RHG Mortgage Corporation Limited v Rosa Baira RHG Mortgage Corporation... [2011] NSWSC 520 | Case summary

RHG Mortgage Corporation Limited v Rosa Baira RHG Mortgage Corporation... [2011] NSWSC 520 | Case summary | Zoe

Judgment 1HIS HONOUR: These two actions were heard together, evidence being received as applicable to them both. 2In each case the plaintiff is a mortgagee seeking possession of land from a mortgagor and judgment for the sum owing under a companion loan agreement, The claims are defended and subject to numerous cross-claims. It is convenient to identify some persons, entities and corporations involved. 3RHG Mortgage Corporation Limited (RHG Mortgage, frequently referred to in evidence by its former name RAMS) was the lender of money and, of course, is the plaintiff. 4RHG Home Loans Pty Limited (RHG Home Loans), also referred to by its previous appellation RAMS) by deed was contracted to procure loan applications and approve and settle them for RHG Mortgage. 5Fast Track Finance Group Pty Limited (Fast Track) was an aggregator contracted to RHG Home Loans to originate purchases of financial services. 6Australian Mortgage and Business Finance Solutions Pty Limited (AMBFS) was a broker which, pursuant to agreements, referred loan applicants to Fast Track. 7Peter Famularo (Famularo) was a director of AMBFS and an accredited broker to Fast Track. In order to avoid prolixity and possible confusion, reference will be made to natural persons by surname or by forename omitting courtesy titles. It is not intended to give offence. 8Famularo compiled and completed the loan application documents which were signed by the applicants in each case. In the language of the agreements, Fast Track was the originator of the loans and RHG Home Loans approved and settled them. 9No issue at trial was raised seeking to controvert the arrangements nor the circumstance that Famularo compiled the documents finally submitted to RHG Home Loans. Nor does any issue require discrimination between AMBFS and Famularo. 10Rosario and Domenica Ianni (Rosario and Domenica) the defendants in one action (the Ianni proceedings) are the proprietors of a residential dwelling at 159 Thompson Street, Drummoyne (the Drummoyne property). RHG Mortgage has a registered mortgage which it is seeking to enforce in this action. It was not disputed that there has been relevant default under the mortgage and associated loan agreement. The Drummoyne property is, and has been for many years, Rosario and Domenica's home. 11Rosa Baira (Baira) is the defendant in the other action (the Baira proceedings) and is the proprietor of a residential dwelling at 319 Livingston Road, Marrickville over the title of which RHG Mortgage has a registered mortgage. This has been her home for many years. She has been widowed and some documentation remains in her previous name, Fiorvianti, Baira being a name which she adopted on remarriage. Again, there has been no dispute that there has been relevant default under the mortgage and associated loan agreement. 12Violante Sandra Ianni (Sandra) is the daughter of Baira and daughter-in-law of Rosario and Domenica. Sandra is a cross-defendant in the second, third and fourth cross-claims in the Ianni proceedings and similarly is a cross-defendant in the second, third and fourth cross-claims in the Baira proceedings. 13Giuseppe (also known as Joseph or Joe) Ianni (Joe) is the son of Rosario and Domenica and the son-in-law of Baira. Although joined in the actions, his participation is inhibited by his status as an undischarged bankrupt. A significant indication of Joe's lack of credibility emerged from inquiry as to his status. He was called as a witness. 14When the actions were called for hearing Joe stated "Giuseppe Ianni, I am representing myself today, one of the defendants to the fourth cross-claim, and second and third". I said that I understood (from a written submission) that he was an undischarged bankrupt and he responded "Not that I'm aware of. It was - it only come to my attention yesterday". Joe continued that he had not been served with any bankruptcy notice "or any other notice in relation to bankruptcy". 15Later in the day, senior counsel for RHG Mortgage and RHG Home Loans produced a computer printout identifying Joe or Joseph Ianni as an undischarged bankrupt. Joe again asserted that he had never been served with "any bankruptcy notice of (sic - or) any notice of that kind". Later, in response to inquiry, he said, "this is the first time I have seen any document in relation to a bankruptcy". 16On the second day of hearing, a bundle of documents was received into evidence including a sealed copy of a sequestration order against the estate of Joseph Ianni made in the Federal Magistrate's Court on 4 June 2010 which noted the act of bankruptcy at 30 December 2009. There was also an affidavit of service being executed on 18 May 2010 of various documents including a creditor's petition. Service was effected at the Drummoyne property. Joe said "But your Honour that's not my address. That was not my address". The past tense of the verb in the second sentence demonstrated considerable guile. As at May 2010 Joe's address may have been at a property in Dural which I will later identify but as at the time of the hearing, he was residing with his parents at Drummoyne. In any event, his address was irrelevant as the affidavit deposed to personal service but it is a further manifestation of that guile that when Joe saw the documents in the hands of the process server he said, "I did not see you and I did not see the documents". I shall later record other reasons for my conclusion that Joe's testimony is unreliable. 17As is apparent from earlier descriptions of familial ties, Joe and Sandra are husband and wife although Sandra now resides with her mother Baira at Marrickville while Joe, as mentioned, lives at Drummoyne. Joe was called as a witness by Mr Downey, solicitor, who appeared for Sandra. 18The circumstances which bring this litigation into being are in a sense sourced from the conduct of businesses by Joe and Sandra. The first business was a caf in the Darling Harbour Complex (Galleria) and this was followed by a licensed restaurant (Fioranis). 19In about 1998, Joe and Sandra made arrangements to operate their business through corporate vehicles, Jencon Australia Pty Limited (Jencon) and Jencon Management Pty Limited (Jencon Management). These arrangements were possibly made through Mr Lo Surdo an accountant who was mentioned in the proceedings and in various documents but was not called as a witness. 20In addition to the Drummoyne and Marrickville properties reference will need to be made the property holdings and acquisitions by Joe and Sandra. It will suffice to note these by location. They are dwellings at Castle Hill (Castle Hill), a unit near Darling Harbour (Pyrmont), a unit at Milsons Point (Milsons Point) and a property at Dural (Dural). Dural is described as a sizeable property with two "in-law" accommodations. In her evidence, Sandra mentioned moving in to reside in "the cottage" as distinct, as I understood the tenor of her evidence, from a main dwelling. 21The loan agreement between RHG Mortgage and Rosario and Domenica was dated 11 October 2005 and that with Baira was dated 28 February 2006. It is however necessary to deal with some of the issues to retrace history of numerous dealings with entities other than RHG Mortgage. Rosa Baira formerly Rosa Fiorvianti 22It would appear that Baira's earliest encounter with the notion of mortgage related to an initial purchase of Marrickville with her first husband which was financed through the Commonwealth Bank. The mortgage was discharged in about 1983. In isolation, I would not draw any relevant conclusion about Baira's appreciation of the notion of mortgage from this transaction but it was an initial experience. 23In about 1990 her son-in-law (Joe) was working in Darling Harbour and Sandra was working elsewhere. Joe canvassed with her the opportunity to buy into a coffee shop. She conceded that he informed her that his parents had refused to give any guarantee so as to enable a bank loan, however she was agreeable so to do. Accommodation was being sought from the Advance Bank which was later absorbed into the St George Bank. For present purposes they can be regarded as the same entity. 24There is some inconsistency between a statement in Baira's affidavit of 23 October 2008 that she recalled signing documents for a loan of about $50,000 from the St George Bank and her affidavit of 20 October 2010 where she said she recalled signing documents for a loan of $155,000. 25It can be observed that in giving evidence Baira repeatedly, by various expressions, contended that her understanding always was that she had guaranteed $155,000 and no more. As I shall later record, there is in particular a contradiction between Baira and Famularo whereby Baira asserted that she had never met him but for reasons to which I will come her assertion is quite incredible and I have concluded that her testimony generally is uncreditworthy. That apart, as I shall also recount, over years and years she signed numerous documents associated with loans and credit facilities made available to Joe and Sandra (or their companies) in relation to which security over Marrickville was offered and taken. 