PERPETUAL TRUSTEES VIC LTD v BODIROZA

SOLICITORS : Kemp Strang Bozinovska & Co

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

PERPETUAL TRUSTEES VICTORIA LIMITED v Slavica BODIROZA

JUDGMENT 1 RS HULME J: The Defendant is the owner of land at 7/118 Elizabeth Drive Liverpool, being the land contained in CT Folio Identifier 7/SP12051. Pursuant to mortgage number 939257, dated 24 January 2003, the Plaintiff is the mortgagee of that land having, on or about that date, lent the Plaintiff a sum of $160,000 that was employed by the Plaintiff in the purchase of the property for the sum of $200,000. 2 The Plaintiff claims that as at 19 February 2007 the Defendant was in default in an amount of $2,887.22 on account of "principal, interest and fees" that had not been paid when due, and that she further failed to comply with a default notice served on 27 February 2007. By an Amended Statement of Claim filed on 27 October 2008, the Plaintiff claims:- (i) An order for possession of the land, or alternatively (ii) An order for restitution in the sum of $160,000 and (iii) Interest. 3 In fact the Plaintiff's payment records show that the Defendant made her first payment of interest on 24 February 2003. On the following day, the payment was dishonoured and she thus fell into default. A payment in March 2003 was also dishonoured although the Defendant seems to have substantially made up the 2 dishonoured payments later in March. Other dishonoured payments occurred in January and May 2004 and in a number of months of 2005 and 2006. However the extent of the default at any one time seems not to have exceeded about $1,500 until June 2006. It fluctuated for some time above and below this figure until November 2006 when it reached about $2,500 from which time it never reduced below that amount. By June 2007 it reached $10,000. There were then some payments but in July 2007 it was $8,000 after which it has increased because of both non-payment of interest and legal fees. 4 In the Defence filed the Defendant indicated reliance on the Contracts Review Act and a number of the provision of the Consumer Credit Code. However, at the time of trial, it was only the first of these that was relied upon. 5 In opposition to the Defendant's claim the Plaintiff sought to rely on, inter alia, a number of documents said to have come into existence prior to the advance of the money and execution of the mortgage. The circumstances in which those documents came into existence were in issue as was the question whether what purports to be the Defendant's signature on a number of the documents is really hers. For reasons not readily understandable in light of such a challenge to the documents, the parties were content to rely on, with some exceptions, photocopies. However, that was the form of the evidence and I must do the best I can with it. 6 Additional complications arose because of the multiplicity of intermediaries who were involved in the effecting of the original transaction between the Plaintiff and the Defendant. It is convenient to outline these and their roles at this stage. 7 The Plaintiff is the trustee of a number of trusts from which funds are lent to persons wishing to borrow. At the time with which I am concerned, the decision as to whether any particular application for a loan should be granted was made by a wholesale finance company, Challenger Mortgage Management Pty Ltd, previously known as Interstar Wholesale Finance Pty Ltd and Interstar Securities (Australia) Pty Ltd. It will be convenient to refer to this company as "Challenger" and "Interstar". Mr Wort, a senior officer of Challenger agreed that Challenger acted as the agent for the Plaintiff and gave evidence that Challenger's practice involved the receipt of loan applications forwarded by "a loan originator" or broker. 8 Howard Pacific Finance Pty Ltd (hereinafter referred to as "Howard Pacific") was such a loan originator and offered mortgage broking services. There were lengthy "Mortgage Management" and "Loan Origination and Mortgage" Agreements between Challenger and Howard Pacific that came into evidence. Mr Wort said that he was aware that mortgage originators sometimes had loans introduced to them by other mortgage brokers. 9 That happened in this case. Indeed, there were 2 intermediaries or brokers between the Defendant and Howard Pacific. The mortgage broker who actually saw the Defendant was a Mr Milan Vlasic. Although Mr Vlasic initially said that he forwarded the Defendant's application for finance to Howard Pacific, it became clear that he in fact sent it to another company Anagold Pty Ltd and that Anagold then communicated with Howard Pacific. 10 The evidence indicates that, so far as the transaction the subject of these proceedings is concerned, the person who acted as, or on behalf of, Anagold was an Anastasia Sourlas. A Company Search reveals that, until April 2000, she had been the sole director and secretary of that company although from that time those roles were taken over by a Mr Ornelas. What practical difference, if any, that made to the day to day operations of Anagold was not the subject of evidence. At all relevant times Ms Sourlas was however the sole director and secretary of another company Anatax Pty Ltd that carried on business from the same address as Anagold, viz 14 King St, Warrawong. Anatax carried on business under the name of Master Tax Service. 11 Warrawong is a place some little distance south of Wollongong. Howard Pacific carried on business in Wollongong. The Plaintiff lived at 11 Idress Place, Edensor Park, a suburb near Liverpool. 12 The course of events and documentation that occurred between the initial meeting between Mr Vlasic and the Defendant and the Plaintiff's advancement of funds, though not entirely clear, is of significance in the case and must be referred to. 13 According to the Defendant, she was awarded some $42,000 in consequence of some accident in which she was involved. She then saw some solicitors Stoikovich Banfield Macri about buying a home unit. Mr Novakovic of that firm told her to find a unit. She approached an estate agent and did so. She was aware that $42,000 was not enough to pay for the unit and approached the solicitors to obtain more, telling them she was a pensioner. They told her to obtain a statement from the Social Security Department showing the extent of her pension and then they would arrange for a broker to see her. 14 Mr Vlasic then called. According to the Defendant she showed him the Social Security statement. He said that he did not need to see that but did need to know how much money she had in the bank. Although her evidence was not all consistent on the topic she seems to have shown him a bank statement evidencing the $42,000 and then he gave her some paperwork to sign in a number of places. According to the Defendant, Mr Vlasic did not tell her the nature of the documents she was signing. However, she gave evidence to the effect that the solicitor who organised for Mr Vlasic to come told her that when a broker came she was supposed to sign papers in relation to her loan. Mr Vlasic also told her she was supposed to sign something for the loan. 15 Mr Vlasic who had little or no memory in respect of some aspects of the particular transaction gave evidence that he commenced business as a mortgage broker in February 2002 and in about November 2002 attended the home of the Defendant where he spoke to her in Serbian. His contact with her was probably inspired by a call from Stoikovich Banfield Macri and he probably phoned the Defendant prior to the one occasion on which he saw her. He said that she had told him she wanted to buy a property for herself and her son and in which she was going to live. She said that she had some money for a deposit and when asked how she could service the loan said that she was working as an artist. Mr Vlasic could not recall whether the Defendant showed or faxed any documents to him regarding her income or assets or capacity to repay. Neither could he recall whether he knew that the Defendant was in receipt of Centrelink payments. Mr Vlasic said he helped the Defendant to complete a Howard Pacific Finance application form and perhaps one or two forms for other potential lenders. He asked her also to sign a form in relation to the Privacy Act and, in his affidavit of 5 May 2008, said that, "As I recall, the documents of Ms Bodiroza were sent to Howard Pacific Finance." These may also have included an application for a First Home Buyer's grant. 16 Mr Vlasic said that it was his usual practice to translate a mortgage finance application for to a client if that client spoke Serbian but little or no English and to tell those seeking loans words to the effect:- "You realise that the property will be in your name but you cannot dispose of it or do other things with it without the consent of the mortgagee. Your minimum monthly repayment will be based on the indicative interest rates. If interest rates increase, so will your repayments. Can you re-service the loan? Your repayments will be likely to be… if you think that you will be making good money from this property by selling it in one year, you may be disappointed. Don't expect the market to go up, because it may not happen. The property market may even fall in the short term, but in the long term properties do go up." 17 Mr Vlasic said that he did not receive any payment from Mrs Bodiroza for arranging her loan but believed that he received some from the Plaintiff or Howard Pacific or, when regard is had to later evidence he gave, Anagold. The amount was 0.6% of the money lent. He did not notice any ill health either physical or mental in Mrs Bodiroza. He said that a few months after the transaction she rang him many times and said words to the effect that she had some plans to buy some town houses, possibly with someone else, and asked if she could get a further loan and what the repayments would be. Mr Vlasic said that he had no recollection of the figures discussed. 18 In evidence, Mr Vlasic retreated from his statement that he had sent documents to Howard Pacific, saying that he sent them to an organisation or a company named Anagold, that he seems to have thought was associated with Howard Pacific. Asked if the documents were sent to anyone in particular, he mentioned Anastasia Sourlas and Kylie. 19 At one time Mr Vlasic said that Anagold was a close associate of Howard Pacific. This description was objected to and struck out although there was no objection later when Mr Vlasic described Anagold as "part of Howard Pacific". Mr Vlasic went on to say that he did not know how they were organised. Mr Vlasic was not asked why he sent documents to Anagold rather than Howard Pacific. 20 Mr Vlasic agreed in cross-examination that anyone borrowing $160,000 who was on Social Security and with no other apparent source of income might have difficulty in servicing the loan. He said that he would have asked as to the Defendant's income but had no recollection of her response beyond that she said she was an artist. He had the impression that she was in receipt of more than merely Social Security payments but in the witness box he seemed quite unsure. He agreed with counsel for the Plaintiff that he would not have organised the loan if the Defendant had told him that her only income was Centrelink payments. 21 On the other hand, when counsel for the Plaintiff put to Mr Vlasic that it was his invariable practice to obtain information from a person regarding his or her finances when they were seeking to obtain a loan, Mr Vlasic replied:-

