Wyse & Young International Pty Limited v Sanna

Background

1. Prior to 26 July 2012, Ms Sanna was the registered proprietor of a residential property which she and Mr Sanna had occupied as their family home at Copacabana, subject to a mortgage to Australian Executor Trustee Limited ("AETL"), and also of a property at Green Valley. Ms Sanna had purchased the Copacabana property in or about December 1999 for a price of $740,000, part of which was borrowed from Permanent Custodians Limited ("Permanent") on a mortgage loan secured on the Copacabana property. The property was refinanced on 6 November 2006, when the mortgage to Permanent was replaced by the mortgage to AETL. The AETL mortgage secured a principal sum of $1,650,000 and interest at 7.70% per annum, for a term of 30 years. The default interest rate was an additional 4%, thus 11.7%. The mortgage was guaranteed by DCL Constructions Pty Ltd ACN 072 499 426 ("Old DCL") and Danic Holdings Pty Ltd ("Danic"), and also secured other loans provided to Ms Sanna or any guarantor, including a facility of $1,352,000 provided to Ms Sanna under a loan agreement dated 30 October 2006. The purpose was stated to be "to refinance owner occupied residence from Colonial/CBA … Approx. payout $550,000".
2. According to Ms Sanna's affidavit evidence, she and Mr Sanna separated in or about March 2011, although this became uncertain, with her later evidence diverting from that position.
3. By mid-2011, Ms Sanna and her companies were in financial difficulty, and she was having difficulty in meeting her mortgage obligations to AETL. On 1 September 2011, AETL issued a default notice.
4. According to Mr Dimitriou, on or about 21 October 2011, WYI and Mr Sanna, Ms Sanna and Old DCL entered into the First Costs Agreement. According to Mr Sanna, he and Mr Dimitriou had met in or about 2010, when they were introduced by a mutual friend. Mr Sanna denied having received or executed the First Costs Agreement. While he concedes having engaged WYI, he maintains that the retainer was oral only, and that he had never received a tax invoice from WYI in relation to the accounting services said to have been provided for him or his companies.
5. In her affidavit evidence, Ms Sanna said that she was introduced to Mr Dimitriou, by Mr Sanna, in or about November 2011; in her oral evidence she ultimately said that it was on 2 December 2011.
6. In late 2011, AETL commenced proceedings in the Common Law Division against Ms Sanna for possession of the Copacabana property. She provided the Statement of Claim to Mr Dimitriou, and sought his assistance to save the Copacabana property.
7. Wolgan contends that on 15 December 2011, it entered into the Saving Fee Agreement with Mr and Ms Sanna, entitling it to a fee if it negotiated a reduction in Ms Sanna's liability to AETL. Mr and Ms Sanna deny having executed the Saving Fee Agreement.
8. Two slightly different versions of a Binding Financial Agreement, under s 90C of the (CTH) Family Law Act 1975, between Mr Sanna and Ms Sanna, bear the date 16 December 2011. Whether that was the date on which either of them was executed is doubtful, but ultimately does not have to be resolved.
9. On 9 January 2012, Arcadia Property Holdings Pty Limited ("APH") was incorporated. At all material times, Danny Kalischer was its sole director. It had its registered office at Mr Dimitriou's Bella Vista office, and I infer was incorporated through Mr Dimitriou or one of his entities.
10. A writ of possession in respect of the Copacabana property issued in February 2012 and Ms Sanna received a Notice to Vacate dated 23 February 2012. The Sannas deposed that they vacated the Copacabana property in about April 2012, but as will emerge I do not accept this. On 2 April 2012, lawyers retained for Ms Sanna by Mr Dimitriou procured a stay of execution of the writ until 10 April, and on 10 April the stay was further extended until 2 May 2012.
11. On 14 April 2012, with the consent of AETL, Ms Sanna engaged George Brand Real Estate to sell the Copacabana property. By letter of that date, George Brand Real Estate advised Ms Sanna that a higher price would be achieved if necessary repairs were carried out. Although it seems that at one stage the property was listed for auction, the auction did not proceed.
12. On 28 April 2012, a valuation of the Copacabana property at $950,000 was provided, by valuers retained by WYI "on behalf of Lepa Sanna".
13. Ms Sanna deposed that in or about May 2012, Mr Dimitriou had a conversation with her in which he said that he liked the Copacabana property and was intending to negotiate to purchase it himself. As will appear, I do not accept this.
14. On 14 May 2012 Gadens, the solicitors acting for AETL, sent a letter to Mr Dimitriou, stating that they were proceeding with the eviction on 13 June at 1130, but would seek instructions if provided with an exchanged unconditional contract for sale.
15. New DCL was incorporated on 16 May 2012 and on the same day (according to Mr Dimitriou) WYI mailed the Second Costs Agreement (which included New DCL) to the Sannas. It is not suggested that Mr Sanna or New DCL ever executed the Second Costs Agreement, but WYI contends that Mr Sanna and New DCL accepted it, by conduct, by continuing to give instructions with notice of its terms. The Sannas deny having ever received it.
16. On 7 June 2012, the selling agent George Brand Real Estate wrote to Ms Sanna that the property was not selling, and recommended that she reduce the asking price.
17. A cover page of a contract for sale of the Copacabana property, from Ms Sanna to APH, which is purportedly signed by Mr Kalischer and Ms Sanna and witnessed by Mr Sanna, was provided by Mr Dimitriou to Gadens; it nominates Grays Legal as the vendor's solicitor, and Russo & Partners as the purchaser's solicitor. On 7 June 2012, Grays Legal sent a letter, addressed to Ms Sanna (at Copacabana), reporting that the sale of Copacabana to APH had gone through and contracts had been exchanged unconditionally, dated 9 June 2012, and a deposit of $47,426 (being 5% of price of $948,520) paid. A retainer letter dated 13 June 2012 from Russo & Partners addressed to APH at Mr Dimitriou's business address refers to a sale of Copacabana to APH. However, as will appear, I do not accept that any such contract was in fact exchanged or deposit paid.
18. Ms Sanna says that around this time, in May to June 2012, she and Mr Sanna vacated Copacabana and moved to rental accommodation at Daley's Point, and a rental schedule for the Daley's Point property commences from 8 June 2012. For reasons explained below, if they or either of them did indeed move, it was not a complete nor permanent move. It ultimately, if very belatedly, emerged that at least Mr Sanna understood from his conversations with Mr Dimitriou that the reason for Mr Dimitriou's intervention was to "save" the property, so that there would be an opportunity for the Sanna's to re‑acquire it, and that if Ms Sanna was not party to those conversations, Mr Sanna informed her of them.
19. On 13 June 2012 at 0945, Mr Dimitriou sent an email to Gadens (which had been drafted the previous evening), requesting a further stay on order to complete the sale and discharge the mortgage. A Gadens file note of 13 June records "t/a Mr Dimitriou have we received anything from George Brand? No. He thinks contract has been exchanged. Our client's consent is required and as we have received nothing eviction is proceeding tomorrow".
20. AETL sought to proceed with the eviction, and most of the locks had been changed when Mr Dimitriou and lawyers retained by him procured a further stay from Campbell J, until 21 July 2012. Ms Sanna was by that stage outside the property, but their furniture and effects were still inside. The Sheriff returned the keys to Ms Sanna.
