1 This is an appeal from the County Court against the dismissal of a claim by State Securities Pty Ltd, a mortgage broking company (first appellant) and Mr Tom Karas, (second appellant) its manager, for brokerage fees in the amount of $17,343.51 plus statutory interest allegedly incurred by Ms Martha Dromi ('the respondent').

2 The appellants claimed that the entitlement to fees arose pursuant to two brokering agreements, referred to as the 'second agreement' and the 'third agreement', which were executed by the respondent.[1] Each of the agreements included a written term to the effect that a 'procuration fee' of '$600 plus 2% of the loan amount plus GST' was due and payable by the borrower (and hence interest would accrue) 'upon signing this Appointment whether or not a Letter of Offer is received', and payable within three working days of settlement (if not deducted at settlement). The second agreement was dated 26 May 2005. The third agreement was not dated, but it was the appellant's contention that it was entered into on or about 1 June 2005.

3 The appellants claimed that the second and third agreements related to two loans that the appellants brokered to refinance properties belonging to the respondent at 90-92 Guest Street and 94 Guest Street, Tootgarook. The respondent did not dispute the fact that the appellants had procured the two loans in question for her.

4 The two key issues identified by the trial judge for determination were (1) whether the respondent had signed the second and third agreements and (2) whether the second and third agreements related to the loan transactions upon which the appellants relied. His Honour concluded that the respondent had signed the agreements, but that they were not referable to the loans alleged. In the course of deciding the above issues, his Honour made adverse findings as to the credit of both the second appellant and the respondent.

5 The learned trial judge made the following findings. He stated that it was not in issue that the second appellant and the respondent 'had a very close business and social relationship between 2003 and 2007' but they 'had a falling out in March or April of 2007', and 'are now involved in litigation on various fronts.'[2]

6 Examining the two agreements that the appellants relied upon, his Honour noted that each was a two-page document, with the first page numbered '1 of 2' and the second page numbered '7'. Neither agreement contained any reference to the property for which a loan was sought or the amount of loan sought. In the schedules to both agreements, it was stated that 'lender' for the purposes of the agreement meant 'Interstar Securities (Australia) Pty Ltd (and associated entities)' and 'State Securities P/L (and associated entities)'.

7 The second agreement was dated 26 May 2005 and had the respondent's name printed on it. The third agreement was undated and did not have the respondent's name printed on it. Both agreements contained signatures that his Honour found to be the respondent's.

8 His Honour noted that the loan relied upon by the appellants as being that to which the second agreement related was a loan from Challenger Mortgage Management Pty Ltd ('Challenger') facilitated by Perpetual Trustees Victoria Ltd in the amount of $423,000, on the respondent's property at 90-92 Guest Street, Tootgarook ('the second loan').[3] The loan to which the appellants alleged the third agreement related was a loan of $116,000 from Paladin Wholesale Funding ('Paladin') facilitated by Perpetual Trustees Australia Ltd on the respondent's property at 94 Guest Street ('the third loan').[4]

9 After concluding that he was satisfied that the respondent had signed the agreements, his Honour stated that the 'real issue' was whether the second agreement related to the Challenger loan, and the third agreement to the Paladin loan.[5] His Honour emphasised that '[a]n entitlement to a brokerage fee cannot exist in a vacuum. It must relate to a specific property.'[6]

10 His Honour held that, as neither agreement indicated the property in relation to which a loan was sought or the amount sought to be lent, the issue fell to be determined on the oral evidence given by the second appellant, namely his statement that he had extracted the agreements from the first appellant's files relating to the respective loans. Although it was suggested that the respondent had not challenged the second appellant's evidence in that regard, I consider that the cross-examination made it sufficiently clear that it was in issue that he had obtained the second agreement from the first appellant's file relating to the Challenger loan and the third agreement from the first appellant's file relating to the Paladin loan. His Honour appeared to have concluded that the only other relevant evidence the appellants relied upon was the fact that a copy of the second agreement had been found on a file held by Challenger which was produced under subpoena.