26The initial transaction concerned the purchase of what became the Galleria. On 10 January 1992 Baira signed an Advance Bank loan approval (as did Joe and Sandra). Special condition 16 required certification that Rosa Fiorvianti (Baira) had been independently advised as to financial and legal liability. 27On 26 May 1992 she signed a mortgage and unlimited guarantee in favour of Advance Bank. Her signatures were witnessed by a Marrickville solicitor, Mr Ross. In the light of her constant protests while giving evidence that no one explained anything to her, Mr Ross seems to have been an exception (to some of her protests). She said she had a great deal of help from her solicitor at the time. In her affidavit she acknowledged that he explained the mortgage and guarantee document to her. Nevertheless, it was complained that he did not read the documents to her. It would have been quite a ritual exercise and of minimal if any use compared to an explanation simply to read the documents to her. The complaint that he did not speak in Italian is a combative assertion. Her present command of English as demonstrated in the witness box is considerable and it was obviously open to her to say so if she did not understand Mr Ross. In the same vein, she attempted to draw a fine distinction with little practical difference in deposing that her understanding was that the bank could "ask" her to sell her home but did not understand that the bank could "cause" it to be sold. 28At the same time Mr Ross prepared, and Baira, Joe and Sandra entered a deed which vested Baira with considerable protections and powers in relation to the Galleria. Baira testified that this was designed to inhibit employment of a person (apparently a relative) whom she did not wish to be employed at the caf. The deed was not so limited and, given her acknowledgement of Mr Ross' assistance, I am satisfied that she was made aware that she was reserving to herself considerable authority beyond such limitation. I do not summarise all of the matters within the deed but there are provisions in relation to the using of credit, her access to accounting and financial records, and an indemnity for breach and her rights (on default by Joe and Sandra) to enter, operate or sell the business. 29The entry into this deed is not consistent with Baira's claims that she was simply signing documents presented to her by her daughter being ignorant of their content or simply being told and accepting that these were documents wanted "by the bank". In answer to cross-examination she propounded that she did not know what she was signing, that her daughter Sandra did not know (so she had said) what she was asking her to sign and that she, Baira, did not know whether Joe knew what was in the documents or not. It might have been possible that a signature would be made in such circumstances by a person on one or two occasions but to sign documents of obvious commercial import again and again over many years in that manner stretches beyond the bounds of credibility. 30Another transaction took place in June 1994. Baira (Fiorvianti) signed a Statement of Financial Position. Joe and Sandra were seeking accommodation in the sum of $112,000 to carry out some renovations to the Galleria. The mortgage to the bank remained in place. On 30 June 1994 Baira signed an eight-page document as guarantor, initialling the operative pages. Her signature was witnessed by a friend of hers. On the first page was a specified loan amount of $112,000. In harmony with her claim that she had no relevant belief other than that she was guaranteeing $155,000, although she acknowledged her signature, she said in effect that she knew nothing about this matter of extension of the loan. 31Baira claimed handicaps in reading English but, had she looked, the figure (not being $155,000) was in prominent display. I realise that it is now some years since the events under reference but I observe that Baira was able to articulate her stance about various matters when giving evidence in English and at times with considerable force. 32It is noted that this agreement contained a special condition that a new independent legal and financial advice certificate was to be obtained by "Rosa Fiorvianti in relation to this new additional loan". The words "new additional" could not be misunderstood as effecting no change to existing arrangements. 33By July 1998 Joe and Sandra were moving to operate the restaurant which became Fioranis. The Jencon corporate vehicles had been established. 34By letter of 3 August 1998 St George Bank offered scheduled facilities on condition of the supply of a number of securities including a first mortgage by Rosa Fiorvianti (Baira) over the Marrickville property and a guarantee and indemnity from her, limited to the sale proceeds of Marrickville. The facilities are specified and loan and overdrafts are documented in sums of $400,000 and $30,000. Baira claimed in her affidavit that she was unsure of the signature (Fiorvianti) on the page headed "Guarantor's Acknowledgement". I am satisfied that it is her signature. Baira executed a Deed of Guarantee and Indemnity in favour of St George Bank. 35Significantly, and contrary to Baira's claim that she simply signed documents "for the Bank" as presented to her by her daughter, this deed was signed by her and witnessed again by Mr Ross. Further Mr Ross gave a certificate that he had spent 40 minutes in conference with Baira and that he gave advice to her before any documents were signed. 36As different facilities or changes to facilities were offered by the Bank. Baira acceded to requests to sign and execute more and more documents. I do not accept that she was merely signing documents at the request of her daughter nor do I accept that she had no idea of the involvement of security over the Marrickville property. 37Moving forward to May 2000 she subscribed to a statutory declaration headed in bold type "Declaration by Third Party Mortgagor, Guarantor, Security Mortgagor or Indemnifier for the Borrower". The address at Marrickville was specifically mentioned. It was a relatively concise document. In a separate paragraph therein it was attested that independent legal advice had been received. In large printing the relevant document was identified as "Offer of Facility dated 24 May 2000". The witness to her signature was Albert Natticckiag, a neighbour with whom she was acquainted. Baira said he merely witnessed her signature. If she was obstructing him from seeing the content, a question arises as to what knowledge she had which would prompt her to do that or, if he did see the content, it is difficult to believe that Baira would ask him to witness her signature on a document about which she claimed to have no appreciation of its significance. 38It will be unnecessarily tedious to chronicle every one of every signature of Baira on a multitude of documents. As she has purported not to have any relevant knowledge of the documents which she has signed, I conclude that her various statements about signatures which she does or does not accept as hers, or about which she expresses doubt, are based upon visual inspection made after this litigation was commenced. There is no evidence of any protest of falsity being made by her before then. 39To the extent that signatures are queried or disputed, I am satisfied that the probability is that they are genuine signatures of Baira. I am conscious that Baira expressly disputed her signature on two documents, one directed to RAMS asking to forward all future correspondence concerning her loan to Dural and the other to St George Bank giving instructions as to payout and mortgage discharge. I am also aware of Sandra's claim to forgery of one of these signatures. Neither of these documents is critical to the dispute between RHG Mortgage and Baira and I am not persuaded that, forged or not, the signatures on those documents cast any light upon the issues of this trial. 40In cases where Baira expresses doubt or denial otherwise, particularly on documents about which she continues to claim to know nothing, I do not accept that where a witness is recorded that all these witnesses have been willing to engage in deception. 