21. On 18 June 2012 at 1707, Mr Dimitriou sent an email to Gadens, enclosing a letter to "the vendor's solicitor". On the same day at 1729, Russo & Partners transmitted by facsimile to Grays a letter confirming that the transaction would settle on 21 July 2012. A statutory declaration dated 20 June 2012 and purportedly signed by Mr Kalischer states that the transaction was at arm's length, which was purportedly witnessed by "Gauci" at 236 George Street, Sydney. Also on 20 June 2012, to which date the possession proceedings had been adjourned, the Court noted that the parties had reached an agreement.
22. On 25 June 2012, Pepper on behalf of AETL wrote to Ms Sanna with reference to the November 2006 loan of $1,650,000, seeking her acknowledgement that the proceeds of the security property (Copacabana) would not clear the debt, and that she would remain liable for the balance. Ms Sanna signed the acknowledgment on 28 June 2012.
23. On 26 June 2012, Russo sent a fee note to APH (addressed care of Mr Dimitriou's office).
24. On 28 June 2012, Mr Dimitriou sent an email to Gadens, stating that Hancocks (solicitors) were no longer acting, and referring to statutory declarations and a settlement sheet from "the purchaser's solicitor". On 29 June 2012, Mr Dimitriou sent an email to Gadens enclosing correspondence from "the vendor's solicitors" relating to settlement adjustments. On 10 July 2012, Mr Dimitriou sent an email to Gadens, referring to the settlement scheduled for 20 July 2012.
25. On 17 July 2012, Russo issued a further fee note to APH, for $1,009, presumably for additional work done.
26. On 18 July 2012, Gadens sent an email to Mr Dimitriou, requesting documents in preparation for settlement on 20 July. On 19 July 2012, Mr Dimitriou sent an email to Gadens providing some documents, and objecting to providing others. Also on 19 July, Grays issued an invoice to Ms Sanna, for acting on "your sale to [APH]".
27. On 20 July 2012, Gadens sent a letter to WYI, stating that they were ready to proceed at 2pm, upon receipt of cheques to Gadens for $10,016 and to AETL for $913,473. A settlement sheet dated 20 July 2012 refers to a "sale to APH". Also on 20 July 2012, at 1039, Mr Dimitriou sent an email to Gadens, stating that he would advise "the purchaser's solicitor" and seek to book settlement for Monday, while Ms Sanna explored raising further funds. On the same day, Gadens made a file note: "att Mr Dimitriou they have come up with the extra funds and will be able to settle Monday between 2 and 3".
28. A Gadens file note dated 24 July 2012 at 1015 records "att Mr Dimitriou he is on his way has been waiting for purchaser's solicitor". Then, at 1145 "left detailed message where are you matter must settle soon". At 1312, Mr Dimitriou sent an email to Gadens: "just about to head into town please provide total amount owing to AET under mortgage". Gadens replied at 1425: "Balance of loan is $1,981,353. When will you be arriving for settlement?".
29. On 24 July 2012 Mr Dimitriou instructed Mr Foley, solicitor, to "drop everything and prepare security documentation urgently in order to save the Sannas' property". Mr Foley went to Mr Dimitriou's office later that day and began work. Mr and Ms Sanna were there; they arrived separately. He finished the documentation by 1800 on 25 July, when he had to leave to attend a dinner in Glebe, and expected that they would be signed that evening. Mr Sanna, but not Ms Sanna, was in the office that day. However, on 26 July he had a further conversation with Mr Dimitriou, and was told the documents had not been signed "last night". Later that evening he returned to Mr Dimitriou's office for the purpose of researching the Personal Property Securities legislation, which he had not previously encountered. By then, to the best of his recollection, the security documents had been executed, and multiple copies had been signed. Only Mr Dimitriou was there.
30. Meanwhile, on 25 July 2012 at 1036, Gadens noted that Mr Dimitriou had "just received okay for settlement from purchaser's solicitor, booked for 3pm". At 1621, they received by facsimile "copy Gadens b/c and AET b/c. Settlement will now need to be tomorrow". This was a reference to the bank cheques in favour of AETL and Gadens. On 26 July 2012 at 0959 Gadens sent an email to Mr Dimitriou, stating "we will be available when you come in".
31. The plaintiffs allege that in the course of 26 July 2012 the Sannas (and New DCL) executed the Deed of Loan, the General Security Agreement and other security documents which are dated 26 July 2012 - including a settlement direction letter which directs the application of the proceeds of the $1.2 million advance, apparently signed by Ms Sanna. The signatures of Mr Sanna and Ms Sanna appear to be witnessed by Ms Thelma Gray of Grays Legal, and she testified that she had indeed witnessed those signatures. In their affidavit evidence, Mr and Ms Sanna denied executing any of those documents, but by the end of the trial they accepted that at least some of the signatures which appear on those documents might be theirs.
32. On 1 August 2012 at 2114, Mr Dimitriou sent an email to Gadens "can you facilitate settlement Thursday 2 August at 2pm?". Gadens responded on 2 August 2012 at 1111 "we can do 2pm today upon condition of bank cheques".
33. Gadens' settlement instructions record settlement on 2 August 2012 at 1400, when Gadens received two bank cheques totalling $923,490.27. Stamp duty was paid on the Deed of Loan on 3 August 2012.
34. On 20 November 2012, the Professionals Ettalong (Real Estate agents) sent a letter to the Sannas "re notice to vacate 35 Daley Ave", which evidently responded to notice from the Sannas that they proposed to vacate that property. Mr Sanna deposed that in November 2012 he and Mr Dimitriou had a conversation in which Mr Dimitriou asked Mr Sanna to buy the Copacabana Property back from him, for the same amount as he had paid, as Mr Dimitriou needed funds. Ms Sanna deposed that Mr Sanna informed her of the content of that conversation after it occurred. However, in the light of Mr Sanna's ultimate concession that it had always been his understanding that it was with returning it to the Sannas in mind that Mr Dimitriou had procured the release of the property from AETL in the first place, this was less than a frank description.
35. On 17 April 2013, Mr Sanna executed a mortgage of Copacabana to Westpac. On 8 May 2013, a transfer of Green Valley by Ms Sanna to Mr Sanna (said to be pursuant to Family Law Act, s 90C (which refers to binding financial agreements)) was witnessed by Carlos Moreno, an employee of WYI. This appears to have coincided with a Westpac loan to Mr Sanna, which included the refinance of a debt to Permanent Mortgages secured on Green Valley, and a partial repayment of the loan from DPI. On 9 May 2013, the Westpac refinance was completed, and from it DPI received $820,662.60 which was applied in reduction of the amount owing under the Deed of Loan, and Mr Sanna received a transfer of the Copacabana property from Ms Sanna, expressed to be pursuant to s 90C of the Family Law Act. On 19 June 2013, Mr Dimitriou sent an email to Mr and Ms Sanna: "As you are aware DPI had discharged the facility and undertook to discharge the mortgage partially". However, the Sannas characterised this transaction as a purchase by Mr Sanna from APH.
36. On the application of a creditor unconnected with these proceedings, a sequestration order made against Ms Sanna, by the Federal Circuit Court, on 10 December 2013, pursuant to which Paul Gerard Weston became her trustee in bankruptcy. It was indicated to the Court that she had been discharged by the conclusion of the hearing, but if so, this has no impact on the current issues in these proceedings.
37. On 7 December 2013, Mr Dimitriou sent an email to Mr Sanna "I am doing my best … would you be kind enough to wack $10k into DPI". On 9 December 2013, Mr Sanna sent an email to Mr Dimitriou "We will sort something next week just paid ACE … appreciate your efforts if only we didn't have Damien's costs right now it would have went to you anyway".