11 His Honour accordingly was of the view that 'much then depends upon the credit of second [appellant]'. Counsel for the respondent primarily attacked the credit of the second appellant on two bases - that purported assignments (dated 29 June 2007) of the second and third agreements from the first appellant to the second appellant were 'a sham', and that in a separate Supreme Court proceeding,

11 Master Efthim made a finding that the second appellant had made a false statement under oath.

12 In relation to the assignments, his Honour noted that:

• The assignments were not referred to in the original Statement of Claim filed 22 January 2008.

• The second appellant only had copies of the assignments and not the originals (which he claimed had been sent to the respondent, but which she claimed she had never received).

• The assignments were expressed to relate to agreements made on 21 June 2005 and 18 July 2005 being the dates of invoices sent to the respondent claiming the brokerage fees. These were not the dates of the second agreement (26 May 2005) and the third agreement (allegedly 1 June 2005).

• the amounts of the alleged debts to be assigned pursuant to the assignments did not include the $600 flat fee plus $60 GST.

• After it had purported to assign its interests, on 28 November 2007, the first appellant lodged caveats over the properties at 90-92 and 94 Guest Street.

• The second appellant did not make any demand for payment under the assignments.

13 His Honour was entitled to look with suspicion upon the evidence that any entitlement to the procuration fees had been assigned from the first to the second appellant. Although counsel for the respondent submitted that his Honour's findings amounted to a conclusion that the assignments were a sham, we do not consider that his Honour went so far. It is unnecessary, however, to express a view as to whether they are effective in law. For reasons that will become apparent, it will be necessary to remit this question to the trial judge for further determination.

14 His Honour then noted statements made by Master Efthim (as he then was) in a Supreme Court proceeding concerning the appointment of an administrator, in which the second appellant swore that he did not appoint a particular administrator because that appointment 'was made by State Securities Pty Ltd, of which his wife is a director.' In an order made on 29 April 2008, Master Efthim stated under 'Other Matters' that:

That statement is false. There is evidence before the Court which has not been rebutted and demonstrates that...Mr Karas is the manger and in effective control of State Securities Pty Ltd. Mr Karas was given the opportunity to rebut the evidence put to the Court, but did not do so.[7]

15 His Honour concluded that 'the matters to which I have referred above throw doubts upon the credit of the second [applicant] and his business practices.'[8]

16 His Honour then proceeded to examine matters that his Honour found raised significant questions about the respondent's credit as a witness, including false evidence she gave in an affidavit dated 23 April 2008 in a different Supreme Court proceeding about whether her last name was 'Dromi' or 'Tsamis', her late amendment of the Defence to withdraw admissions that it was her signature on the agreements, ostensibly fraudulent letters written for her benefit and a passport in the name Martha Dromi which the respondent maintained was fraudulent.

[Counsel for the appellants] relied upon the fact that the loans for 90-92 Guest Street and 94 Guest Street, Tootgarook were procured by the first [appellant] and that accordingly, it might have been expected that brokerage was payable. On the other hand, on account of the close relationship between the second [appellant] and the [respondent], brokerage may not have been charged.[9]

As will be apparent, I have considerable reservations as to the credit of both the second [appellant] and the [respondent] as to where the truth lies.

The onus, however, lies upon the [appellants] to satisfy me on the balance of probabilities that the second agreement relates to the loan procured for 90-92 Guest Street, Tootgarook, and that the third agreement refers to the loan procured for 94 Guest Street, Tootgarook. In all the circumstances, they have not so satisfied me.[10]

Errors in findings as to the second appellant's credit (grounds 6, 7 and 8)

19 Under cover of grounds 6, 7, and 8 the appellants maintained that the trial judge erred in law, when examining the credit of the second appellant, by relying on a finding by Master Efthim in a different proceeding that the second appellant had made a false statement under oath, and rejecting the second appellant's evidence on this basis. The appellants invited this court to go behind Master Efthim's finding that the second appellant made a false statement under oath, and to conclude instead that the second appellant's statement was 'literally true' or, at worst, a 'half truth'.