"Not necessarily. If they have got a deposit, if they are self employed, if it's a loan (sic) doc so I don't recall."

22 It is convenient next to refer to the documents that came into evidence and seem to me potentially relevant. They were not all in a logical order at the time of tender and I set them out so far as I can in chronological sequence, although in the case of some of them the date I have selected is a fax transmission date rather than the original date of the document. I should record that in the case of Exhibit A, pages 1 - 17 were admitted with the reservation that at the time of tender the signature was not proved and they were admitted subject to their relevance being shown. As will become apparent from my reference to them, I am satisfied that those documents are relevant and this whosever signature they bear. Date Document Exhibit Comment (i) Undated Loan Application Ex A, p1,2 Mr Merceica says that pages 1-7 were part of this document (ii) 25.11.02 Loan Disclosure Form, Ex A, p3 Purports to be signed by Defendant (iii) 25.11.02 Declaration of Purpose Ex A, p4 DITTO (iv) 25.1.02 Loan Purpose Checklist Ex A, p5 DITTO (v) 25.11.02 Privacy Act 1988 Consent Ex A, p6,7 DITTO (vi) 25.11.02 Fax of photocopy of Defendant's credit card Ex F In Exhibit, a copy of Defendant's passport & citizenship certificate signed by Anastasia are attached (vii) 26.11.02 Baycorp report on Defendant Ex 1,p13-14 (viii) 26.11.02 Faxed copy of 2 pages of Defendant's passport Ex B (ix) 26.11.02 Faxed and re-faxed copy of 2 pages of Defendant's passport Ex E (x) 26.11.02 Fax transmission sheet, HP to Anastasia, attaching HP letter to Defendant acknowledging application, indicating conditional approval & enclosing documents for signing; also attaching faxed copy of Ex E Ex 2 Page numbers do not match statement on transmission sheet (xi) 26.11.02 HP letter to Defendant, acknowledging application, indicating conditional approval & enclosing documents for signing Ex 1,p 15-22 Purports to have been signed and initialled by Defendant on 27.11.02 (xii) 26.11.02 Fax to Anastasia including copy of (xi) and copy of fax of passport to Anastasia Exhibit 2 Numbers of pages don't reconcile (xiii) 26.11.02 Fax Vlasic to SBM attaching copy of part of (xi) Ex D Annexures bear fax numbering that totality of faxes indicate denotes Anagold (xiv) 30.11.02 Valuation of subject property Ex 1, p23-31 (xv) 02.12.02 Fax HP to Interstar forwarding application for finance (Total pages 29) Ex 1, p35 Probably included documents (i) .. above Fax at 12.30 & circa 13.12 (xvi) 02.12.02 Copy Documents (i) - (v) above and copy 2001 and 2002 Tax Returns faxed from HP Ex A, p1-15 Documents and tax returns purport to be signed by Defendant (xvii) 02.12.02 HP Certification to Lender Exhibit 4 (xviii) 02.12.02 Interstar decision & summary of checks Ex 1, p 32-33 (xix) 02.12.02 "Preliminary Loan Approval" by Interstar Ex 5 Fax to 0242293447 at 14.37 (xx) 02.12.02 Fax Vlasic to SBM enclosing HP letter advising formal approval Ex C Fax times 16.22 & 17.22 (xxi) 05.12.02 Accountant verification, signed by K Smith Ex 1, p36 (xxii) 16.12.02 Letter First Title Secure to SBM enclosing documents & instructions re settlement Ex 1, p50-52, 55-56 I infer pages 55-56 are part of this letter Loan Offer/Agreement (xxiii) 16.12.02 Ex A, p18-27 Includes undated acceptance purporting to be signed by Defendant Ex A, p28-80 Interstar Terms and Conditions Booklet referred to in Loan Offer (xxiv) 18.12.02 SBM file note - "Bodiroza …Appt for 11.00 Fri 10/12/02 Re mortgage docs" Ex 1, p38 (xxv) 20.12.02 Borrower's acknowledgment of reading documents and having chosen not to receive legal advice Ex 1, p48, Ex A , p 17 Purports to be signed by Defendant. (xxvi) 20.12.02 Direct debit request Ex 1, p49 Purports to be signed by Defendant. (xxvii) 20.12.02 Applicant's financial summary Ex A, p16 Purports to be signed by Defendant & refers to $60,408 income (xxviii) 23.12.02 Copy SBM letter to First Title Secure enclosing 10 documents including Loan Agreement, Mortgage, Borrower's acknowledgement and Financial Summary Ex 1, p 41-47 Not all enclosures included. None signed, unless page 48 should be included as an enclosure (xxix) 27.12.02 Faxed letter First Title Secure to SBM Ex 1, p53-54 Settlement to be 17.1.03 - more requirements (xxx) 22.01.03 Letter First Title Secure to P & Ors Ex 1, p 57-58 Settlement has been effected (xxxi) 23.1.03 Copy Cheques to HP and valuer Ex 1, p 59 (xxxii) 24.01.03 Original mortgage, loan contract and borrower's acknowledgement re legal advice Exhibit H (xxxiii) 24.01.03 Photocopy mortgage Ex A, p81-82 Memorandum Ex A, p83-99 (xxxiv) 28.01.03 SBM costs memo to Defendant re purchase Ex 1, p 61 No charges for mortgage (xxxv) 29.01.03 Letter First Title Secure to HP enclosing cheques to HP & valuer Ex 1, p 59-60 Settlement was on 24.1.03 - Herewith your fee - $2310

