Perpetual Trustee Company Limited v El-Bayeh

DECISION : I direct the parties to bring in short minutes of order in accordance with these reasons, failing agreement as to which I will list the proceeding for further hearing as to the form of orders I should make.

CATCHWORDS : MORTGAGES - whether forged - whether any debt secured - whether innocent party obtained any benefit from funds advanced - CONTRACTS - whether mortgage originator liable for breach in failing to detect fraud - DECEIT - liability of fraudster - whether property held on trust for fraudster by innocent party

Australian Securities and Investments Commission Act (Cth) 2001 Civil Liability Act 2002 LEGISLATION CITED : Fair Trading Act 1987 Real Property Act Trade Practices Act 1974 (Cth)

ANZ Banking Group Limited v Westpac Banking Corporation (1988) 164 CLR 662 Brennan v Duncan [2006] NSWSC 674 Chandra v Perpetual Trustees Victoria Limited [2007] NSWSC 694; (2007) 13 BPR 24,675; CASES CITED : David Securities Pty Limited v Commonwealth Bank of Australia (1992) 175 CLR 353 Heperu Pty Ltd v Belle [2009] NSWCA 252; (2009) 258 ALR 727 Perpetual Trustees v Tsai [2004] NSWSC 745; (2004) 12 BPR 22,281; Printy v Provident Capital Limited [2007] NSWSC 287 PT Limited v Maradona (1992) 25 NSWLR 643;

Perpetual Trustee Company Limited (Plaintiff) David El-Bayeh (First defendant) PARTIES : CTC Group Pty Ltd (Second Defendant) Michael Saadie (Third Defendant) Youssef El-Bayeh (Fourth Defendant)

J. Simpkins SC (Plaintiff) COUNSEL : R. McKeand SC / A. Stenhouse (First Defendant) G. M. Gregg (Second Defendant) C. W. Robinson (Fourth Defendant)

Gadens Lawyers (Plaintiff) SOLICITORS : Parramatta City Legal (First Defendant) Gilchrist Connell (Second Defendant) Cambridge Law (Fourth Defendant)

• 57 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

06/266040 PERPETUAL TRUSTEE COMPANY LIMITED v DAVID EL-BAYEH & ORS

JUDGMENT 1 HER HONOUR: Mr David El-Bayeh is the registered proprietor of a property in Harris Park. In August 2004, Perpetual Trustee Company Limited was given a mortgage over the property to secure an advance of $480,000 made pursuant to a loan agreement purportedly entered into with David El-Bayeh as borrower. A portion of the funds advanced was applied to discharge an earlier mortgage given to Westpac when the property was purchased. The balance, a sum of $291,583.61, was paid into a Westpac account in David El-Bayeh's name. 2 There is no dispute as to the fact that the loan agreement has fallen into default. On 15 November 2006, Perpetual commenced these proceedings seeking judgment against David El-Bayeh for the amount owing pursuant to that agreement, together with an order for possession of the property. David El-Bayeh opposes the relief sought. He denies entering into the loan agreement with Perpetual and says that his signatures on that agreement and related documents, and on the mortgage to Perpetual, have been forged. 3 David El-Bayeh alleges that the author of the fraud is his eldest brother, Mr Youssef El-Bayeh (also known as "Joseph" or "Joe" El-Bayeh). In May 2007, David filed a cross-claim in the proceedings (the first cross-claim) against Youssef seeking indemnity or contribution and, alternatively, damages from him towards any judgment recovered against David by Perpetual.

4 Youssef El-Bayeh denies any fraud on his part and has brought a cross-claim against David (the third cross-claim) claiming equitable damages or equitable compensation, alleging that David holds the property on trust for Youssef. 5 The loan was initially proposed to Perpetual by CTC Group Pty Ltd, a mortgage originator. The relationship between Perpetual and CTC was governed by a "Mortgage Origination Deed" dated 9 August 2004. The performance of CTC's obligations under that deed was guaranteed by Mr Michael Saadie. After the fraud allegation was made against Youssef El-Bayeh in the first cross-claim, Perpetual joined CTC (as second defendant) and Mr Saadie (as third defendant) seeking indemnity pursuant to the Mortgage Origination Deed and the guarantee respectively. The claim against CTC seeks damages, in the alternative, for breach of the deed or pursuant to the Trade Practices Act 1974 (Cth) and the Australian Securities and Investments Commission Act (Cth) 2001. 6 Mr Saadie entered a submitting appearance early after the commencement of the proceedings. He gave evidence, but was not legally represented at the hearing. 7 Perpetual also joined Youssef El-Bayeh (as fourth defendant) seeking damages for deceit and alternatively pursuant to the Fair Trading Act 1987. 8 A further cross-claim by David El-Bayeh against CTC seeking indemnity or contribution towards any judgment recovered against David by Perpetual (the second cross-claim) was not pursued (T3.13). Factual issues raised for the Court's determination 9 The parties provided an agreed statement of issues identifying the following factual questions raised by those claims:

(a) whether David El-Bayeh executed any of the impugned documents relating to the Perpetual loan (the CTC loan application form and related documents; the Perpetual loan agreement and the Perpetual mortgage);

(b) whether David El-Bayeh provided items of identification to CTC as listed in its 100 point check;

(c) whether David El-Bayeh received the benefit of the funds advanced pursuant to the Perpetual loan agreement and, if so, to what extent. 10 The principal issues in the claims against Youssef El-Bayeh are whether, if David El-Bayeh's signature on any of the Perpetual documents was forged, Youssef El-Bayeh was the author of the fraud or participated in it and whether Youssef received the benefit of the loan funds advanced. The issue raised by Youssef's cross-claim is whether the circumstances in which the property was acquired in David's name were such as to give rise to an implied trust. 11 The principal issue raised by Perpetual's claims against CTC and Mr Saadie is whether it may be concluded, in light of the resolution of the claims against David and Youssef El-Bayeh, that there has been any breach of CTC's obligations under the Mortgage Origination Deed and, if so, whether Mr Saadie is liable under the guarantee to indemnify Perpetual for any loss incurred as a result.

Context in which the fraud is alleged to have occurred 12 The assessment of David El-Bayeh's contentions requires an understanding of some of the background of the El-Bayeh family up to the time when Perpetual commenced to enforce its mortgage. David El-Bayeh is the youngest of eleven siblings. His family came to Australia from Lebanon before he was born. The first to migrate was Youssef, who arrived in 1965. Youssef worked long hours in a factory and sent money home to his father in Lebanon so that his siblings could be sent, in turn, to join him. Ultimately the whole family, including the parents, was reunited in Australia. David was born here in 1971. Youssef is some 27 years his senior. 13 It was common ground between the parties that Youssef had assumed a parental role towards David and his siblings and was indeed somewhat of a patriarch. By the time David was growing up, both his parents had retired. Youssef regarded himself as the head of the family from at least that time. He controlled the financial affairs of the whole family. He collected and controlled his parents' pensions and all of the proceeds of the family take-away food business. He took out loans, bought properties, made all the mortgage repayments and collected the rents. He assumed responsibility for providing for the whole family who, in return, were expected only to respect his absolute authority. 14 David El-Bayeh said that, from the age of about 16 for approximately 8 or 9 years, he regularly worked in the family business. He was at university in Armidale for part of that time but said he came home and worked every holiday period, including over the lengthy break at summer, during those years. Throughout that time, he was paid $20 for a full shift, which could vary from about 8 to 12 hours. Before then, he had obtained other employment from the age of about 13. By the end of Year 12 he had saved $10,000, which he kept in an account with the Commonwealth Bank. He said that, in early 1989, Youssef El-Bayeh asked him for that money and he gave it to him. His best recollection as to what Youssef El-Bayeh had said at that time was that Youssef was going to hold the money for David for his future. 15 Youssef El-Bayeh denied that he had ever sought or received any money from David. He agreed that David had worked in the family business, at least during his school years from 1987 to 1989, but said that it was not every weekend. He confirmed that he (Youssef) allowed payment of only $20 per shift: "Sometime when he like it he come to do few hour, that's between him, David and Tony, nothing to do with me. But my order is anyone who want to work there get $20 from this deal and that's what they done… [$20] per day or per one hour, because we still all this for the family, but you will see what happen on the end" (T294.45-T295.3). 16 In 1989, David El-Bayeh began a commerce degree at the University of New England in Armidale. He said that Youssef El-Bayeh stopped talking to him towards the end of that year and has not talked to him directly since that time. Asked why that was so, David El-Bayeh said (at T83.24): "Well, I think it was as simple as he gave me an instruction and I got upset with him and I swore at him". 17 Notwithstanding the cessation of direct communication between the two men, David El-Bayeh continued to live in the family home from time to time with Youssef, their elderly parents and Youssef's wife and children. 18 It was not entirely clear whether Youssef El-Bayeh accepted that he and David had not talked directly for so long a period of time. In his affidavit served in advance of the hearing, Youssef deposed to a series of direct conversations between him and David when they attended upon various people in relation to the Perpetual loan. However, under cross-examination by Mr McKeand, who appeared with Mr Stenhouse for David El-Bayeh, Youssef appeared to accept that at least some if not most of their dealings had been through intermediaries. He maintained that, when necessary or important, they did speak to each other. He did appear to accept, however, that there had been some falling out between them, which he explained in the following terms (at T313.48-T314.18): "[David] come to eat, sleep and go. That where the trouble start. He don't like me know what doing. My family still alive. I don't control like before. Even now. When they grow up after 18 my own children, they not control by me. They not listen to me like before and that wrong. I come from family, like place, I can listen to my family, mother, grandmother until when I 60, 80, a hundred. But this Australia, the law, the family. I nearly have trouble with my daughter if you ask me. If you want to ask me about the law. We love the country, I been here 45 years. When he grow up after 18 years old I can't control because the law say you can't have anything to do with your son or your brother or your sister, my children. So, so I get hurt. If he do something wrong I can't do nothing. He say my personal life, he tell me one day, I want to do what I want to do. And I'm the person not to cause trouble my father, my mother still alive. I leave. I love to talk to them but every time we talk when I saw someone from my children or my family do something wrong I say all right, let's go, we leave, we help my father and my mother, they sick, and keep in peace. That is how I grow up, up to now." 19 Youssef El-Bayeh's account of a series of easy conversations between him and David is difficult to reconcile with that evidence. Perpetual contended that it was not open to David El-Bayeh to invite me to reject Youssef's account as being "inconceivable", since that was not put squarely to Youssef. In fairness to Mr McKeand, I think he did his best to put what he could to Youssef, who proved to be a difficult witness (see T314.24 to T315.34). In any event, whether or not it was put, it remains an unsatisfactory aspect of Youssef's evidence as to certain steps in the execution of the security documents.