20 In paragraph 5 of the affidavit sworn by the second appellant on 18 April 2008 to which Master Efthim was referring, the second appellant deposed that he did not appoint the relevant administrator, and stated:

The appointment was made by [the first appellant] of which my wife is a director. I am not employed by this company or a director of that company. My wife has been in the industry for approximately 20 years and it is her own business.

21 Despite that being technically accurate, a fact missing from the above description of the second appellant's relationship with the first appellant was that he managed and had 'effective control of the business affairs' of the company; a fact which he readily proffered in the present case,[11] and which Master Efthim found to be the case. Master Efthim also stated that the second appellant was given the opportunity to rebut the evidence put to the Court and clarify his position, but did not do so. In those circumstances, it appears that it may have been open to the Master to draw the inference that the second appellant deliberately omitted reference to his role as manager of the first appellant, to make it appear that the appointment was made by the first appellant free from his personal influence.

22 With all respect, however, the trial judge was wrong to take the Master's conclusions into account. Evidently, they related solely to the second appellant's credit and, whatever may be the juridical significance of a Master's notes under the heading 'Other Matters', they are not a recognised exception to the collateral evidence rule.[12] It was of course permissible for the respondent to cross-examine the second appellant on the contents of his affidavit of 18 April 2008, and to put to him in cross-examination as going to his credit, that, by telling only half the truth, he had been deceitful. But counsel for the respondent was bound by the witness's answers. Counsel was not entitled to tender Master Efthim's views to rebut the witness's answers.

23 To that extent, this ground of appeal is made out.

24 The judge also relied upon the evidence of the purported assignments of the second and third agreements from the first appellant to the second appellant in finding that the second appellant was not a trustworthy witness.

25 The appellants did not challenge his Honour's reliance on this evidence in their notice of appeal, but sought to do so in their submissions. They submitted that, while there were 'defects' in the assignments such as the disparity in the dates of the agreements referred to in the assignments and the second and third agreements and the failure to assign the 'flat fee' of $600, there were 'other credible explanations' for these defects other than that the assignments were a 'sham'. Their counsel referred in this context to evidence given at the trial by the second appellant to the effect that his wife did not wish to become involved in this dispute with the respondent and for this reason asked him to accept an assignment of each agreement.

26 The wrong dates and amounts noted on the assignments, the lack of consideration given, failure to produce the original documents and the lodging of caveats by the first appellant to protect its interests in the properties which had supposedly been assigned to the second appellant five months earlier, raise suspicions about the purported assignments which his Honour was entitled to take into account in concluding that he had 'considerable reservations' as to the credit of the second appellant.

Finding was against the weight of the evidence (grounds 1-5, 9, 11, 14 and 15)

27 Although not pleaded, the respondent argued on the trial, without apparent objection and without being required to amend her pleadings, that, even if the agreements were executed by the respondent, the appellants had failed to establish (as they had pleaded) that the second agreement related to the Challenger loan or that the third agreement related to the Paladin loan. It was on this issue that the trial judge found for the respondent.

28 Ground 15 is that the decision of his Honour was against the weight of the evidence. Grounds 1-5, 11 and 14 identify features of the evidence adduced at the trial which, the appellant contends, ought to have led to the conclusion that the respondent was indebted to the appellants or one or other of them pursuant to the agreements. In substance these grounds raise the contention that it was not open to the trial judge to conclude that the appellants had failed to establish on the balance of probabilities that the agreements related to the respective loans. Under ground 9 it was contended that the trial judge incorrectly gave weight to a hypothesis that brokerage may not have been charged on account of the close relationship between the second appellant and the respondent.

29 The appellants submitted that his Honour ought to have held that, on the balance of probabilities, the Challenger loan related to the second agreement, and the Paladin loan related to the third agreement.