Procedural history

1. These proceedings were commenced on 24 July 2015, initially to extend the operation of caveats in respect of the Green Valley property. By their summons of that date, DPI (and other plaintiffs) claimed (inter alia) declarations that the Deed of Loan and the General Security Agreement of 26 July 2012 are valid and subsisting, and judgment (including against New DCL) for $1,123,333.39 pursuant to the Deed of Loan. The initial defendants included Ms Sanna's trustee in bankruptcy, but he ceased to be a party on 27 November 2015. The ASOC of 17 November 2016 claimed, in substance: 1. declarations that the Deed of Loan and associated security documents between DPI as lender, New DCL as borrower, and Mr Sanna and Ms Sanna are valid and enforceable; 2. declarations that the mortgage of the Green Valley property between Ms Sanna and Mr Sanna as mortgagors and DPI as mortgagee dated 26 July 2012 is valid, and that the property is charged for the outstanding loan; 3. judgment for the loan, for professional costs pursuant to the Costs Agreements, and for the Saving Fee under the Saving Fee Agreement; 4. an order setting aside or declaring void the transfer of Ms Sanna's interest in Green Valley to Mr Sanna; and 5. judgment for possession and orders for sale of Green Valley.
2. Relief was also claimed in respect of the Copacabana property, but this was abandoned at a relatively early stage.
3. The defence filed 20 December 2016 denied execution of all relevant documents and alleged that the apparent signatures of Mr Sanna, Ms Sanna and their entities were forgeries.
4. On 7 June 2017, the proceedings were fixed for hearing for two days commencing on 5 December 2017. An amended defence filed on 3 June 2017 made only minor amendments, and none to the substance of the defence.
5. On 13 June 2017, I heard New DCL's application to set aside a creditors statutory demand served on it by DPI for the debt under the Deed of Loan. The transcript of Mr Sanna's evidence in those proceedings ("the creditor's statutory demand proceedings") was received in evidence in these proceedings. For reasons then given, the demand was set aside on the footing that there was a genuine dispute as to the existence of the debt. [2] However, in order to expedite the resolution of the underlying dispute, with the consent of both parties I vacated the previous appointment for hearing and fixed the proceedings for hearing to commence on 12 September 2017 for three days, appointed 8 August for pre-trial directions, and granted leave to adduce forensic handwriting expert evidence in respect of the disputed signatures.
6. The defendants filed a motion on 18 August 2017 seeking an order for transfer of the proceedings pursuant to the cross-vesting legislation to the Federal Court of Australia - where Ms Sanna's trustee in bankruptcy had commenced proceedings in the Federal Court of Australia, inter alia to have the purported transfer of her interest in Green Valley to Mr Sanna declared void - and leave to amend their defence and to file a cross claim, propounding a case for relief for breach of fiduciary duty, and under the (NSW) Contracts Review Act 1980 ("CRA"), essentially on the basis that Mr Dimitriou as the Sannas' financial adviser counselled or permitted them to borrow from his related entities in preference of his interests over theirs, at interest rates which were manifestly excessive and unreasonable.
7. For reasons then given I concluded that, for want of parties (in particular the trustee in bankruptcy) claims for relief in respect of the Green Valley property could not, at least at that stage, proceed; but that claims for monetary judgments against the extant defendants could, and that those claims should not be transferred to the Federal Court. As to amendment, I concluded that the proposed amended defence, although very late, did not appear to raise issues which were incapable of being dealt with at the imminent hearing; and that while the proposed cross claim would, without satisfactory explanation, raise a case which there had been ample opportunity to raise earlier, involved a significant change to the case which had been conducted to that point (which was very clearly one of forgery, alone) and sat uncomfortably with evidence previously given by Mr Sanna (in the creditor statutory demand proceeding) in which he denied the possibility that he had been tricked; nonetheless the amendment should be allowed, as the contention that there was a fiduciary relationship was arguable, and amendments to enable the real issues to be presented and adjudicated should be allowed if they would not be causative of unacceptable prejudice. While there was a real risk that delay would defeat the plaintiffs' claim in the context of the pressure they were then under, the fact that the defendants would adduce no additional evidence on the new issues, and that the plaintiffs would be permitted to adduce evidence on the new issues up to and orally at trial, the interests of justice favoured permitting the defendants to propound their cross claim. I therefore granted leave to amend the defence and to file the cross claim, ordered that the plaintiffs' claims for judgment for a monetary sum or sums against the defendants be determined separately and before the other claims for relief in the proceedings, and adjourned the application for transfer of the proceedings to the Federal Court until the determination of those claims.
8. The final hearing of the proceedings commenced on 12 September 2017. Mr Dimitriou appeared, by leave, for the plaintiffs. Mr Lee of counsel appeared for the defendants, and much assisted the Court. Unfortunately, the three day estimate proved grossly optimistic, and the proceedings had to be adjourned from time to time, until oral submissions were completed on 8 March 2018, when judgment was reserved.

The forgery issue

1. As has been observed, until very late in the proceedings, the sole defence advanced by the defendants was that they had never executed the documents relied on by the plaintiffs - namely the First and Second Costs Agreements, the Deed of Loan and the General Security Agreement, and the Saving Fee Agreement - and that what appeared to be their signatures on them were forgeries, probably made by Mr Dimitriou. That allegation was pleaded in their defences, verified by their affidavits. In their affidavit and oral evidence in the proceedings - and in the case of Mr Sanna also in his evidence in the creditor's statutory demand proceedings - they repeatedly denied having executed those and other documents, referred to below.

The First Costs Agreement

1. The First Costs Agreement appears to have been signed by Mr Sanna, on his own behalf and on behalf of DCL Constructions (NSW) Pty Ltd ("DCL(NSW)") and Coastwide Concrete Panels Pty Ltd ("Coastwide"), and by Ms Sanna, on her own behalf and as sole director of Danic, DLD (NSW) Pty Ltd ("DLD"), and Old DCL (a different company from the second defendant New DCL, which was not incorporated until May 2012). Against each signature appears the date "21/10/2011", in what seems to be the same handwriting, the inference being that the one person has inserted the date multiple times, once for each signature.
2. Mr Sanna and Ms Sanna each also appear to have signed, in the body of the document, a clause which stated: Witness: I was witness to the fact that this mandate was explained in detail and in full to the clients mentioned above.
3. Also bearing the date 21 October 2011 is an authority, addressed to WYI, to "prepare, assess and lodge my/our finance application", apparently signed by Ms Sanna, and apparently witnessed by Andrew Jetson, who was an employee of WYI.
4. Mr and Ms Sanna denied that the signatures which appeared to be theirs on the First Costs Agreement were in fact their own, and alleged that they were forgeries. Alternatively, it was submitted that if the First Costs Agreement was executed by the Sannas at all, it was not executed in October 2011, and at the very least must have been backdated, which was said to be highly relevant to Mr Dimitriou's credit overall.

