be recoverable in appropriate cases of defamation." 277 In Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419, the Court of Appeal held that the defendant's conduct amounted to "conscious and contumelious" disregard for the plaintiff's rights which called for curial disapprobation in the form of punitive damages. The Court said this: (at para [1495]) "The appellant broadcast the program intending that the defamatory imputations be conveyed. The broadcast was nation-wide on a key television program. The imputations were grave. The appellant's personnel were recklessly indifferent to the truth or falsity of the imputations, and did not make the inquiries into their truth or falsity which should have been made. ... " 278 In Costello Abbott & Ors v Random House Australia Pty Ltd [1999] ACTSC 13; (1999) 149 FLR 367, Higgins J refused to award exemplary damages against the defendant, having found the steps taken to confirm their account were seriously inadequate (para [444]), as opposed to intentionally or recklessly engaging in conscious wrongdoing in contumelious disregard of another's rights (at [453]-[466]). 279 Here, the plaintiff submitted that it was appropriate to award exemplary damages in respect of all States, apart from New South Wales, because the defendant acted in contumelious disregard of his rights in the following respects: (Statement of Claim: para [54]) "(a) Unnecessary and excessive publication throughout all the States and Territories of the Commonwealth and on Sky News; (b) When the Defendant, its servants and agents interviewed the Plaintiff for the programme they assumed his guilt and cast aside the presumption of innocence. No sincere or proper enquiries were made of the Plaintiff to get his point of view or rebut the imputations. (c) The Defendant, its servants and agents made no proper enquiries about Doreen Smith but accepted what she and her relatives said without question. Doreen Smith is also known as Doreen Steele a notorious fraudster and thief who has a long criminal record which includes at least one lengthy prison sentence. (d) The Defendant's attitude to the Plaintiff was insulting. Attempts by the Plaintiff to stop the programme and explain the true position were rebuffed and the Defendant treated the Plaintiff in a high handed and arrogant manner." 280 The publication cannot be viewed as excessive (cf para (a)). Today Tonight was a national programme. The subject, mortgage brokers, was a matter of public interest. 281 The remaining paragraphs (paras (b), (c) and (d)), in essence make two complaints. The first is that the defendant failed to make proper enquiries concerning Doreen Smith/Steele, "a notorious fraudster and thief with a long criminal record". The second concerned the defendant's attitude, and especially that of its reporter, towards the plaintiff. 282 Dealing with the first of these matters, the difficulty in its investigation faced by the defendant was the same as that faced by Mr Mahommed. Doreen Smith was a practised fraudster. She was very plausible. It is hard to reconcile the feeble pensioner depicted on the screen with the woman who accumulated a significant criminal record in her lifetime and, at the age of 69, secured a substantial contract with a large corporation for the next five years. Perhaps one would expect, in this day and age, an investigative journalist to routinely "Google" those who make accusations. Here, even that may not have yielded the connection between the aging Ms Smith and the Doreen Steele of her past. 283 Turning to the reporter's attitude towards Mr Mahommed, it is not appropriate to import the presumption of innocence, operating in criminal trials, into the standards demanded of investigative journalists. Journalists, nonetheless, would do well to be mindful of that presumption, which is really no more than a reminder that things are not always as they seem. Scepticism is required, as well as confirmation of accusations that are made. 284 Here the journalist chose not to interview Mr Mahommed at his place of business, apprising him of the broad issue with which they were concerned (that is, his dealings with Doreen Smith, Trevor and Tony Steele). Rather, they chose the more dramatic but much less satisfactory confrontation in the street. The exchange with the person accused in such circumstances was never likely to amount to an interview, as paras [244] to [246] (supra) demonstrate. Mr Mahommed was really not afforded an opportunity to do more than lamely deny the accusations. 285 When Mr Mahommed complained to Channel 7, Mr Richardson came to his office. One gathers that he listened with patience to his explanation. Mr Mahommed thereafter provided documentation, hoping to persuade Channel 7 that the accusations were false. However, the material was voluminous. It simply demonstrated that there had been a series of loans. It confirmed that Doreen Smith, a feeble old woman, and Tony Steele, a schizophrenic and invalid pensioner, had been represented as having earned significant salaries. The documents did not capture Doreen Smith's real personality, and the representations she had made to Mr Mahommed. Nor did they answer the false suggestion made by Trevor Steele that Mr Mahommed had taken Doreen Smith's money and that of Tony Steele. 286 The programme was certainly not an impressive piece of investigative journalism. However, it cannot be said that the defendant intentionally or recklessly engaged in wrongdoing "in contumelious disregard of another's rights". I do not believe that it is appropriate to award exemplary damages in States outside New South Wales.