23 To the above list should be added an undated handwritten file note of Stoikovic Banfield Macri contained in Exhibit 1. Without attempting to reproduce the form of the document exactly, it reads, inter alia:- "P/att Bodoriza Mrs Slavica A/c 11.15 pm Perpetual Trustees Vict 6.45 … 10 year 2 days notice of addit… … penalty _________________________ Interest only 10 years Default rate 2% ________________________ Mortgage Default Provisions explained Explained CGT consequences Well aware of loss of subsidy if contribute … " 24 The document Exhibit B and which I have numbered (viii) or a prior copy of it was faxed from Bonnyrigg Post Office on 26 November 2002 by the Defendant. Mr Vlasic sent or delivered this to Anastasia after writing on it:- "Anastasia Re: ID for Slavica Bodiroza Care: Interest only option required." 25 Ex E is another copy of Ex B with an additional fax note that does not belong to Mr Vlasic. A comparison of the additional fax note with others bearing numbers and in a similar style tends to indicate that Exhibit E was sent from Anagold. 26 Exhibit D is a letter of conditional approval from Howard Pacific addressed to the Defendant indicating conditional approval of the loan application. The letter seems to have been faxed from Howard Pacific to someone and then to Mr Vlasic who sent it to Stoikovic Banfield Macri, all transmissions occurring on 26 November 2002. The letter requested that the Defendant read it and its enclosures carefully as they outlined the proposed terms and conditions of the loan facility, and sign an "Acknowledgment" enclosed and initial a copy of the letter and attached schedule. A fuller copy of this documentation is contained in Exhibit 1 where 6 pages seem to have been initialled with the letters "SD" (not "SB") and the "Acknowledgment" purports to bear the Defendant's signature beside the date 27/11/2002. 27 The schedule stated the total loan amount to be $160,000, the "indicative repayment at 6.5% was $860.00" and by markings in rectangles stated that something was "variable" and that there was interest only for 10 years. There was also a 3 page "Guide to the Howard Pacific Home Loans Premium Facility" which contained a considerable amount of detail. The "ACKNOWLEDGEMENT" was so entitled and made a number of representations including, immediately above what purports to be the Defendant's signature, the statement "I/we state that the Lender may rely on the entire contents of this Acknowledgement and the contents of the letter that accompanied it."