The Saving Fee Agreement

1. The Saving Fee Agreement bears the date 15 December 2011. The named parties are Ms Sanna (called the "Client"), and Wolgan; Danic, DCL(NSW), DLD and Mr Sanna are named as guarantors. It is apparently executed: 1. by Ms Sanna personally, witnessed by Thelma Gray, solicitor; 2. on behalf of Danic by Ms Sanna, witnessed by Thelma Gray, solicitor; 3. on behalf of DCL(NSW) by Mr Sanna, witnessed by Thelma Gray, solicitor; 4. on behalf of DLD by Ms Sanna, witnessed by Thelma Gray, solicitor; 5. on behalf of DLD in its trustee capacity by Ms Sanna, witnessed by Thelma Gray, solicitor; 6. on behalf of Wolgan, by Mr Dimitriou, witnessed by Andrew Jetson.
2. The Saving Fee Agreement was not separately executed by Mr Sanna in his personal capacity, but he did apparently sign Schedule A (Authority to Disburse), above the description "Signature of Guarantor".
3. Mr and Ms Sanna denied that the signatures which appeared to be theirs on the Saving Fee Agreement were in fact their own, and alleged that they were forgeries.

The 26 July documents

1. An extensive suite of documents bear the date 26 July 2012. They relate to the alleged advance by DPI of $1.2 million to New DCL, and although they have wider relevance on questions of credit, they are relevant chiefly to the second plaintiff DPI's claim, which is founded on the Deed of Loan and the General Security Agreement.
2. The Deed of Loan, which bears the date "26th day of July 2012" (26th having been inserted in handwriting in a space left in the printed document before "day of July 2012"), is expressed to be between DPI (ACN 146 084 451) as lender, APH, New DCL, DCL(NSW) and DLD (as borrower), and Lepa Sanna and Corrado Sanna (as guarantor), and is apparently executed by: 1. Defined Property Holdings Pty Ltd (ACN 155 050 285), by Mr Dimitriou as Sole Director. The non-correspondence of this with the named party Defined Properties Investment Pty Ltd (ACN 146 084 451) gives rise to another issue, which is dealt with later; 2. APH, by Mr Kalischer as Sole Director; 3. New DCL, by Mr Sanna as Sole Director; 4. DCL(NSW), by Mr Sanna as Sole Director; 5. DLD, by Ms Sanna as Sole Director; 6. Mr Sanna personally, whose signature appears to be witnessed by Thelma Gray, solicitor; and 7. Ms Sanna personally, whose signature also appears to be witnessed by Thelma Gray, solicitor.
3. The General Security Agreement, which also bears the date "26th day of July 2012" (26th again having been inserted in handwriting in a space left in the printed document before "day of July 2012"), is expressed to be between APH, New DCL, DCL(NSW) and DLD (as the Grantor), DPI (ACN 146 084 451) (as the Secured Party), and Corrado Sanna and Lepa Sanna (as the Guarantor), and purports to be executed by: 1. APH, by an unidentified signatory as Sole Director; 2. New DCL, by Mr Sanna as Sole Director; 3. DCL(NSW), by Mr Sanna as Sole Director; 4. DLD, by Ms Sanna as Sole Director; 5. Defined Property Holdings Pty Ltd (ACN 155 050 285), by Mr Dimitriou as Sole Director. Again, the non-correspondence of this with the named party Defined Properties Investment Pty Ltd (ACN 146 084 451) gives rise to another issue, which is dealt with later; 6. Mr Sanna personally, whose signature appears to be witnessed by Thelma Gray, solicitor; and 7. Ms Sanna personally, whose signature also appears to be witnessed by Thelma Gray, solicitor.
4. Mr and Ms Sanna denied that the signatures which appeared to be theirs on the Deed of Loan and the General Security Agreement were in fact their own, and alleged that they were forgeries.
5. In addition, in the course of their evidence (and Mr Sanna's evidence in the creditor's statutory demand proceedings), Mr and Ms Sanna denied the authenticity of what appeared to be their signatures on a number of other documents which also bore the date 26 July 2012, including: 1. a document entitled "Where no legal or financial independent advice obtained Acknowledgement and Undertaking", apparently signed by Mr Sanna and Ms Sanna, with both signatures apparently witnessed by Thelma Gray, solicitor; 2. a document entitled "Declaration of the trustee" apparently signed by Ms Sanna as Sole Director and Secretary of DLD, annexing Minutes of a Meeting of Directors of DLD, also apparently signed by Ms Sanna; 3. a Statutory Declaration, apparently signed by Mr Sanna and Ms Sanna and witnessed by Thelma Gray, solicitor; 4. a document entitled "Declaration to the Lender and to its Solicitors", apparently signed by Mr Sanna for himself and as Sole Director of New DCL and DCL(NSW), and by Ms Sanna, for herself and as Sole Director of DLD, with both signatures apparently witnessed by Thelma Gray, solicitor; 5. a mortgage of Folio 41/875272 (the Green Valley property) by Mr and Ms Sanna as mortgagor to DPI (ACN 146 084 451) as mortgagee, apparently executed both on the cover page and on the annexure by Mr Sanna and Ms Sanna personally, witnessed by Thelma Gray, solicitor (whose address was shown as 8/32 Albert Street, Parramatta), and on behalf of DPI by Mr Dimitriou as Sole Director; 6. a mortgage of Folio 33/718953 (the Copacabana property) by Ms Sanna as mortgagor to DPI (ACN 146 084 451) as mortgagee, apparently executed both on the cover page and on the annexure by Ms Sanna personally, witnessed by Thelma Gray, solicitor (whose address was shown as 8/32 Albert Street, Parramatta), and on behalf of DPI by Mr Dimitriou as Sole Director; 7. a Business Purpose Declaration; and 8. a Direction letter, to DPI by APH, New DCL, DCL(NSW), and DLD, expressed to be signed on behalf of New DCL, DCL(NSW), and DLD by Mr and Ms Sanna as Sole Directors but in fact apparently signed only by Ms Sanna, and making provision to be expressed to be signed, but in fact unsigned, on behalf of APH by Danny Kalischer as Sole Director.
6. In addition to the last-mentioned Direction letter, many other of those documents also provided for execution on behalf of APH by Danny Kalischer, but were not in fact executed on behalf of APH. This is consistent with there being a contemplation, until a very late stage of the transaction, that APH would be involved in the transaction, in a capacity associated with the Sanna interests (that is, as a co-borrower, guarantor or provider of security).