41In 2002 in relation to further facility agreement, St George Bank again required a declaration by Baira as a third party mortgagor. By this time I note the Bank was holding security over Marrickville, Castle Hill, Pyrmont and Milsons Point. Obviously St George had observed the name change from Fiorvianti to Baira and required another statutory declaration to put that matter in order. Two declarations were witnessed by Angelo Lo Surdo. In witnessing the documents he identified himself as a justice of the peace by number as well as full name. The unstated implication of Baira's evidence that she had never met him must be that he was consciously claiming to witness a signature when he had not done so. I would infer that any justice of the peace would be aware of the unlawfulness of so doing. This allegation by Baira puts Mr Lo Surdo into the long line of people, mostly professionals, who for no apparent advantage to themselves, were alleged by her to be prepared to act deceptively in relation to her obligations. I do not accept Baira's evidence. 42In the latter part of 2004, by which time Fioranis was in operation, St George Bank offered further facilities in which the total of $1,000,059 was endorsed in bold type on a letter which was signed by Baira immediately under a heading, again in bold type, "Acknowledgement by Guarantor". 43Baira also signed other associated documents. The witness to the signatures was a solicitor, Mr Calvitto, who also certified to tendering appropriate advice to Baira. Baira agreed that she recalled seeing Mr Calvitto. She said she attended with Joe and Sandra after being referred by a local solicitor, Mr Serio. Mr Calvitto was an impressive witness and I regard his testimony as reliable. He speaks fluent Italian although in conferring with him, Baira did not seem to need to call upon that ability. He was manifestly independent and had never met Joe, Sandra or Baira before. 44Although Mr Calvitto does not recollect this, Baira deposed that he had sought to speak to her alone when he enquired, according to her, whether she had been forced to give the guarantee. She denied that he explained "in detail" any of the documents. Mr Calvitto certified that he had so explained the legal nature and significance of the documents before they were signed. 45As a solicitor, he had performed a similar task on many occasions. However Mr Calvitto made a file note concerning the attendance. This included his suggestion to the three people that they should consult a financial planner and consider when they might "cash in". I got the clear impression that Mr Calvitto had the opinion, which I infer would be derived from experience, that apparently successful restaurants do not necessarily continue so to be indefinitely. His file note reveals the context in which he raised the need for planning. 46Baira has seized upon the expression about cashing in to elevate it into being a principal focus of the meeting. In support of her defence she has elaborated upon her modest background and lack of formal education. Those circumstances did not prevent her from possessing a capacity to look shrewdly to protecting her own interests. Mr Calvittto recorded that he had no doubt that Baira knew exactly what she was doing. I agree with his conclusion. 47In oral testimony, Baira claimed that she had told Mr Calvitto that she had been a guarantor "from the first time for $150,000", implying that she was telling him that she understood that to be the limit of her exposure. I do not accept that she ever canvassed that figure with Mr Calvitto. Entirely different figures were drawn to her attention. After the consultation an account was given to her, it was paid and a receipt issued. It was addressed to her and contained the following significant description of the legal services rendered: "Advice for your indemnity renewal with St George Bank involving your daughter Sandra, her husband Joe and their company Jencon Australia Pty Limited for their Darling Harbour restaurant Fioranis with securities including your own Marrickville property in your sole name, three other properties of Joe and Sandra plus their restaurant with total exposure of $2.1m with current servicing at about $20,000 per month". 48This was an emphatic method of ensuring that Baira was apprised of exactly what was involved. 49Two further observations about the encounter with Mr Calvitto can be made. His file note records that Baira worked in her own restaurant with her second husband which is "not doing well". Mr Calvitto had no reason to invent this information and it will echo when the evidence of Famularo is considered. The second is a volunteered statement claimed by Baira to have been made by her to Mr Calvitto about Joe and Sandra whom she said, "through the years they have been doing good". Whether she said this to Mr Calvitto or not, it reveals a state of mind which would have a tendency to explain why she might not have acted to concern herself about any exposure consequent upon mortgaging her property. 50Finally, in relation to Baira's meeting with Mr Calvitto, I would note the care for her position which she took in relation to the suggestion that she might give a power of attorney in that, having formed an impression that she did not wish so to do, he recorded that he would, if requested, refuse to be involved. 51In about May 2005, St George Bank was again offering further facility and once again Baira signed an acknowledgement as guarantor. Her signature was witnessed by a Cathy Macri who Baira denied knowing. Apparently she may have been an employee of the accountant, Mr Lo Surdo, another person Baira claims never to have met. If Baira is to be believed, Ms Macri is yet another stranger to her prepared to act at the very least improperly in relation to documentation signed by her. It was not Baira's contention that she went to Mr Lo Surdo's office and signed a document but was unaware of the name of the person who witnessed her signature. She simply denied knowledge of Ms Macri. 52In about mid 2005 Joe and Sandra became interested in purchasing Dural. I am conscious that there appeared to be some criticism by Sandra about Joe proceeding to purchase without fully consulting her but in the event they obtained title together and were both involved in financing for it. The purchase price exceeded $2,000.000 and, from somewhere, a deposit exceeding $200,000 must have been found. More or less concurrently, some reorganisation of funds and securities was commenced to be put in train. 53The initial contact between Joe and Sandra and Famularo as a mortgage broker arose in connection with this purchase. The principal finance was arranged by Famularo through a loan from the National Australia Bank (NAB). In existence at the time were various facilities made available to Joe and Sandra and the Jencon Corporations by the St George Bank, in respect of which St George held guarantees and mortgage security in particular over Marrickville given by Baira and over Drummoyne given by Rosario and Domenica. St George also held securities over other properties of Joe and Sandra. 54What came to be undertaken was a substantial reorganisation of financing and mortgages and it is in the context of this that mortgages were given by Baira (and Rosario and Domenica) to RHG Mortgage which were eventually the subjects of default and the claims which are made in this litigation. Chronologically, the loan secured on Drummoyne was made prior to that on Marrickville but I will continue to deal with the latter. 55On 15 September 2005 Baira signed (as guarantor) a new facilities offer from St George increasing the overdraft availability to $350,000. On the first page of the document in bold type is a total limit (appearing below an itemised list) of $1,177,148. Even a casual glance at this figure would catch the eye. 56Then there was a further letter from St George noting an overall reduction in existing facilities of $624,000. Baira again signed as guarantor on 13 October 2005. She does not deny that her signatures appear on these documents. The witness described as Anthony Ianni however does not accept the authenticity of his witnessing signatures. 57In relation to the execution of the reduction of facilities document there is a letter dated 12 October 2005 to St George Bank from Egistos Solicitors. The author of this letter was an employed solicitor, Mr Forster. The letter confirms to the Bank that there had been explained to Baira the nature of a guarantee and the possible consequences of default and that she had acknowledged her understanding of these matters. Incidentally Mr Forster added that Baira was familiar with the business of the borrower (presumably Fioranis) and had confidence in its success. This resonates of Baira's testimony that she had told Mr Calvitto that Joe and Sandra were doing well. 58Mr Forster clearly had no detailed recollection of the consultation although he did remember that he was told that the woman was in a hurry to get back to the restaurant. Mr Forster was challenged to describe the person whom he had seen. It is fair to say that, to the extent that he gave any description, it would not fit Baira. It was not disputed that Baira had seen Mr Forster on 8 November 2005 when he witnessed the execution by her of a power of attorney. There had apparently been a change of mind about this since seeing Mr Calvitto. It was put to Mr Forster that on 12 October and 8 November he saw two different women. No assertion was made as to who the person on 12 October might have been. An account for the consultation on 12 October was made out to Baira and was paid. 59The proposition that Baira did not receive the advice tendered on 12 October is, subject to Baira's version, based upon Mr Forster's somewhat muddled memory and descriptive powers. There was however no muddle in the precise report of the consultation made to the Bank on the day it occurred. I reject the contention that some sort of substitution had taken place and I am satisfied of the probability that Baira was the recipient of Mr Forster's advice on 12 October. 