Police v William Michael CANNON

Overview 7This is a case in which it was alleged that the Accused, a finance broker, dishonestly obtained the proceeds of three loans, totalling $590,000, by deception, via three separate loan transactions resulting in the lenders' interests being secured over the properties of each purported borrower, mortgagor and guarantor, without their knowledge or consent. 8Putting aside the loan documents executed by Mr Mark Anthony, the son of Mr Melhem Azzam and Mrs Therese Azzam, listed as the borrower under a Loan Agreement between Speedy Gantry Hire Pty Limited (as lender/mortgagee), Mr Mark Anthony (as borrower) and Mr Melhem Azzam and Mrs Therese Azzam (as mortgagors/guarantors), it was alleged that all other loan and mortgage documents were forged. 9Expert evidence as to this fact was not adduced. Whilst I have reservations as to the authenticity of the signatures purporting to be of the various borrowers, mortgagors and guarantors, and indeed the witnesses to those signatures, in the absence of expert evidence, a conclusion of forgery and associated motive can only be arrived at via inferential means, to which reference is made later in these reasons.

Applicable legal principles 10The charges preferred by the prosecution were founded on s 178BA of the Crimes Act 1900, which was the relevant provision at the time of the alleged offences. Section 178BA has since been repealed by the Crimes Amendment (Fraud, Identity and Forgery Offences) Act 2009, which commenced on 22 February 2010 and made extensive amendments to the Crimes Act 1900 (NSW), as it pertains to fraud, identity, forgery and other related offences. The amending Act inserted an exhaustive statutory definition of dishonesty (an element of the offence the subject of the current proceedings) and increased various maximum penalties prescribed by statute. The successor to s 178BA is now contained in s 192E of the Crimes Act 1900 . To avoid doubt, these reasons are based entirely on the law as it stood at the time of the respective alleged offences between March 2009 and May 2009. 11At the relevant time, section 178BA(1) and (2) provided as follows: 178BA Obtaining money etc by deception (1) Whosoever by any deception dishonestly obtains for himself or herself or another person any money or valuable thing or any financial advantage of any kind whatsoever shall be liable to imprisonment for 5 years. In subsection (1): "deception" means deception (whether deliberate or reckless) by words or conduct as to fact or as to law, including: (a) a deception as to the present intentions of the person using the deception or of any other person, and (b) an act or thing done or omitted to be done with the intention of causing: (i) a computer system, or (ii) a machine that is designed to operate by means of payment or identification, to make a response that the person doing or omitting to do the act or thing is not authorised to cause the computer system or machine to make. 12If there were any issue as to whether the financial advantage said to have been obtained by the Accused was obtained through or for his business entity, WC Financial Services, s 21(1) of the Interpretation Act 1987 resolves this issue by providing a definition for "person" as including an individual, a corporation and a body corporate or politic. 13As the total amount under the various loans, namely $590,000, being the value of the money which the prosecution alleges was obtained by the Accused in contravention of s 178BA of the Crimes Act 1900, exceeded $5,000, the proceedings were dealt with summarily as neither the prosecution nor the Accused elected that they be dealt with on indictment: Schedule 1, Table 1, Part 2, Criminal Procedure Act 1986. 14In R v Licardy (unreported, NSWCCA, 26/5/95), the Court of Criminal Appeal summarised the elements of an offence under s 178BA of the Crimes Act 1900 (NSW) as: (1)The Accused by a deception, (2)Dishonestly obtained for himself or another person, (3)Money, a valuable thing, or a financial advantage. 15I refer, later in these reasons, to the additional ingredient that there be a causal connection between the deception and the financial advantage. 16It is appropriate at this point to outline some of the salient principles which bear upon the decision this Court is ultimately required to make. 17By virtue of the definition of 'deception' in s 178BA(2), the import of the word is widely encompassing. 18In Corporate Affairs Commission v Papoulias (1990) 20 NSWLR 503, Allen J (at 506) described deception as being the "intentional inducing in another of a state of mind which [the accused] knows does not accord with fact." 19In Balcombe v De Simoni (1972) 126 CLR 576, Gibbs J (at 593) (with whom Menzies J agreed) adopted the reasoning outlined in Re London and Globe Finance Corp Ltd [1903] 1 Ch 728 (at 732) as to what "with intent to defraud" meant: - To deceive is, I apprehend, to induce a man to believe that a thing is true which is false, and which the person practising the deceit knows or believes to be false. To defraud is to deprive by deceit: it is by deceit to induce a man to act to his injury. More tersely it may be put, that to deceive is by falsehood to induce a state of mind; to defraud is by deceit to induce a course of action. 20Matters such as this often call for an instruction as to the legal nature of the elements of the offence. As to the appropriate trial direction in matters of dishonesty, in Glenister v R [1980] 2 NSWLR 597, which involved the fraudulent misappropriation of company property by a director, and in which the Court of Criminal Appeal treated fraud and dishonesty as synonymous at law, the Court held (at 607) that: It will be sufficient if the trial judge instructs the jury that the Crown must prove that the accused acted dishonestly. It is unnecessary for him to go further and define dishonesty. It is enough if he informs the jury that, in deciding whether an application was or was not dishonest, they should apply the current standards of ordinary decent people: R v Feely [1973] 1 All ER 341. 21The effect of this decision was to set in train a multitude of decisions that became a matter of some controversy. Notwithstanding that the present proceedings were dealt with summarily, the Court, sitting both as the trier of fact and law, is required to ensure that it properly instructs itself as if it were directing a jury had the matter been dealt with on indictment. 22The decision in Glenister v R was preceded, and influenced to a great extent, by the English Court of Appeal decision in R v Feely [1973] 1 All ER 341, where it had been decided that dishonesty, under the legislation in question, related only to the state of mind of the accused. The decision in Glenister v R was followed by the English Court of Appeal decision in R v Ghosh [1982] 2 All ER 689 which held that dishonesty described not a course of conduct but a state of mind which could not be established independently of the knowledge and belief of the accused and, in determining whether the accused had acted dishonestly, the test was first whether the accused's actions had been dishonest according to the ordinary standards of reasonable and honest people and, if so, whether the accused himself had realised that his actions were, according to those standards, dishonest. 