The Family Law documents

1. Relevant to the resolution of these issues are additional documents which appear to be binding financial agreements ("BFAs") under Family Law Act, s 90C, and which appear to have been signed by Mr and Ms Sanna, who again disputed the authenticity of their respective signatures.
2. The first BFA is expressed to be between Mr Sanna and Ms Sanna, and on the front page bears a date in 2011 which is difficult to decipher, the month having been overwritten; however, both the annexed certificates of independent advice are dated 16 December 2011. It recites that they separated on 1 March 2011, and provides inter alia for Ms Sanna to transfer her interest in both Green Valley and Copacabana to Mr Sanna. Copacabana was described as the former matrimonial home. Mr Sanna's apparent signature was apparently witnessed by Mr Russo, solicitor, who also apparently signed his certificate of independent advice. Ms Sanna's signature was apparently witnessed by Thelma Gray, solicitor, who also apparently signed her certificate of independent advice.
3. There is another version of the BFA, which also bears the date 16 December 2011, and is in identical form and terms, save that it defines Green Valley rather than Copacabana as the former matrimonial home. Like the other version, it provides for Ms Sanna to transfer her interest in both properties to Mr Sanna. Again, Mr Sanna's apparent signature was apparently witnessed by Mr Russo and Ms Sanna's by Ms Gray, and those solicitors apparently signed their respective certificates of independent advice.
4. In connection with the BFAs, there is also an unregistered transfer of Green Valley by Ms Sanna to Mr Sanna, undated, stated to be pursuant to Family Law Act, s 90C, apparently signed by Ms Sanna as transferor and witnessed by Mr Dimitriou, and by Mr Sanna as transferee, also witnessed by Mr Dimitriou; and a (further) stamped transfer of Green Valley, bearing the date 8 May 2013, from Ms Sanna to Mr Sanna, expressed to be pursuant to Family Law Act, s 90C on which Ms Sanna's apparent signature is witnessed by Carlos Moreno (an employee of WYI), who also witnessed Mr Sanna's apparent signature.