60For a particular reason to which I now turn, I find that Baira's testimony is unworthy of credit. That particularity is not to set aside the adverse effect on Baira's credit of the contradiction between her behaviour and her execution of documentation against her unlikely proposition that for years and years she signed many documents in blithesome ignorance of what she was doing. 61The loan to Baira from RHG Mortgage was brokered by Famularo. He had a meeting with her on 2 December 2005. Baira not only denied that meeting but denied she had ever met Famularo. This denial was a falsity and I would assess it as a brazen attempt to avoid the consequences of her own actions. 62Famularo's diary has a coordinate entry for the appointment but more significantly there are pages of hand written notes of the meeting which are entirely consistent with his version of the meeting. If, as Baira now asserts, there was no such meeting, it is implied that Famularo has invented the content of it as recorded in the notes. I note in passing that no allegation of fraud of any kind appears in the pleadings. The notes contain personal detail about Baira including driver's licence, Medicare and passport numbers together with expiry details. Famularo noted that he asked for tax returns but was told that these were "not available". He noted a comment emanating from Baira during the interview referring to "cash business". 63No credible proposition was advanced as to why Famularo would act dishonestly in brokering these loans. No doubt he would receive commission at established rates but he was not shown to have any special relationship with Joe and Sandra. Indeed, his statement that in the overall conduct of AMBFS business these were relatively small transactions was neither explored, challenged nor contradicted. 64It would be unnecessarily prolix to recapitulate all the detail in the notes. Their existence and their content are destructive of Baira's stance in denying that the meeting had happened and consequently, accumulated to the matters of contradiction to which I have previously referred, lead me to reject her evidence where it is inconsistent with what appears in the documentation. It follows that I do not accept Baira's asserted uncertainties and denials in relation to signatures which purport to be hers. I am satisfied that those signatures purporting to be hers were in fact made by her. A possible exception relates only to two letters which in any event were not operative in consummating the transaction. 65There is no defect in the terms or execution of the loan and mortgage documentation. Default is not disputed and, subject to defences, RHG Mortgage has shown an entitlement to the relief which it seeks. 66Before turning to the defences some observations should be made about the business conducted by Joe and Sandra. These observations are applicable in both actions. Galleria and Fioranis 67In an affidavit, Sandra stated that "We ran Galleria for some years" and "We earned a lot of money from the business". She described opening the new restaurant, Fioranis, in about December 1998. She described this as "a successful business from the beginning" and mentioned that it was extended in 2002. No one suggested that these descriptions were inaccurate. 68Some records of Jencon Australia Pty Limited were tendered. In harmony with what Sandra deposed, financial statements showed gross trading profits of $1,084,063.19 (2002), $1,482,980.17 (2003), $2,065,244.11 (2004) and $2,006,407.74 (2005). 69In 2003 and 2004 payment of director's fees of $156,000 and $147,000 were debited to expenses. Joe and Sandra were the sole directors. In 2004 and 2005, payment of director's fees was eliminated from the expenses list but, in lieu, there were debits of $600,000 in each year for management fees. During those years expenses for payment of wages were noted at $470,406 and $480,536. Reference was made to the sum of $600,000 as "wages" but fairly obviously to the extent that that description is given, it refers to payments in substitution for director's fees. I do not infer anything improper about the accounting method, however it can be noted that there are no parallel personal income tax returns of Joe and Sandra absorbing $600,000. The overall picture lends credence to Famularo's evidence that he had been told that cash payments were being made although how or where any cash was ultimately channelled or funnelled was not revealed to him nor was it detectable from the evidence. 70Fioranis closed in about 2008 which was about the same time as payments due under the mortgages to RHG Mortgage ceased. Up until then, ignoring minor matters not now the subject of complaint, payments and in some respects greater than minimum due, were regularly made. 71These observations reveal a sound basis for concluding that Baira, Rosario and Domenica held a belief that their children were conducting a successful business and were possessed of significant means. They were more than willing to cooperate in continuing the operability of the business by making their properties available to secure financial facilities. 72Somewhat curiously, the circumstances which led to a change from a business which was figuratively swimming in money to sudden closure have not been made available for scrutiny. Defence - Baira 73Although I deal to an extent with these matters separately, many of the comments made are self-evidently applicable to both cases. 74In the course of submissions, counsel referred to authorities and, in particular, to cases where entrepreneurial or dishonest children have persuaded a parent or parents to risk their homes by making funds available secured by mortgage. These instances are distinguishable from such inveiglements. In particular it was correct to submit that Baira serially signed loan and facility agreements over years culminating in the documents which are central to this claim. 75Baira had appropriate advice tendered to her. As the deed earlier discussed demonstrates, she was capable of acting astutely in her own interest. 76The defence to the amended statement of claim pleads lengthy facts in answer to the allegation of entry into the mortgage. I do not accept the testimony of Baira in support of the critical alleged facts especially her claim to belief as to the limited extent of exposure on the guarantees which she gave from time to time. Nor do I accept that she was unaware that the security given by her extended beyond the sum involved in the very first guarantee which she gave many years ago. Nor do I accept that she had never met Famularo, that she did not provide him with information which he conveyed when seeking accommodation for her or that the nature of the transaction with RHG Mortgage was such that she was the borrower of funds. From time to time she was given very specific and appropriate advice by solicitors and I do not accept that she simply signed documents without any enquiry or knowledge concerning what she was signing. 77Baira pleaded that the mortgage was unjust at the time it was made within the meaning of the Contracts Review Act ( CR Act ) and seeks relief in accordance with what is made available by that statute. 78It was not contended that there was any term or condition of the loan secured by the mortgage which was intrinsically unjust. The terms, including interest rate, could not be categorised as other than ordinary for a transaction of this type. There is no evidence that the lender engaged in applying any unfair pressure, or any pressure at all, nor did it engage in discreditable tactics. To the contrary, the documentation which it presented frequently contained warnings and exhortations to seek advice, legal or financial as appropriate. It was, broadly, not to the disadvantage of the lender if Baira chose to ignore warnings. 79There is of course the statutory prescription of matters to be given regard in relation to the public interest and the circumstances of a contract in respect of which relief is sought. Some of these have been the focus of particular submission on behalf of Baira. 80There is no essential difference in the inequality of bargaining power between the lender and the borrower in this instance from any case of a natural person seeking to borrow money from a large corporation and offering to secure the loan by mortgage. There was no imperative for Baira to enter the agreement other than her own choice and certainly nothing emanating from the lender. It is not irrelevant that there already existed commitments with the St George Bank and it was not suggested that the dealings there were discernibly unjust in the sense of the CR Act . 