Circumstances in which the property was purchased 20 In 1989, Youssef arranged for the purchase of three properties in the names of three of his brothers. One was purchased in David's name with a loan from Westpac secured by a mortgage. 21 David El-Bayeh said that, at some point in 1989 (after Youssef had stopped talking to him) his brother Tony told him: "You are required down at the solicitor's office to sign documents for purchase of a property" (T71.10). David El-Bayeh and his brothers Tony and Louis went with Youssef to the solicitor's office where each signed documents for the purchase of a property in his name. They then went to a bank and signed "a whole heap of documents" for the loan (T71.46). 22 Youssef said he bought the properties for the brothers' own benefit, not for his benefit. He said that was the agreement between him and his father (T291.20-T291.27). 23 David's property was purchased for $180,000. Youssef's evidence was that he paid the deposit on the property. As already noted, he denied having received $10,000 from David. I do not think it is necessary to resolve that dispute. The balance of the purchase price was funded through a loan from Westpac secured by the Westpac mortgage. 24 David El-Bayeh was 18 years old at that stage. He had not seen the property that was purchased in his name. He did not assume responsibility for the loan and frankly accepted that he left any repayments to Youssef (T122.39). He was subsequently given to understand that the property had been rented but he did not receive any income from the renting of the property.

The second Westpac loan (December 2000) 25 In December 2000, the original Westpac loan relating to David El-Bayeh's property was repaid in full. On the same day, a new loan in the sum of $190,000 was made by Westpac against the security of the original mortgage granted in 1989. It appears that a new Westpac account was established to facilitate the drawdown of that amount. 26 In his first affidavit in the proceedings sworn 14 July 2008, David El-Bayeh described his knowledge of that facility as follows: "I now know that in the year 2000 there was a redraw facility activated on the Westpac loan account which was at the time secured by a mortgage over the property. The account was held in both my name and the name of Youssef El-Bayeh. Annexed hereto and marked with the letter "B" is a true copy of a document entitled "Instructions and Authority". I recognise the signature appearing at the foot of that document as being the signature of Youssef El-Bayeh. The signature which appears on that document below my name is not my signature. It is a forgery. I did not authorise the redraw facility and had no knowledge of it until recently." 27 The only affidavit relied upon by Youssef El-Bayeh in the proceedings was sworn on 19 August 2009. In that affidavit, Youssef explained the redraw facility. He stated that, in or about November 2000, he exchanged contracts for the sale of a property in Ryde. He said that he wanted to pay the proceeds of that sale into the Westpac loan account relating to David El-Bayeh's property to reduce the balance of that loan. He said: "Knowing that I might require the use of some of the proceeds of that sale I arranged for a redraw application form to be sent to me by Westpac for me and David to sign. Annexed hereto and marked "C" is a copy of the signed application." 28 The document annexed was the same as annexure B referred to in the passage of David's affidavit set out above. Youssef did not state in terms in his affidavit that David had signed that document. When the affidavit was read at the hearing, the following statement directed to that issue was objected to and rejected: "When Westpac required signatures on a document, I would complete my section, I would then have David sign his part, and then return the document to Westpac. Generally David signed any document I asked him to in relation to the property" (paragraphs 16 and 17). 29 I subsequently granted leave to Youssef El-Bayeh to address that issue in oral evidence (T276.5). The evidence given pursuant to that leave was as follows (at T276.9-T276.32): "Q. Do you recall where you signed that? A. In the bank. Q. Whereabouts? A. Parramatta. Q. Did you sign it before anybody? Was there anybody else there? A. The bank manager and his secretary was there. Q. Was there anybody else there? A. David and me. Q. Just look at the other signature on the page, would you, on the right-hand side. A. Yes. Q. You are pointing to the right-hand side? A. Yeah, this one right-hand side. Q. Do you know whose signature that is? A. David. Q. Do you recall seeing David sign that piece of paper? A. In front of me, the manager and the secretary." 30 Having regard to the context in which that evidence was given, I regard it as being completely unreliable and I do not place any weight on it. I do not believe that the evidence was based on any actual recollection Youssef El-Bayeh had at the time he gave his evidence. There was no reference in his affidavit to any such meeting. Further, it was not put to David El-Bayeh that such a meeting took place at the bank. On the contrary, counsel for Youssef El-Bayeh (presumably in accordance with his instructions) put it to David El-Bayeh in cross-examination that he signed the document at the El-Bayeh home at Winston Hills (T106.19-T106.34): "Q. You have your affidavit in front of you. Please look at annexure B to your affidavit [the redraw authority]. Isn't it the case, that just as in 1989 you had been with your brother to a solicitors and acquired a property in your name and incurred a substantial obligation to pay the debt on that property, just as you did as you were bid by your brother, you signed, put your signature on the redraw authority that is annexure B to your affidavit. Isn't that right? A. No, I did not. Q. And you did that at your home in Winston Hills ? A. No, I did not. Q. And the documents provided to you by Youssef Bayeh? A. No, I did not, that is incorrect. Q. Or one of his children perhaps? A. That's incorrect" (my emphasis). 31 Bank statements obtained on subpoena from Westpac in respect of the original home loan account for the property (Exhibit 2(D1)) disclose that the original loan was repaid in full with a final loan repayment of $68,517.68 on 6 December 2000. The account shows a closing balance of nil for that date. On the same day, a separate account was opened in the same names (Youssef El-Bayeh and David Bayeh) with an initial loan drawing of $190,000. A deposit in the order of $120,000 described as "Deposit of settlement proceeds from El-Bayeh" reduced the outstanding balance to less than $70,000 but a series of substantial withdrawals over the following few months quickly took that account back to a debit balance in the order of around $189,000. 32 David El-Bayeh says that those withdrawals were made without his knowledge or consent (paragraphs 19 to 21 of his affidavit sworn 14 July 2008). The bank statements relating to the account are addressed to "Mr D Bayeh" at an address at Winston Hills. David El-Bayeh says that there was no mailbox at that address and that all mail to that address was redirected to Youssef El-Bayeh's post office box address. Although Youssef El-Bayeh did not address that specific contention in terms, his evidence appeared to confirm that he controlled all the mail coming to the address where they lived (T281.46-T282.1). 33 After March 2001, the new Westpac account appears to have been operated as an ordinary loan account, with regular repayments and regular debits of interest until it was repaid in full on 11 October 2004, whereafter the account was closed. 34 The net effect of the transactions on the two Westpac accounts as disclosed by the bank statements was that, between December 2000 and March 2001, the debt secured by David El-Bayeh's mortgage was increased by about $120,000. 35 David El-Bayeh said that he had no involvement whatsoever in the creation or operation of the new Westpac account and that he did not know it existed until he carried out his enquiries for the purposes of these proceedings. He obtained documents relating to the creation of that account on subpoena from Westpac in July 2009 and addressed those documents in a further affidavit sworn on 10 September 2009. In that affidavit, David El-Bayeh said that the signatures attributed to him on those documents are not his signatures and that they are forgeries (affidavit sworn 10 September 2009 at paragraph 40). The documents bear signatures attributed to Youssef El-Bayeh. However, Youssef did not respond to David's second affidavit and gave no explanation as to the execution of those documents.

CTC and Mr Naaman 36 The loan to which I have referred as the Perpetual loan was in fact funded by a company called Resimac Limited. Perpetual is the trustee of trusts that provide funds for loans funded by Resimac. In such cases, Perpetual is the named lender and mortgagee. For convenience, I will refer to both Perpetual and Resimac as Perpetual. 37 As at August 2004, Perpetual received some of its lending business through companies known as mortgage originators. The relationship between Perpetual and its mortgage originators was governed by an agreement referred to as the Mortgage Origination Deed. On 9 August 2004, Perpetual entered into a Mortgage Origination Deed with CTC. 38 The loan application in the present case was put forward to Perpetual by Mr Naaman Naaman, then an employee of CTC. One of the documents included in the application (a borrower's income declaration) bore a signature attributed to David El-Bayeh purportedly witnessed by Mr Naaman. 39 Mr Naaman could accordingly have been a critical witness, but he was not called by CTC to give evidence. The only explanation for his absence came in the affidavit of Mr Saadie (the third defendant). He said that, upon inquiry, he was told that Mr Naaman had gone to Lebanon on business. He subsequently called Mr Naaman on his mobile telephone to ask him about David Bayeh's loan application. In a later conversation he asked Mr Naaman when he would be returning to Australia and Mr Naaman said "I will never come back to Australia" (affidavit of Michael Saadie sworn 29 May 2009 at paragraph 31). That evidence did not go so far as to establish that Mr Naaman had refused to provide a statement and no evidence was adduced by CTC as to whether any steps were taken to secure his assistance as a witness (in person or electronically).

Loan application submitted to Perpetual by CTC (August 2004)

40 Mr Naaman submitted the loan application to Perpetual by facsimile dated 18 August 2004. The facsimile included six documents purportedly signed by David El-Bayeh and dated 5 August 2004 (interestingly, four days before the date of the Mortgage Origination Deed between Perpetual and CTC). As already noted, the facsimile also included a document purportedly signed by David El-Bayeh in the presence of Mr Naaman on 16 August 2004 (the "Lodoc borrower's income declaration"). 41 In the case of each of those documents, the signature and printed name attributed to the applicant were in the surname "El-Bayeh", not "Bayeh". The mortgage originally granted to Westpac in 1989 is in the name Bayeh.

42 Mr Naaman's facsimile to Perpetual also included a "100 point check" attaching a photocopy of David El-Bayeh's passport and Medicare card and a rates notice from Parramatta City Council relating to the property. As to the rates notice, it was common ground that Youssef El-Bayeh received all documents and paid all out-goings in relation to the property, so it is certainly not impossible that Youssef could have provided that document to CTC without reverting to David. As to the passport and Medicare card, David El-Bayeh said that they were kept in a drawer (or a cupboard: T144.19) at the family home at Winston Hills, which was also the home of Youssef and his wife and children. I am satisfied that Youssef and indeed other members of his family had ready access to those documents. 43 If those documents were provided to Mr Naaman by someone other than David El-Bayeh, there are many possibilities as to Mr Naaman's position. As submitted on behalf of CTC, one possibility is that a family member with a resemblance to David El-Bayeh impersonated him and gave Mr Naaman no cause to suspect that anything was amiss. It is also possible that, as arguably reflected in a later file note made by David El-Bayeh (considered below), Mr Naaman was given some explanation as to why David El-Bayeh could not present himself in person and that Mr Naaman (negligently) proceeded with the loan on that basis, relying on the identification documents provided to him but never seeing or speaking directly to David El-Bayeh. A third possibility, which is speculative, is that Mr Naaman was a knowing participant in the fraud. It will be necessary to return to an assessment of those possibilities in the context of Perpetual's claim against CTC. 44 On 19 August 2004, Mr Paul Carroll of Perpetual sent a "confirmation of approval" of the loan to Mr Naaman. The following day, Mr Naaman requested to have that document re-sent "as the surname needs to be changed to Bayeh, NOT El-Bayeh" (affidavit of Paul Carroll sworn 1 April 2009 at page 127). A further confirmation of approval was then sent by Mr Carroll to Mr Naaman dated 23 August 2004 describing the borrower as David Bayeh. That approval was subject to a special condition that the borrower provide a statutory declaration confirming that he is known as Mr David El-Bayeh (Mr Carroll's affidavit at page 133).