30 In Edwards v Noble,[13] Barwick CJ made the following comments regarding how appellate courts should treat findings of fact made by the trial judge:

In any appeal against a finding of fact...the appellate court ought not to reverse the finding of fact unless it is convinced that it is wrong. If that finding is a view reasonably open on the evidence, it is not enough in my opinion to warrant its reversal that the appellate court would not have been prepared on that evidence to make the same finding.[14]

31 On the other hand, as Kirby J explained in State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq):[15]

In some cases the evidence of the witness, where credibility is in question, although relevant to the outcome of a trial, relates only to particular aspects of the parties' dispute and leaves untouched other evidence which requires separate evaluation with no obstacle of a credibility finding. In such cases, to avoid appellate reversal, the trial judge must demonstrate that such evaluation has occurred. It will be rare, in large and complex cases presenting multiple issues, for the entire decision to hang on the credibility of a single witness, although that can certainly happen. Where there is other evidence, unchallenged, unanswered, ostensibly reliable and supported by uncontested contemporaneous records, an adverse credibility finding in respect of one witness or more does not remove from consideration all of the other evidence. Nor can it relieve the trial judge, or the appellate court when required, of the duties of analysis and the provision of reasons to demonstrate and explain that such analysis has occurred.

It may be possible to show, by reference to incontrovertible facts or uncontested testimony, that although the trial judge reached conclusions which were adverse to the credibility of an important, even crucial, witness, such conclusions are plainly wrong. For example, they may be based upon expressed or implied assumptions about the evidence (for example, that witnesses are in conflict) which careful analysis of the record demonstrates to be incorrect.

It may also be possible to demonstrate that, although the trial judge reached conclusions adverse to the credibility of an important witness, this has been done on the basis of evidence which was wrongly admitted. Where such evidence has occasioned a substantial miscarriage of the trial it may be excluded and the foundation for the credibility finding may then be knocked away.

32 In effect, the appellants submitted that this is such a case. As they would have it, the evidence of the second appellant, taken in conjunction with the circumstantial evidence surrounding the obtaining of the two loans, and the nature of the defence raised, meant that the only view reasonably open to his Honour on the evidence was that the second and third agreements related to the Challenger loan and the Paladin loan respectively. It followed, it was said, that the judge was plainly wrong to conclude that the appellants failed to establish that the agreements were made with respect to the two loans.

33 Counsel for the appellants referred in particular to the following facts and circumstances as necessitating that conclusion:

• the evidence of the second appellant that the agreements related to those loans;

• the date of the second agreement (26 May 2005) is the same as the date of the application for the Challenger loan;

• a copy of the second agreement was held by Challenger, the provider of the second loan, on its file relating to the second loan;

• the mortgage insurer named in the third agreement is the same as that named in the Paladin loan;

• the evidence of the second appellant that the respondent agreed to change the lender nominated in the third agreement (Interstar) to the lender who provided the third loan (Paladin), which was not challenged;

• the evidence of the second appellant that the second agreement was held by the first appellant on its file relating to the Challenger loan, and the third agreement on its file relating to the Paladin loan, which was not meaningfully contradicted;

• the acknowledgement by the respondent that the second appellant had been requested by her to obtain both loans;

• the respondent did not assert that the appellants had ever procured any loans for her, other than the Challenger and Paladin loans, to which the second or third agreements might otherwise relate;

• the respondent did not identify any other broker authorisation as relating to the Challenger and Paladin loans despite acknowledging that both loans were procured for her by the first appellant;

• the respondent understood that the appellant would obtain a commission from the lender in satisfying her request to refinance the loans.

34 The respondent submitted that, although his Honour did make reference to the fact that a copy of the second agreement appeared in files relating to the Challenger loan held by both the first appellant and Challenger, that fact was not determinative. It remained a possibility that the second appellant merely faxed a copy of a previous brokerage agreement to Challenger. Counsel for the respondent argued that such an hypothesis could not be disregarded in view of the findings which his Honour made as to the credit of the second appellant.

35 As to the coincidence of the dates of the second agreement and the application for the Challenger loan, while accepting that it too was a factor which suggests they are related, the respondent submitted that it was not determinative, as the respondent gave evidence that at the time of the loans in question she was 'applying for many loans',[16] and so there is the possibility that she applied for more than one loan on 26 May 2005.

36 In terms of the third agreement, the respondent submitted that the appearance of the same mortgage insurer's name on both documents was not particularly persuasive in itself (as the same mortgage insurer's name also appears on the second agreement), and again that the weight to be given to the second appellant's evidence, that the respondent consented to a change in the provider of the third loan from the one stipulated on the third agreement to Paladin, who actually provided the third loan, depended on the credit of the second appellant.