81Whether the borrower was unreasonably handicapped in complying with the terms, specifically for repayment, depends upon two things peculiar to this transaction. First, whether she told the truth when she informed Famularo about her cash income and, second, whether she was content to rely upon a cash flow being made available from Joe and Sandra's business. Money from Joe and Sandra's business had apparently met any obligations in the past and in fact it continued to be the case until the unexplained demise of Fioranis in 2008. 82Baira was capable of acting to protect her own interest as demonstrated by the deed prepared for her by Mr Ross. That she trusted her daughter and son-in-law does not operate to negate or diminish her ability so to act. She has detailed her educational and domestic background and I repeat that lack of formal education does not equate with an absence of financial shrewdness. 83The conversation, denied by her, which she had on 2 December 2005 with Famularo in Italian showed an accurate understanding of the total loans of Joe and Sandra and the plan to have St George release its security over Marrickville for $650,000. She was able to respond to Famularo's scepticism about the willingness of St George Bank to release its security with a firm assurance to him that she and Joe could see to it. I interpolate that, as Baira takes the stance that no such meeting ever occurred, I am comfortable to accept his version of the encounter with her as substantially accurate. 84I also accept the evidence of the solicitors that the legal and practical effect of the agreements into which she was entering were explained to her. Nothing could have been in plainer language than Mr Calvitto's blunt warning that "she will lose her house if things go wrong". 85That RHG Mortgage had already granted a loan on security of Drummoyne does not of itself point towards Baira's dealing being unjust. It was submitted that it was highly relevant to note the contemporaneous loan in October 2005 to Joe and Sandra at the time of the loan secured by Drummoyne. How this is relevant to creating an injustice in a contract with Baira is not clear. 86It might be observed that a consequence of what ultimately occurred, which is perceptibly of benefit to Baira, was that if she had been called upon as a guarantor under the extant St George facilities, she was potentially liable for about double the amount for which she became liable under the RHG Mortgage. 87Baira also relied upon an alternative claim for relief based upon unconscionability in that she was in a position of special disability visa vis RHG Mortgage. Given the "facts" conveyed by Baira and passed ultimately to the lender I am not satisfied that therein, or for any other reason, it should have been appreciated that Baira was in a position of special disadvantage in relation to the transaction. The source of any deceit was to be found in what Baira told Famularo. 88I conclude that the defences fail and that the plaintiff is entitled to the orders for judgment which it seeks. First cross-claim - Baira proceedings 89Baira instituted a cross-claim against RHG Mortgage, AMBFS and Famularo. 90The claim against RHG Mortgage was that its conduct was unconscionable within the meaning of s 12BAB of the Australian Securities and Investments Commission Act 2001 ( ASIC Act ). Given the nature of the transaction an alternative claim formulated pursuant to the Trade Practices Act 1974 ( TP Act ) cannot be tenable. 91In support of the cross-claim Baira repeated the matters pleaded in defence (save some specific reference to the CR Act ) and I do not repeat my reasons for rejecting the assertions upon which these are based. In addition, it was contended that RHG Mortgage engaged in unconscionable conduct in that the "split" of the extant exposure to St George Bank of approximately $1.2 m should have been disclosed by it to her with a caution that such could materially and adversely affect Baira's interest. The agreement did not have that colour. It is in fact perceptible that Baira knew that, although Joe and Sandra were prospering, she became alert to Mr Calvitto's sound warning and it was therefore prudent to cooperate in a reduction of her potential exposure should Joe and Sandra's prosperity go into decline. 92In short, the claims against AMBFS and Famularo must fail if his evidence is believed. I have accepted it. Nothing will be served by chronicling the various misrepresentations asserted in the pleading to have been made by Famularo whom I find made no such misrepresentations. I accept his evidence that his function as a broker was to find a potentially willing lender and to assemble and forward the documentation required by that lender. He was not, as between himself and the would-be borrower, an investigator of the truth of the information conveyed to him by that would-be borrower. 93At the risk of repetition, in so far as it was pleaded that Famularo (and AMBFS) acted on the instructions of Joe and Sandra in putting forward the loan application by Baira, I reject that contention. That contention basically requires acceptance of Baira's testimony that she had never met Famularo which contention I reject. 94There should be judgment for the cross-defendants on this cross-claim. Second and third cross-claims - Baira proceedings 95These cross-claims are brought by RHG Mortgage and RHG home loans respectively and are contingent upon their failure to obtain principal relief in the action. As I have held that RHG Mortgage is entitled to judgment there must be judgments for the cross-defendants on these cross-claims. The fourth cross-claim - Baira proceedings 96The fourth cross-claim was instituted by Baira against Joe and Sandra. As noted Joe is now an undischarged bankrupt and no necessary order has been obtained enabling the continuation of proceedings against him. Although the pleading refers to them as a duality, I deal with the cross-claim as advanced against Sandra. 97The essence of the cross-claim was a repetition of the assertions that Baira merely signed documents at the request of the cross-defendants and that she had nothing to do with the supply of information to Famularo which he assembled and submitted in order to obtain the loan accommodation. 98As I have already specified, on the critical issues I did not find Baira a truthful witness and the fundamental allegations in the cross-claim that Famularo proceeded upon the instructions of and upon the information supplied by Joe and Sandra rather than Baira, I reject. 99Baira was the borrower from RHG Mortgage although in answer to cross-examination Sandra impliedly accepted that she had a responsibility for the money owed. The implication arose from her evidence that Baira was in her view not responsible and she added that she hoped there would be some equity left in Dural that "may be able to help towards these proceedings". NAB has apparently been in possession of Dural since about January 2010. 100Sandra also said "I'm defending what she (Baira) said is true". Despite that evidence, submissions on her behalf canvassed the reliance by the lender (acting through RHG Home Loans) in assessing and approving applications on the information supplied by the broker. It then became necessary to adopt a somewhat paradoxical stance. On the one hand Baira's version of the truth is that she denied ever meeting Famularo but in a submission on behalf of Sandra it is stated (and presumably relied upon) that Famularo said that no one other than Baira provided him with information relevant to the loan application. 101Earlier mention was made of two documents with signatures specifically challenged by Baira. Sandra claimed to have forged her mother's signature on a letter regarding the address to which documents should be despatched. Assuming that to have been the case, it was not a document which would have been operative in the sense of touching upon the rights and liabilities of the parties in relation to security. The same can be said of the signature on a letter directing the distribution of funds on settlement. 102As I have accepted Famularo's evidence and rejected that of Baira, it follows that the factual basis upon which the cross-claim is pleaded has not been established and there should be judgment for the cross-defendant. I do not comment upon whether on the basis of the "responsibility" of which she spoke, Sandra should otherwise indemnify her mother. The Ianni proceedings 103Some general observations should be made. Domenica appeared in Court only briefly. It was obvious that she is presently in poor health and this is confirmed by an affidavit of her medical attendant. As I recall she attended in a wheelchair and she was not subjected to cross-examination. Famularo said that her presentation five or six years ago when he saw her was quite different from the present and he was not challenged about that remark. It was, at least tacitly, accepted that Domenica was not fit to give evidence. Although her current situation was not a matter of controversy, the overall evidence does not suggest other than that she joined in the arrangements alongside her husband Rosario intentionally. In the course of what became a stream of mortgage backed guarantees it is notable that they were seen separately by the solicitors Mr Egisto and Mr Previte. 