Execution of the mortgage and the loan agreement 45 According to Youssef El-Bayeh, the Perpetual loan agreement and mortgage were sent by mail to the address of the family home at Winston Hills for execution. I accept, as submitted on behalf of CTC, that there is no evidence to suggest that CTC or Mr Naaman ever saw the executed documents or had any involvement in the manner of their execution. 46 The mortgage is in the name "David Bayeh" as mortgagor. The loan agreement is in the name "David Bayeh" as customer and names Perpetual Trustees Company Limited as lender. Youssef said that, after a discussion with David, they went together to their family pharmacy, "Tolar Pharmacy" to have those documents signed by a Justice of the Peace. 47 Youssef described the trip to the pharmacy in some detail. He said that he told Margaret Tolar, who is a Justice of the Peace, that David needed her to witness his signature on some loan papers. She said "It doesn't say it needs a JP so you can witness all these documents for him". According to Youssef, David then signed "the document" and Youssef signed as witness. The document referred to must be the mortgage. It bears a "signature of mortgagor", which does not have the appearance of a signature at all but is the name "D Bayeh" written in capital letters. That so-called signature is certified as having been witnessed by "Joe Bayeh". 48 Youssef says that, before David could execute any further documents, he (Youssef) said to Margaret, who was still in front of them at the counter, "we are here anyway so can you please witness the papers just in case. I don't want to send the bank the papers and they send them back because it needs a JP to witness. It will take too long." Youssef said that David then signed some other documents which Margaret also signed. Margaret Tolar did in fact sign the mortgage with the letters "JP", her number as a Justice of the Peace and the date 31 August 2004. She also signed the loan agreement and the general terms near where the so-called signature "D Bayeh" appears in the same curious form (in capital letters). Ms Tolar also signed her name next to a signature of the same kind attributed to David Bayeh on a document headed "Authority to pay out and discharge mortgage". All of her signatures are dated 31 August 2004. 49 A similar signature attributed to David Bayeh (that is, the words "D Bayeh" in capital letters) appears on a statutory declaration dated 4 October 2004. That appears to be the statutory declaration sought by Perpetual as a condition of its approval of the loan application submitted to it by Mr Naaman of CTC. The statutory declaration states, among other things, that David Bayeh is the person described in the certificate of title for the property and that he is the same as the person described as David El-Bayeh. That statutory declaration is witnessed by Mr Richard Lamont, Justice of the Peace. Youssef states that he and David went back to Tolar Pharmacy to have that document witnessed and that he saw Mr Lamont and David sign the document. 50 Significantly, the capitalised signature attributed to David Bayeh on the statutory declaration is completely different from the signature attributed to him on the CTC loan application form (the contents of which appear to have precipitated the request for the statutory declaration in the first place). 51 David El-Bayeh says that he did not sign any of those documents. He says that he first became aware that a further loan had been obtained against the security of the property registered in his name in 2006. 52 I do not accept Youssef's evidence on that issue. Senior counsel for perpetual frankly acknowledged that he was a difficult witness with a dominating personality who is unused to being restricted as to what he can do or say. I do not have any difficulty accepting that he may have presented the security documents at Tolars Pharmacy in David's absence and signed them himself, or procured someone else to do so.

Evidence of the Justices of the Peace 53 The two Justices of the Peace were called as witnesses in David El-Bayeh's case, apparently for the purpose of eliminating any Jones v Dunkel inference. Notwithstanding the sterling efforts of counsel for the other parties to establish otherwise, their evidence gave no comfort whatsoever as to the integrity of the signatures attributed to David El-Bayeh on the documents they witnessed. Both worked at a pharmacy at which Youssef El-Bayeh is a regular customer. Mr Lamont was an elderly gentleman who appeared slightly disgruntled at having been subpoenaed to give evidence. His evidence-in-chief as to his witnessing the signature on the statutory declaration included the following exchange (at T230.30): "Q. Do you recall the occasion when that was-- A. No, I don't. I'll tell you why. Can I tell you? I work in a very busy pharmacy, up to, we do up to 300 prescriptions a day. Not only that, there is schedule 3 drugs which have to be handed out by a pharmacist. There would be 60 of those at least, you know, handing those out all day. People come in to see you, you have to speak to them. Then there are things like they come in for Mersyndol tablets. You have to go and speak to them. Then somebody will come in for a Justice of the Peace. I mean, how would you remember anything? I can't remember who I sold Mersyndol tablets to, same as I can't remember signing that declaration. But I did sign it."

54 Mr Lamont did not know whether he knew David El-Bayeh at that time. Asked whether he could see anybody he recognised in Court, he said "I know Joseph El-Bayeh". He did not recognise anybody else. David El-Bayeh was in Court at that time. In my view, having regard to the circumstances described in Mr Lamont's answer set out above, it would not be at all surprising if he had witnessed Youssef El-Bayeh sign the document, overlooking the fact that the signature read "D Bayeh" with the name "David Bayeh" in small print underneath. Nor would it be surprising if he witnessed the placement of that signature by someone else, without requiring identification, on the strength of their having been introduced to him by Youssef. 55 As to the documents witnessed by Ms Tolar, it is significant, in my view, that one of the documents was in fact signed by "Joe Bayeh" (Youseff El-Bayeh) as witness to the purported signature of the mortgagor, "D Bayeh". Ms Tolar knew "Joseph El-Bayeh" as a person who frequented the pharmacy. She identified Youssef El-Bayeh in Court as that person (T235.33). She also thought two other people in Court at the time she gave her evidence looked familiar. They were David El-Bayeh and Mr Saadie (the third defendant)(T236.2-5). 56 Given that Ms Tolar knew Youssef El-Bayeh, and that he had already signed the document as witness to that of the mortgagor, there may have been some confusion as to what she thought she was signing for. It must be accepted that she also signed in at least three places where the only other writing was the capitalised "D Bayeh" but that barely even looks like a signature. There is no certification on her part on those pages as to why she signed them. On Youssef's own account, she did not think the documents had to be signed by a Justice of the Peace at all. 57 The involvement of Margaret Tolar does not persuade me that David El-Bayeh in fact placed any signature on those documents in her presence. There was plainly ample scope, in my view, for Youssef El-Bayeh to obtain the signatures of the two Justices of the Peace on the mortgage and the loan agreement without David El-Bayeh in fact being present to sign those documents.

The new Westpac account (September 2004) 58 According to David, Youssef El-Bayeh's daughter Denise spoke to him in 2004, saying "My father requires a new bank account in your name, a key card account". He originally said that the account was opened in "about July 2004" but it is clear from bank records that it was later. That was one of many credit points taken against David El-Bayeh but I do not think anything much turns on that inconsistency. David El-Bayeh said that his response to Denise El-Bayeh was "Well, as long as he is not going to cause me any trouble I will provide you with a debit account. No credit" (T69.7). He said he then went to the Newington branch of Westpac where he completed an application for a key card account. 59 Westpac records in relation to that account were admitted into evidence as a single exhibit (Exhibit D). That exhibit in fact appears to consist of three separate documents, a "Customer Account Opening" dated 30 September 2004 (three pages), a photocopy of David El-Bayeh's passport and driver's licence and a single page (identified as "2 of 3") which bears "details of persons authorised" to act on an unspecified account. The last page of the Customer Account Opening document bears the signature of David El-Bayeh and a certification by a bank officer that "the procedures to open this account have been complied with". David El-Bayeh said that the customer signature on that document (page 3 of Exhibit D) is his signature (T69.30 and T118.24). He said, however, that the specimen signature on the last page attributed to him against the words "details of persons authorised" is not his signature (T69.44 and T118.43). That page also bears a specimen signature of Youssef El-Bayeh as a "person authorised". 60 Documents produced under subpoena from Westpac (Exhibit 2(D1)) include statements relating to an account in the name of David El-Bayeh which is probably the account brought into existence following his attendance at the bank. The sum of $291,583.61 from Perpetual was deposited into that account on 26 October 2004. Withdrawal slips tendered as part of Exhibit 2(D1) show that Youssef El-Bayeh made a number of substantial withdrawals from that account in November 2004. One of those, relating to a withdrawal of almost $30,000 and apparently signed by Youssef (certainly not purportedly signed by David) bears the annotation "phoned Newington - confirmed customer can sign on account". 61 David El-Bayeh frankly acknowledged in cross-examination that, when he opened the account in 2004, he understood that although it was to be in his name, his brother Youssef El-Bayeh would operate it as if it were his own (T120.14). He accepted that he gave Youssef complete authority to operate the account as he saw fit (T120.39). However, the uncontested evidence was that he understood that it was to be a debit account on which Youssef could only operate by depositing and withdrawing funds, always leaving a credit or nil balance (affidavit sworn 18 February 2010). Youssef El-Bayeh's daughter, Denise, did not give evidence and there was no challenge to David's evidence on that issue. 62 The two signatures attributed to David El-Bayeh on the two separate pages of Exhibit D (pages 3 and 5) do differ in appearance. There is a handwritten annotation next to the specimen signature attributed to David El-Bayeh on the last page which appears to say "confirm w/ cu", presumably meaning "confirm with customer". It was submitted on behalf of CTC that I should infer, in those circumstances, that David El-Bayeh had given Westpac confirmation that Youssef El-Bayeh was an authorised signatory to the account. 63 In one sense, it may not matter, since David acknowledged that Youssef had authority to operate that account as he saw fit. On David's case, the fraud lay in the fact that the funds deposited into the account were, unbeknownst to David, funds borrowed in his name against the security of his property. In any event, to the extent that it matters, I do not think there is a proper basis for my inferring that any bank officer in fact checked with David El-Bayeh, either as to the obvious difference between the two signatures attributed to him or as to whether Youssef was an authorised signatory to that account.

Distribution of loan funds advanced by Perpetual (October 2004) 64 As already noted, the Perpetual loan funds were applied in part to discharge the mortgage to Westpac. The final repayment on the 2000 Westpac loan, in the sum of $181,982.87, was deposited into the account relating to that loan on 11 October 2004 (Exhibit 2(D1)). On 26 October 2004, the sum of $291,583.61 from Perpetual was deposited into a separate Westpac account (probably the account opened by David El-Bayeh at Youssef's request). David El-Bayeh says, and it was not contested, that he has not made any withdrawals from that account. Events of 2006

65 In perhaps around August 2006, Youssef El-Bayeh's son Andrew asked David El-Bayeh to meet Youssef at a firm of solicitors called "Firmstones". When David El-Bayeh attended that meeting, it became apparent to him that he was being asked to sign a contract of sale for the property which involved its being transferred from him to Andrew. David El-Bayeh refused to sign the documents put in front of him. At around the same time, he saw a "for sale" sign outside the front of his property. He began investigating at that point and retained a solicitor. 66 At some point after that, David El-Bayeh obtained a copy of the Perpetual mortgage bearing the capitalised signature attributed to him as mortgagor. He subsequently made an appointment to see Mr Carey Wingate and Mr Stephen Highfield at Perpetual. He made notes of that meeting (annexure F to his affidavit sworn 14 July 2008). Interestingly, the first entry in the notes states "No Power of Attourney (sic) used". Neither Mr Wingate nor David El-Bayeh was challenged as to the accuracy or authenticity of that note. 67 The note is consistent with David El-Bayeh's contention that he had then only recently become aware of the Perpetual mortgage and was investigating how it had come into existence without his knowledge. The note also records a commitment (presumably given by Mr Wingate) to "release documents in 24 hours". In subsequent correspondence, David El-Bayeh's solicitors renewed the request for "all documents which purport to be executed by our client in relation to the mortgage advance". It appears that Perpetual had by then decided to obtain legal advice before releasing the documents, and was refusing to cancel an auction of the property then scheduled for early September.