23In R v McQueeney (1989) 39 A Crim R 56, a similar approach was arrived at whereby the Court of Criminal Appeal (per Gleeson CJ, as he then was) held that: The principal complaint that was made about the directions given by the learned trial judge in relation to the ingredients of the charge of fraudulent misappropriation was that his Honour inappropriately confused "subjective" and "objective" aspects of dishonesty. In my view that is not a valid criticism of the summing up of the learned trial judge. His Honour pointed out to the jury that subjective dishonesty was a necessary element of the charge of fraudulent misappropriation, and in that connection he informed the jury that a person may engage in objective conduct which, on its face, looks as though it is or may be dishonest, but that it is nevertheless necessary to go on and investigate the question whether in truth, in all the circumstances, the person had a guilty mind. He also emphasised that it was not sufficient to conclude that the applicant had engaged in conduct that was negligent, or even grossly negligent. He made it plain to the jury, on a number of occasions, that fraud involving personal dishonesty was alleged and had to be established beyond reasonable doubt. There was, in my view, ample evidence on which the jury could have reached the conclusion that the Crown case was made out. 24The decisions in R v Feely and R v Ghosh created a divergence of judicial opinion, the ratios of which were applied in Queensland, but not in Victoria and New South Wales. It was not until the decision of the High Court of Australia in Peters v R (1998) 192 CLR 493 that the division of judicial opinion was resolved and the Court departed from the approach taken in R v Ghosh . In the joint judgment of Toohey and Gaudron JJ, their Honours held that the Ghosh test "distract[ed] from the true factual issue to be determined and conflat[ed] what [were] really two separate questions" . It was held that: [18] In a case in which it is necessary for a jury to decide whether an act is dishonest, the proper course is for the trial judge to identify the knowledge, belief or intent which is said to render that act dishonest and to instruct the jury to decide whether the accused had that knowledge, belief or intent and, if so, to determine whether, on that account, the act was dishonest. Necessarily, the test to be applied in deciding whether the act done is properly characterised as dishonest will differ depending on whether the question is whether it was dishonest according to ordinary notions or dishonest in some special sense. If the question is whether the act was dishonest according to ordinary notions, it is sufficient that the jury be instructed that that is to be decided by the standards of ordinary, decent people. However, if "dishonest" is used in some special sense in legislation creating an offence, it will ordinarily be necessary for the jury to be told what is or, perhaps, more usually, what is not meant by that word. Certainly, it will be necessary for the jury to be instructed as to that special meaning if there is an issue whether the act in question is properly characterised as dishonest. 25In most cases, the question as to whether an act, done with some particular knowledge, belief or intent, is properly characterised as dishonest is usually not in issue. Save for exceptional cases in which it is in issue, Toohey and Gaudron JJ held (at [28]) that: - ....it is sufficient for a trial judge simply to instruct the jury that they must be satisfied beyond reasonable doubt as to the knowledge, belief or intent alleged by the prosecution before they can convict. Alternatively, the trial judge may instruct the jury that, if satisfied as to the knowledge, belief or intent alleged, the means in question are properly characterised as dishonest and they should so find. 26It is this tenet, in my view a highly instructive one, which should serve as the basis from which this Court's decision should flow when considering the delineation between questions of fact and questions of law, the latter of which require me to direct myself as though I were directing a jury on the application of the law on the facts, as they found them to be, in matters prosecuted on indictment. These and other cautionary criminal trial directions apply to a magistrate or judge sitting alone as they do to a trial before a judge and jury: Fleming v R (1998) 197 CLR 250. For abundant clarity, I have directed myself in accordance with the reasoning advanced by the High Court in Peters v R . 27It should also be noted that dishonesty can be negatived by a genuine belief by the accused in a legal entitlement to the property taken: Langham v R (1984) 12 A Crim R 391. To the extent that the Defence case relied upon the Accused's assertion, via his oral testimony, that he was entitled to act in the way that he did and as an intermediary for the lender, it was held, in R v Balnaves (2000) 117 A Crim R 85, that clear and unambiguous directions should be given to the jury that the accused's state of mind is relevant to the question of dishonest or fraudulent intent and that they must bear in mind the explanation given by the accused, including whether there was a genuine belief in an entitlement to the property or money taken. 28This line of reasoning was followed by the Court of Criminal Appeal in R v Adler [2002] NSWCCA 180, in which Bergin J, with whom Spigelman CJ and Barr J agreed, in a case also involving offences alleged under s.178BA of the Crimes Act 1900 (NSW), held that the fact that the jury were directed by the trial judge to 'dismiss from their minds any thoughts' of an alternative hypothesis, that being a circumstantial case, meant that they were left with the task of considering the evidence without the capacity to consider whether the payments could have been induced by something other than a criminal deception. The exclusion of that capacity would, her Honour found, very likely have impacted upon the jury's consideration of the evidence and any doubts they may have had in relation to certain evidence would have been given much less weight. 29Although the present case is a partly circumstantial case, the need for careful scrutiny of the explanation proffered by the Accused, moderated by the clear and unambiguous directions a trial judge would be required to give to a jury in relation to the Accused's state of mind, is a necessary exercise in which to engage in determining the question of dishonest intent, as an element of the charges faced by the Accused, including whether he held a genuine belief in an entitlement to the money received, but not, of course, whether there was a legal right to practise the deception. Lest there be any doubt, I have directed myself in accordance with the reasoning advanced above. 30Of course, the ingredients of the offence referred to earlier in these reasons, without more, do not adequately represent the true position at law. The overarching principle to be borne in mind is that there must exist, to the requisite criminal standard, evidence of 'intent'. For fear of reciting the obvious, an intent to do the physical act involved in the offence with which an accused has been charged is indispensable to criminal responsibility: R v O'Connor (1980) 146 CLR 64. Upon this fundamental proposition rest a number of subtle ancillary considerations. 31First, general proof of an actual desire or wish to do an act of the proscribed character is proof of general intent: R v Reynhoudt (1962) 107 CLR 381. 