Dishonesty on the part of the plaintiff. 287 As stated, no defence was pleaded by the defendant to either promotion (the first and second matters complained of). The defences pleaded in respect of the programme (the third matter complained of) have failed. Nonetheless, the defendant has succeeded in demonstrating that there was, on the part of Mr Mahommed, what may broadly be termed "dishonesty" in a number of respects. It relies upon such material in mitigation of damages. It asserts that it is available in respect of all three publications and all imputations. 288 The plaintiff submitted that much of the material had no relevance to the libel or the imputations, and is not available in mitigation. 289 Let me begin by restating the adverse findings which touch upon Mr Mahommed's honesty. They were: First, Mr Mahommed, when making applications for a loan on behalf of a client, was obliged to furnish the lender with accurate information. The lender required an estimate of the applicant's assets (including the value of household items, motor vehicles and money in the bank). It also required a statement of earnings. In three applications, Mr Mahommed made an upward adjustment of the value of certain assets or income (the first Smith application (supra paras [100]-[102]); the first Steele application (supra para [109]) and the second Steele application (supra para [117])). Secondly, when called upon to provide an explanation for such changes before Palmer J, and before this Court, Mr Mahommed said different things at different times. Collectively, his explanations were improbable. It is likely that in each case he changed the figures to put the applicant in a rather better light. Strangely, he did so although he recognised that such material was of marginal relevance and that the primary determinant, in terms of approval from the lender, was the value of the real estate being offered as security (supra paras [101], [109], [144]-[146]). Thirdly, in October 2003 and again in April 2004, Mr Mahommed submitted applications to the lender on behalf of Doreen Smith, which included a statement of income which he knew to be false or in respect of which he was wilfully blind, failing to ask obvious questions which would have revealed its falsity (supra paras [193]-[200]). I believe he did so partly out of friendship and partly out of self interest. Again, from his perspective, he was aware that the primary determinant, in terms of approval, would be the real estate security. Fourthly, having been seriously defamed by the defendant on 29 June 2004, the plaintiff was then joined in an action brought by Doreen Smith, Tony Steele and Maxwell Developments which came before Palmer J in 2005. He was called upon to account for his dealings with Ms Smith, Tony Steele and the company. He had, by that time, been made aware by the Office of Fair Trading (Exhibit J) and the programme itself, that Tony Steele was allegedly schizophrenic and an invalid pensioner. Instead of providing a truthful account of his dealings with Tony Steele, which might have shown him in a poor light as a mortgage broker, in terms of his duty, he gave a false explanation in his affidavit (Exhibit 35) (24.1.05). He repeated that explanation, with some elaboration, before Palmer J and this Court. 290 The issue arises whether all or any of this material is available to mitigate the damages payable to the plaintiff.