Meeting with Mr Saadie in December 2006 68 David El-Bayeh said that the first time he ever went to the offices of CTC was in December 2006 when he was telephoned by Mr Saadie. He said that when he arrived at the meeting he shook hands with Mr Saadie and that was the first time he had met him. Present at the meeting at that stage were David's brother Father Simon (a priest), his brother-in-law Assaad, Youssef El-Bayeh and Mr Saadie. David El-Bayeh said (at paragraph 53 of his affidavit sworn 14 July 2008): "During the meeting I said to Michael Saadie words to the effect, "I can't believe Joe has borrowed all this money in my name. How did he do it? It's fraud". Michael Saadie replied "I thought you were sick and could not get out of bed. I thought that for whatever reason, you did not want to show your face. That's why we proceeded with the loan application without you. We need to resolve this issue and your brother needs time to obtain more finance". Michael Saadie then asked me for my licence which I provided. He took a photocopy of it." 69 In his oral evidence, David El-Bayeh said that, when he described the loan as "fraud", Youssef El-Bayeh got up and began swearing in Arabic. David El-Bayeh's translation of the words said was "This Fucking little bastard. I have raised him since he was a young man - since he was a kid. He's like a son to me" (T157.41). 70 Mr Saadie denied that there was any reference to "fraud" at that meeting and denied saying the words attributed to him by David. His version of events in December 2006 was that Youssef El-Bayeh initially came to his office with Father Simon and Assaad. He said that Youssef told him that he (Youssef) and David had had a fight and that Youssef wanted to remove the loan from David's name and shift it to his name. He denied that the reason for his being involved was that David had said the loan was a fraud (T262.36). It should be noted that, by that date, these proceedings had been commenced, and only as against David El-Bayeh at that stage. 71 Mr Saadie said he contacted David El-Bayeh and asked him to join the meeting. He says that, upon his arrival, David said "Can you tell Joe to give me what he gave to Tony". According to Mr Saadie, Youssef then said "Tony's situation is not the same as David's … I have raised David like a son for the past 35 years … I have paid for everything … He has lived in my house, I have paid all his living expenses and his school fees … I have even paid back the debt on his house and I used to give him spending money every week …". 72 Mr Saadie said that Youssef then left CTC's offices and that Father Simon and Assaad left shortly afterwards. According to Mr Saadie, a conversation then took place in the following terms: Saadie said: "Look David, there is nobody here now, please tell me the story…" David said: "Just like Tony, I used to work for Joe in his takeaway shop for $25 a week…and Joe just gave Tony his property…now why won't he give me the property like he did with Tony?" Saadie said: "But Joe says that Tony's situation is different to yours…He has taken you in, he has raised you and provided everything you need…Joe loves you. Do not create a problem with him…try and resolve it within the family". David said: "You are right the circumstances are different, there is a large mortgage on my property…the mortgage is more than the value of the property…I cannot afford to repay it…I have also missed out on the first home owners grant and I am stuck with this property. I cannot buy any other property…I just want Joe to reduce the mortgage to the same level as Tony's." Saadie said: "Do you want me to call Joe so we can sort this problem out?" David said: "Can you try and convince Joe to bring the mortgage down by $150,000 then I would be happy…" Saadie said: "Look David I am not your brother I cannot ask him to do that for you…but would you sit down with him and try to work this out?" David said: "I would like to sit down as a family to discuss the problem but I don't want to be there when Joe starts screaming and getting angry though…" Saadie said: "I will see what I can do."

73 David El-Bayeh agreed that, after Youssef El-Bayeh and the others left the meeting, he and Mr Saadie had a private conversation. He could not recall all of the detail of that conversation. He did appear to accept in cross-examination, however, that there had been some discussion as to the fact that Youssef had given one of his other brothers a property and that at some point the conversation turned to the question whether Youssef would come to a similar arrangement with David. David says that, before he left Mr Saadie's office, Mr Saadie said "Give me some time and I'll get back to you". 74 Mr Saadie says that David El-Bayeh visited him again, briefly, in January 2007 and asked "Did you convince Joe to give me the property with no debt?" David El-Bayeh denied asking that question, but did accept that Mr Saadie had said something to the effect "This is a family problem. You need to resolve it yourselves" (T152 -T155). 75 Youssef El-Bayeh's version of those events was consistent with Mr Saadie's. He said (in paragraph 48 of his affidavit sworn 19 August 2009): "When David arrived, we all had a conversation with words to the following effect: Michael said: "David, Joe tells me that you and him had an argument about the re-finance of the house" David said: "yes, all I want Joe to do is give me what he gave my brother" Michael said: "ok, but is this argument worth the trouble with the bank and the problems it is causing in your family" David said: "there won't be a problem with the bank if Joe reduces the debt like he did with Louis" Youssef said: "how many times do I have to tell you that your situation is different. Louis worked in the shop and worked hard. I didn't raise him from a young age like you. You were like my son, you lived with me, I paid for your school, sports, university, I never asked you to pay for anything, how can you say that you are the same as Louis" I did not want to remain in the room any longer and I was overcome with emotions so I left the office of CTC." 76 David El-Bayeh said that he made notes in his diary of what was discussed in that meeting. He initially said that the notes were made during the meeting (affidavit sworn 14 July 2008 at paragraph 52). Under cross-examination, he said that it would have been after the meeting, "possibly the same day" (T116.48 to T117.4). The diary entry appears on the page dated Friday 1 December 2006. It records the place of the meeting and the people present and says: "How did he get an ABN in my name - No Answer

• How did he get this loan in my name - sick - not want to show face * took copy of licence Joe stormed out." 77 In my view, those notes have all the appearances of a contemporaneous record. I do not accept that the diary entry is a concoction, as submitted on behalf of Perpetual. I think it is highly unlikely that, if David El-Bayeh had determined upon a path of creating a false evidentiary trail, he would have created a note that was so specific and yet so equivocal in the support it would provide for his case. He would surely have fixed the case properly if at all. 78 On the strength of those notes, coupled with my assessment of David El-Bayeh as a witness, I am satisfied that Mr Saadie said words to the effect of those attributed to him by David El-Bayeh, "I thought you were sick and could not get out of bed. I thought that for whatever reason, you did not want to show your face. That's why we proceeded with the loan application without you." It was submitted on behalf of the parties opposed to David El-Bayeh that Mr Saadie had no motive to be untruthful in denying saying those words, beyond the motive any party has to be untruthful. That is nonetheless something of a motive in the face of allegations of the kind made in the present case. Further, Mr Saadie's evidence must compete with a contemporaneous note. 79 The difficulty is to know what to make of the words said. There is no evidence that Mr Saadie was involved in the preparation of the loan application itself. Whatever information he had as to those events had been told to him by others. It was common ground that he was initially approached by Yousseff El-Bayeh in company with Father Simon and Assaad. David El-Bayeh was invited to join the meeting after Youssef had explained to Mr Saadie why they were seeking his assistance. 80 A possibility is that Mr Saadie was stating his understanding as to why Youssef El-Bayeh had been allowed to attend to the execution of the mortgage and the loan agreement (the signatures on which differ so obviously in appearance from the signatures on the CTC loan application). He may simply have been repeating something he had just been told before David El-Bayeh joined the meeting. Those are all matters of speculation. 81 Whether or not fraud was asserted in terms during the meeting, I am comfortably satisfied that, after joining the meeting, David El-Bayeh in effect interrogated Mr Saadie as to how the loan had been obtained without his knowledge. David El-Bayeh's account in that respect is consistent with his contemporaneous note, the authenticity of which I accept.

82 However, contrary to the account given by David El-Bayeh in his affidavits, I am satisfied that there was some discussion at that meeting surrounding a request by David for Youssef to resolve the matter by giving David what he had given to another brother. It was common ground that David was invited to join a meeting that had initially proceeded without him. Mr Saadie said that the premise of the meeting was that Youssef and David had had a fight and that Youssef wanted to remove the loan from David's name and shift it to his name. It accords with common sense, in that context, that there would have been some discussion as to the terms on which David would consent to such a proposal. As submitted by Mr McKeand, the fraud allegation had already been put out by David El-Bayeh in a proper way through solicitors at that time. The December meeting appears to have been an attempt to resolve the matter within the family, with Mr Saadie's assistance. 83 David El-Bayeh's answers in cross-examination in relation to that aspect of the conversation were somewhat equivocal. To the extent that he appeared to distance himself from the suggestion that he was pressing for a deal with Youssef, I do not think that he was being entirely frank. He did, however, ultimately acknowledge that there had been some discussion along those lines. Evidence of Louis Bayeh 84 For reasons he probably regrets, David El-Bayeh called his brother Louis El-Bayeh to give evidence in his case. The original purpose of doing so appears to have been two-fold. First, Louis El-Bayeh's affidavit broadly corroborated the evidence of David El-Bayeh as to the hours David worked in the family business; the fact that he was paid only $20 for each day that he worked and the fact that, although their brother Youssef did not work in the business, the income it generated was entirely controlled by him. Separately, Louis stated that he, like David, had not spoken directly to Youssef for about 22 years and that any conversation with Youssef during that period had been indirect, through a mutual family member. 85 The second purpose of Louis El-Bayeh's evidence appears to have been to respond to something said in Youssef El-Bayeh's affidavit. Youssef had stated that, in about mid 2004, he began to feel the financial strain of having to make repayments on a number of mortgages. A possibility was to raise some money on the existing mortgage over the property in the name of Louis El-Bayeh. Youssef El-Bayeh gave evidence (in paragraph 20 of his affidavit) of a meeting "at Laura's house" at which that proposal was discussed. According to Youssef, Louis said "I don't want you to borrow more money on my house". Youssef asserted further that, after some discussion, David had said "Don't worry about Louis' house, let him take over that mortgage and you can get money against the house in my name. I don't mind". According to Youssef the conversation concluded as follows: David said: "just let me get the loan and that way you are both happy. There is no reason to fight over this" Youssef said: "you are right, I don't want to cause family problem or lose (sic) a brother over money" David said: "Good, then just tell me what you need done and I will do it" Youssef said: "I will speak to the bank and then let you know" 86 By way of response to that evidence, Louis El-Bayeh stated: "I am certain that the meeting referred to actually took place in January 2006; not mid 2004. The date sticks in my mind as the meeting took place about two weeks before I moved house and my wife was about five months pregnant."