32Secondly, in the absence of direct proof, the question becomes one of the drawing of inferences for all the proved facts and objective circumstances in an individual case. In inferring a person's intention from his or her words or actions, the trier of fact is entitled to take into account its own experience of life and to evaluate the intention that would normally be inferred from such words or actions. However, it must be appreciated that: (1)It is the intention of the particular accused in question which is in issue, not that of some hypothetical reasonable person: Pereira v DPP (1988) 82 ALR 217; (2)In such cases the question always remains one of actual knowledge; (3)Where knowledge is inferred from the circumstances surrounding the commission of the alleged offence, knowledge must be the only rational inference available. 33Thirdly, an accused's knowledge of, or expertise concerning, the relevant circumstances, in the inquiry of whether the accused ought to have known that his conduct was unlawful and likely to produce the result that ensued, may be proved by direct evidence or by inference. If the prosecution relies on inference to prove that the accused knew the relevant circumstances, the inference may be established by proving other facts that make it logical to infer that the accused knew the circumstances: Simpson v R (1998) 194 CLR 228 (per Gaudron and McHugh JJ). 34That being the case, the thread common to all of the observations referred to above is that it is the subjective intention of the accused, ordinarily, which is determinative. In Cutter v R (1997) 143 ALR 498, Kirby J (at 511) held: It is important to draw a distinction between the intention of the accused and his or her motives, desires, wishes or hopes in doing the act alleged to constitute the crime charged.... [T]he better view is that the word ['intent']...should not be defined but should be left to the trier of fact without elaboration as to its meaning... Clearly enough where there is no direct evidence to which the trier of fact can safely resort, so as to draw an inference as to the 'subjective' intention of the accused, the principal focus of attention will ordinarily be the facts surrounding the alleged offence. Windeyer J explained why this was so in his reasons in Parker v R (1963) 111 CLR 610 at 648-9: 'In every case where intent is in question, the question is what did the accused ... intend. Of that, the acts he did may well provide the most cogent evidence. I some cases, the evidence that the acts provide may be so strong as to compel an inference of what is intent was, no matter what he may say about it afterwards. If the immediate consequence of an act is obvious and inevitable, the intentional doing of the act imports and intention to produce the consequence' 35I should, at this stage, also stress the importance of one further ingredient in the assessment process, that is, that there be a causal connection between the deception and the benefit or advantage obtained. Although not expressly referred to in s 178BA, the causal connection to which I have referred is an inherent characteristic of the offences with which the Accused has been charged and is a matter which bears some weight when conducting the fact finding exercise. 36In Flack v R [2011] NSWCCA 167, the applicant (for leave to extend the time within which to file an appeal) was convicted of five counts of obtaining a financial advantage, contrary to the same provision with which the present case is concerned, after he obtained loans from financial institutions for the purpose of purchasing buses which did not exist. The applicant submitted that the trial judge erred in rejecting a no case to answer submission claiming that there was a lack of nexus between the deception and the financial advantage obtained. In assessing the merits of the appeal for the purpose of determining whether to grant an extension of the time within which to appeal, Johnson J, with whom McClellan CJ at CL and Hidden J agreed, held that there was no error. His Honour held (at [37] - [40]): 37 What must be established, however, is a causal connection between the deception used and the financial advantage obtained. The deception must have been the means whereby the financial advantage was obtained, or the effective cause of the financial advantage being obtained. It is an essential ingredient of an offence under s.178BA that the cause of the giving of the financial advantage was the deception used by the accused person: R v Stanhope (NSWCCA, unreported, 10 September 1987, pages 6-8); R v Clarkson [1987] VR 962 at 980; R v Ho; R v Szeto at 147. 38 The question whether the deception was an operative cause of the obtaining of financial advantage, falls to be answered as a question of fact by the members of the jury applying their commonsense: R v King [1987] 1 QB 547 at 553. 39 As the Crown submitted in this Court, commonsense and inferences had a role to play in this case. The loan documents required identification details of the " goods involved" . This was by way of engine and VIN numbers. There needed to be a certificate of currency for the " goods" . There was also a requirement for the " goods" to be insured. There were in fact insurance policies taken out for each of the five " goods" , separately identified by individual VIN and engine numbers. The evidence revealed that these policies were for existing property (T767). There was a requirement, for at least some of the loans, that there be an acknowledgement that the " goods" had been inspected by the borrower." 40 The applications to the financial institutions in each case contained considerable details which could be inferred as identifying a particular bus which was in existence, including insurance coverage for an identified bus. The representations contained in the documentation supporting the applications were available to establish that those representations were deceptive, and were an operating factor on the conduct of the financial institutions in approving the loans. This inference was available with respect to each of the five counts. It was not necessary that the actual person who processed the loan give evidence." 37The final matter for consideration before turning to the application of the principles to the facts of the present matter relates to the assessment of a witness's evidence. In assessing the evidence adduced in the trial, the Court may, as the trier of fact, decide which evidence is believed and how much weight is to be placed on the testimony of each witness. In carrying out that task, it is to be borne in mind the trier of fact may use common sense and experience in order to assess the credibility of each witness. It is within the Court's power to accept some part of a witness's evidence, some part of the Accused's evidence, while rejecting other parts: R v Manunta (1990) 54 SASR 17. Ultimately, the burden of proof rests with the prosecution to prove, beyond reasonable doubt, every element or essential fact that comprise the offences with which the Accused has been charged. The fact that the Accused has himself given, and called from others, evidence in the trial does not shift the onus or place upon him any burden to prove his innocence. It is entirely for the prosecution to prove the Accused's guilt beyond reasonable doubt. 38Although some of the above principles may be trite, their restatement, in my view, is desirable in giving transparency to the decision making process upon which the Court is set to embark.