37 The appellants submitted (in ground 9 of their appeal) that his Honour erred in 'giving weight' to the 'hypothesis' that no brokerage was charged, given that the second agreement was signed by the respondent, on the same day as the application for the Challenger loan application, and that brokerage had been paid to the first appellant by the respondent's family's company (Nafpaktos Pty Ltd) and a company of which the respondent was director (Direct One Pty Ltd) in relation to previous loans. His Honour did advert to the possibility that no obligation to pay the brokerage was intended, given the context of the 'close relationship' between the second appellant and the respondent, but his Honour made no finding in that regard; nor can it be said that it was a fact which otherwise influenced his Honour's conclusion.

38 The appellants also relied on the fact that the respondent did not assert that the first appellant ever agreed to refrain from charging brokerage in relation to the Challenger and Paladin loans. The evidence given by the respondent at trial was that she had no recollection of signing the second and third agreements, and had no recollection of what they related to. She denied that she and the second appellant had ever discussed brokerage fees in relation to the loans, or indeed the loans themselves.

39 The respondent submitted that the possibility that brokerage was not charged was not a mere hypothesis. Counsel for the respondent pointed to the fact that, in cross-examination, the second appellant agreed that the first appellant would not always charge the client for the brokerage fees, even where it was entitled to such fees pursuant to a brokerage authority. He also argued that the first appellant received consideration for entering the brokerage agreement, but that it came from the lender, not the borrower. There were, too, the adverse findings as to the second appellant's credit which, it was said, entitled the trial judge to reject the second appellant's testimony that the agreements related to the identified loans or that the agreements were extracted from the first appellant's files relating to those loans.

40 Plainly enough, there is some force in the contentions on each side. The one salient thing which is incontrovertible, however, is that the first appellant procured the Challenger and Paladin loans, and there is no evidence of any other brokering agreement or any other loans being procured by the appellants for the respondent. The respondent was unable to identify any broker authorisation other than the second and third agreements which did relate to either loan. It is also unlikely that the appellants procured the loans without any agreement being signed, because, at the very least, the signature of the respondent was needed to enable the release of the respondent's information to the lender by the broker and to entitle it a to a commission from the lender.

41 In the absence of any evidence of any other authorisation signed by the respondent for the first appellant to broker the Challenger and Paladin loans, and as the respondent did not advance any alternate explanation for why these agreements were signed by her but merely put the appellants to their proof, we consider that the surrounding circumstances strongly supported the second appellant's evidence that the agreements signed by the respondent did relate to these loans. These circumstances had to be taken into account in assessing the second appellant's credibility and reliability. When they are, the hypothesis that the agreements did not relate to the Challenger and Paladin loans was, in our view, not reasonably open on the evidence adduced by the parties. The trial judge should have concluded that the appellants had established that the agreements were related to the loans as the appellants contended.

42 These grounds of appeal are, therefore, made out.

43 It remains to deal briefly with two further grounds which would only fall for consideration were we in error in our conclusion that the appellants must succeed on grounds 1-5, 9, 11, 14 and 15.

Error in holding second loan had to correspond to second agreement (ground 10)

44 Under ground 10 the appellants submitted that the learned trial judge erred in holding that it was necessary for the appellants to satisfy his Honour that the second agreement related to the second (Challenger) loan and the third agreement to the third (Paladin) loan as:

the rate of brokerage specified in each of the agreements was the same and the debt due by the respondent was the same whether the second agreement related to the second loan or the third loan and the third agreement related to the second loan or the third loan.

45 This submission is erroneous. As his Honour stated, it was necessary for the second and third agreements to relate to the particular loans alleged, because an entitlement to a brokerage fee cannot exist in a vacuum.[17] The appellants impliedly acknowledged this at trial, as they pleaded their claim to the brokerage fees on the basis that the second agreement related to the second loan and the third agreement to the third loan, and sought at trial to connect the particular loans and agreements accordingly through details such as the dates and mortgage insurers and the placement of each agreement in the corresponding loan's file kept by the first appellant.