The significance of that evidence, of course, was that, on Louis' version, the meeting took place after the Perpetual loan had been taken out, not before. Louis stated, further, that he did not recall David saying words to the effect of those attributed to him by Youssef in paragraph 20 of his affidavit (set out above). 87 Before the re-examination of David El-Bayeh, and before Louis El-Bayeh was called to give evidence, it was indicated on behalf of Youssef El-Bayeh that he wished to correct paragraph 20 of his affidavit. Counsel said (at T164.4): "He [Youssef El-Bayeh] now says that in fact, as he recalls it today, in fact the first defendant is quite right. That occurred late in 2006, consistent with what Mr Louis El-Bayeh and the first defendant have said". 88 That concession was apt to generate confusion, since neither Louis El-Bayeh nor David El-Bayeh had in fact said that the meeting occurred "late in 2006". Each had stated in his affidavit that the meeting at which Louis refused to agree to Youssef's borrowing further funds against the security of Louis' house was in about January 2006. David El-Bayeh's evidence as to that meeting was as follows: "During that meeting I certainly did not volunteer to borrow further funds against the property in my name. I do accept however that Louis and Youssef did discuss during that meeting the prospect of Youssef borrowing further funds in Louis' name. Louis refused" (paragraph 18 of David El-Bayeh's affidavit sworn 10 September 2009).

89 More importantly, however, the making of the concession completely undermines Youssef El-Bayeh's case. Although Youssef's account implicitly acknowledged that the purpose of the Perpetual loan was to obtain funds for his own use (not for the use of David), the case put by way of defence was that the entire transaction proceeded with David's knowledge and consent. 90 If the meeting in fact occurred in 2006, the burden of the concession that the funds were for the use of Youssef El-Bayeh remains but the foundation for the contention that David acquiesced in that course disappears. 91 Louis El-Bayeh's evidence did rather suggest, however, that David El-Bayeh might have had some inkling before August 2006 of the possibility that his property had been refianced. During cross-examination by Mr Robinson (who appeared on behalf of Youssef El-Bayeh), Louis El-Bayeh evidently recalled that, as at January 2006, both he and David knew that Youssef had already "refinanced" David's property (see T174.7-T174.31). 92 He was subsequently pressed as to what David had told him "about refinancing the debt on the … property". He said "All I know about that is that Youssef required identification off David to borrow more money" (T175.34). 93 That evidence generated a great deal of forensic excitement at the hearing. Under cross-examination by Mr Gregg on behalf of CTC, Louis El-Bayeh accepted propositions put in the following terms (at T176):

(a) that David had told him (Louis) that Youssef had refinanced the property;

(b) that David had also told him (Louis) that Youssef had asked him for "forms of identification" to facilitate that borrowing. 94 Mr McKeand sought to re-examine Louis El-Bayeh to clarify some alleged confusion as to "two refinancing situations, one in 2004 and one in the second half of 2006" (T181.11). I did not permit that re-examination because I thought Louis El-Bayeh's evidence on that issue had been clear. 95 An application was subsequently made on behalf of David El-Bayeh to recall Louis El-Bayeh on the basis that some of his evidence "was given in error" and that he would like the opportunity to correct the error (T268.15). In due course further evidence was given by both David El-Bayeh and Louis El-Bayeh (initially on the voir dire and ultimately admitted by consent). 96 The further evidence disclosed that, after the conclusion of Louis El-Bayeh's evidence, David El-Bayeh had spoken to him by telephone to "clarify" some aspects of his evidence. Mr McKeand informed the Court that it was he who had requested David El-Bayeh to make that phone call, a course of which I was critical during the hearing (see my judgment given 19 March 2010). Confusingly, David El-Bayeh appeared to be under the impression that he had made the phone call of his own initiative. In any event, it is unfortunate that the call was made at all. The contents of that conversation and subsequent events had the result, in my view, of hopelessly contaminating any independent recollection Louis El-Bayeh may have had as to precisely what David El-Bayeh had said to him on the topic of refinancing and when. 97 In his further evidence, Louis El-Bayeh endeavoured to explain that, as at January 2006, all he knew was that David had given Youssef a power of attorney. He said it was his assumption that Youssef wanted the power of attorney for the purpose of refinancing, but that he was never told that by David. He said "I am certain the first time David told me that Youssef had borrowed more money on the property was at around the time the 'for sale' sign appeared on the property. That was around August 2006". 98 Both David and Louis El-Bayeh were cross-examined at length as to their further evidence and a great deal of time and energy was spent in submissions directed to analysing the import and implications of what they said. In deference to the energies devoted to that issue, I make the following observations. 99 First, Louis El-Bayeh struck me as a person who was not overly meticulous in the way he expressed himself. It was submitted on behalf of Perpetual that, according to the account he gave in his further evidence, his original evidence (at T174) must have been false and that at any rate one of the versions he gave must have been. If it was intended to draw a distinction between "false" and "wrong", I think that submission overlooks the complexities of knowledge and recollection and the facility of the witness to deal with those complexities. In my assessment, Louis El-Bayeh was endeavouring, to the best of his ability, to give honest assistance to David's cause each time he gave evidence, but he was easily led into confusion under cross-examination by able barristers appearing in different interests. 100 Secondly, in my view, it is quite plausible that Louis was mistaken in the evidence he originally gave (at T174). Such a mistake could easily have arisen as a result of his having failed to distinguish, in his own mind, between what David had told him and an assumption he had made. Further, in my experience, one of the areas in which human memory is particularly fallible is in recalling the order in which different pieces of information have been acquired. It is equally plausible, however, that Louis' original evidence was both candid and accurate. As I have already said, the true position in my view became hopelessly contaminated by the events that occurred after he gave his evidence including the contents of the call he received from David El-Bayeh, his subsequent conference with the legal representatives and his exposure to meticulous (and in my view repetitive) cross-examination by several barristers as to the inevitable discrepancies between different versions of those events. 101 Thirdly I accept, as submitted on behalf of both Perpetual and CTC, that an entry in David El-Bayeh's diary strongly suggests that he was indeed aware of some connection between Perpetual and his property by no later than February 2006. David El-Bayeh's diary for Friday 17 February 2006 includes an entry which records the following information:

(d) the lot and DP number for the property and some dimensions. 102 David El-Bayeh was unable to explain how that entry came to be in his diary for that date. In my view, it suggests that he had some awareness as to the existence of the Perpetual mortgage earlier in 2006 than he said in evidence in these proceedings. Conversely, however, it also tends to corroborate his case that he had no knowledge of that mortgage earlier than that time. It would be curious, otherwise, if he felt the need to record his own name and the address of his property in his own diary. The note reads as a record of information obtained from another source. 103 Having regard to all of those considerations, I have come to the following conclusions in respect of the evidence of Louis El-Bayeh and the further evidence of David El-Bayeh on that issue:

(a) I am unable to be satisfied one way or the other, on the balance of probabilities, as to whether David El-Bayeh knew in January 2006 that Youssef El-Bayeh had "refinanced" the property;

(b) I am satisfied on the balance of probabilities that David El-Bayeh had obtained some information as to the possible involvement of Perpetual in the finance of the property as early as 17 February 2006. The note does not establish, however, that he knew anything more about the borrowings at that stage, nor that he had any knowledge of the involvement of Perpetual at any earlier point in time;

(c) I am satisfied on the balance of probabilities that David El-Bayeh was not aware that his property was under threat of a mortgagee sale until later in the year, probably around August 2006. 104 In light of the confusion as to whether David El-Bayeh made the telephone call to Louis El-Bayeh of his own initiative or at the request of his legal representatives, I do not think it is appropriate to draw any conclusion as to the propriety of his having made that call. I do not accept the submissions put forcefully on behalf of Perpetual and CTC that his subsequent evidence reflected badly on his credit. To my observation, he frankly acknowledged his concern at what he perceived as a mistaken assumption on the part of Louis El-Bayeh. I am not persuaded that there was any dishonesty or disingenuity in his evidence as to how he perceived those issues. Consideration of David El-Bayeh's forgery allegations