104Rosario claimed to be restricted in the understanding of English and requested to give evidence through an interpreter. He did so. He has been in Australia since 1954. He worked in a factory for five years, then as a fisherman for 18 months and then for about 33 years as a painter and docker for the Department of Defence at Garden Island Naval Dockyard. He said he worked in a gang of Italians but I find it hard to credit that for 33 years part of the operations of an Australian naval establishment was conducted in Italian to the extent that Rosario did not achieve fluency in English. While it can be appreciated that a witness may be more comfortable speaking in his first language, Rosario's contention of his limited ability to communicate in English contained a measure of deceit. It was revealed that his own solicitor in these proceedings had read him the lengthy affidavits to which he deposed and that solicitor explained the nature and the effect of relevant documents to him in English and received an appropriate acknowledgement that Rosario understood. This false claim to limited language ability operated to diminish Rosario's credibility. 105I am, of course, conscious of recognised risks in founding judgment on an assessment of demeanour but that awareness does not require that an artificial blindness be adopted. Demeanour is but one of the reasons for my reservations about the testimony of Rosario. The submission that he was hardly a shrinking violet but a strong, wily and capable man was entirely compatible with my own assessment and I would accept that submission. His capacity to protect himself (and his wife) was demonstrated by his refusal when Joe and Sandra on the very first time sought assistance in the purchase of Galleria. This would have involved Joe and Sandra leaving their respective employments and Rosario declined to make available Drummoyne as a security for a bank loan. As earlier described, Joe and Sandra then went to Baira who was willing to accede to their request. 106A question arises then, what caused the change in the attitude and willingness of Rosario and Domenica? The matter was not explored in those terms but, as already recounted, Galleria was said to have made a lot of money and Fioranis was literally turning over millions of dollars and making huge trading profits. It would be quite unreal not to infer that in a broad way Rosario and Domenica were aware that Joe and Sandra's business was flourishing. That provides a likely answer to the question. 107In somewhat parallel to the denial by Baira, a matter of particular import in relation to the evidence of Rosario is his denial that he ever met Famularo. That he and Baira make similar denials does not add strength to the contention of either. I have already dealt with the sheer incredibility of Baira's assertion. Again, there are handwritten notes by Famularo of his meeting with Rosario and Domenica which fortify his evidence that he did have the meeting and his testimony was coordinate with what he said he was told. I reject the claims that there had been no meeting with Famularo. A lie of this magnitude about a critical fact not only diminishes credibility generally but extinguishes it where it is contradicted by evidence, particularly that of Famularo. 108It is significant to note that in a minute of that meeting on 14 September 2005, which had been diarised for 9.30 on that day, Famularo recorded "Family business". He was talking to Rosario and Domenica not to Joe and Sandra. I have already referred to the accounts of Jencon Management where an amount of $600,000 appears to have been distributed as "wages" other than wages to kitchen, waitstaff and the like who would have been comprehended within the expense item of Jencon Australia. As I have observed, no documentation was presented which shows any amount approaching $600,000 being paid directly or indirectly to Joe and Sandra only. The chronology of dealings - Ianni 109As recounted, after the refusal to assist when finance to purchase Galleria was sought, a change occurred and in about mid-2000 Rosario and Domenica executed a mortgage and guarantee in favour of St George Bank. As Sandra said, a lot of money had been made from the Galleria and Fioranis was successful from the beginning. 110Some loan documents were signed and witnessed by an officer of the Bank but the mortgage itself was signed by each of Rosario and Domenica and witnessed by solicitors Mr Egisto and Mr Previte respectively. It is of interest to note a relatively unusual special condition that the guarantor's liability was to be limited to the value of Drummoyne. I do not think it likely that the Bank included this provision without some negotiation and it contributes towards a conclusion that Rosario had significant capacity to act in protection of his (and Domenica's) interests. 111In addition to the mortgage and loan documentation, each of Rosario and Domenica on 13 July 2000 made declarations in which they individually deposed that they had received independent legal advice regarding the loan between Joe and Sandra and the Bank and in relation to the security documents relating to the Drummoyne property. Further they each declared that they had freely and voluntarily signed the mortgage over Drummoyne, the deed of guarantee and indemnity and the acknowledgment by guarantors/mortgagors. 112I accept the evidence of Mr Egisto and Mr Previte that they discharged their obligations in giving appropriate advice and explanation to Rosario and Domenica. 113The securities remained in place and in accordance with arrangements within the family group and obviously from the profits of Joe and Sandra's enterprise, necessary payments were made and Rosario and Domenica were not called upon in respect of the guarantee. 114Concerning Rosario and Domenica, it was in September 2005 that Famularo was consulted about what became a loan from RGH Mortgage and the subject of this litigation. As previously mentioned Famularo had been arranging finance through NAB for Joe and Sandra to enable completion of the purchase of Dural. Joe and Sandra's financial facilities (including those through Jencon) were complex but no point will be served by tracing all of them in detail. It was apparent that what NAB was willing to advance would need to be supplemented both in terms of money and security. 115Rosario's explanation for signing further documents was that Joe had told him that they were going to another bank to get a cheaper interest. He said he was willing to sign documents in the belief that he was liable to be called upon, at most, in respect of a guarantee of $100,000. He did not claim that he was misled by Joe (or Sandra or anyone else) into this belief but it became a mantra which he incanted during his testimony, frequently without reference to the question which was being asked at the time. I am satisfied that he has invented this belief in an attempt to deflect from himself the consequences of his knowing and voluntary actions. 116In the absence of relevant contradiction it is easier to accept Famularo's evidence although he was, in any event, an impressive witness whose testimony as to events and circumstances was persuasively compatible with the pattern of recorded activity and documentation. 117It was intended to apply for what is popularly referred to as a low doc loan. Famularo dryly commented that these are made available by lenders without requiring presentation of particular records, for example income tax returns. There were two meetings between Famularo and Rosario and Domenica on 14 and 16 September 2005. On each of those days Rosario and Domenica signed RAMS Borrower Self Certification - Income and Affordability forms. The difference was that on the first document Jencon Australia Pty Limited with ABN identification was endorsed. This was obviously an error arising from a misunderstanding on the part of Famularo and was corrected on the second occasion. Whether as between RAMS and Famularo, he as broker should or should not have filled in the form is not germane to any relief sought by Rosario and Domenica. I am satisfied that, consistently with his notes, the relevant information emanated from them and they affirmed its correctness by endorsing their signatures. If it be the case that, in failing to check what he was told or in failing to comply with any guidelines, Famularo may have a potential liability to those to whom he forwarded the documentation, that does not create a duty owed to the applicants whereby Famularo was obliged to investigate the truth of what they had represented to him. 118This activity was connected, inter alia, with the purchase of Dural by Joe and Sandra for a price of approximately $2.2m. Obviously it was necessary to have the funds available in order to achieve settlement and I am unwilling to draw any sinister inference from the fact that Famularo sought urgency in order to meet the requirements of scheduled completion of the Dural purchase. A document has emerged, from whence is not revealed, purporting to be the first page of a contract for the purchase of Dural by Rosario and Domenica for $500,000. The copy has written on it, for whatever it is meant to convey, "not security". A fax imprint suggests that it is page 18 of a 20 page dispatch from "unknown". I am unable to make anything of this mysterious document other than to conclude that, whatever its provenance, it did not operate so as to effect one way or another the transaction into which Rosario and Domenica entered with RHG Mortgage. 