The principles in respect of mitigation. 291 Gatley on Libel and Slander (10th ed) characterises evidence in reduction of damages under a number of headings including: (para [33.28]) 1. Claimant's bad reputation. 3. Evidence properly before the Court on some other issue. 292 Here the defendant seeks to rely upon bad reputation, which it particularised in the Amended Defence as follows: "15 The defendant intends to make a case that the plaintiff's reputation was substantially impaired by the effect of the findings of Justice Palmer in proceedings No 4778 of 2004 in the Supreme Court of New South Wales (' the Palmer proceedings '), specifically in relation to the credit of the plaintiff at paragraphs [100]-[103]." 293 It was acknowledged that the Court of Appeal in Rochfort v John Fairfax & Sons Ltd [1972] 1 NSWLR 16 had determined that evidence of bad reputation is evidence "accumulated from one source or another over the period of time that precedes the occasion of the libel that is in suit" (at 23). The judgment of Palmer J was after the broadcast. Plainly I am bound by the Court of Appeal judgment. The defendant formally submitted that the judgment was wrong (cf ABC v McBride [2001] NSWCA 322, per Ipp AJA, Beazley JA agreeing, paras [64]-[75]). 294 I turn then to the second category, evidence properly before the Court on some other issue. In Plato Films Limited v Speidel (supra para [9]), Lord Denning said this, in the context of the defence of justification: (at 1142) "... In Clarkson v Lawson ((1830) 6 Bing 587, 591) Sergeant Wilde put the very case: 'If [the defendant] had charged the plaintiff with stealing three horses, he might have justified as to one,' and Park J said he could. 'It was the common practice,' said Sir James Scarlett in one of the cases cited to your Lordships, 'if a defendant could not justify all, to justify a part of the libel, and produce witnesses to prove the part justified, as a ground of mitigation and reduction of damages': see Waithman v Weaver (Dow & RyNP 10, 11). This rule is based on sound sense. ..." 295 Lord Denning added: "... If it were not so, the plaintiff would recover damages for a character which he did not possess or deserve; and this the law will not permit." 296 In Turner v News Group Newspapers Ltd (CA) [2006] 1 WLR 3469, Keene LJ expressed the principle in these words: (at 3481) "43 But once one is dealing with matters which are directly relevant to the subject matter of the libel, even though they do not establish the truth of the defamatory words, the position has long been different. Perhaps the most obvious is the admission of evidence put before the jury on a plea of justification or fair comment which ultimately fails. It has long been established that evidence of specific acts properly admitted on such a plea may none the less be taken into account by the jury when assessing damages even though the plea has failed. This goes back to the early 19th century (see Chalmers v Shackell (1834) 6 C & P 475) and has been accepted in other common law jurisdictions for many years, as can be seen in Sutter v Brown 1962 AD 712. But it is also well recognised in modern English law. Perhaps the best known example is to be found in this court's decision in Pamplin v Express Newspapers Ltd (Note) [1988] 1 WLR 116." 297 The rationale for the principle was stated in the following terms: (at 3482) "46 ... It seems to me that it must lie in the fact that such evidence, 'properly' admitted on a plea of justification or fair comment, is likely to have some direct bearing on the subject matter of the libel, even though it falls short of establishing such a defence. ... " 298 However, there are limits and they may be traced to relevance. First, the evidence said to be in mitigation must be sufficiently connected in time to bear upon the matters before the Court (Goody v Odhams Press Ltd [1967] 1 QB 333, per Lord Denning at 341) (cf DS: para [47]). That is not a difficulty in the present case. The material, the subject of adverse findings, was reasonably contemporaneous with the publication itself, including the Equity proceedings which took place in the following year. 299 The second limitation, however, is one of some importance in this trial. The evidence must relate to the relevant "sector" of the plaintiff's reputation. In Plato Films Limited v Speidel (supra), Lord Denning famously said this: (at 1140) "When evidence of good or bad character is given, it should be directed to that sector of a man's character which is relevant. Thus, if the libel imputes theft, the relevant sector is his character for honesty, not his character as a motorist. And so forth. It is for the judge to rule what is the relevant sector." 300 In Turner v News Group Newspapers Ltd (supra), Moses LJ provided a valuable commentary on the task, when he said this: (at 3492) "89 ... A claimant's life may appropriately be considered in sectors: see Lord Denning in Speidel v Plato Films Ltd [1961] AC 1090, 1140 and Goody v Odhams Press Ltd [1967] 1 QB 333, 341A. A defendant may seek to reduce the damages by adducing evidence which is directly relevant to a claimant's conduct or reputation in the particular sector to which the defamatory material relates for the purpose of mitigating damage." 301 The touchstone is relevance. Moses LJ said this: (at 3492) "89 ... The key lies in identifying that which is directly relevant to the issue of damages. ... " 302 His Lordship added: (at 3492) "90 Direct relevance to a particular sector of the claimant's life should be assessed by starting with a careful identification of the sector of the claimant's life to which the defamatory material relates; too broad an approach, such as his private life , will defeat the function of the reference to 'direct relevance'. Further restriction may be achieved by scrutiny of the purpose for which it is sought to adduce the facts in issue. It should be recalled that the purpose of the rule in Scott v Sampson was by no means only a desire to keep a case within manageable proportion. The rule serves the important function of preventing a claimant from being terrorised into submission. ... " 303 So, to identify the sector too broadly is unfair to the plaintiff. To identify it too narrowly is unfair to the defendant. 304 However, the identification of the relevant sector is not easy, as Meagher JA remarked in O'Hagan v Nationwide News Pty Limited [2001] NSWCA 302; (2001) 53 NSWLR 89 (para [7]). The plaintiff in that case was a former policeman. The Daily Telegraph newspaper published an article which conveyed the following imputation: (para [1]) "that he arranged with another person, for the price of $10,000, to have a third person murdered." 305 The newspaper pleaded, in mitigation of damages, the following particulars of bad reputation: (para [2]) "(b) The plaintiff had at the time of publication of the matter complained of a reputation in the New South Wales Police Service, the National Crime Authority and the Australian Federal Police as: (i) A policeman who had pleaded guilty to two NSW Police Service departmental charges of misconduct; (ii) A policeman who had been suspended from duty in 1988 after being charged with conspiracy to pervert the course of justice; (iii) A person who fabricated evidence against persons who had been charged with criminal offences; and (iv) A person who was generally dishonest and corrupt." 306 The trial Judge, over objection, admitted evidence in support of the plea of mitigation. He was said to be in error because reputation evidence must relate to "the relevant sector of the plaintiff's reputation". Here, according to the plaintiff, the relevant sector was "activities of violence" (para [8]). The newspaper submitted that the relevant sector was "conduct as a police officer" (para [8]). The Court determined that the characterisation by the defendant was correct. Stein JA said this: "31 The imputation in this appeal was described by counsel for the appellant as referring to the sector of 'activities of violence', however the gravity of the imputation extended beyond such an artificial construct to his reputation in the sector addressing his conduct as a police officer. Indeed, as noted by Meagher JA, the gravity of the imputation is in part due to the appellant's position as a police officer.