105 The allegation that Youssef El-Bayeh procured the Westpac loan in 2000 and the Perpetual loan in 2004 by means of forgery is, of course, an extremely serious allegation. As submitted on behalf of Perpetual, the gravity of the matters alleged must be taken into account in deciding whether the Court is satisfied that David El-Bayeh has made good his defence. In that respect, my attention was drawn to the principles stated by Johnson J in Jeans v Cleary [2006] NSWSC 647 at [27] to [29]. I have had regard to those principles. 106 I have determined the issues relating to the impugned signatures primarily on the basis of my assessment of the credibility and reliability of the evidence of David El-Bayeh and Youssef El-Bayeh and my consideration of the appearance of the signatures (with the assistance of the expert opinion evidence on that issue). Before turning to those matters, I should deal with two further considerations raised in the submissions on behalf of Perpetual. 107 Perpetual submitted as a factor telling against fraud that there was no need for a non-genuine signature written without authority. In particular, Perpetual relied on the clear evidence that Youssef El-Bayeh "ruled" the family and that family members (including David El-Bayeh) were compliant to his wishes. So much may be accepted, but I do not think it follows that forgery was "quite unnecessary". In my view, Youssef's autocratic approach is equally consistent with David El-Bayeh's case. To Youssef, it was not so much a question of being confident that he would have David's consent as believing he did not need it, as evidenced in the following exchange in his cross-examination by Mr McKeand (T312.39): "Q. So you say. Mr El-Bayeh, you knew before you borrowed that $480,000 that apart from the money that would be used to pay off the existing Westpac mortgage debt on David's property, he would not agree to a borrowing of a larger sum for you to use for other purposes. You knew that, didn't you? A. I don't need him to agree or not agree. Because when I borrowed the money and when I do the business and the loan from anywhere, he didn't have anything to do with it. Only I ask him what I am doing, like what I have, talking with him and with my father, with the family. I try to buy some house to each of my brother and sister. If I get accident, if I die, they have something in their name." 108 In my view, there was force in the submission put by Mr McKeand on behalf of David El-Bayeh that Youssef El-Bayeh's evidence could be encapsulated in the proposition that he would not admit anything against his interests in the present case, meaning his view of his interests, which was not necessarily a legal view. As noted by Mr McKeand, the best example of that was his extreme pride in his role in looking after the family, which he may or may not have known had a potential legal significance (adverse to his trust claim against David). 109 The second additional consideration raised in submissions by Perpetual was whether the person who made the questioned signatures was likely to have a physical resemblance to David El-Bayeh. The need to consider that issue arises in respect of the signatures witnessed by the two Justices of the Peace, Mr Lamont and Ms Tolar, and the signature purportedly witnessed by Mr Naaman. Whilst I do not disbelieve the evidence of the two Justices of the Peace, I think it is quite possible that they could, through confusion or oversight, have signed the documents in the absence of David El-Bayeh. As to Mr Naaman, the simple fact is that he did not give evidence and I draw no comfort whatsoever from the fact of his having purportedly witnessed one of the David El-Bayeh signatures. Did David El-Bayeh sign the Westpac documents? 110 Perpetual submitted that it ought to be found as to some of the Westpac signatures that they appear to be those of David El-Bayeh. Although Perpetual's claim does not turn on the authenticity of those signatures, Perpetual submitted that the determination of that question should inform the determination of the issues relating to the Perpetual documents. In particular, it was submitted that, if the Westpac signatures are genuine, they will add to the body of comparable handwriting for the purposes of reaching conclusions about the Perpetual documents. It was submitted, further, that since the Westpac loan in 2000 is disputed by David El-Bayeh as another alleged forgery, "an adverse finding to him about authenticity ought to resolve any other complaints of forgery". 111 Understood in that way, the authenticity of the Westpac signatures was put by Perpetual as a matter going primarily to credit. The critical question in that context is whether David El-Bayeh was lying when he said that the signatures on the Westpac documents relating to the advance of $190,000 in December 2000 are not his. Separately, the authenticity of the Westpac signatures is a fact in issue in determining what is secured by the Perpetual mortgage if it is forged and in David El-Bayeh's claim against Youssef El-Bayeh. 112 A starting point is to record that, overall, David El-Bayeh impressed me as a straightforward and fairly reliable witness. He has a tertiary qualification and is evidently a man of some intelligence. As already indicated, I accept that he was probably not entirely frank as to whether he was pressing Youssef to give him the same deal as Louis. I think his evidence on that issue was probably coloured by self-interest or embarrassment. However, that recognition does not prompt me to reject other parts of his evidence. An attempt to negotiate a deal of the kind alleged is not inconsistent with his case. Indeed, there are aspects of the conversation deposed to by Mr Saadie that are entirely consistent with David's description of the recent discovery of large borrowings secured by a mortgage over his property. 113 There was a substantial attack on David El-Bayeh's credit by each of the other parties to the proceedings. Dealing particularly with the Westpac documents, Perpetual noted that there had been a series of occasions on which David El-Bayeh had obeyed or acceded to the requests of Youssef El-Bayeh and abided by his decisions. The matters relied upon by Perpetual included the fact that the property was purchased after David was told that Youssef required him to sign documents and he "obeyed" (T121.11); the giving of the power of attorney; the circumstances surrounding his opening the Westpac account in 2004 and the fact that, following the purchase of the property, Youssef had in effect dealt with it as if he was the owner, with no objection from David. In that context, Perpetual submitted that it defies credulity to suggest that David El-Bayeh would have resisted any "requirement" by Youssef El-Bayeh that he sign documents for loans against the property in 2000 or 2004. 114 I do not accept that submission. Youssef El-Bayeh was clearly both difficult and autocratic. As already noted, he said that he bought the properties for his brothers' own benefit, not for his benefit. However, he evidently regarded their benefit to be subject to his whim. He said that he had promised his father he was happy to give each brother a house and a car when they got married. He said "That's why I didn't have big argument with my brother Louis because he get married and have few children, I gave him the house" (T291.34). 115 Youssef El-Bayeh insisted, nonetheless, that he meant to help his siblings both before and after marriage, subject to one thing (at T292.11): "Something important here, for all of you. That's in my mind to help my brother and my sister and my family all the way, before marry and after marry. Only one thing. Between our family I used to say all the time I don't want anyone to break the religion law, the government law and no gambling and no drug, and I was very happy to help them all the way, before marry and after marry, because I bring them to Australia and I responsible for them and all the people from my village and the people they know, they know me, they know that." 116 It accords with common sense and common experience that David El-Bayeh's response over the years to that measure of authority was one of mixed resistance, particularly as he grew older. 117 It should be noted that, apart from his evidence in relation to the redraw authority, Youssef gave no evidence that he did in fact approach David to sign any documents relating to the loan of $190,000. Under cross-examination by counsel for Perpetual, he stated that the signatures attributed to him on the Westpac documents were his and that those attributed to David El-Bayeh were David El-Bayeh's (see T278.4; T278.42; T279.10 and T279.17). However, he professed to having no recollection of a loan in that amount (T298-300). 118 Separately, it was clear that Youssef El-Bayeh considered himself entitled at all times to use the property as he wished, as disclosed in the following exchange in cross-examination (at T296.19): "Q. In 1989 when the property was in David's name David could have sold it to someone else, couldn't he? A. Can't sold it. He is under my control. The whole family up to now didn't do anything before they ask me. My father, he say you're the one and he agree with me and he know who I am and all the family was happy with me up to this point and I am proud what I done with my family. Q. But the property was in David's name. He could have sold it and paid off the mortgage? A. I don't think he could sold it. To pay the mortgage, I ask him, when we get problem with the money, I say look, we have problem, we must do something. I need some money to pay the mortgage and the bank, the Perpetual or something, they want their money. Let's come to do something to lend money from different bank to pay this and to control ourselves going. He say no, I don't want. I say I can put it on my brother Tony name or my son name because my son doesn't borrow any money, I was trying to go up on his name and he also get angry. He say you have to give me house. I say how can I give you house now? What for to give you house? And I say you be living since you born with us and the last time 15 year you work for $50,000, $70,000 a year and now you tell me you didn't have anything?" 119 I am not satisfied that Youssef El-Bayeh sought David El-Bayeh's express consent to the second Westpac loan at any time. No party suggested that David had sought the loan of his own initiative. I am satisfied that it was Youssef who applied for that loan. 120 Could it be concluded, nonetheless, that Youssef had David's authority to enter into that transaction on his behalf? It was David El-Bayeh's evidence that, if Youssef had come to him in 2000 and said he wanted to borrow money against the property, he "probably would have had an objection" (T124.40). He explained: "I was under the impression that the loan would never go any higher than what it was and it was, the property was going to be for my future and I would have, I would have probably, I would have rejected that Youssef could borrow more money." 121 It was submitted on behalf of Perpetual that David's explanation was "transparent nonsense". I disagree. Even making due allowance for hindsight wisdom, it is an explanation that makes perfect sense, in my view. As already noted, Youssef acknowledged that the property was bought for David's benefit. Perpetual's submissions placed reliance on the fact that David had not previously resisted any instruction from Youssef, but he had not (so far as the evidence discloses) previously been asked to consent to further borrowings in his name secured by the mortgage over the property in his name. Further, although he had not previously shown any interest in the state of borrowing against the property, it must be remembered that, by the year 2000, he was aged 29. The question is not whether his position has moral force but what he is likely to have done (assuming he was asked) knowing that the property was registered in his name. Consideration of the Westpac signatures 122 A critical task, of course, is to consider the signatures themselves. David El-Bayeh retained a handwriting expert, Mr Chris Anderson, who gave expert opinion evidence on that issue. No other party called evidence of that kind. Mr Anderson was provided with a collection of "specimen signatures" for the purpose of his reports. He examined some, but not all, of the impugned Westpac documents. 123 The documents obtained on subpoena by David El-Bayeh from Westpac which allegedly bear forgeries of his signature were annexed to his affidavit sworn 10 September 2009 (marked "B"). Those documents are listed below (for ease of reference, I have included the reference numbers allocated by Mr Anderson to the documents he considered):

(a) a loan offer, being a letter from Westpac to Youssef El-Bayeh and David Bayeh dated 21 November 2000 offering an amount of credit in the sum of $190,000. The last page of the letter, headed "Acceptance of loan offer", bears signatures attributed to Youssef El-Bayeh and "David Bayeh". Each signature is dated 1 December 2000 in what appears to be the same handwriting;

(b) a document headed "Residential property details" purportedly signed "D. Bayeh" on 28 October 2000 (Mr Anderson's item 24);

(c) a document headed "Personal finance application" naming Youssef El-Bayeh as applicant and "David Bayeh" as co-applicant. Page 7 of that document (Mr Anderson's item 26-7) bears an illegible signature attributed to the applicant and a signature "D. Bayeh" attributed to the co-applicant. Each signature is dated 1 December 2000, apparently in the same handwriting. That page also nominates Youssef El-Bayeh to receive notices and other documents on behalf of both applicants. Page 8 of the same document (Mr Anderson's item 26-8) also bears a signature attributed to the applicant and a signature "D. Bayeh" attributed to the co-applicant. Again, each signature is dated 1 December 2000, apparently in the same handwriting.

(d) a document headed "Provision of credit - purpose declaration" (Mr Anderson's item 26-9) bearing signatures attributed to Youssef El-Bayeh and David Bayeh with a single date recorded, being 1 December 2000;

(e) a document headed "Instructions and authority" which requests "redraw authority" and bears signatures attributed to Youssef El-Bayeh and David Bayeh each dated 1 December 2000 apparently in the same handwriting (Mr Anderson's item 25). 124 The first observation that jumps out to the untrained eye is that one of the signatures (on the document headed "Residential property details" dated 28 October 2000) differs in appearance from the others (which are all dated 1 December 2000). Even Youssef did not suggest that was an original signature of David El-Bayeh (T278.23). 125 Beyond that observation, it is necessary to have resort to the assistance provided by the evidence of Mr Anderson. His reports annexed the specimen signatures (items 12 to 23). It was not disputed that those were genuine signatures of David El-Bayeh. The dates of those documents range between 1998 (a passport) and May 2007 (the affidavit verifying the first cross-claim in these proceedings). Mr Anderson was satisfied that the same person wrote each of the specimen signatures. I am satisfied that the specimen signatures are those of David El-Bayeh. I will refer to those as the genuine signatures. 126 Once again, to the untrained eye, the immediate impression is that the genuine signatures are completely different from the Westpac signatures. An obvious difference is that, in the genuine signatures, the full surname is illegible and it is difficult to make out more than the letters "D El B". By contrast, the Westpac signatures are all written, legibly, as "D. Bayeh". 127 My own observation in that respect is reinforced by Mr Anderson's opinion. He stated, "These questioned signatures [the Westpac signatures in the documents identified above as items 24 to 26] are not pictorially similar to the specimen signatures" (paragraph 18). The term "pictorially similar" was defined to mean that the questioned and genuine signatures have "some level of pictorial resemblance that is observable and cannot be attributed to co-incidence or chance". Mr Anderson explained, "This observation just allows the FDE [apparently a reference to himself] to formulate hypotheses on how the questioned signature may have come into existence." 128 The two unsurprising hypotheses formulated by Mr Anderson in respect of the Westpac signatures were, first, that the writer of the specimen signatures wrote the questioned signatures "but in a manner outside the usual way this person writes their signature" and, secondly, that another writer wrote the questioned signatures making no attempt to copy the form of a genuine signature. 129 Senior counsel for Perpetual provided written submissions which included a careful and detailed analysis of all of the relevant signatures. In those submissions, it was noted that Mr Anderson did not consider the Westpac mortgage signed by David El-Bayeh in 1989. As with the impugned Westpac signatures, that signature (which is acknowledged to be genuine) is written, legibly, as "D. Bayeh". Bearing in mind that Mr Anderson did not consider that signature (written when David was 18), an alternative hypothesis is that the person who wrote the Westpac signatures in 2000 used the 1989 Westpac mortgage as the source of a genuine signature to be copied, but I accept that is a matter of speculation and I hesitate to place any great weight on it. 130 Owing to similarities between the questioned signatures in two of the Westpac documents and certain letter formations in the genuine signatures provided to Mr Anderson, he stated that it is not possible to eliminate the "specimen writer" (David El-Bayeh) from having written the questioned signatures on those two items. I have had careful regard to Mr Anderson's reservation in that respect. On balance, however, I am comfortably satisfied, on the balance of probabilities, that David El-Bayeh was telling the truth when he said that the signatures attributed to him on the Westpac documents are not his signatures. I am also satisfied on the strength of the evidence of both David and Youssef El-Bayeh that David had no knowledge of the Westpac loan approved in 2000 and that he did not give his authority or consent to that transaction.