119Originally they sought accommodation of $1,000,000 but following valuation RAMS offered $910,000 and this was accepted. There is no reason to think that this was anything but routine. In order to complete the Dural transaction, St George Bank was asked to release securities which it held over Drummoyne and Pyrmont so that settlement could take place as it did on 14 October 2005. In preparation, St George had specified the amounts it would require in order to release securities. 120Appointments were made for Rosario and Domenica to see a solicitor, Mr Wennerbom, for the purpose of executing the mortgage and associated documents. Phillips Fox were solicitors then acting for Joe and Sandra. Mr Wennerbom had previously been a member of that firm. He apparently did liquor licensing work in respect of Fioranis and continued to do so. In passing I note that neither Joe nor Sandra held the liquor licence and it emerged that this was held by one of Joe's brothers. Mr Wennerbom gave firm and credible evidence in response to questioning and it is plain that he was independent of Joe and Sandra in respect of the transaction about which he was being asked to advise Rosario and Domenica. It can be observed that among the documents signed by Rosario and Domenica there was an acknowledgement that RAMS had recommended they obtain both financial and legal advice. They obtained the latter from Mr Wennerbom. Some forensic excursions were travelled when Mr Wennerbom gave evidence. It suffices to state that I accept his record for time charging purposes reveals a time spent giving the advice which he certified as I also accept his explanation that he was giving legal not financial advice which was the reason for what was contended to be a conflict between the borrowers signing a document declining financial and legal advice but in fact receiving legal advice. As I have indicated I consider that Mr Wennerbom was a truthful and accurate witness. 121Each of Rosario and Domenica made declarations in relation to receiving legal advice regarding the loan and security documents prior to signing them. This was, like the mortgage, a document of a type with which they had previous experience and would have been more than familiar and even if that experience had passed from memory, Mr Wennerbom explained the document to them. Defence - Ianni proceedings 122The pleaded defence is, in part, couched in curious language. Exactly what defence is sought to be raised by assertion that signing documents is "not recalled", or that signatures "appear to be" is not immediately obvious. The defendants are entitled to put the plaintiff to proof of its claims by not admitting that the mortgage was signed by them but it is not clear whether the companion allegation that they "have not seen the original of the mortgage", is intended to imply denial. Logically one cannot sign an unseen document. In the event, however, denials of the authenticity of signatures by Rosario and Domenica were not forthcoming. Allegations that they were induced to enter agreements under the influence of Joe were not supported by Rosario's testimony. At the highest he said that Joe told him they were changing banks to get a better rate of interest and Rosario said words to the effect that "That's good". 123Ultimately the defence relied upon assertion that the loan and mortgage were unjust at the time they were entered into in the sense of the general law and the CR Act and the Consumer Credit Code as well as provisions as to unconscionability in the ASIC Act . As this was a financial transaction, although raised in written submissions, I assume that the TP Act is not relied upon. There is no essential difference in any case in the Federal statutory provisions. 124A number of factual matters were raised. It was claimed that the solicitor Mr Egisto simply witnessed signatures and gave no advice. I prefer the evidence of Mr Egisto. Some detailed investigation of documents was undertaken including examination of some faxed copies. I do not draw any inference relevant to the issues in the case from the apparent absence of pages from copies held in files or repositories which were produced for the purpose of litigation. The very existence of a fax copy demonstrates that an original must exist or have existed somewhere. 125Again, the issue of never meeting Famularo was raised. It was said in submission that Rosario and Domenica do not deny that their signatures are on the applications but they cannot give any evidence as to when or how their signatures were placed on the form. This language simply attempts obfuscation. It acknowledges that Famulao sent genuine applications signed by Rosario and Domenica and, as I have found, they did meet him and supply to him the necessary information. The unstated alternative that Famularo invented the content would attribute to him an ability to derive information without having a source. This would be truly remarkable. I do not accept the proposition that he was actually receiving information from Joe and pretending that it came from Rosario and Domenica. 126Some focus was directed to the existence of a document from St George Bank in the form of a typical statement labelled "Snapshot of Account", in the name of Rosario and Domenica. By reference to the account number it clearly was a statement in relation to an account of Joe and Sandra. It was not suggested that the statement was not a genuine product of the Bank. The most likely explanation is that, bearing in mind the Bank records would identify Rosario and Domenica as guarantors, some officer of the Bank sent them the "Snapshot" for their information. If it later became attached to some other document I do not regard that as sinister. 127Like a lot of things upon which time was spent throughout the hearing, this was a "red herring" which has no determinative relevance but which was sought to be accumulated with matters of similar ilk. The purpose was apparently to cast an aura of suspicion about the transactions. These comments are equally applicable in both actions. 128It was, in my view, to Famularo's credit that he agreed that he physically entered the supplied detail into the applications although a guideline cautioned against a broker so doing. Famularo said that it was his usual practice to do so and, whilst I recognise that adherence or non-adherence to guidelines can on occasions assist in assessing a transaction, it must be remembered that guidelines are just that. Non-adherence to a guideline does not of itself corrupt a transaction. 129There was nothing unjust in the terms of the loan agreement and mortgage and in particular the terms as to the rate of interest. I did not understand the contrary to be suggested. Nor was there identified any conduct or requirement of RHG Mortgage which could be categorised as unconscionable. It responded (through RHG Home Loans) appropriately to the application and it was assessed properly on the information supplied. 130A principal thrust of the submissions in support of the defence involved the recitation of the litany of matters to be considered when the CR Act is relied upon. It is to be observed that as the statute requires consideration, an injustice is not determined simply by using the specified factors as a checklist with the result following fulfilment of the specification by the party seeking relief. 131Both Rosario and Domenica on the one hand and Baira also on the other had been content for years to offer their properties to secure facilities for Joe and Sandra's business enterprises. They did so in circumstances where such evidence as was made available showed a successful business with very high cash turn over and trading profits. All of Rosario, Domenica and Baira denied owning an interest in the restaurants, whether formal or informal, and no contesting party could have been in the position to challenge such propositions. There were however representations to Famularo of substantial income by all of them which, if true, must have been derived somehow or other from the cash flows emanating from the restaurant. 