32 The appellant had been a policeman for over 35 years, members of his family were police officers, and indeed the majority of the witnesses he called at trial were serving or former police officers. The police service formed his dominant life force. The appellant conducted his case, as noted by the trial judge 'on the basis of good reputation… as a police officer'. It follows that the sector identified by the appellant as relevant, that area in which he felt his reputation was damaged, was his conduct as a police officer." 307 In ABC v McBride (supra), Ipp AJA (as he then was) provided a useful commentary upon the reasoning of the Court of Appeal in O'Hagan. He said this: "25 Meagher JA remarked on the difficulties in determining the relevant sector and the absence in the authorities of reliable guidelines that could assist in the inquiry. He determined the relevant sector, in effect, by considering the overall defamatory impact of the imputation pleaded. The defamation was directed at the very essence of the office of a police officer, hence, the relevant sector was the appellant's reputation as a police officer generally." 308 Ipp AJA added: "28 In my view, the rule that evidence of bad reputation must be confined to the relevant sector of a plaintiff's reputation means merely that the evidence, to be admissible, must be relevant to that part of the plaintiff's reputation capable of being harmed by the defamatory material. This, as was recognised in O'Hagan v Nationwide News Pty Ltd , may be difficult to apply in practice." 309 The action in ABC v McBride arose out of a Four Corners programme in 1988. Dr McBride was, at that time, a medical practitioner. However, he was struck off in 1993 for medical fraud. The plaintiff's Statement of Claim alleged the following defamatory imputations: (para [6]) "(a) The [plaintiff] deliberately exposed women patients to danger. (b) [T]he [plaintiff] had so acted as to warrant him being accused of conduct which endangered the lives and health of women patients." 310 The defendant's plea in mitigation relied upon particulars of scientific fraud. On the application of Dr McBride, the particulars were struck out. The ABC appealed. 311 It was common ground that evidence of bad reputation had to be confined to the "relevant sector" (para [16]). The issue was whether the scientific fraud was within the relevant sector. Ipp AJA, having referred to O'Hagan and the need for the evidence to be "relevant to that part of the plaintiff's reputation capable of being harmed by the defamatory material", said this: "29 On the one hand, the exercise of defining a particular "sector" should not result in the widening of the area of the plaintiff's reputation beyond that which is capable of being harmed by the defamatory material. For example, in determining the sector applicable, the ambit of admissible evidence should not be enlarged artificially by reason of a desire to define the sector merely by reference to easily defined segments of the plaintiff's occupation. On the other hand, the relevant sector should not be limited "by the artificial construct we now know as an imputation" (per Levine J in Marsden v Amalgamated Television Services Pty Ltd [1999] NSWSC 1119, as applied in O'Hagan v Nationwide News Pty Ltd by Stein JA and Brownie AJA. 30 The essential question in determining the relevant sector remains: what is the scope of the plaintiff's reputation capable of being harmed by the defamatory material?" 312 Counsel for the ABC drew attention to the judgment of the Medical Tribunal in 1993, which included these words: (para [32]) "There is force in the submission of Senior Counsel for the [Tribunal] that whilst the proven misconduct [in respect of scientific fraud] does not relate to the practise of medicine, the relationship is so close that it might well fall into that category. ... " 313 In identifying the sector, it is relevant to look at the defamatory material. Ipp AJA said this: "47 A transcript of the Four Corners program in question is annexed to the statement of claim. The transcript forms part of the context in which the pleaded imputations are to be understood. It is relevant and admissible for the purposes of demonstrating the force and effect of the imputations pleaded and giving colour to and explaining the significance of them ... " 314 It is also important to look at the terms of the imputations. His Honour said this: "34 While the imputations have to be recognised as an 'artificial construct,' significant weight has to be given to them. Underlying the imputation that the respondent ' deliberately exposed women patients to danger' are elements of calculated callousness and heartless indifference to the well-being of women patients. The imputation that the respondent ' so acted as to warrant him being accused of conduct which endangered the lives and health of women patients ' is to the same effect. This is the necessary consequence of the phrase 'so acted'. In other words, the second imputation is to be read as alleging, ' the respondent, in deliberately exposing women patients to danger, acted as to warrant him being accused of conduct which endangered the lives and health of women patients .' 35 Thus, the imputations pleaded relate to the respondent's reputation as a medical practitioner only in so far as that reputation concerned his attitude to and dealings with patients , in the sense of the degree of care, concern, and compassion that he displayed towards them, and his dedication to and compliance with the therapeutic ideals of accepted medical practice." 315 His Honour then stated his conclusion in these terms: "36 The reputation of a medical practitioner, insofar as it relates to his dealings with his patients, is wide in scope, and it would, ordinarily, provide considerable latitude for a defendant who wished to allege material in mitigation of damage. But, in my opinion, such a reputation is far removed from the reputation of a person, who, for example, conducts laboratory tests on animals for the purposes of determining their reaction to experimental drugs. ... " 316 His Honour determined that a person who occupied himself as a medical practitioner and occasionally as an experimental scientist was conducting two separate occupations, although they may not be entirely unrelated (para [36]). He did not believe that a reputation for falsifying results of experiments would impinge on a reputation for being a caring and compassionate doctor (para [37]).