28 Exhibit C is a letter of approval from Kylie Smith addressed to the Defendant indicating approval of the loan application. The letter seems to have been faxed from Howard Pacific to someone and then to Mr Vlasic who sent it to Stoikovic Banfield Macri. All of these transmissions seem to have been on 2 December 2002. 29 Mr Vlasic agreed, as do I, that the "someone" to whom Howard Smith sent Exhibits C and D was Anagold. 30 I turn then to the evidence bearing most directly on the question whether a number of the documents were forged or fraudulent. 31 In handwritten entries in the portion of the Loan Application I have numbered (i), the purpose of the loan was described as "to purchase first home at 80% lend". The space for liabilities was entirely blank and the Defendant's assets were described as:- FHOG (First Homeowners Grant) $7000.00 Cash $42,000.00 Deposit paid $500.00 Furniture $50,000.00 32 The Defendant herself was described as a "self employed dressmaker" and as having been employed in that capacity for 3 years. Her "salary" and total income was said to be $59,000.00. There was no indication that the Defendant owned a motor vehicle. 33 Towards the foot of that document there was a "Loan Assessment Check List" referring to numerous documents including, for "Self-Employed Individuals", "Copy of last 2 years tax returns and tax assessment notices". None of the dozen or so items on the Check List were ticked in the boxes provided and on the first page spaces provided for a driver's licence number and accountant's name were also left blank. There is no provision for signature on these pages. 34 The document, or part of the Loan Application, described as a "Loan Disclosure Form" and which I have numbered (ii), contained a statement of the amount of the loan, the borrower's name, that the borrower applied for credit and the information set out in the application was correct, that the borrower agreed to pay loan application fees and charges and was aware that the credit provider might be paying commissions. That page, dated 25/11/02, purported to be signed by the Defendant. 35 The document, or part of the Loan Application, entitled "Declaration of Purpose" was in two parts. The first part declaring that the credit to be provided was wholly or predominately for business or investment purposes was, so far as is relevant, left blank. The second part which dealt with the addresses to which documents under the Consumer Credit Code were to be sent had no addresses stipulated, was dated 25/11/02 and also purported to be signed by the Defendant. 36 The document or part of the Loan Application entitled "Loan Purpose Check List" described as the purpose of the loan "to purchase a residence to be owner-occupied", was dated 25/11/02 and also purported to be signed by the Defendant. 37 The document or part of the document entitled "Privacy Act 1988 Consent" included an acknowledgement to the effect that the Plaintiff had made an application for credit from First Pacific NSW Pty Ltd (not Howard Pacific) and described the "Lender" as "Interstar Securities (Australia) Pty Ltd (and associated entities). Four other entities were listed under the description "insurer". This document was dated 25.11.02 and also purported to be signed by the Plaintiff. 38 The documents bear indications from a fax machine that they was sent from Howard Pacific Finance Wollongong as pages 4-7 and 9-11 of a 29 page fax sent on 2 December 2002. The reference to 29 pages and the nature of the document suggests that these pages accompanied the Fax Transmission cover sheet that was page 35 of Exhibit 1 and which contemplated being sent from Howard Pacific to Interstar. 39 Part of that fax also purported to be copies of tax returns for the Plaintiff for the years to 30 June 2001 and 30 June 2002 in a form normally used for electronic lodgement. The 2002 return disclosed the Plaintiff as having a net income from a business as a dressmaker of $60,408, a gross income of $79,145 and expenses totalling $18,737 including motor vehicle expenses of $2,765. 40 The 2001 return contained corresponding entries resulting in a net income for that year of $57,720. 41 Both returns referred to the Tax Agent as "Master Tax Service", purported to be signed above a contact name of Anastasia Sourlas, were undated and in the copies tendered had the TFN, client's reference and agent's reference number obliterated. The obliteration could possibly have been a consequence of photocopying a partly highlighted document but the depth of the black in the obliteration marking is more suggestive of use of a black felt pen or the like having been used either to obliterate what was underneath or to give that impression. Interstar's Manual that became Exhibit 3 required that the Tax File Number, of any proposed borrower be concealed. 42 The two tax returns formed pages 21-27 of the 29 page fax. Apart from pages 4-7, 9-11 and the Fax Transmission sheet to which I have referred, there was no evidence as to what the balance of the 29 pages were. 43 Another group of documents seem to have come into existence on and after 16 December 2002 when First Title Secure, an organisation that seems to have been acting as conveyancers for the Plaintiff wrote to Stoikovich Banfield Macri enclosing a number of documents identified on a checklist for signature and clearly appropriate for the effecting of a transaction of the nature sought by the Defendant. On 23 December Mr Miljevic of Stoikovich Banfield and Macri wrote back to First Title Secure returning those documents. Of the 10 listed in the letter of 23 December, there are in evidence photocopies of documents of the same description that purport to bear the Defendant's signature, viz: 1. Loan Agreement Table, Item (xxiii) 2 Mortgage (now stamped) Table, Item (xxxiv) 3. Borrower's Acknowledgment Table, Item (xxv) 4. Applicant's Financial Summary Table, Item (xxvii) 7. Direct Debit Request. Table, Item (xxvi) 44 In addition, late in the trial, there were tendered and admitted as Exhibit H original versions of the documents just listed as 1, 2, and 3 together with 2 unexecuted pages or documents one of which was appropriate for use if the Defendant had received independent legal advice regarding the loan and security documents and the other, drafted for completion by an interpreter, if an interpreter had been present and translated conversation between a solicitor and a borrower. 45 The Loan Agreement is a 10 page document, largely in tabular form containing a great deal of detail albeit some noted as "not applicable" in the Plaintiff's case. The opening paragraph of the document records "the Lender offer You a Loan on the terms and conditions of this Loan Offer and the additional terms and conditions contained in the Interstar Loan Terms and Conditions Booklet." 46 The Agreement recorded, in addition to the matters to be expected, that the total credit fees and charges ascertainable at that time were $1,852 and that commission would be paid by Interstar Securities (Australia) Pty Ltd to Howard Pacific Home Loans for "referred credit business" or "referral", the amount of commission being $1,760. On the penultimate page under a heading "ACCEPTANCE AND RECEIPT", the document contained an acknowledgement of receipt of the Offer, the security document and the Terms and Conditions and that the lender had recommended the Defendant obtain independent legal and financial advice and that the Defendant agreed to the terms of, and accepted, the offer. 47 Approximately half of the final page, and which was the only page drafted for signature by a borrower, is completely blank. Above the lines for signature is a rectangle headed with the terms "IMPORTANT", "BEFORE YOU SIGN" and "THINGS YOU MUST KNOW". The content of that rectangle is clearly directed to informing, and calculated to inform, the borrower of consequences of signing. 48 The Interstar Loan Terms and Conditions Booklet is some 53 pages long and, because of its size and detail, is clearly calculated to induce any borrower not to read it. 49 The mortgage is in a common short form consisting of but 2 pages and is clear to any one who troubles to read it and understands the concept of a mortgage. It refers to covenants in a filed Memorandum. 50 The Borrower's Acknowledgement consists of about two-thirds of a page of type. The first paragraph reads:- "Perpetual Trustees Victoria Ltd STRONGLY RECOMMENDS that you obtain legal and financial advice regarding your loan contract and any securities granted by you BEFORE you sign them." 51 A little lower down, in uppercase, bold and underlined is the word "ACKNOWLEDGEMENT". Below that is a rectangle which reads:- THIS SECTION MUST BE COMPLETED IF YOU HAVE CHOSEN NOT TO OBTAIN LEGAL ADVICE. IF YOU HAVE ANY DOUBTS OR WANT MORE INFORMATION, YOU SHOULD CONTACT YOUR GOVERNMENT CONSUMER AGENCY OR GET LEGAL ADVICE I ACKNOWLEDGE THAT: I have been handed a copy of the Loan Agreement and all security documents… I have read the Documents and this Acknowledgement. I have been given the opportunity to obtain legal advice on the nature and effect of the Documents but have chosen not to do so on my own accord. I understand the nature and effect of the Documents, and do not require them to be translated into another language. I understand the obligations and risks involved in signing the Documents. I sign the Documents freely, voluntarily and without pressure from any person. 