Mr and Ms Sanna

1. Originally, both Mr and Ms Sanna were adamant that they had not and could not have signed the disputed documents. In respect of both Costs Agreements, Mr Sanna deposed: I have never seen, signed, or received these costs agreements.
2. In her affidavit, Ms Sanna deposed to having been introduced to Mr Dimitriou "in or around November 2011". When asked whether she had then been given a retainer agreement, she said "You gave me a lot of documents that day". When asked what day, she said "In November approximately"; she confirmed this was November 2011. She did not recall what the documents were, but did not dispute that they could have been or included a retainer. Later, when shown the First Costs Agreement, she said that she did not recall signing it, and that she was not sure whether what appeared to be her signature on it was in fact hers, "because I met you at the end of November … but this is dated 21 October". She confirmed she had met Mr Dimitriou "earlier than December 2011", and, when asked why, said "Because I went to a friend's funeral the day he came up": she said that Mr Dimitriou had come to her office, at Somersby, and then asked in future to meet at his office (at Bella Vista), which they thereafter did. She said the name of the person whose funeral she had attended was Kate (possibly Kathryn) Fletcher. She thought the funeral was around 25 or 26 November, at Kincumber.
3. A day or so later, while still in cross-examination, she volunteered that Ms Fletcher had died on 27 November, and the funeral was on 2 December 2011; I infer that this was after she had found the funeral notice, referred to below. Ultimately, in re-examination, she said that she first met Mr Dimitriou on 2 December 2011, after the funeral of Kathrine Maer Brophy Hall that day, when she says she proceeded directly to her office (at Somersby) and met Mr Dimitriou and his associate, and not long after met Mr Dimitriou again in his office (at Bella Vista). She produced a copy of the funeral notice of that day. She said that Fletcher was the name of a man Ms Hall had dreamed that she might marry after getting a divorce.
4. As to the Saving Fee Agreement, Ms Sanna deposed that she had never before seen it, and that the signature that appears on it was not hers.
5. In respect of the transfers of both properties, Mr Sanna deposed: I do not recall executing the transfers for both Green Valley Property and Copacabana Property.
6. He said that "on or around early 2013" he and Ms Sanna attended Mr Dimitriou's office, and Mr Dimitriou "put some documents in front of Lepa and myself and he said sign here" and then said words to the effect that he would ensure that they did not have to pay stamp duty on the transfer of properties. He further deposed that he had been shown the two BFAs, and: 94. I have been shown 2 family law agreements. 95. Exhibited at page 165 of "CS1" are true copies of the agreements. 96. I have never met Salvatore Russo or Thelma Grey [sic]. 97. The first time I saw these documents were when they were referred to in an affidavit of George in these proceedings, and relied on in these proceedings.
7. Ms Sanna deposed that she did not know who Thelma Gray was and had never met anyone by that name. She said that the signature on the BFAs appeared to be hers, but she did not recall signing it, that no-one explained it to her, and that she had never met Thelma Gray, who appeared to have witnessed her signature.
8. As to the Deed of Loan, the General Security Agreement, the mortgage to DPI of Green Valley, and the Direction letter, Mr Sanna deposed that he did not sign them, and that the signatures that appear on them were not his; that he had never seen the Direction letter; and that the first time he saw those documents was when they were referred to in an affidavit of Mr Dimitriou in these proceedings. He repeated that he had never met Thelma Gray, who had purportedly witnessed his signature on the Saving Fee Agreement, the Deed of Loan, the General Security Agreement, and the mortgage to DPI of Green Valley.
9. Ms Sanna deposed that she had never before seen the Deed of Loan, the General Security Agreement, or the mortgage of Green Valley to DPI; that the signatures appearing on them were not hers, and that she had never met Thelma Gray, who appeared to have witnessed her apparent signatures. She deposed that she could not recall whether she had seen the Direction letter before, and that the signature on it could be hers but she was not entirely sure. She also said that when in Mr Dimitriou's office, she had seen him "cut out signatures from documents and sticky tape those signatures onto different documents, which were then photocopied", and also saw him use tracing paper and trace over signatures, which he would then transfer to another document "to give the impression that the document had been signed by that person". She said that when she saw this, she was extremely shocked, and no longer engaged Mr Dimitriou's services. She was strongly challenged about that evidence. She said that the documents in question were unrelated to her affairs, but related to some different client.
10. In the creditor's statutory demand proceedings, Mr Sanna gave this evidence: Q. I am sorry Mr Sanna, I may rephrase that question. In so far as the documents that I have tendered thus far, bar the mortgage document to Perpetual which you may understand is La Trobe, I asked you whether you are able to look at his Honour and tell his Honour and swear before his Honour that you did not execute these documents that were tendered in evidence in this cross examination and I remind you Mr Sanna --- A. I did not sign any documents to do with a $1.2 million loan or in advance of any of my companies, ever.