Submissions of the parties. 317 The defendant suggested in written submissions that the relevant sector was "dishonesty". It said this: (DS: para [9(j)]) "9(j) The sting of the imputation, of course, is the dishonesty of the plaintiff. The imputation (drawn on behalf of the plaintiff, but also relied on by the defendant) is general - it concerns the condition of the plaintiff rather than a particular act. It relates to dishonesty in relation to his business, although dishonesty is a pervasive characteristic. It is however a distinctly different charge than, for example, violence, or sexual misconduct, or incompetence, whether on specific occasions or as a general tendency or condition. ... " 318 Having referred to Lord Denning's statement in Plato Films Limited v Speidel (supra), the defendant said this: "9(j) ... It is right to assimilate (as Lord Denning does ... in Plato v Speidel ) theft and dishonesty - the former is the species and the latter the genus. It is convenient for various purposes to refer to a 'sector' of a person's reputation, and honesty (and the lack of it) is one of the clearest examples of such a sector." 319 The following was then put: (DS: paras [56]-[57]) "56 The evidence in this case reveals the plaintiff as undeserving of substantial damages in relation to allegations of dishonesty. On balance the Court would conclude that he behaved dishonestly toward Liberty, Doreen Smith, Tony Steele and also in the course of his evidence before Palmer J and this Court. 57 To the extent to which that submission is accepted, he is not entitled to damages of more than a derisory amount. The situation may be contrasted with the recent decision in Jenman v Ollis [2008] NSWSC 67, where substantial damages ($20,000) were still awarded in the face of a partially successful contextual truth defence, because a quite distinct allegation of violent tendency was made outside the generally proved allegations of financial dishonesty. It is submitted that the plaintiff in this case ought receive only contemptuous damages." 320 In submissions, Mr Smark SC, for the defendant, introduced a qualification concerning the relevant sector. He said this: (T 655) " ... the sector generally is dishonesty. I made one qualification of that which was that we don't say that matters peculiarly within the private life of the plaintiff ... " 321 Counsel for Mr Mahommed suggested that the relevant sector was "dishonesty in mortgage broking" (T 645). It was also said that the Amended Defence confined the matter in mitigation to the programme, not the promotions (T 646). Counsel for the defendant disagreed. However, if there were doubt, he sought leave to amend paragraph [8] of the Amended Defence to put the matter beyond doubt. As I read the Amended Defence, paragraph [8] applies to all publications. However, the defendant was given leave to put the matter beyond doubt by adding to paragraph [14] the words "and of the facts as proved in relation to those imputations".