Analysis 39The evidence of the lenders' director, Mr Michael Foy, was that he had met the Accused in 2008 when their children were playing soccer for the same club. The Accused had introduced himself as a mortgage broker and an association developed whereby the Accused offered Mr Foy better returns on funds than Mr Foy has been earning on his investments. The first transaction involved short term lending for a principal sum of $70,000 with an interest rate of 6% per month. Apparently, the Accused produced a loan agreement prepared by lawyers retained by him, which had already been executed by the borrowers, and Mr Foy executed the documents and arranged for the transfer of funds into the Accused's business account, WC Financial Services, there being a verbal agreement that the Accused would attend to providing the funds to the borrowers himself. Mr Foy conceded that it was this transaction that set the precedent for the three loans, the subject of the charges, which followed. I gathered from his evidence that since the Accused had been timely in repaying the principal and interest in the antecedent loan, Mr Foy was comfortable in dealing with him for the subsequent loans. 40The subsequent three loans were based on similar terms, except that Mr Foy, on behalf of the lenders, retained his own lawyer, Mr George Gourlas, to act for the lenders on those transactions. Whilst I accept that there is a market for short-term loans, the interest terms in the respective loans defy logic. There was no cogent evidence to suggest that the borrowers, mortgagors and guarantors purportedly involved in these transactions had any need for short-term finance or would have had difficulty obtaining finance from mainstream lenders. 41The Vaxavanis loan documents provided for a loan amount of $120,000 over a term of three months, security in the form of a second registered Mortgage over the family home, but in the interim a Caveat to be registered on title, an interest rate of 72% per annum accruing at 6% per month ($7,200 per month), and a margin of 3.5% per month over and above the monthly interest rate in the event that the loan was in default. 42The Azzam loan documents provided for a loan amount of $400,000 over a term of three months, security in the form of a second registered Mortgage over the family home, but in the interim a Caveat to be registered on title, an interest rate of 108% per annum accruing at 9% per month ($36,000 per month), and a margin of 3.5% per month over and above the monthly interest rate in the event that the loan was in default. 43The Abouhaidar loan documents provided for a loan amount of $70,000 over a term of three months, security in the form of a second registered Mortgage over the family home, but in the interim a Caveat to be registered on title, an interest rate of 96% per annum accruing at 8% per month ($5,600 per month), and a margin of 3.5% per month over and above the monthly interest rate in the event that the loan was in default. 44Notably, it was Mr Foy's evidence that in relation to the three loans the subject of the charges, no capital repayments have been made in reduction of the principal sums lent, although he did receive cash payments from the Accused representing the first month's interest payments required to be made by under the respective loan agreements up front. He gave evidence that he did receive a cheque in the sum of $20,000 from the Accused, drawn from the Accused's business account, which was to be for principal, but which was dishonoured. 45It was Mr Foy's evidence that of the 9% interest payable under the Azzam loan, 3% would be remitted to the Accused as payment by the lender for brokerage fees. It was not entirely clear whether the same proportion of interest was to be remitted to the Accused in respect of the Vaxavanis and Abouhaidar loans. 46Evidence was given by Ms Stella Kitson, the daughter and carer of, and donee under a Power of Attorney from, Mrs Frida Vaxavanis. Ms Kitson described her mother as being a 77-year-old lady who could not speak English very well, could not read or write English, suffers from diabetes and a heart condition, and is in a fragile state. As her mother's carer, her evidence was that her mother was significantly dependent upon her, with Ms Kitson attending to her banking needs, paying her bills, renewing insurance policies and looking after real estate owned by her mother. Ms Kitson gave evidence that her mother would not have been able to execute any of the Vaxavanis loan documents without her assistance and, having seen her mother sign documents many times over the years, the signatures and initials said to be her mother's on the Vaxavanis loan documents did not resemble her mother's true signature and initials. 47More relevantly, however, Ms Kitson gave evidence that her father, Mr Hercules Vaxavanis, passed away in 2006. The only rational inference to be drawn from the signatures and initials on the loan documents said to have been signed by Mr Vaxavanis in May 2009 is, plainly, that they are a forgery. It became apparent to Ms Kitson that a fraud had been perpetrated and "money had been obtained in my father's name". The Vaxavanis documents tendered into evidence as part of Exhibit 7 include a letter of demand dated 10 November 2009, forwarded by the lender's solicitor, Mr George Gourlas, to Mr and Mrs Vaxavanis, seeking repayment of the principal and interest, by that stage having reached $175,800, failing which the lender would exercise its power of sale. 48Another salient feature of the signatures of Mr and Mrs Vaxavanis on the Vaxavanis loan documents is that they purport to be witnessed by Mr Nick Manolios. Whilst there is evidence from Mr Abouhaidar that Mr Manolios was Mr and Mrs Abouhaidar's family accountant, there is no evidence that Mr Manolios was the accountant for Mr and Mrs Vaxavanis or that he was in any way associated with them. The irresistible, and indeed compelling, inference that flows therefrom is that the signatures of the witness, said to be Mr Manolios, are also forgeries. 