132In both cases the defendants have chosen to adopt what was correctly described as a minimalist stance. In that circumstance what remains available for examination is the documentation which on its face is regular and untainted. Complaint was made of the absence of benefit but I am satisfied that, although I do not find the defendants had an identified proprietorial interest, all of the transactions were part of consensual family arrangements and the reality was that documents were signed for the benefit of general family prosperity. 133As in the case of Baira, I find the agreement and mortgage sought to be impugned by Rosario and Domenica was not unjust. Neither were other defences based upon statute sustained. 134RHG Mortgage is entitled to the judgment sought. The first cross-claim - Ianni 135Rosario and Domenica, in the event that the loan agreement and mortgage were not set aside, as is now determined, sought declarations against RHG Mortgage raising matters not sustained in their defence and also sought damages from AMBFS and Famularo for negligence or unconscionable conduct including that specified in the ASIC Act . I reiterate that what was involved was a financial service and resort to the TP Act was not available. 136The evidence, which, there being nothing to the contrary, I accept, was that the function of the broker (AMBFS and Famuularo) was to receive information from applicants for loan, assemble the documentation and forward it into what in this instance was a chain leading to the ultimate lending of funds by RHG Mortgage. 137At some length which I will not recite, in the further amended statement of cross-claim (paragraph 35) there were pleaded alleged breaches of supposed duty of AMBFS and Famularo said to be owed to the would-be borrowers. Those allegations are not supported by the evidence. For example, if paragraph 35(d) "failed to lodge the RAMS loan application without the authority or instruction of the cross-claimants to do so" is intended to mean that the application was lodged without authority, the evidence of the meeting and the supply of information and the signature of the applications documents contradicts the proposition. Contrary to the allegations, it was Rosario and Domenica who consulted Famularo and there is no basis for finding that the fact that Joe initially introduced his parents can be elevated into his giving instructions about the transaction upon which they were embarked. The advice by the solicitors significantly undermines the proposition now sought to be relied upon. 138I have already said that it was not the task of the broker to investigate his clients. Famularo acted in accordance with what he had been told. It was not his task to challenge the truth of the information in the context of his relationship with the clients. It has been observed that among the documents given to Famularo and forwarded by him was a rates receipt which showed a pensioner discount. That was entirely inconsistent with what Famularo had been told but his task was not that of a forensic investigator and I accept his evidence that he did not notice this item as, obviously, no one else "further up' the line did, as it could reasonably be predicted that identification as Rosario as a pensioner would have led to refusal of the loan. 139It was also argued on behalf of Famulao and AMBFS that it had not been demonstrated in any event that anything done by them caused a loss to Rosario and Domenica and, as a further alternative, that if the business of Joe and Sandra had come to failure, they would suffer the same loss to St George Bank as they now would suffer to RHG Mortgage. There is force in these arguments but in my view the claims in this cross-action fail for want of proof of negligence or other pleaded cause in any event. 140There should be judgment for the cross-defendants on the first cross-claim. The second and third cross-claims 141These cross-claims are brought by RHG Mortgage and RHG Home Loans respectively. The need for the remedies sought was contingent upon failure of RGHG Mortgage to obtain judgment in the action. As it will succeed, the foundation for these cross-claims will not come into existence and there should be judgment for the cross-defendants. The fourth cross-claim 142This is a claim by Rosario and Domenica filed against Joe and Sandra. Joe's status as an undischarged bankrupt has already been noted and I will not repeat what has already been said. However the cross-claim in its terms charges that Rosario and Domenica acted under the influence of Joe and that Joe and Sandra, in breach of duty of care, procured finance, induced them to sign documents, applied money for their own benefit and failed to act in their interests. These allegations are simply not supported by the evidence. 143In particular it is alleged that a false representation was made that Rosario and Domenica were guaranteeing only $100,000. There is no evidence that either Joe or Sandra made any such representation to them. 144The factual basis upon which the cross-claim is pleaded has not been established and there will be judgment for the cross-defendant Sandra on this cross-claim. General - both actions 145There was accumulated in evidence several thousand pages of documentation in relation to the subject of the loans and the trail of preceding transactions and it would be a fruitless exercise to analyse every aspect of every dealing. The essential truth is that Baira, Rosario and Domenica were uninhibitedly willing to offer their properties to secure the continuation of what appeared to be an outstandingly successful business. Indeed they have chosen not to reveal how it came to fail, the evidence being limited to cryptic observations about Fiorani's closing in about 2008. 146The volume of submissions has a reflection in that of the documentation just mentioned. The necessity to elaborate on every miniscule detail is removed because ultimately there is always a critical determinative element of reliance upon claims by Baira and Rosario whose respective untruthfulness has been demonstrated. 147Baira, Rosario and Domenica were not induced to offer their properties to come to the aid of a perceptibly risky enterprise nor to one, examination of which, would have revealed the seeds of failure. The mortgagors were content to use their properties in circumstances where all the appearances of prosperity existed and this appearance was affirmed by the apparent ability for commitments to be met. As noted in the account which Mr Calvitto prepared for the advice which he gave, the service requirement of loans was in the vicinity of $20,000 per month and this seemed to be able to be met and, so far as the evidence which the defendants were prepared to tender demonstrated, continued to be able to be met until the business just evaporated. 148While there is a veritable avalanche of documents, the outcome is inevitable in the light of the lack of credibility of Baira and Rosario as witnesses. It was accurate for counsel to submit that, whenever inconvenient truths were presented, the defendants denied them and made scandalous allegations against third parties. The defendants signed documents of obvious serious financial import and there is no reason to find other than that they intended their signatures be relied upon. Orders 149In accordance with the foregoing, I propose the following orders: Baira proceedings (1) Judgment for the plaintiff for possession of the land identified in the statement of claim. (2) Judgment for the cross-defendants on each of the first, second and third cross-claims and for the cross-defendant Sandra Ianni on the fourth cross-claim. (3) Judgment for the plaintiff for the amount due and owing under the loan agreement and mortgage to date. (4) Leave to issue a writ of possession. (5) Subject to submission, costs to follow the event of judgments in the proceedings and on the cross-claims. Ianni proceedings (1) Judgment for the plaintiff for possession of the land identified in the statement of claim. (2) Judgment for the cross-defendants on each of the first, second and third cross-claims and for the cross-defendant Sandra Ianni on the fourth cross-claim. (3) Judgment for the plaintiff for the amount due and owing under the loan agreement and mortgage to date. (4) Leave to issue a writ of possession. (5) Subject to submission, costs to follow the event of judgments in the proceedings and on the cross-claims. Direction 150Counsel for the plaintiff in each action to prepare minutes giving effect to these proposed orders and to present them to enable orders to be made on a date now to be fixed.

RHG Mortgage Corporation Limited v Rosa Baira RHG Mortgage Corporation Limited v Rosario Ianni

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Judgment (4 paragraphs)

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