The relevant sector. 322 Usually the issue requiring an identification of sectors will arise at the beginning of a case (as in O'Hagan and McBride) and will determine the evidence that can be introduced as evidence of bad reputation or in support of a plea of justification. Here, the issue arises at the end of the trial, the evidence having been introduced in respect of the defences to Imputations 11 and 12 that have failed. The issue is whether that evidence has a broader relevance and can be used in mitigation of Imputations 1 to 10, as well as Imputations 11 and 12. That requires an examination of whether it relates to a relevant sector of reputation. If it does, does it materially mitigate the damage occasioned by each imputation? 323 Are the sectors "dishonesty" or "dishonesty in business" too broad, in the same way that the sector of "medicine" was found to be too broad in McBride? Are there two separate sectors, with different imputations relating to each, and the evidence put forward in mitigation relevant to some but not others? The two possible sectors are: 1. Mr Mahommed's reputation for financial honesty.

2. Mr Mahommed's reputation for truthfulness. 324 There is a significant difference between someone who is prepared to lie, especially to cover up wrongdoing, and someone who steals from another. Both are dishonest. However, dishonesty is a large umbrella. It is a crude classification for conduct which is very different. A person may have a reputation as a liar, but not a thief. 325 Here, some of the imputations involved the suggestion of financial dishonesty without more.

Imputation 1 (first promotion): The plaintiff is a thief. Imputation 5 (second promotion): The plaintiff kept stealing money from a dementia patient.

Imputation 10 (the programme): The plaintiff is a thief. 326 Only in the very broadest sense could it be said that the fact that a person is shown to be a liar in certain circumstances is relevant to the fact that he is a thief. To adopt the test of Ipp AJA in McBride, that part of the plaintiff's reputation which was capable of being harmed by the publication was his reputation for financial integrity or honesty, not his reputation for truthfulness. 327 The remaining imputations in the promotions and the programme are broader in their scope, just as the imputation in O'Hagan was, in context, broader than the suggestion of violence. The other imputations combine financial dishonesty with a generalised description of the means by which the financial objective was accomplished ("ripped off", "swindled", "took advantage of", "dishonest financial adviser and mortgage broker"). The gravity of the imputation (to use Stein JA's phrase in O'Hagan) extends beyond financial dishonesty. It includes the means of obtaining that objective and lying thereby becomes relevant. 328 Here the material put forward in mitigation, with one possible exception, related to the plaintiff's reputation for truthfulness, not financial honesty. The possible exception was the third matter in paragraph [289] supra, where Mr Mahommed put forward an application on behalf of Doreen Smith for reasons which included his own financial self interest. That matter aside, the remaining matters appear to be far removed from a person who is a thief, who steals money from clients. 329 So, if the matter were to be approached upon the basis that there were two different sectors, the evidence put forward in mitigation could not be relied upon in respect of Imputations 1, 5 and 10, apart from the matter to which I have just made reference (the third matter in para [289] supra, where Mr Mahommed pursued his own self interest). On this approach, the matters in mitigation could be relied upon in respect of all other imputations. 330 However, both parties identified the relevant sector rather more broadly, namely "honesty in business" (defendant) and "honesty as a mortgage broker" (plaintiff). On either characterisation, it seems to me that all matters are available in mitigation in respect of all imputations. However, the distinction in terms of relevance between lying and stealing would remain. The circumstances in which the lying occurred would also be relevant. The marginal increase in the value of assets in the Smith/Steele applications was, in relative terms, a very minor form of dishonesty. Putting forward Ms Smith's application containing a statement of income knowing it to be false, or refraining from enquiry which would reveal its falsity, was more serious. Nonetheless, in comparison to what was said about Mr Mahommed on the programme, it was also a very mild form of dishonesty. 331 One then comes to the false explanations provided by Mr Mahommed in his affidavit on 24 January 2005 (Exhibit 35) and his evidence before Palmer J and this Court. There is no question that Mr Mahommed's conduct involved serious and repeated dishonesty. Nonetheless, there was a context. The "cover up" followed closely upon the programme. The programme comprehensively and unfairly savaged Mr Mahommed's reputation, including his reputation for financial honesty. I have no doubt that he was shattered by the experience and especially the injustice of what had been said about him. To lie in such circumstances, in the hope of recovering one's reputation, was foolish. Ultimately it did not help. It was nonetheless a very human reaction and one which does not necessarily suggest a pervasive dishonesty in Mr Mahommed's character.