49The evidence of Mr George Abouhaidar was that he met the Accused through a friend in 2008/2009. He and his wife were considering refinancing their home loan of $720,000 from their then lender to St George Bank, using the services of the Accused as mortgage broker. At about the same time, he was also seeking to borrow the sum of $70,000. It was not entirely clear from the evidence whether that was incorporated in the $720,000 refinance amount he was considering or in addition to it. I understood, from his evidence, that in addition to the first registered mortgage secured over his home in favour of his then mortgagee, he also had a loan secured by way of a Caveat registered on title in favour of Circuit Finance Australia Limited ("Circuit Finance"), in respect of which an amount of $20,000 remained outstanding and had he and his wife proceeded with the $720,000 loan from St George Bank, the refinance would have covered the $20,000 owing to Circuit Finance and would have left him with surplus funds with which to extinguish some other debts. 50At the time of these events, Mr Abouhaidar and his wife received from the Accused loan documents with Speedy Gantry Hire Pty Limited ("Speedy Gantry") listed as lender/mortgagee for a loan of $70,000. His evidence was that he did not want to obtain a loan through Speedy Gantry and, ultimately, after conferring with, and obtaining advice from, his accountant, Mr Nick Manolios, in relation to the Abouhaidar loan documents, he and his wife did not proceed with the refinance to St George Bank or the loan from Speedy Gantry. He emphatically denied signing the Abouhaidar loan documents and stated that none of the signatures appearing on those documents were his or his wife's. I accept his evidence on this point and conclude that the signatures purporting to be his and his wife's and the signatures purporting to be his accountant's, as witness, were forgeries. It became clear to him that something untoward had taken place when he discovered that a Caveat in favour of Speedy Gantry had been registered on the title to his family home. 51A remarkable feature of his evidence was that he readily conceded playing the part of interpreter in the Azzam documents said to have executed by Mr and Mrs Azzam as mortgagors and guarantors. There was no evidence to suggest that he was an accredited Arabic speaking interpreter. He accepted that he executed, as interpreter, a document entitled Interpreter's Certificate (part of Exhibit 5), which contained an acknowledgment that he translated, from the English language to the Arabic language, and explained to Mr and Mrs Azzam in Arabic, the Loan Agreement, Mortgage and Guarantee and Indemnity, and that they executed the documents in his presence and appeared to understand the nature and effect of the documents and their obligations thereunder. He frankly admitted that Mr and Mrs Azzam were not present when he translated the documents, despite the acknowledgment. 52The inference to be drawn, when reconciled with the evidence of Mr and Mrs Azzam, is that the documents bearing the signatures purporting to be Mr and Mrs Azzam's were forgeries and were not witnessed by Mr Abouhaidar in their presence. I do not believe that Mr Abouhaidar forged Mr and Mrs Azzam's signatures, nor was this suggested. I do, however, believe that the signatures appearing as witness on the Azzam loan documents are indeed Mr Abouhaidar's and that he did not witness Mr and Mrs Azzam execute any of the documents. 53Despite Mr Abouhaidar's admissions, his oral testimony was completed by asserting that he did not know, but had since become aware, what he was asked by the Accused to sign in relation to the Azzam loan, believing that he was simply executing a document to assist Mr Mark Anthony in obtaining a loan. I do not accept this part of his evidence. 54An inference that flows from Mr Abouhaidar's admission of impropriety, in the adoption of the clearly inconsistent acknowledgments in the Interpreter's Certificate and the execution of documents as witness without the signatories being present, is the likelihood that he may have acted in collaboration with the Accused in at least one of the offences with which the Accused has been charged, namely that surrounding the Azzam loan. There is, however, an exiguousness of evidence to definitively ground such a conclusion and, accordingly, I do not propose to pursue this further in these reasons. 55Evidence was also given by Mrs Monica Abouhaidar that generally corroborated the evidence given by her husband to the extent that she too emphatically denied executing the Abouhaidar loan documents and stated that none of the signatures appearing on those documents were hers. I accept her evidence on this point and conclude that the signatures purporting to be hers and her husband's and the signatures purporting to be that of her accountant, Mr Nick Manolios, as witness, were forgeries. It became apparent to her that there was an irregularity when she attended her solicitors' office with a bank cheque for $20,000 in order to discharge the loan secured by Circuit Finance over her home and discovered that the loan had already been repaid by the Accused, without her knowledge or direction, and without her having provided the Accused any funds within which to discharge the loan or to obtain a Withdrawal of Caveat arising therefrom. The only rational inference, in my view, to be drawn from this evidence is that the Accused attended to the discharge of the loan secured by Circuit Finance in order to pave the way for the registration of the Caveat in favour of Speedy Gantry over the family home of Mr and Mrs Abouhaidar and the effectual drawdown of the loan the subject of these proceedings, which was deposited into the Accused's account. 56Both Mr and Mrs Azzam gave evidence with the assistance of an Arabic speaking interpreter. Their statements to police, both dated 19 January 2010, were tendered into evidence and were fairly consistent with the evidence thus far. They denied applying for a loan or executing any loan, mortgage or guarantee documents. In fact, their home had been unencumbered since 1997. They denied executing the mortgage and guarantee documents creating an interest in favour of Speedy Gantry, nor did they know who did. They emphatically denied executing the Azzam loan documents and stated that none of the signatures appearing on those documents were theirs. I accept their evidence on this point and conclude that the signatures purporting to be theirs were forgeries. It became abundantly clear to them that something untoward had taken place and that they had been the victims of fraud when they received a letter of demand from the lender/mortgagee seeking repayment of the principal loan and interest which, by that stage, had reached about $544,000. 