52 Within the rectangle is the handwritten date 20-12-02 and what purports to be the Defendant's signature. 53 The Applicant's Financial Summary consists of one page. Prominently set out is the loan amount of $160,000. The document goes on to state that the Applicant had provided to the lender details of her current income expenses, assets and liabilities which details had been used in the lender's assessment of the Loan Application and the Borrower's ability to meet her obligations and that these details were summarised below. There were then two columns for expenses and two columns for income. Listed as expenses were:- Mortgage payments - this loan $10,320.00 Income tax $16,678.00 Living expenses $10,560.00 Total $37,558.00 54 Listed as income were:- Salary (gross pre-tax) $60,408.00 Business income (net pre-tax) $0.00 Rental income (net) $0.00 Total $60,408.00 55 There was then a figure for "Surplus (total income less total expenses)" of $22,850.00 and a figure for "net assets" of $92,500.00. Immediately above what purports to be the Defendant's signature and the date was a statement to the effect that the information was a complete summary of her financial position and that she believed she could meet her obligations under the loan. The document is clear in its set-out and terms. 56 The Direct Debit Request authorised Perpetual Trustees Victoria Limited to arrange for amounts to be debited from the Applicant's account identified. There was then set out reference to the Commonwealth Bank at Fairfield the Defendant's name and account number. 57 There was a deal of evidence concerning what purported to be the Defendant's signatures to various documents. Much of her evidence in this connection was entirely unsatisfactory. In an Affidavit of 9 May 2008 she denied that the signatures apparent on the Loan Disclosure Form, the Declaration of Purpose, the Loan Purpose Checklist, the Privacy Act Consent, 2002 and 2001 Tax Returns, documents included as pages 3, 4, 5, 7, 8 and 12 in what became Exhibit A were hers. She also denied that the handwriting on those pages was hers and said furthermore that, as far as she could recall, she was not present when the writing was done. During cross-examination she reaffirmed that those signatures were not hers. 58 All of the documents referred to in the immediately preceding paragraph formed part of the 29 page fax of 2 December 2002. 59 The Defendant said nothing in her Affidavit about the signatures purporting to be hers on the "Applicant's Financial Summary", the "Borrower's Acknowledgment", the "Loan Agreement" or the mortgage which signatures appear at pages 16, 17, 27 and 82 of Exhibit A. The first two of these bear date 20.12.02. The third is undated and the fourth bears a handwritten date inserted out of place "24/1/03." As has been said these four documents would seem to have been sent to Stoikovich Banfield Macri on 16 December and by Stoikovich Banfield Macri on 23 December. 60 After reaffirming at T29 that the signatures at pages 3, 4, 5, 7, 8 and 12 were not hers, the Plaintiff was taken to the "Applicant's Financial Summary" (page 16 of Exhibit A). She then denied that that was her signature adding that she wasn't sure that she had been shown that document - T31-2. Taken to the "Borrowers Acknowledgment" - Exhibit A, p 17 - she also denied that the signature on that document was hers. She added that "maybe they didn't explain it to me well". 61 At T27 the Defendant said that the signature on page 27 of Exhibit A (the Loan Agreement) was not hers. At T32 she said that the signature was hers. Later, having been tackled with her acceptance of the signature on the mortgage being hers and a statement that she signed only one document she said that the signature on page 27 was not hers. T33. 62 The Defendant gave no persuasive reason for, in her affidavit, neglecting to deny her signature on pages 16, 17 and 27 of the exhibit. In the course of her evidence, the Defendant agreed that it was her signature on a photocopy of the mortgage, saying that she thought she signed that at the end of 2002. - T24. 63 The Defendant also said she signed all the documents "for mortgage" at once at the Solicitors - T26. Very shortly afterwards - at T26 and 27 on three occasions she said she put her signature in only one place in front of Mr Miljevic. At T31 sShe said that she signed three times with Mr Miljevic and did not sign anything else anywhere else. At T32 she again said that she signed only one document at Boban Miljevic's (The name is misspelt in the transcript.) and wrote her signature only once. At T34 she said that she "signed once in front of Milan (sic) solicitor, 3 times with Milan, and everything else is not mine." At T36 she said that she put her signature in only one spot. At T47 she said that she signed only one document in front of Mr Miljevic. 64 Before I leave this topic of signing in front of Mr Miljevic, I should say that I do not regard this evidence on the issue of one or three documents or signatures as deliberately false. Whatever be the situation in other respects, I think that the inconsistencies referred to in the immediately preceding paragraph reflected the Defendant's understanding of the questions or her ability to communicate. 65 So far as her meeting with Mr Vlasic was concerned, the Defendant said that he gave her some paperwork, saying "I am supposed to put my signature on few spots, probably about three places". - T24. Later evidence she gave supported the view that she had signed 3 times in front of Mr Vlasic - T44, 45, 46. Without the documents being again shown to her, she then accepted the possibility that the documents shown to her previously were ones she signed with Mr Vlasic - T47. Shown pages 16 and 17 she agreed that it looked like her signature and might be hers - T48. 66 Mr Vlasic also gave evidence about the documents. He said that a number of them were not as they had been when they were prepared by him or when signed by the Plaintiff in his presence. These were, using the page numbers in Exhibit A:- P1-2 Loan Application P 3 Loan Disclosure Form P 4 Declaration of Purpose P 5 Loan Purpose Check List P 7 Page 2 of the Privacy Act Consent. 67 Mr Vlasic did not remember seeing any of the pages in Exhibit 1. As I said earlier, Mr Vlasic said that he had no recollection of some aspects of his conversation with the Defendant. He was not asked as to the form documents took when he obtained them from the Plaintiff. 68 The Loan Agreement and the mortgage purport to have been witnessed by Mr Miljevic who swore an affidavit identifying his signature to these documents. He said that since his employment as a solicitor he had witnessed many documents and had no specific recollection of witnessing those here but that he had never signed a document as a witness without witnessing the signature of the person whose signature he was purporting to witness. 69 Mr Miljevic also said that it was his usual practice when a client attended to sign loan and mortgage documents, to have the client sign all of the documents that were available for signature at the one time and for them to be returned to the lender in one bundle and that, although he was not completely certain, he believed that the date appearing at the bottom of the Applicant's Financial Summary looked to be in his handwriting. Mr Miljevic whose affidavit was obtained by the Plaintiff's solicitors and who was called in the Plaintiff's case, was not asked and gave no evidence as to whether he had given any advice to the Defendant. 70 The Defendant was also asked as to the extent of her contact with Messrs Stoikovich Banfield Macri. She said that she did not have any (significant) conversation with Mr Miljevic. She also spoke to Mr Novakovic but said that there were no discussions with him when dangers of a mortgage were explained or that, if she did not pay the interest, the lender could take her property. She then agreed that after she signed the contract for the purchase of the property, Mr Novakovich had told her she could not move into the unit because she could not pay the rent. Because she did not have the financial means to afford mortgage and rate charges she decided to lease the property and has not resided there since the date of purchase. 71 I have referred to the Defendant's evidence to the effect that the solicitor who organised for Mr Vlasic to come told her that when a broker came she was supposed to sign papers in relation to her loan and Mr Vlasic said something similar. When giving evidence about signing in front of Mr Miljevic she said at one time that she did not know what she was signing but later said that she had been told that it was in relation to her loan. 72 After the conclusion of the cross-examination I asked the Defendant a number of questions. In the course of her answers she acknowledged that she knew she did not have enough money to pay for the unit she was buying, knew she had to borrow some money and expected to pay interest on the money borrowed. She said that she did not expect the interest could change and go up. There were also the following questions and answers:-