The opinion of Justice Palmer. 332 It will be remembered that the defendant relied upon the findings of Palmer J as evidence of bad reputation, although it accepted that, on the authorities that bound me, such a matter could not be taken into account (supra para [293]). 333 The defendant argued in the alternative that, on the analogy of convictions, statements about a person in open court were part of the public record and available in mitigation. 334 Attention was drawn to the statement of Lord Denning in Goody v Odhams Press Limited (supra), where the following was said in the context of evidence available in mitigation: (at 340/1) " ... I think that previous convictions are admissible. They stand in a class by themselves. They are the raw material upon which bad reputation is build up. They have taken place in open court. They are matters of public knowledge. They are accepted by people generally as giving the best guide to his reputation and standing. They must of course be relevant, in this sense, that they must be convictions in the relevant sector of his life and have taken place within a relevant period such as to affect his current reputation. But being relevant, they are admissible. They are very different from previous instances of misconduct, for those have not been tried out or resulted in convictions or come before a court of law. To introduce those might lead to endless disputes. Whereas previous convictions are virtually indisputable." 335 Palmer J, in the course of his judgment on 28 April 2005, made a number of findings critical of Mr Mahommed (Steele-Smith v Liberty Financial Pty Limited (supra para [33]) at paras [100]-[103]). The defendant asked that I take those findings into account as part of its case in mitigation of damages. No authority extending to findings in a court judgment was identified. The admission of such material would involve an expansion of the categories available in mitigation of damages. As a matter of principle, such findings seem to me very different from a conviction. A conviction is the end of a process, although it embodies the collective opinion of a jury where it follows a verdict. The conviction is a fact. It is quite different from a Judge's reasoning, which is an opinion. The opinion may be right or wrong, fair or unfair. Unlike a conviction, it is not, to use Lord Denning's words, "virtually indisputable". For the purposes of this action, I do not believe Palmer J's findings are relevant in mitigation.