57Whilst they both denied their son, Mr Mark Anthony, having any involvement in obtaining the loan secured over their family home, in the statement made to police by Mrs Azzam (Exhibit 11), she stated that her son left the house at around the time of these events and never returned. I accept that whilst this admission might be indicative of some indiscretion on the part of Mr Anthony in relation to the predicament in which his parents were now placed, there is an exiguousness of evidence to definitively ground such a conclusion and, accordingly, I do not propose to pursue this further in these reasons. 58Much like the Vaxavanis loan, there is another salient feature in relation to the signatures of Mr and Mrs Azzam on one of the documents comprised as part of the Azzam loan document, namely the Declaration by Third Party Mortgagor, Guarantor, Surety Mortgagor or Indemnifier for the Borrower. That document purports to be witnessed by Mr Nick Manolios. Whilst there is evidence from Mr Abouhaidar that Mr Manolios was Mr and Mrs Abouhaidar's family accountant, there is no evidence that Mr Manolios was the accountant for Mr and Mrs Azzam or that he was in any way associated with them. The irresistible and, again, compelling, inference that flows therefrom is that the signature of the witness, said to be Mr Manolios, is also a forgery. 59Evidence was also given by Mr Mark Anthony who stated that he had known Mr Abouhaidar since his school years. He was at, the time of these events, trying to obtain a loan. Mr Abouhaidar introduced him to the Accused and a meeting took place whereby the Accused requested $3,000 from him, to be deposited into the Accused's TAB account. As he did not have the funds, he told the Accused to disregard his request for assistance to secure a loan. He recalled that some days later, Mr Abouhaidar, of his own volition and without any instructions from Mr Anthony, had arranged for someone to pay the $3,000 to the Accused on Mr Anthony's behalf. As the money was "put up for [him]", the Accused and Mr Abouhaidar took Mr Anthony to a Mr Peter Antoniou, solicitor, and, under threats to his life in the foyer, Mr Abouhaidar and the Accused forced Mr Anthony to execute the loan documents in the solicitor's presence. The execution clauses on the documents where his parents, Mr and Mrs Azzam, were to sign were still blank at that stage, although he too, when shown the documents in evidence agreed that the signatures which subsequently appeared did not resemble the signatures of his mother and father. 60Some days later, Mr Anthony recalled Mr Abouhaidar telling him "not to worry" and that he had "some money coming his way" which "he did not want his wife to know about" and asked if he could deposit the money into his (Mr Anthony's) account. In what appeared to me to be somewhat unusual, Mr Anthony agreed and was "happy to help". In the days that followed, they took him accompanied to various branches and withdrew money from an account in Mr Anthony's name and Mr Abouhaidar purchased a ticket and travelled to Argentina. He denied receiving any of the funds from the Azzam loan drawdown, including any of the funds that were deposited into an account with BankWest apparently opened in his name. 61I gathered from Mr Anthony's evidence that he was vulnerable and it seems that vulnerability was not lost on those with whom he came into contact. I believe he was threatened by the Accused and that he was used as a means to achieve an end. 62Following the close of the prosecution case, I found a prima facie case and the Accused went into evidence. 63The Accused was, for "five, six or seven years", a finance and mortgage broker, trading as WC Financial Services. It was his evidence that he was "not qualified", although the I accept that the Australian mortgage broking industry has yet to be regulated in any significant way, as was the case with the financial services industry over the last decade, with the amendment of the Corporations Act 2001 (Cth) to insert Chapter 7, dealing with financial services and markets, and the introduction of stringent rules and the necessity for those engaging in that industry to obtain financial services licences. Needless to say, the Accused had, over the years, obtained experience in the workings of loan transactions arising from deals which he had brokered on behalf of lenders and borrowers and, on his own evidence, "getting finance for properties" and "short term loans". 64A pertinent feature of his evidence was that, having opened an account with BankWest in November 2008, he used that account to "facilitate loans". He conceded that the three transactions of which the present charges form part, and one transaction immediately preceding the three in question, were the first occasion on which he had control of the funds. 65According to the Accused, the agreement reached with the lenders' director, Mr Michael Foy, was that the Accused would receive the funds from each loan drawdown and would disburse the funds at the borrowers' request. Mr Foy gave evidence that the there was a verbal agreement reached that the funds would be disbursed to the respective borrowers after drawdown. One cannot overlook the volatility of this procedure which effectively put the Accused in control of large sums of money in circumstances where a mortgage broker's role, if one accepts this was the role the Accused played in these transactions, is to facilitate, as an intermediary, negotiations and secure the appropriate property finance loan between a mortgagor and mortgagee, not to receive the loan proceeds from the drawdown into his business account and to disburse them therefrom. 66There is nothing, in my opinion, which forbids the practice in which the Accused engaged, but what became clear from the evidence was that the process was readily susceptible to abuse and the lender unwittingly facilitated a state of affairs that ultimately culminated in the charges laid against the Accused. That, however, in no way suggests that the lender was complicit in the fraud perpetrated upon the unsuspecting borrowers, mortgagors and guarantors. The inescapable conclusion is that the Accused was emboldened by the ease with which he was able to take control of the funds and, by virtue of the immediately preceding transaction, gained Mr Foy's trust and confidence in continuing to do business with him. The Accused's level of participation in the respective transactions transcended the boundaries of professional expediency and entered a state of frenzied interest and enthusiasm in securing and procuring the drawdown of the loan proceeds by electronic funds transfer directly into his account. 