11. Concerned that perhaps Mr Sanna had signed the documents hurriedly, not knowing what they were, or mistaken as to what they were, on one of the occasions on which he and Ms Sanna had admittedly signed documents, in haste, at Mr Dimitriou's office, I intervened: HIS HONOUR: Q. Not even unknowingly? A. Your Honour we were given, on the run, some documents that Mr Dimitriou said "sign here" 7.30 at night. There was thrown in front of my wife and I, a couple of times, I don't know if it was these documents or whatever it was, "Just give us a signature. I'll sort it out" and that was the end of it, but I've never seen these documents. Q. So are you saying that these documents you could have signed them at 7 o'clock one night in the circumstances you have just described? A. I don't think I'm sure if it was, if it had to do anything with a $1.2 million loan I wouldn't have done it on the run. There's things that we were signing on part of the because Wise & Young International was our accountant firm looking over the group of companies. Now, we could have been signing a tax returns on the run. We could have been signing other things. But it came to a $1.2 million loan, which we have never, ever received from Defined and that's all I can say. Now, if Mr Dimitriou wants to hang his hat on all these documents, by all means please show us a transfer of $1.2 million to our company or our companies and then I can say: Okay, well, you know, hands up I've taken the money. He has never advanced that. The only money that was advanced was from Westpac Bank and we have statements to prove that. Now, you can show me where the $1.2 million was given to our companies.
12. However, some of the 26 July documents - in particular, the "Acknowledgement and Undertaking", the Statutory Declaration, and the Declaration to Lender and its Solicitors - referred very conspicuously and in bold type at or near their head to "LOAN $1,200,000 (One Million Two Hundred Thousand Dollars)".
13. In the course of their oral evidence, Mr and Ms Sanna maintained, when shown a range of documents with what appeared or purported to be their signatures on them, that some of them were definitely authentic, some were definitely not, and as to others they were uncertain. In the case of some documents, they expressed different views about the authenticity of their signatures on different pages of the same document, in that each said that some signatures which purported to be his or hers on some documents were his or her authentic signature, while others on the same document were not.
14. Perhaps most strikingly, Mr Sanna was shown what appeared to be his signature on a number of pages of a document, the nature and content of which was concealed, and said that some were definitely not his. When it was revealed that this document was an affidavit sworn by him in the presence of his solicitor Mr Kekatos, the authenticity of his signatures on which was beyond question, he retreated to a less categorical position: HIS HONOUR Q. I just want you to have a look at the document I now show you. I am showing the witness page 927 of volume 3. Please - no - please only look at the part I've shown you- A. Yep. Q. Do you see that there are two sets of initials on that document? A. Yes. Q. Are either of those initials yours? A. No. Q. Are you adamant about that? A. Yes. Q. No- A. I don't do my Ss like - well - yeah, go on? Q. No possibility of doubt about that? A. Not like those, no. Q. I now show you- A. The second one, your Honour, is very close, but- Q. But it's definitely not yours? A. To my knowledge, no. Q. I'm not asking you to your knowledge- A. Well, no. No. No. Q. It's yours or not? A. No. Q. I now show you page 928 also folded over just to reveal the signatures? A. Yeah. Q. There are two initials there. Are either of them yours? A. The first one, no. The second one could be. Q. Could be? A. Yeah. Close. Q. I now show you page 929? A. The first one no, the second one, yes. Q. It is yours? A. The second one? Q. Definitely yours? A. Very close. Yes. Q. I now show you page 930. That only shows one signature or one initial, at least. Is that yours or not? A. No. Q. Definitely not? A. I don't break my S. I do my S all in one go. Q. Definitely not yours? A. No. Q. Do you agree that you've said that the signature on 930 - I'm sorry - I will get this back into order - 927 is definitely not yours, that 928, I think you said may be, 929 may be, 930 - I'm sorry 929 - 927 you said definitely? A. Yeah. … Q. 927 you said no, 928 maybe, 929 yes and 930 no? A. Yes. Q. I'll now show you the documents together with the pages unfolded? A. Yes. Q. Do you now recognise that the document I'm showing you is an affidavit sworn by you in the presence of Mr Kekatos on I think it was 4 May 2015? A. Well, like I said that could - maybe. That's a maybe. So, yeah. Q. Sir, you didn't say maybe to the first page. You said no. In fact, I asked are you adamant about that and you said yes. Do you accept that you have denied that at least two of the initials on that document are yours when they plainly are yours because they were witnessed by Mr Kekatos? A. I think I - I don't know, your Honour. I mean this one here - the first one is not mine. Are you talking about the second signature? Q. Yes? A. Right. Look, doesn't look like it, but, anyway, if I signed it, I signed it. I don't know.
15. To like effect, Mr Dimitriou showed Ms Sanna (who was adamant that she only ever executed documents at the request of Mr Dimitriou in his office) four documents, being Electronic Lodgement Declarations, apparently signed be her; she maintained that the apparent signatures on two (PX12 and PX14) were not hers, but that those on another two (PX13) appeared to be hers. As to the signature on a fifth document (PX18), when asked whether or not it was her signature, she said "I don't know". However, all five were clearly transmitted by facsimile from her office to Mr Dimitriou's office on the evening of 22 March 2012, four of them in a single, 4-page facsimile transmission. The context makes clear that they must have been signed by her in her office and transmitted to Mr Dimitriou's office, but she would not accept this.