46 To accept the submission now that the agreements were essentially interchangeable would be to disregard the case pleaded by the appellants and would undermine the appellants' central argument at trial and on appeal that, on the evidence, his Honour should have found that the second agreement did relate to the loan from Challenger, and the third agreement to the loan by Paladin.

Error in failing to find that flat fee was payable under both agreements regardless of whether a loan was procured (grounds 12 and 13)

47 Under cover of grounds 12 and 13 the appellants submitted that whether or not they could establish that the second and third agreements related to any particular loans the trial judge ought to have held that the respondent owed the appellants the flat rate of $660, inclusive of GST, and interest payable under both agreements, and erred in not giving reasons as to why the two flat fees of $660 were not owed to the appellants. They relied upon the characterisation of the 'procuration fee' as a single fee with two separate components: the flat fee of $600 plus GST and the 2% of the loan amount plus GST. The appellants submitted that they were entitled to the 'flat fee' of $600 plus GST from the respondent pursuant to each agreement, as this fee was payable whether or not any loan was procured.

48 One explanation for why his Honour did not give any reasons why he did not order that the sum of $1320 plus interest was payable by the respondent regardless of whether the appellants had established that any referable loans had been procured is that the appellants did not plead their claim in such as way as to require his Honour to decide this. In the Amended Statement of Claim filed 17 October 2008, the appellants pleaded in respect of the second agreement that:

it was agreed that in consideration of the first and secondnamed plaintiffs procuring a loan for the defendant with a specified lender, the defendant would pay to the firstnamed plaintiff a fee of $600.00 together with 2% of the loan amount of $423,000 being the sum of $9,060 plus GST totalling the sum of $9,966 ('the second brokerage fee').

The 'third brokerage fee' was identically pleaded, except for the amounts of the loan and therefore the fee payable.

49 It is true that the express wording of the agreements provided that the brokerage fee was 'due and payable upon signing this Appointment whether or not a Letter of Offer is received'. However, as his Honour noted, 'it would be difficult to determine what procuration fee was payable if there was no amount loaned.'[18] Clearly, the '2% of the amount loaned' component of the procuration fee could not, as a matter of practice, be calculated, and therefore payable, until there was a loan offer. The question whether the $600 component was severable from the 2% of the loan amount component, and became a debt due separate from the 2% component, was not raised by the pleadings, nor does it appear that this question was put to his Honour by the parties. His Honour proceeded on the basis that the two 'components' of the procuration fee were to be considered together, and that since he was not satisfied that the agreements related to the particular loans, no fee was payable.

50 As the issue was not pleaded or raised during the trial, we do not consider that the appellants are now entitled to raise the issue. But as the matter has been fully argued, we should in deference to the parties indicate our view that on the proper construction of the broker agreements the $600 component of the procuration fee was not severable from the rest of the fee, so as to be payable in the event that the 2% component was not payable for whatever reason.

51 Assuming the appeal were to be allowed, the respondent sought to resist an order for judgment in favour of the appellants on the basis of other defences relied upon at trial but which were not the subject of any determination by the trial judge. During the trial the second appellant had been extensively cross-examined about the nature of the business relationship between him and the respondent, to support alternative defences in the event that it be found that the respondent had executed the agreements. The course of that cross-examination as to the evidence of that relationship was explained to the trial judge as going to whether 'there is an arrangement between the plaintiff and the defendant whereby the commission is never sought and never paid'. The respondent had pleaded that the parties provided 'business and like services to each other without charging for the same'. It was further alleged that she had entered into 'a contra arrangement' with the second appellant whereby, through a company, MDC Entertainment, she assisted the second appellant in purchasing and operating the Metro Night Club. She thus pleaded that if she was indebted to the appellants for the brokerage fees, then such fees had been waived by reason of the contra arrangement. On appeal, the respondent maintained reliance upon the evidence of the business relationship between the parties as providing a number of alternative defences. In addition to the defence of waiver that had been pleaded, she submitted that such evidence supported the conclusion that there was no intention that the agreement was intended to give rise to legal consequences, citing in support Balfour v Balfour[19] and Air Great Lakes Pty Ltd & Ors v KS Easter (Holdings) Pty Ltd.[20] This defence was not pleaded but it was raised in evidence and in closing submissions. Unfortunately, the trial judge did not require the respondent to amend her pleadings to raise this issue.