Q. Before you borrowed the money what did you think would happen if you couldn't pay the lender regularly? A. They did not tell me what can happen.

Q. Did you have any thoughts as to what could happen? A. I did not have any thoughts. I did not think about - I didn't know, I didn't know that's dangerous.

Q. Did you understand that all or most people who lend money want to be repaid? A. Maybe I didn't know - understand a hundred percent. Because they did not explain to me that its very dangerous. 73 Other evidence concerning the Defendant to which it is appropriate to refer is the following. She was born in January 1963 in Serbia. In 1984 she received a Diploma of Education and in 1990 a Master of Arts. In Serbia her main source of income was derived from both teaching to paint and painting icons in Bosnian churches. In 1996 she, her son and second husband, from whom she then separated, migrated to Australia. She said, and I accept, that she could not write or read English. The one with which I am concerned is the only mortgage into which the Defendant has entered. 74 At the time of entering into the Mortgage, and at the time of trial, the Defendant was renting an apartment owned by the Housing Department. Her income consisted merely of a Centrelink pension and she did not receive any rental assistance. To her knowledge the only outstanding liability she held at this time was $700.00 in outstanding Council rates. 75 There was a tenant in the unit at the time the Defendant acquired it and, in light of Mr Novakovic's advice that she could not afford to move into the unit, the Defendant allowed the tenant to stay. When the Defendant first received rent from the unit it was $185 per week of which the estate agent took $15. She has also had to spend monies on strata and other levies and rates. Over the intervening period there has been a time when the unit was unoccupied. She said that about 5 years ago she received some advice about the taxation authorities paying for repairs to the unit, went to see a taxation agent in Liverpool, and he advised her that because she was a pensioner and had to spend half of her pension on her mortgage, she did not need to file a return. She said that in fact since coming to Australia, she had never completed or filed a tax return and never had a tax agent do so on her behalf. 76 In a report clearly obtained for other purposes and dated 6 May 2002, Dr Shand, a psychiatrist, opined that the Defendant was suffering from schizophrenia of the paranoid type and considered her totally unfit for work of any kind on the open market. In evidence he gave in these proceedings, Dr Shand said that it was likely that the Defendant continued to suffer from chronic schizophrenia when she entered into the mortgage on 24 January 2003. 77 In his report, Dr Shand referred to a large number of symptoms that the Defendant had described to him but which it is unnecessary to detail. Some were indicative of a lack of motivation and therefore depression. In cross-examination Dr Shand agreed that that taking by the Defendant of active and significant steps towards purchasing a house, might indicate that at the time she wasn't "suffering so badly from depression or the psychosis, whatever it may be". 78 Dr Shand's report makes it clear that the Defendant seems to have had substantial psychiatric consultation or treatment since 1996. 79 Other evidence on the Plaintiff's side of the record was provided by a Mr Skwarek, a director of Howard Pacific. In 2002 he was the Account Manager managing accounts referred to Howard Pacific by Anagold, a company he conceded was connected to Master Tax Services. He said that although Anagold and Howard Pacific did business together, they were completely unrelated. It was not the practice of Howard Pacific to amend in any way documents forwarded by Anagold and if the documents were incomplete or needed further information Howard Pacific would, as a general practice, notify Anagold so they could liaise with their client and supply additional information. 80 Mr Skwarek said it was the practice of Howard Pacific in relation to loan applications it forwarded to Challenger to verify details provided by a client either directly or through someone such as another broker. Mr Skwarek said that, by way of example, to verify self-employment details and tax returns an employee of Howard Pacific would contact the accountant who prepared the tax returns provided in support of an application. According to Mr Skwarek Howard Pacific had never knowingly forwarded loan applications and documents to Challenger where the veracity of information was questionable. 81 Mr Skwarek annexed to his affidavit an Accountant Verification form completed by one of Howard Pacific Finance's employees Kylie Smith and which he said was forwarded to Challenger in support of the Plaintiff's loan application. The Verification form was dated 5/12/02, contained the Plaintiff's surname, said that the following self employment details were confirmed for the above borrower, named as "Contact" Anastasia Sourlas, described her as "Accountant", recorded what was apparently her phone number, and the response "Yes" in a typed line that read, "Verification of preparation of Taxation Return for above client". Ms Smith was Mr Skwarek's assistant at the time and she was the person who processed the Plaintiff's loan application. 82 Another document also apparently prepared by Ms Smith and dated 2/12/2002 was entitled "SEND TO LENDER" and stated its purpose as "To assist the lender with settlement please complete the following information." The document recorded a number of matters including fees paid or payable to the valuer, Howard Pacific and First Title, purported to confirm that a number of things had been done, said that the borrower had not contacted Howard Pacific directly but been referred by Master Tax Service and certified, inter alia:- a. "We have made full and complete enquiries in relation to this loan application … c. The authenticity of all the information and documentation supporting this loan application has been independently verified by us … e. We have made full and complete enquiries to satisfy ourselves that: i. All of the borrowers clearly have a good command of the English language; f. All of the information given by us in relation to this loan application is true in all material aspects … 83 On the same day a further document was generated, it appears within Challenger. It is contained in Exhibit 1 and entitled "Interstar Decision". It refers to an Application Summary generated by Kylie Smith, and records some 12 "Underwriting Decisions". Included in the details of those decisions was the following:- 68 Please obtain document verification for the genuine equity item "Long Term Savings $42,000". If this is not possible forward application for manual review. 6 Ms Slavica Bodiroza - No third party mortgage issues - applicant's ability to commit transaction is within guidelines 3 Sufficient documentation has been sighted to verify income amounts for Mrs Slavica B… 51 Satisfactory Individual Credit Report ahs been obtained … 84 Mr Wort who, as I have said, was a senior employee of Challenger said that in the case of a self employed applicant applying for a loan of the nature of that applied for by the Defendant, the loan originator was required to submit taxation returns for the two preceding financial years in order to confirm evidence of income of a potential borrower and to research and verify employment information. The tax returns would be relied upon by Challenger. 85 Evidence as to the Plaintiff's knowledge of the Defendant's financial circumstances at the time of the making of the loan was provided by Mr Merceica who the recoveries manager of Challenger Mortgage Management Pty Ltd. He said that this consisted of:- (i) The information provided in the initial loan application. (ii) The 2001 and 2002 tax returns; and (iii) The information provided in the "Applicant's Financial Summary" 86 He said also that at the time of approving and entering into the Loan Agreement and Mortgage the Plaintiff was unaware that the Defendant was on any Centrelink benefits, had no reason to believe the tax returns were not authentic and accurate and that the Plaintiff was unaware of any language difficulties or mental incapacity suffered by the Defendant. 87 Except if and insofar as Howard Pacific's knowledge may be imputed to Challenger, I accept this evidence. 88 I should make further reference to the lengthy "Mortgage Management" and "Loan Origination and Mortgage" Agreements between Challenger and Howard Pacific that came into evidence. They were annexed to an affidavit of Mr Wort and there was also a 147 page "Interstar Guidelines Manual" that recites it had been prepared to assist (Loan Originators) with the origination of mortgage loans for the Interstar program. The Manual required that originators strictly adhere to and comply with their obligations under the Manual. Mr Rogers, Counsel for the Plaintiff conceded at one stage that Howard Pacific Finance was a mortgage manager for the Plaintiff. 89 The first of these, and which was current at the time the loan to the Plaintiff was made, provided that Howard Pacific could provide a submission to Interstar. If Interstar was prepared to arrange for the Plaintiff to advance money on a mortgage referred to in a submission, it would then provide to Howard Pacific an Offer and Acceptance Notice. Howard Pacific would manage and service the mortgage. There was provision for Interstar to pay Howard Pacific a fee for performing its obligations under the agreement and for Interstar to require Howard Pacific to pay to the Plaintiff losses arising from any Approved Mortgage. The document provided that "nothing herein contained shall be deemed or construed by the parties hereto of by any other person creating the relationship of partnership or of principal and agent". 90 The second document was along broadly similar lines although it came into force only in January 2004 91 I turn to the issues that arise for decision. A convenient starting point is the question of whether all of the signatures purporting to be those of the Defendant are hers. In the case of the documents I have numbered (ii), (iii), (iv) and (v), all dated 25 November 2002, I am satisfied they are not. I have said enough to indicate that, the Defendant's evidence, at least considered in isolation, is entitled to little if any weight in this connection. However, her evidence does derive support from Mr Vlasic and also, in my view, from a comparison with her purported signatures of those documents and on others such as the mortgage and those witnessed by Mr Miljevic. It is unnecessary for present purposes to attempt to describe all of the differences in signature I perceive but prominent differences lie in the fact that in the documents of 25 November, the "S" of Slavica takes a form similar to a complete "8", the "l" in that name contains no loop, and the "i" is not dotted (or missing); in Bodiroza, the tail or end of the "B" returns to overlap the bottom of the upright in that letter and the dotting of the "i" has been omitted or placed very much to the right. The Defendant's signatures on the mortgage, acceptance of the offer, and Borrowers Acknowledgment, all apparently signed on 20 December 2002 and/or witnessed by Mr Miljevic, and her affidavits do not have these features. Again I acknowledge that it would have been better if I had all originals for the purposes of comparison but the differences are sufficiently clear for me to rely on them. 92 Other features of the documentation tend in the same direction. Living as the Plaintiff has near Liverpool, it is unlikely that she would employ a Tax Agent south of Wollongong. Apparently without a driving licence or vehicle, it is unlikely that she would have incurred the motor vehicle expenses recorded on the tax return. Furthermore, my observation of the Plaintiff and the evidence concerning her medical condition argue - persuasively, not conclusively - against her having the success as a dressmaker that the copy tax returns suggest. 93 The Plaintiff's command of English can at best be described as very poor. Kylie Smith's recording on Exhibit 4 that she had made full and complete enquiries to satisfy Howard Pacific that the Plaintiff had a good command of the English language also indicates that someone acting to further the Defendant's application to the Plaintiff for loan funds was quite prepared to lie in the course of that pursuit. On that topic the "someone" cannot have been the Plaintiff. 94 On the other hand, I am satisfied that the signatures purporting to be those of the Defendant appearing on the mortgage, acceptance of the offer, and Borrowers Acknowledgment, all apparently signed on 20 December 2002 and/or witnessed by Mr Miljevic, and those appearing on the Applicant's Financial Summary and Direct Debit Request of the same date are genuine signatures of hers. I accept what Mr Miljevic had to say in this regard but quite independently, the inherent likelihood of the situation where conveyancing documents are sent to solicitors for signature and then returned argues for the signatures on those documents being genuine. The signatures also do not display the features that argued for the earlier documents being forged. 95 The signature purporting to be that of the Defendant appearing on the document of 26 November 2002 that I have numbered (xi) does not display all of the features that have led me to conclude that those on documents dated 25 November are not those of the Defendant and the issue is not made any easier to resolve by the poor quality of the photocopy. However the "S" contains the same features and the similarity between the handwritten printing of the Defendant's name on the documents of 25 and 26 November leads me to the view that they were probably done by the same hand and that the signature on that last mentioned document is also not that of the Defendant. 