67The Accused denied all impropriety. There were a number of acts on the part of the Accused that, on their own, seem innocuous, but when taken together, should have raised warning bells. The Accused personally collected loan documents from the lenders' solicitors; personally returned documents said to have been executed by the various borrowers, mortgagors and guarantors to the lenders' solicitors; escorted the purported borrower, Mr Mark Anthony, to a solicitor's office for the execution of one set of loan documents; prevailed upon the purported borrower, Mr Mark Anthony, to utilise the services of the Accused's chosen solicitor to execute loan documents; personally attended to the drawing of a bank cheque from his own account for the payout of an existing loan with an unrelated lender, secured by Caveat over the title to the property owned by the purported borrowers, Mr and Mrs Abouhaidar, and paid out that loan, and procured and obtained from that lender a Withdrawal of Caveat in registrable form, paving the way for the registration of the Caveat in favour of Speedy Gantry over the family home of Mr and Mrs Abouhaidar to regularise the drawdown of the loan the subject of these proceedings; and personally attended to some repayments to the lender of interest and legal costs and disbursements out of the loan proceeds deposited into his account. 68One of the documents most notably absent, and which casts a dark shadow upon the Accused's evidence, was a direction to pay, a document commonly executed by borrowers and mortgagors prior to loan drawdown informing lenders and mortgagees of the persons or entities in whose favour the loan proceeds are to be drawn. Indeed, nor was there a direction to pay from any of the borrowers and mortgagors to the Accused to inform him of what their intentions were, if one accepts the Accused's evidence, with the loan proceeds once they were deposited into his account. 69The apex of the Accused's exculpatory revelation was his uncorroborated oral testimony that the respective borrowers and mortgagors verbally authorised him to receive the loan proceeds from the various transactions into his business account, retain large sums of money for his brokerage fees, in one case on his own evidence $30,000, in what could only be described as exorbitant and indicative of his avarice, and to deal with the proceeds on their behalf. What that precisely meant was a mystery. In one case, the Accused gave evidence that Mr Peter Vaxavanis, the son of the purported borrowers, Mr and Mrs Vaxavanis, gave the Accused instructions to have a large sum of cash from the loan proceeds ready for collection by the girlfriend of a Mr Peter Megaloudis, as Mr and Mrs Vaxavanis senior were supposedly putting their property up to help their son's friend, Mr Megaloudis. In fact, the Accused alluded to all of the borrowers being introduced to him by Mr Peter Megaloudis and deflected a lot of the blame attributed to him in cross-examination to the sons of the mortgagors, namely Mr Mark Anthony and Mr Peter Vaxavanis, who were instrumental in the motivation behind obtaining these loans. On the Accused's evidence, it was these persons who instructed him as to where the loan proceeds were to be applied, despite, if it were true in Mr Peter Vaxavanis' case, that he was not the borrower on any of the loan documents and in no position to direct anyone as to how the loan proceeds were to be applied. I gathered from the evidence that these transactions were part of a much larger ring of deception. 70Interestingly, the Accused had no involvement, nor indeed was there any evidence to suggest that he even met the purported borrowers, Mr and Mrs Azzam and Mr and Mrs Vaxavanis. He gave evidence that he had had discussions with the respective sons of Mr and Mrs Azzam and Mr and Mrs Vaxavanis and that he had had discussions with the purported borrowers Mr and Mrs Abouhaidar. As far as I could gather, none of the purported borrowers and mortgagors received any of the loan proceeds, but for the possibility that Mr Mark Anthony received some money into an account opened in his name at the same BankWest branch at which the Accused banked in order to facilitate a transfer of some money into his account. As stated earlier, Mr Anthony denies receiving any money. 71By far the most alarming part of the evidence was that the given by Ms Stella Kitson, the daughter and carer of, and donee under a Power of Attorney from, Mrs Frida Vaxavanis, a 77-year-old lady who could not read, write or speak English, suffers from diabetes and a heart condition and is in a fragile state. It transpired that not only did her mother not take out a loan secured over the family home, based on loan documents purportedly executed by her mother and father as co-borrowers and co-mortgagors, but that, whilst her father's name was still on title as a registered proprietor of the family home, her father had actually passed away in 2006, some three years before the forged loan documents purported to convey their acceptance of a loan for $120,000. 72The fact that the Accused might not have met some of the persons said to be have been the borrowers, mortgagors and guarantors under the loan documents does not necessarily mean that there is no causal connection. On a proper analysis of the evidence, the requisite causal connection is established because the acts in which the Accused engaged and which I find constitute deception are inextricably linked to the money obtained. 73He attempted to explain away many of the inconsistencies in his evidence. He gave evidence as to each of the deposits and withdrawals appearing in his bank statement (Exhibit 2) and, relying wholly upon his memory, sought to explain the source of each deposit and the persons to whom each of the withdrawals were delivered. Most of the withdrawals, he said, were cash withdrawals in payment of legal fees and disbursements to solicitors and accountants, and to the lenders for interest repayments arising from the loan transactions. Some of the larger sums were withdrawn, supposedly at the request of the various borrowers and their sons as I have referred to earlier, and given to Mr Abouhaidar, Mr Anthony, and a substantial sum to the liquidators of the Watersedge Resort, an entity which the Accused said was related to Mr Peter Megaloudis and, according to his evidence, from which some of the documents adduced, such as Interpreter's Certificate, were faxed, noting the "fax header". I noted from the bank statement of the Accused's account adduced into evidence that many of the smaller withdrawals were made from automatic teller machines within TAB betting venues. 