52 It may be said that a conclusion that legal relations were not intended is difficult to reconcile with the fact that the respondent signed the agreement. The fact that the respondent said that she 'signed documents put before her by the second [appellant] without reading them' because at the time she was 'applying for many loans' tends to suggest that both parties thought that signing the agreements was required to give legal effect to their agreement that the first appellant would broker loans for the respondent. The broker agreement contains a 'privacy consent' authority which was required to be completed in order for the borrower's information to be provided to a lender, to enable a loan to be approved. The agreement also contains the respondent's authority for the first appellant to instruct the lender to deduct the brokerage fee from the proceeds of the loan.

53 It is most unfortunate that his Honour made no findings of fact in relation to these defences raised, and reached no conclusion with respect to them as he was required to do in compliance with his obligation to deal with all of the issues raised in the case. Despite the fact that the parties and this Court do not have the benefit of any relevant findings on the outstanding defences, the parties understandably wished to avoid the expense of further proceedings in the County Court and invited this Court to determine these questions. Although the Court was willing to accommodate the parties' request, it became apparent as the oral argument progressed that there was a substantial body of evidence from the second appellant and the respondent concerning these issues which gave rise to competing arguments as to whether any of these defences could be made out. As the credit of both the respondent and the second appellant was much in issue, it was not open to this Court to resolve these issues. Once that view was conveyed to the parties during argument, all parties submitted that in the event that the appeal was allowed, the outstanding matters should be remitted for determination by the trial judge.

54 Accordingly, the appeal should be allowed and the matter remitted to the trial judge for determination of the outstanding questions which will be specified in the orders of the Court.

[1] A claim pursuant to a 'first agreement' was settled prior to trial.

[2] State Securities Pty Ltd and Karas, Tom v Dromi, Martha [2009] VCC 0833 (Unreported, Judge Shelton, 26 June 2009) [3].

[3] The first appellant procured this loan from Interstar Wholesale Finance Pty Ltd as mortgage manager for Perpetual Trustees Victoria Ltd.

[4] The first appellant procured this loan from Interstar Wholesale Finance Pty Ltd as mortgage manager for Perpetual Trustees Australia Ltd.

[5] State Securities Pty Ltd and Karas, Tom v Dromi, Martha [2009] VCC 0833 (Unreported, Judge Shelton, 26 June 2009) [16].

[10] State Securities Pty Ltd and Karas, Tom v Dromi, Martha [2009] VCC 0833 (Unreported, Judge Shelton, 26 June 2009) [42]-[43].

[11] See Amended Statement of Claim filed 17 October 2008, [3] and Transcript p 4 line 1.

[12] Piddington v Bennett & Wood Pty Ltd [1940] HCA 2; (1940) 63 CLR 533, 545 (Latham CJ); Goldsmith v Sandilands [2002] HCA 31; (2002) 190 ALR 370 [41] (McHugh J); Humphries v The Queen (1987) 17 FCR 182, 186; cf Roberts v Western Australia [2005] WASCA 37; (2005) 29 WAR 445 [80]-[83]; Heydon, Cross on Evidence, Aust Ed, [19015].

[13] [1971] HCA 54; (1971) 125 CLR 296.

[15] [1999] HCA 3; (1999) 160 ALR 588, 620 (citations omitted).

[16] State Securities Pty Ltd and Karas, Tom v Dromi, Martha [2009] VCC 0833 (Unreported, Judge Shelton, 26 June 2009) [14].

[17] State Securities Pty Ltd and Karas, Tom v Dromi, Martha [2009] VCC 0833 (Unreported, Judge Shelton, 26 June 2009) [17].

[18] State Securities Pty Ltd and Karas, Tom v Dromi, Martha [2009] VCC 0833 (Unreported, Judge Shelton, 26 June 2009) [7].

[19] [1919] 2 KB 571.

[20] (1985) 2 NSWLR 309.