96 There are further features of the transaction and its documentation that seem out of the ordinary. Because Mr Vlasic was not asked questions on the topic, I should not take this aspect too far but there is no apparent and legitimate reason why he sent documents to Anagold rather than directly to Howard Pacific. With similar hesitancy, because of the absence of specific allegation in the Defence (although it is asserted that the Plaintiff knew or should have known that the Defendant's income was but Centrelink payments), I am also satisfied that the Tax Returns were not genuine returns of the Plaintiff and in all probability were prepared by Anagold's associate, Master Tax Services. Given that the Defendant's application to Howard Pacific came to that organisation from Anagold or Master Tax Services and Anastasia Sourlas' role in those organisations, Kylie Smith's "Accountant Verification" from the same source cannot be described as other than dissembling. As she seems to have made no enquiries of anyone else at that time, her statements in the "SEND TO LENDER" document of having made "full and complete enquiries" in relation to the loan application, to satisfy Howard Pacific that "All of the borrowers clearly have a good command of the English language" and that "the authenticity of all the information and documentation supporting this loan application has been independently verified by us" were wrong and must have been known to be wrong. 97 During the course of his address, counsel for the Plaintiff submitted that if there was any falsification of documents it occurred at Master Tax Services. I think a more correct account of events is that Mr Vlasic, Master Tax Services and Kylie Smith so arranged and documented events that the loan was approved when it otherwise would not have been. 98 In her affidavit of 25 October, the Defendant asserted that prior to entering into the mortgage no independent legal advice was provided to her as to the legal rights and obligations arising under it. Although Mr Miljevic provided an affidavit to the Plaintiff's solicitors and was called by the Plaintiff's counsel he was not asked whether he had given the Defendant any explanation as to the effect of the documents and gave no evidence that he had. On behalf of the Defendant attention was drawn to the fact that the account from Stoikovich Banfield Macri was for acting on the purchase of the unit the Defendant bought and contained no reference to acting on the mortgage. I have already adverted to the fact that Mr Miljevic was not asked and gave no evidence to suggest that he gave advice to the Defendant. 99 However, the 18 December 2002 Stoikovic Banfield Macri file note of an appointment for the Defendant on 20 December 2002 and the more detailed notes that appear to refer to what happened in such a meeting argue strongly for the Defendant's solicitors having given her some explanation of the documents. So do the inherent probabilities of the situation. On the other hand, it is proper to note the limited topics referred to in those detailed notes. Though there is a reference to "6.45", (the interest rate), default provisions and some other matters there is no reference indicative of any consideration of the Defendant's capacity to afford the mortgage payments. That is perhaps not surprising given that contracts for the purchase of the property had by that time been exchanged (on 11 December) and the logical time for any consideration of the Defendant's capacity to pay was prior to that. 100 Even if the Defendant never saw the documents copies of which were included in the 29 page fax of 2 December 2002, in combination the group of documents signed by the Defendant and included within those returned by Stoikovich Banfield Macri make very clear the substance of the transaction into which the Defendant was entering and her financial situation as represented to the Plaintiff. It is difficult to believe that she simply signed the documents without bothering to find out, and without being given some account of, the substance of them. 101 On the other hand, at face value the transaction into which the Defendant entered was so obviously an improvident one that it is hard to believe she entered into it with knowledge in the sense of appreciation of what was involved. If she did not lease the unit to others, she had to find $860 per month for interest payments and other monies for body corporate fees and rates and, of course, something for other living expenses. Her only income was the disability pension. Leasing the unit of course provided another $730 (4.33 x $170) a month but that still left a difference between rent (when received) and $860 interest payments of $130 per month and there were still rates and body corporate fees to pay. 102 I am inspired by these figures to consider again whether the Defendant's actual or anticipated income may have been higher than simply the pension, either because she had some other source of income, whether as a dress-maker or otherwise, or anticipated that her son who by the time of her affidavit of October 2007 was receiving another $230 every 2 weeks from the Department of Social Security may have made some contribution. However, in the end I am satisfied that the evidence provides no basis for such possibilities. 103 Furthermore, I am not persuaded that the financial impossibility into which the Defendant was entering was pointed out to her. Certainly, she conceded that Mr Novakovich told her that she would have to rent the unit, but there is nothing to indicate that he had the knowledge that I do that even that course would not be sufficient. There is no evidence that Mr Miljevic had any cause to doubt the figures in the documents that he received and hence to embark upon an exercise similar to that which I have done though I do think it likely that he would have pointed out to the Defendant what her monthly payments to the Plaintiff would be. 104 (I should add to the above remarks that the evidence does not reveal what the "subsidy" or "contribute" - possibly "contributions" - referred to towards the end of the Stoikovich, Banfield Macri handwritten note may have been. Although the Defendant denied that she was receipt of it, one possibility is a rental subsidy sometimes paid by the Social Services Department to those pensioners who pay rent and which would presumably be lost if the Defendant moved into the unit. However, whatever the references may have been, I am satisfied that they do not affect the general picture I have referred to.) 105 In the result, and despite her signature to documents that should have made the situation clear to her, I think the probability is that the Defendant did not know, in the sense of appreciate, the extent of the transaction she was entering into. On the other hand, I have no doubt that she knew she was borrowing money, obliged to pay interest, giving a mortgage and that the interest rate might change if she did not pay her interest on time. I have no doubt she must have known that the lender had additional rights against the property if she defaulted. In that connection, it is to be noted that in her affidavit of 25 October 2007, while the Defendant mentioned the word "mortgage" on many occasions, nowhere did she say that she did not understand the meaning of that term. 106 Against this background I turn to the legal bases upon which the Defendant relies. Section 7 of the Contracts Review Act empowers the Court to do a variety of things if it "finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made". The conclusion at which I have arrived is that the contract was unjust. It was unjust because of the combination of the following reasons or factors. 107 One was the contract's improvidence to the Defendant and the fact that she was undertaking a liability she could not, as a practical matter, meet and that the effect of not meeting her liability was likely, indeed virtually certain, to deprive her of virtually her only asset, the $42,000 or so she was employing in the purchase of the unit. 108 A second was that the Defendant was not able to protect her own interests. I draw that inference because, despite the opportunity the Defendant had to avoid entering into the contract and to appreciate the consequences of doing so, and to recognise the errors in some of the documents she was signing, she went ahead. For want of some other obvious cause, it seems likely that the Defendant's inability was at least partly due to her inability to read English and to the fact that she has mental health issues. 109 In that latter connection I should record also my impression that, despite her academic qualifications, the Defendant is not particularly intelligent. While I regard some of her answers, for example those to questions from me that I have quoted, as dissembling, her answers on other topics such as the number of documents signed and signatures imposed in front of Mr Miljevic, were so extraordinarily inconsistent even when close together, that I do not regard her thinking or understanding as normal. 110 I should add that I incline to the view that my conclusion about the Defendant's inability to protect her own interests falls within the expression "reasonably able" in s9(2)(e) though I do not regard this further element as critical to my overall view concerning the unjustness of the contract. 111 A third factor was that the Defendant seems to have had no expert advice to the effect she could not afford the mortgage (and purchase of the property mortgaged). Put another way in deference to the terms of s9(2)(i) of the Contracts Review Act, the practical effect of the mortgage was not explained to her, or at least not explained adequately. In so concluding I do not ignore the evidence to the effect that Mr Novakovich told the Defendant she could not afford to live in the unit but the truth of the matter is that she could not afford it at all. 112 A fourth lies in the forgery and falsity of the documents that were prepared in order to induce Challenger and the Plaintiff to agree to make the loan to the Defendant. I do not ignore the fact that the Defendant had the opportunity to correct at least some of the misrepresentations that were made and the likelihood that Challenger's desire for information of the nature of that which was falsified was primarily to protect Challenger and the Plaintiff. However, information of that nature is also calculated to protect potential borrowers and the Defendant was deprived of that protection. 113 A fifth lies in the misrepresentations made by Kylie Smith of Howard Pacific in the "Accountant Verification" document (Table (xxi)) and in Exhibit 4 (Table (xvii)). Remarks made in the immediately preceding paragraph apply to these documents also. 114 I am of course conscious that many of the matters to which I have referred do not fall within the precise terms of s9(2) of the Contracts Review Act. However, the matters there stated are not definitive and exhaustive of the matters to be taken into account and the matters to which I have referred may usefully be compared with the reference to consequences in s9(1) and to paragraphs (e), (h), and (i) of s9(2). 115 I also recognise that there are a number of matters referred to in s9(2) that either do not argue for a finding of unfairness or indeed argue in the opposite direction. Factually, the circumstances contemplated in paragraphs (a) to (d) existed but I do not regard them as relevant in this case. The sheer volume of the contract argues against the Defendant comprehending most of its terms and it is difficult to see that anything like its volume was reasonably necessary for the Plaintiff's protection. Again however, I do not regard that fact or the terms of paragraph (g) as significant in this case. I incline to the view that Howard Pacific, the actions of whose employee Kylie Smith contribute to my conclusion of unfairness, appeared to be acting on behalf of the Plaintiff. I do not see any of the matters referred to in paragraphs (k) and (l) as relevant here. 116 One matter that is of relevance is the public interest in holding parties to their contracts freely entered into. Another is that the Plaintiff itself has not been guilty of any conduct that could be characterised as unfair or misleading. Indeed, its form of Loan Offer and Acceptance and the Borrower's Acknowledgment were calculated to fully inform the Defendant that she was undertaking a significant liability and of the importance of obtaining legal advice. 117 It is appropriate to say something more about the apparent relationship between the Plaintiff and Howard Pacific. Clearly, the Plaintiff has sought to establish a method of operation whereby it is brought into contact with, and ultimately contracts with, borrowers who, individually, will be in widely different circumstances. To further its interests in that regard it entered into an arrangement with Howard Pacific, and no doubt others, to make or receive contact with such borrowers, and to remunerate Howard Pacific for its efforts. No doubt Howard Pacific was acting in its own interests in the transaction and also, at least in some respects, in the interests of the Defendant. However it was also acting in the Plaintiff's interest and although it was not the Plaintiff's agent, it does not seem to me that one should regard as entirely irrelevant to the concept of unjustness in the contract, the relationship between Howard Pacific and the Plaintiff. Though not master and servant, in effect the Plaintiff was employing Howard Pacific to do the sorts of things that the Plaintiff would have otherwise to do itself if it wanted to make a business of lending money. 118 The conclusion at which I have arrived does not mean that the Court must grant relief. Section 7 of the Act provides that where a court finds a contract or a provision of a contract to have been unjust … it may interfere. 119 The parties agreed that, if I decided that the contract was unfair, my final decision should await the provision of further evidence relating to events, particularly receipt of rent and payments by the Defendant since this matter was heard. However, counsel for the Defendant made it clear that the relief she was seeking was:- (i) That the Plaintiff's application for possession not be granted;