74Much of his evidence was circuitous. His responses to the questions asked of him in the transcript of his record of interview were obfuscatory. He stated, in response to Q98 of the record of interview, that he "had no reason to believe that all the people I've described at the signing of the documents weren't there" and that they "were the people signing the documents" as required. I do not accept this to be the case. 75He was asked in Q110 of the transcript of his record of interview why he did not give the $400,000 to Mark Anthony, seeing as he was the borrower, to which he responded, "[b]ecause that wasn't his instructions. His instructions were um, half through his account and the other half as cash and interest and to pay [various people] ...They were all by Mark's directions [sic] told me to go and fix them all up." I do not accept this evidence nor that these were the directions given to him by Mr Anthony. 76When asked in Q116 of the transcript of his record of interview whether he had any written directions from any of the borrowers or mortgagors, he responded, "I have some written directions." He was asked in Q118 whether he had a direction, written document or formal document from Mr Anthony, to which he responded, "No, I don't. But I'm, I'm fifty, fifty per cent sure that I might have something in a text." I understood this to mean a phone text message. He did say in his oral evidence that he kept a record of the Azzam loan transaction but that he was unable to find it because it was in storage. He had access to it but did not have it with him in Court. 77The Defence case was generally in accordance with the Accused's response to Q195 of the transcript of his record of interview wherein he stated, "I was very loose with what I was doing but I still maintain that I did the right thing and what I was told. And um, at all times I had the lenders lenders um, ah, what's the word, oh, the lender's actions. I was, I was, you know, as far as I was concerned I was doing the right thing by the lender." 78In assessing the Accused's evidence, I concluded that he was an unreliable witness. He was goal oriented, equivocal, and self-serving. His evidence lacked credibility and plausibility. It was markedly inconsistent with the tenor of the surrounding evidence. Whilst there were some parts of his evidence that were conceivable, I did not generally find him to be a witness of truth and reject most of his explanations. 79The evidence of Mr George Gourlas, solicitor, did not add all that much to the proceedings other than to give an account of the documents which he prepared as the lenders' solicitor.

Conclusion 80It must be appreciated that a person, such as a mortgage broker, can fail to act honestly in the exercise of his powers and the discharge of his duties without his conduct involving deception. I accept the submission made by the Accused's solicitor that carelessness and negligence is not sufficient to ground criminal liability, although this is not, in my opinion, one of those cases. 81The fact that other persons might be implicated in the conduct that is alleged as against the Accused is relevant in inculpating them but does not bear as much weight when determining whether such fact exculpates the Accused. 82However, when considering all of the evidence, having identified above the knowledge, belief or intent which is said to render the Accused's actions dishonest, I find that the Accused was possessed of the requisite intent, as an ingredient of the offences with which he has been charged, and that such intent was dishonest according to the standards of ordinary, decent people. 83Having arrived to the conclusion referred to above as to the Accused's credibility, it follows, in my view, that there was, on the part of the Accused, an intent to deceive. Even if I am incorrect in my assessment above, the Accused's conduct, based on his knowledge and expertise concerning mortgage and lending practices, in bringing about a state of affairs which caused the lenders to lend, and deposit into the Accused's account, moneys which they would otherwise not have lent had they known the true position, constitutes dishonesty. Moreover, I do not accept that the Accused had a genuine belief in a legal entitlement to the loan proceeds sourced from the lenders. In my opinion, the Accused's dishonest intent was pervasive and there is nothing that seems to stand in the way of this conclusion. 84The tenor of the submissions made by the Accused's legal representative was that there were a number of inferences available on the evidence. Noting that this case was founded partly on direct evidence and partly on circumstantial evidence, I was cognisant of the fact that competing inferences arose. As the trier of fact, however, I am satisfied that the inference of guilt which I have attributed to the Accused completely overcomes all other inferences so as to leave no reasonable doubt in my mind. It is the combination of direct and circumstantial evidence that formed the basis of these conclusions. 85When assessing the totality of the actions of the Accused, I am persuaded to the view that the cause of the giving of the loan moneys by the lenders to the Accused was the deception used by him. Put another way, the deception was the means or effective cause, by which the loan moneys were obtained and, therefore, I find, beyond reasonable doubt, that there was a causal connection between the deception and the financial advantage obtained.

Decision 86When reconciling all of the evidence, tempered by the cautionary criminal trial directions to which I have referred, I am satisfied beyond reasonable doubt of the facts and evidence adduced in support of the ingredients of the offences with which the Accused has been charged. 87In the circumstances, and for the reasons given, I find the offences proven and the Accused guilty on all three sequences. 88The matter is adjourned to this Court at 9.30 am on 28 October 2011 for sentence. 89Bail is to continue. 90I order a full Pre-Sentence Report. 91The Accused is to report to the Hurstville office of the Probation and Parole Service by 4.00 pm on 22 September 2011, unless contacted sooner, so that arrangements may be made for a Pre-Sentence Report to be prepared. Magistrate Tsavdaridis Downing Centre Local Court 19 September 2011 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 September 2011