Did David El-Bayeh sign any of the Perpetual documents? 131 I have already explained why, in large measure, I accept the evidence of David El-Bayeh. Particularly in relation to the events relating to the Perpetual documents, in my view there was an underlying consistency and cogency to his account. 132 An interesting feature of those events was his evidence that he voluntarily gave Youssef El-Bayeh a Power of Attorney in mid-2004. His evidence on that issue was objected to and rejected but subsequently cross-examined back in (T135). He said: "11. Until recently, I trusted my brother Joe implicitly to manage the property in my best interests. To that end, in about 2004 I gave him a power of attorney, which I now suspect was not valid. However, I never authorised him to borrow or encumber the property in any way that would diminish my interest in the property. 12. In about June 2004 Joe's son, Andrew Bayeh approached me to sign a document for Joe. Andrew Bayeh said to me, "Dad needs you to sign this" and handed me a document entitled 'Power of Attorney'. 13. I did not fully appreciate the nature and effect of the Power of Attorney when I signed it. Prior to that time, I had never before appointed any person to be my attorney, I did not attend upon a solicitor for the purpose of signing the Power of Attorney. Nor did I receive any independent legal advice prior to signing the Power of Attorney. While I signed the document in Andrew Bayeh's presence, my signature was not witnessed. It certainly was not witnessed by a solicitor. 14. I was simply asked to sign the Power of Attorney and `so I did. I did not know that it had to be certified by a solicitor." 133 It appeared to be common ground as between David and Youssef El-Bayeh that, in mid-August 2006, David was asked to attend the offices of Firmstones Solicitors where he was asked by Mr Sam Issa on behalf of Youssef to transfer the property to Youssef's son Andrew (see affidavit of David El-Bayeh sworn 14 July 2008 at paragraph 26; cross-examination of Youssef El-Bayeh at T296.28). David said it was around that time that he began his investigation into the financial arrangements surrounding the property.

134 One of the credit points made against David El-Bayeh invited the Court to doubt whether he had in fact alleged fraud in December 2006 (at the meeting with Mr Saadie). It was noted in that context that he made no such allegation during his earlier meeting with Mr Wingate even though, so it was contended, all relevant facts were then known. In fact, all that David El-Bayeh had been able to obtain by that stage was a copy of the Perpetual mortgage. He said he recognised the purported signature as "simply being the handwriting of Youssef El-Bayeh". That evidence was not challenged and is eminently believable. The next logical inquiry, in those circumstances, was whether the mortgage had been executed under the power of attorney. That is precisely the inquiry he made of Mr Wingate. In that context, it is unsurprising that David El-Bayeh did not articulate the conclusion, right then and there, that there must have been fraud, particularly in light of the fact that he believed a family member was involved. 135 In my assessment, David El-Bayeh's evidence in relation to the Perpetual transaction stands up well to the various attacks upon his credit. However, it is necessary also to consider the objective evidence as to the appearance of the signatures.

Consideration of the Perpetual signatures 136 Mr Anderson compared the genuine signatures with the questioned signatures on the six documents sent by facsimile to Perpetual by Mr Naaman on behalf of CTC on 18 August 2004. The documents bearing the questioned signatures were:

(b) Privacy Act "Consent and Acknowledgement" form dated 5 August 2004;

(e) Discharge Request and Authority and Direction" addressed to Westpac dated 5 August 2004;

(f) Lodoc Borrower's Income Declaration purportedly signed by David El-Bayeh in the presence of Mr Naaman on 16 August 2004. 137 It is important to note that, in the case of each of those documents, the signature and printed name attributed to the applicant were in the surname "El-Bayeh", not "Bayeh". The mortgage originally granted to Westpac in 1989 was in the name Bayeh. 138 In the absence of any evidence from Mr Naaman, I do not draw any comfort as to the authenticity of the signature on the last document from the fact that it was purportedly witnessed by him. 139 Mr Anderson stated that the questioned signatures on those six documents were pictorially similar to the genuine signatures. On that premise, the two hypotheses he formulated as to how the questioned signatures may have come into existence were, first, that the writer of the genuine signatures wrote the questioned signatures and, alternatively, that another writer wrote the questioned signatures attempting to copy the form of a genuine signature either freehand or by a tracing process. 140 Mr Anderson then undertook an analysis of inconsistencies between the questioned and genuine signatures. That analysis supported his second hypothesis. He concluded that there is very strong support that the writer of some of the specimens (David El-Bayeh) did not write the D El-Bayeh signatures on the six questioned documents sent by Mr Naaman to Perpetual. I do not think it is necessary to record the detail of Mr Anderson's analysis. I have given careful consideration to his evidence and see no reason not to accept his conclusion on that issue. 141 Mr Anderson gave separate consideration to the documents listed as his items 7 to 11 which include the mortgage and the loan agreement. Item 7 is a curious document. It appears to be the first attempt to provide the statutory declaration sought by Perpetual as a condition of the loan approval, but it is not even signed. The remaining items are all Perpetual documents in which the signature in question is the name "D BAYEH" written in capital letters. The only specimen Mr Anderson had for comparing such writing was a photocopy of a payment advice form bearing handwritten entries by David El-Bayehwhich included some capital letters. Mr Anderson concluded that there was greater support for the proposition that the writer of that document (David El-Bayeh) did not write the signatures in capital letters on items 7 to 11. He noted, however, that he had only limited material for comparison and on that basis could not express a definitive conclusion. 142 It was submitted on behalf of Perpetual that the anomaly of there being two such different kinds of signature (the cursive signatures on the documents submitted by CTC and the capitalised signatures on the loan agreement and the mortgage) is more readily resolved by concluding that they were all made by David El-Bayeh, rather than there being two impersonators. As already indicated, however, I do not think Youssef El-Bayeh would necessarily have had to pose as, or pretend to introduce, David El-Bayeh. I think it is perfectly likely that he simply presented to the two Justices of the Peace on his own. 143 The evidence of Mr Anderson analysed in the context of my own assessment of the evidence reinforces my conclusion as to the credibility of David El-Bayeh. I am comfortably satisfied on the balance of probabilities that he did not execute any of the Perpetual documents and that the transaction was entered into without his knowledge, authority or consent. I am also satisfied that he did not provide identification documents to Youssef or any other family member knowing that such documents would be used by CTC for the 100 point check. Does the forged mortgage secure any debt? 144 The conclusion that the Perpetual documents are forged is not the end of the matter. Perpetual submits that, even if David El-Bayeh's signatures on the mortgage and the loan agreement are forgeries, the Perpetual mortgage nonetheless secures the amount advanced. 145 That submission derives from the fact that the mortgage is registered. The principles as to the effect of registration of a forged mortgage have been considered in a number of decisions of this Court: see for example PT Limited v Maradona (1992) 25 NSWLR 643; Perpetual Trustees v Tsai [2004] NSWSC 745; (2004) 12 BPR 22,281; Chandra v Perpetual Trustees Victoria Limited [2007] NSWSC 694; (2007) 13 BPR 24,675 at [28]; Printy v Provident Capital Limited [2007] NSWSC 287. As explained in those decisions, although at common law a forged mortgage is not enforceable, absent fraud on the part of the mortgagee, the fact of registration confers indefeasible title under the Real Property Act 1900 to the interest in land that it purports to create. 146 The critical inquiry, however, is to identify on the proper construction of the mortgage what obligation it secures: Chandra at [28]. The outcome of that inquiry may be that the interest in land created by the mortgage, although indefeasible, secures nothing. However a mortgage that, properly constituted, secures an obligation owed to the mortgagee notwithstanding the fraud will, upon registration, confer indefeasible title in respect of that interest in the land. 147 The Perpetual mortgage in the present case consists of a single page mortgage, an annexure setting out additional provisions and a standard form memorandum filed at the Office of Land and Property Information. By clause two in the annexure, the mortgage is amended so as to provide: "David Bayeh, for the purposes of securing to the mortgagee the payment of the amount owing , mortgages to the mortgagee all the mortgagor's estate and interest in the land specified above, and covenants with the mortgagee that the provisions set out in annexure A and/or the memorandum specified below are incorporated in this mortgage"(my emphasis). 148 The "amount owing" is defined as follows (on page 12 of the memorandum incorporated in the mortgage): "means, at any time, all money which one or more of you owe us, or will or may owe us in the future, including under this mortgage or an agreement covered by this mortgage . Without limiting this definition, it includes money owing (or which will or may be owing) to us in our capacity as an assignee because we have taken an assignment of an agreement covered by this mortgage or this mortgage itself, and whether or not: you were aware of the assignment or consented to it; or the assigned obligation was secured before the assignment; or the assignment takes place before or after this mortgage is delivered." 149 The term "you'" is defined throughout the mortgage and the annexure to mean the mortgagor which, of course, is David El-Bayeh. 150 The combined effect of those provisions is that the mortgage is security only for amounts owed to Perpetual by David El-Bayeh, not amounts owed to it by Youssef El-Bayeh. Perpetual did not contend otherwise. It was submitted, however, that David El-Bayeh owes money to Perpetual on the basis that the funds advanced in 2004 were paid under a mistaken belief to or for his benefit so as to give rise to an obligation on his part to give restitution of the unjust enrichment. 151 Mr McKeand submitted (at the heel of the hunt) that the relief claimed by Perpetual on that basis has not been properly pleaded. I reject that submission, for the reasons advanced in Perpetual's submissions in reply (filed with leave after the conclusion of the hearing). 152 It may readily be accepted that the payment was made on Perpetual's part under a mistaken belief. The critical task is to enquire whether it was paid to or for the benefit of David El-Bayeh. Perpetual submitted that, if it was, that fact would give rise to a prima facie obligation on David El-Bayeh to make restitution in the sense of compensation for the benefit of unjust enrichment to the person sustaining the detriment: ANZ Banking Group Limited v Westpac Banking Corporation (1988) 164 CLR 662 at 673.4. 153 As explained in David Securities Pty Limited v Commonwealth Bank of Australia (1992) 175 CLR 353 at 379.6, before such prima facie liability is displaced, "the respondent must point to circumstances which the law recognises would make an order for restitution unjust. There can be no restitution in such circumstances because the law will not provide for recovery except when the enrichment is unjust".

Was David El-Bayeh unjustly enriched by the payment? 154 It was common ground that the funds advanced by Perpetual were distributed:

(a) as to $181,982.87, to discharge the Westpac mortgage;

(b) as to $291,583.61, into a Westpac account (probably the account opened by David El-Bayeh for the use of Youssef El-Bayeh). 155 In order to determine whether David El-Bayeh was unjustly enriched by the payment made to discharge the Westpac mortgage, it is necessary to determine what debt was secured by that mortgage. The Westpac mortgage (Exhibit C) secures: "the payment of the moneys described in the memorandum referred to in the schedule ("the memorandum") as "the moneys hereby secured".