(ii) That the Defendant be permitted to continue in possession;

(iii) That the term of the loan be extended to 25 years from the time of hearing;

(iv) That the default rate of interest be varied to the variable base rate; and

(v) The arrears be cancelled. 120 In totality, that, or anything approximating it, would not be a just result. 121 In light of the parties' desire to call further evidence, I do not intend to express final views on this topic of whether relief should be granted or its form. However, there may be advantage if I indicate some tentative views that may influence the form of any relief. 122 Firstly, the Plaintiff should not, for an extended period, be locked into a contract substantially different from that into which it entered, which has been demonstrated to be one that the Defendant cannot afford, and which is not unlikely to lead to further defaults. If the Defendant wishes to retain the unit, she should make other arrangements to finance it, even if allowed a little time to effect that. 123 If such arrangements cannot be made - and given her default to date, it may be that the Defendant will not find another willing lender - the Plaintiff should be repaid sooner rather than later at least the bulk of the money advanced and interest at the base variable rate, even if this means the sale of the unit as the only practical source of such monies. 124 Should such a sale be necessary then the Plaintiff, because it is a lender and because it has by far the largest amount of money "invested" in the unit, should have the carriage of any sale, at least if the Defendant cannot effect a sale within a short period. It may be that that period should conclude within a few months from now, at least if the Plaintiff co-operates in the sale and there is agreement that the monies should be paid into Court for ultimate division in a manner that reflects any order that may be made in respect of the contract and mortgage the subject of the proceedings. 125 Any order made should take account of the rent received by the Defendant, any costs, e.g. body corporate fees, rates and repairs paid or payable by her, and interest paid by her and/or received by the Plaintiff. 126 If, as was suggested during the hearing, a sale of the unit does not realise enough for the Defendant to receive back what she invested in the unit and for the Plaintiff to receive its entitlement under the mortgage there is something to be said for the view that the loss, taking account of the matters referred to in the immediately preceding paragraph, should be shared in some fashion. It may be that in the determination of that fashion, greater weight should be given to some matters, e.g. the principal lent and the Plaintiff's capital contribution than to others such as the default rate of interest. Of course these matters are not exhaustive. 127 A determination of whether relief should be granted, and if so on what terms, might be easier and involve less risk to both parties as to unforeseen consequences of any relief, if the unit were sold first or at least if its value is known with some degree of certainty. 128 Unfortunately, by the time these reasons are delivered, I will be on leave until mid November. No doubt the parties would require some of that time in any event to prepare the further evidence they wish to call and possibly in consequence of what I have just said. In these circumstances, the orders that seem to me appropriate are:-

(i) I publish these reasons; (ii) I stand the matter over to Tuesday 24 November at 9.30 for mention; (iii) I grant liberty to the parties to approach my Associate for the fixing of a further date for hearing (and if that is done and the parties consent, to vacate the 24 November mention). **********

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