Quantification of damages. 336 In determining damages, the Court is obliged to ensure that there is an appropriate and rational relationship between the relevant harm and the amount of damages awarded (s 46A(1) Defamation Act 1974). In fixing that sum, the Court should have regard to the general range of damages for non-economic loss in personal injury awards in this State (including those regulated by Statute) (s 46A(2) of the Act). The defendant pointed out that the present award appropriate for "a most extreme case" under the Civil Liability Act 2002, is $427,000 and $366,000 under the Motor Accidents Compensation Act 1999 (DS: para [39]). In Rogers v Nationwide News Pty Limited [2003] HCA 52; (2003) 216 CLR 327, Hayne J (Gleeson CJ and Gummow J agreeing) said that the section identified "a presumptive outer limit to awards for defamation" (at 343). 337 In this case, however, there were multiple imputations (each a cause of action) and three publications. Issues arise as to whether there should be separate verdicts. It was accepted that "whether one or more causes of action are to be included in one verdict or judgment will depend upon the exercise of the trial Judge's judicial discretion" (Hayward v Thompson [1982] 1 QB 47, per Lord Denning MR at 62 quoting Scott LJ in Barber v Pigden [1937] 1 KB 664 at 684). Here, I believe that it is appropriate to give a separate verdict for each of the three publications. However, in arriving at each verdict, it is important to be mindful of the fact that there was likely to be a substantial overlap in the viewing audience. Indeed, the idea of the promotions was to tease the audience, exciting their interest in the forthcoming programme. In Carson v John Fairfax & Sons Limited (supra para [242]), the majority (Mason CJ, Deane, Dawson and Gaudron JJ said this): (at 54/55) "While the two publications were different and conveyed different defamatory imputations, there was a clear and close relationship between them. Both were written by the same person (a respondent in the second action, Mr Slee) and published in the same section of different issues of the same newspaper. Each of them was defamatory of the appellant in respect of conduct relating to the same series of litigation. The effect of the defamatory publications was cumulative. The second compounded the harm to the appellant caused by the first: it renewed and expanded the hurt to his feelings; it exacerbated the damage to the reputation which he had hitherto enjoyed in legal, commercial and other circles." 338 The majority, having referred to the fact that no award could be made of exemplary damages, and that malice was not relevant, said this: (at 55) "In the context of those legislative provisions, it is permissible and sensible in a case where claims for closely related defamatory publications have been heard together for a jury, in determining what is the appropriate compensation to be awarded to the plaintiff in respect of each publication, to take account of the aggregate 'harm' suffered by the plaintiff by reason of both of them. ... " 339 Each of the imputations was serious. In combination, they were devastating to the plaintiff's reputation. The material was published very widely. In the first promotion, the words "Stolen, stolen, stolen" appear in large letters across the screen, superimposed upon a brick bungalow in each case (supra para [11]). That was what the plaintiff had stolen (Imputation 1). The figure of "1 million dollars" was mentioned. It was not small-scale theft. 340 But it was worse than that. It was a callous, heartless act against a defenceless old woman who had dementia (Imputation 2). It was also an act that involved greed. The plaintiff took advantage of her and took everything she had (Imputation 3). 341 Mr Mahommed was not named in the first promotion. His image was shown on the screen. The defendant accepted identification. The promotion was brief but dramatic. Everything conveyed was untrue. The hurt to Mr Mahommed's feelings was significant. For the reasons given, he is entitled to aggravated damages. 342 The second promotion was more of the same. However, it was longer and incorporated images of the enfeebled Doreen Smith, underlining the callousness of Mr Mahommed's behaviour (supra para [13]). Immediately after the image of Doreen Smith, her son Trevor Steele was shown saying, with controlled rage, the following: (supra para [13]) "He has robbed her blind." 343 Shortly thereafter he said: "I'd like to see him spend a lot of time in gaol." 344 Again, the promotion was relatively short. Mr Mahommed was not named, although his image was shown. Again, what was said was completely untrue. Doreen Smith did not have dementia. Mr Mahommed did not steal $1 million, or anything, from her. He did not callously take advantage of a patient with dementia. Again, aggravated damages are warranted. 345 One then comes to the programme itself. It began by repeating the slogan in the first promotion: "Stolen, stolen, stolen" (supra para [15]). The introduction that followed repeated the same false allegations. Doreen Smith was said to be a woman suffering from dementia. She was forgetful and her mortgage broker had seized upon these qualities to swindle her of everything she owned (supra para [17]). Mr Mahommed was named. He was confronted in the city where he lived, in the Newcastle region (supra para [18]). His crime and his callousness was worse because, according to her son, all she wanted was a trifling amount for Christmas presents (supra para [21]). Instead, she had been induced to borrow between $800,000 and $1.2 million (supra para [24]). No sooner had the money been loaned to her, than it was transferred to Mr Mahommed's personal account (supra para [25]). The pretext was fees owing. This was, according to an expert in consumer law, "one of the absolute worst" cases (supra para [29]). 346 That was the context within which each of the imputations of "ripping off $1 million" (Imputation 7), "taking advantage of a dementia patient" (Imputation 8), "swindling Doreen Smith" (Imputation 9) and "stealing from her" (Imputation 10), are to be understood. 347 Again, none of these allegations was true. Each was enormously damaging to Mr Mahommed's reputation and hurtful to his feelings, as he and his mother described. He moved house, grew a beard and wore a baseball cap to disguise his appearance. Although no claim was made for special damages, his reputation was so damaged that he ceased working as a mortgage broker. 348 Imputations 11 and 12 are somewhat different. The matters proved in mitigation are more directly relevant to them, and especially Imputation 12 ("dishonest financial adviser and mortgage broker"), than to the other imputations. Nonetheless, there was, in each case (including Imputations 11 and 12), a substantial gulf between the dishonesty collectively described by each publication and the dishonesty (serious though it was in some cases) that the defendant was able to show in its case in mitigation. 349 The appropriate award in respect of each publication, including aggravated damages, is in my view, as follows:

1. In respect of the promotion (Imputations 1, 2 and 3), the sum of $50,000.

2. In respect of the second promotion (Imputations 4, 5 and 6), the sum of $50,000.

3. In respect of the programme (Imputations 7, 8, 9, 10, 11 and 12), the sum of $140,000.

Order. 350 I therefore make the following orders:

1. There shall be a verdict for the plaintiff in respect of the first publication (the first promotion) of $50,000.

2. There shall be a verdict for the plaintiff in respect of the second publication (the second promotion) of $50,000.

3. There shall be a verdict for the plaintiff in respect of the third publication (the programme) of $140,000.

4. The defendant should pay the plaintiff's costs. **********

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