The term "the moneys hereby secured" included any money paid to or for "the Debtor" either alone or jointly. The term "the Debtor" was defined in the schedule on the first page of the mortgage to mean "the said David Bayeh and Youssef El-Bayeh of Ryde Investor". 156 The combined effect of those provisions is that the Westpac mortgage secured amounts owed to Westpac by Youssef El-Bayeh alone. Plainly Youssef El-Bayeh had an obligation to Westpac to repay the second Westpac loan, where those funds were advanced to him without David El-Bayeh's knowledge, authority or consent. It follows that the payment of $181,982.87 made by Perpetual had to be made in order to obtain the discharge of the Westpac mortgage regardless of the circumstances giving rise to that debt. In my view, David El-Bayeh has been enriched by that payment, unjustly to the detriment of Perpetual. The loss was otherwise his to bear. For that reason, in my view, Perpetual is entitled to judgment in that amount and the Perpetual mortgage secures that sum. 157 As to the amount of $291,583.61 paid into the account in David El-Bayeh's name, Perpetual submitted that David El-Bayeh plainly received those funds (by their payment into an account held in his name). It does not follow, however, that he was unjustly enriched in that amount. Perpetual relied on the fact that it was as a consequence of David El-Bayeh's own actions in clothing Youssef El-Bayeh with authority to conduct the Westpac account that the money received was thereafter lost. That submission overlooks a critical step in the fraud. It was not the opening of the Westpac account that clothed Youssef El-Bayeh with the authority to borrow a further $480,000 against the security of David El-Bayeh's property, but the forgery of the Perpetual mortgage and loan agreement. 158 Mr McKeand invited the Court to analyse the consequences of the payment made into the Westpac account in accordance with the discussion in the decision of the Court of Appeal in Heperu Pty Ltd v Belle [2009] NSWCA 252; (2009) 258 ALR 727. In that case, cheques handed to Mr Cincotta by the appellants for investment were misappropriated by him and deposited into a Perpetual account in the name of his wife, Ms Belle. Funds were then withdrawn from the Perpetual account and deposited into a Westpac account also in her name. The appellants sued Ms Belle to recover the misappropriated funds. 159 One of the grounds on which it was alleged that Ms Belle was liable for funds deposited into and withdrawn from the Perpetual account was that she had given Mr Cincotta authority to operate those accounts. The Court held that she was not so liable, because the depositing and withdrawing of the misappropriated funds was beyond the scope of any authority she had given to Mr Cincotta. In particular, the Court held that any general authority that might have been given to him to operate the account as her agent did not extend to using the account to deposit and withdraw funds fraudulently obtained: at [60] per Allsop P; Campbell JA and Handley AJA agreeing at [179] and [180] respectively. There is a strong analogy between those facts and the facts of the present case. 160 It was submitted on behalf of Perpetual that the decision in Heperu is readily distinguishable because the authority given by David El-Bayeh to Youssef El-Bayeh was to deal as he saw fit with moneys otherwise payable to David El-Bayeh. Perpetual submitted that the fraudulently obtained proceeds were not those obtained from strangers but moneys "made payable" to David El-Bayeh that Yousef El-Bayeh was plainly authorised to pay into and out of the Westpac account. 161 In my view, that submission overlooks the central aspect of Youssef El-Bayeh's fraud that the loan funds were made payable to David El-Bayeh in name only. Adopting the analysis applied in Heperu, Perpetual has no remedy against David El-Bayeh in respect of the funds deposited into the Westpac account. 162 I am not satisfied that David El-Bayeh has any obligation to Perpetual in respect of the sum of $291,583.61 paid into the Westpac account. It follows that Perpetual is not entitled to judgment in that amount and that the Perpetual mortgage does not secure that sum. Perpetual's claim against Youssef El-Bayeh 163 As submitted on behalf of Perpetual, Youssef El-Bayeh's evidence discloses beyond any dispute that, however the Perpetual loan was obtained, he was involved in the process of obtaining it. Accordingly, it follows from my conclusions as to David El-Bayeh's forgery allegations that Youssef El-Bayeh participated in the forgeries. I am satisfied on that basis that Perpetual is entitled to judgment against Youssef El-Bayeh for the whole amount claimed.

Perpetual's claims against CTC and Mr Saadie 164 Perpetual relies on the following obligations on CTC under the Mortgage Origination Deed: "(a) To use its "best endeavours": clause 2.1; (b) To satisfy itself that information in a loan application was correct: clause 2.4; (c) To exercise all proper care and diligence and make such inquiries as a prudent lender would to ascertain genuineness, accuracy and completeness: clause 2.5; (d) To comply with the Guidelines: clause 2.6; (e) To disclose any circumstances that could cause a prudent lender to regard the loan or the mortgage as unacceptable: clause 3.11(d); (f) To fully investigate applications: clause 3.11(f); (g) To avoid fraud, dishonesty, misrepresentation and negligence: clause 3.11(h); (h) To indemnify for breach: clause 14.3(d)."

165 The principal difficulty with the claim against CTC is an absence of evidence. As already indicated, CTC did not seek to establish that reasonable steps were taken to secure Mr Naaman's assistance as a witness in the case. However, Perpetual did not expressly invite me to draw any inference from his absence (only Mr McKeand made that submission). 166 Against that background, Perpetual's claim against CTC was put on the basis of the following material facts. First, in light of the undisputed fact that Mr Naaman obtained a photocopy of David El-Bayeh's passport, it was put that he had the means of identifying David El-Bayeh by reference to the passport photograph. As noted on behalf of CTC, however, the possibility remains that a family member with a resemblance to David El-Bayeh impersonated him in that meeting. In the absence of any reliable account as to what transpired in Mr Naaman's office, it is not possible to reach any firm conclusion on that issue. I suspect what happened was that Mr Naaman was prevailed upon to accept David El-Bayeh's identification documents without ever actually meeting David El-Bayeh, but suspicion is not enough to satisfy Perpetual's onus of proof on this issue. 167 The second matter relied upon by Perpetual is that Mr Naaman was on notice that the funds were to be raised for the purposes of Youssef El-Bayeh. So much is apparent from Youssef El-Bayeh's affidavit, where he said (at paragraph 23): "I about August 2004 a friend referred me to a brokerage firm called "CTC" in Parramatta. I attended the offices of CTC and I spoke with a person by the name of Naaman and we had a conversation with words to the following effect: I said: "I have a property in Parramatta that's in my brother's name that I need to borrow money on. Can you help me?" He said: "I will need the property details, valuation fees, details of the current loan and some information from your brother" I said: "ok, good, I will give my brother your details and get him to talk to you. You can get any information that you need about him from him and I will get you some details about the property." 168 Once again, however, the difficulty remains that it is not known whether Mr Naaman subsequently did speak to a person who did a convincing impersonation of David El-Bayeh. 169 The final matter relied upon by Perpetual is that it would be normal practice for a mortgage originator to check the passport photograph against the applicant for the loan, as accepted by Mr Saadie in his evidence (at T241.45-T242.15). Perpetual submits that, if Mr Naaman had done that, there must have been a difference between the impersonator and the photograph. That point is in substance the same as the first point. 170 Perpetual did not seek to place any reliance on the appearance of the signatures themselves. It was noted on behalf of CTC that even David El-Bayeh conceded the appearance of similarity between the signatures attributed to him on the loan application submitted by CTC and his own signature. Mr Gregg noted the pictorial similarity between the two and the fact that it required a microscopic examination of the kind carried out by Mr Anderson to induce the observer to a different conclusion. He submitted that Mr Naaman could not reasonably be expected to have concluded that the signatures were forged. 171 I confess I have not found this issue easy to determine. I think there is some force in Perpetual's contentions that any impersonation should have been detected and that a failure to detect it was a breach of CTC's obligations under the Mortgage Origination Agreement by reason of a failure to carry out basic identification procedures. The difficulty arises partly from the fact that the primary case put by all parties opposed to David El-Bayeh was that all of the relevant signatures attributed to him were genuine. I make no criticism of that approach, but it had the result that alternative scenarios were not so vigorously explored in the evidence. 172 The result is that, although I have my suspicions, I am not satisfied to a state of actual persuasion that Mr Naaman was anything other than the victim of a convincing fraud. It follows that I am not satisfied that there was any breach of duty on the part of CTC. It may appear to be a surprising result that a mortgage originator can defeat a claim based on a forged transaction without calling evidence from the person who put forward the transaction. That is only one of a number of difficult features of the present case. As noted by Mr Gregg on behalf of CTC, a Jones v Dunkel inference is no substitute for positive proof. 173 Ultimately, the evidence has not brought me to a state of satisfaction as to any of the breaches of duty or statute alleged. The bare fact of the fraud, without any reliable evidence as to what happened in the meetings that brought it about, is not enough to establish that Mr Naaman did not act with reasonable care. It follows that Perpetual's claims against CTC and Mr Saadie must be dismissed. Proportionate liability 174 It is accordingly unnecessary to deal with the issues of contributory negligence and apportionment raised in CTC's defence. I should note that both Perpetual and CTC provided detailed submissions both during and after the hearing as to whether Perpetual's claims against CTC and Mr Saadie amount to claims for damages within the meaning of the Civil Liability Act 2002 and addressing the issue of proportionate liability under that Act. I am indebted to counsel for the assistance provided in those submissions but it has not ultimately been necessary for me to determine that issue, in light of the conclusions I have reached. David El-Bayeh's cross-claim against Youssef El-Bayeh 175 It follows from the conclusions I have reached as to the Westpac documents that David El-Bayeh is entitled to an indemnity from Youssef El-Bayeh for the difference between the judgment debt against him of $181,982.87 (the sum applied to discharge the Westpac mortgage) and the sum of $68,517.68 representing the final loan repayment on the original Westpac loan.

Youssef El-Bayeh's cross-claim against David El-Bayeh 176 It was undisputed that the purchase of the property was funded by the original loan from Westpac and that Youssef El-Bayeh made all of the repayments. The evidence did not establish the precise amount of the original loan but it seems likely to have been in the order of $162,000, being the purchase price of $180,000 less a 10% deposit. Mr Robinson submitted that it should be presumed in those circumstances that the parties intended that the beneficial interest in the property be held by Youssef. 177 It is necessary, however, to consider those bare facts in their context. The only evidence as to Youssef's intention when the property was acquired in David's name was Youssef's evidence that he purchased the three properties for his brothers' own benefit, not for his benefit. That was said, not so much by way of concession but as a point of pride. In my view, that is the clearest evidence of an actual intention that the property was to be beneficially held by David El-Bayeh. Any presumption of an implied or resulting trust in accordance with the parties' contribution to the purchase price must yield to that evidence: Brennan v Duncan [2006] NSWSC 674 at [13] per White J. 178 It follows, in my view, that Youssef El-Bayeh has failed to establish the existence of any implied trust. His cross-claim must be dismissed.

Conclusion 179 In light of my conclusion that the Perpetual mortgage is forged, it should not stand on the Register. However, it should only be discharged subject to some appropriate protection of Perpetual's entitlement to receive the sum of $181,982.87 from David El-Bayeh. Whether that should be achieved by David El-Bayeh paying that sum immediately or granting a fresh mortgage or charge over the land to secure that sum is an issue to which the parties may wish to give consideration. Accordingly, it is appropriate that I simply direct the parties to bring in short minutes of order in accordance with these reasons, failing agreement as to which I will list the proceeding for further hearing as to the form of orders I should make. **********

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