Mr Anderson

1. Mr Chris Anderson, forensic document examiner, was retained by the plaintiffs to examine the following documents on which there were disputed "Corrado Sanna" and "Lepa Sanna" signatures: 1. the First Costs Agreement of 20 October 2011; 2. a General Power of Attorney of 20 July 2012; 3. the Statutory Declaration of 26 July 2012; 4. the Deed of Loan of 26 July 2012; 5. the Declaration to Lender and its Solicitors of 26 July 2012; 6. the Mortgage of Green Valley of 26 July 2012; 7. the Mortgage of Copacabana of 26 July 2012; 8. the General Security Agreement of 26 July 2012; 9. the Business Purpose Declaration of 26 July 2012; 10. the Direction as to payment of 26 July 2012; and 11. the Acknowledgement and Undertaking re independent advice of 26 July 2012.
2. Having compared the disputed signatures with specimen signatures of Mr Sanna and Ms Sanna, he reported: 1. In respect of the disputed Corrado Sanna signatures, there was no evidence of the indicia of forgery, and no evidence to support the hypothesis that the disputed signatures had been made by copying, but there was evidence that the writer of the specimen signatures also wrote the disputed signatures. He concluded, with "practical certainty", that the writer of the specimen Corrado Sanna signatures was the person who wrote the disputed Corrado Sanna signatures. 2. In respect of the disputed Lepa Sanna signatures, there was no evidence of the indicia of forgery and no evidence to indicate that the disputed signatures were other than genuine. However, he did not express a formal conclusion, for want of a sufficient range of specimen signatures.
3. Mr Anderson's evidence was not challenged, nor was expert evidence to contradict it called.

Mr Foley

1. Mr Foley, solicitor, gave evidence that on or about 24 July 2012 he was asked by Mr Dimitriou urgently to prepare a set of security documents "to save the Sannas' property", and went over to Mr Dimitriou's office to do so later that day. He recalled that both Mr and Ms Sanna were in Mr Dimitriou's office during 24 July, having arrived separately. Over that and the following day, in Mr Dimitriou's office, he completed the documentation and produced multiple sets, and it was ready to be signed by late on 25 July, when he had to get away to a dinner commitment, leaving Mr Dimitriou's office at about 1800. At that stage nothing had been signed. He recalls Mr Sanna being at Mr Dimitriou's office on 25 July.
2. The next day - 26 July - he was surprised to learn that the documentation had not yet been signed. In the course of that day he returned to Mr Dimitriou's office for the purpose of researching aspects of the Personal Property Securities legislation, which he had not previously encountered, and as best he recalls by then the documentation had been executed. Neither of the Sannas, but only Mr Dimitriou, was there when he returned on 26 July.

Ms Gray

1. Ms Gray gave evidence that on 15 December 2011, she witnessed Mr and Ms Sanna sign the Saving Fee Agreement, in front of her, at Mr Dimitriou's Bella Vista office, he having called her and asked her if she would attend to witness some signatures. In an affidavit (an unsigned copy of which was in evidence before me, but which the evidence established had been filed in other proceedings before Darke J, such that it was established that it had been sworn), Ms Gray deposed that on 16 December 2011, she witnessed Ms Sanna sign the BFAs, which had already been executed by Mr Sanna and Mr Russo.
2. In her oral evidence, Ms Gray confirmed that she signed the BFA as a witness, and gave the certificate of independent advice in respect of Ms Sanna. She said that when she signed it, it had already been dated 16 December 2011, and that the date was not in her handwriting; that accords with the appearance of the document. She said that she did not recall the date on which she saw and advised Ms Sanna and witnessed her signature on the BFA, and she did not recall whether it had already been executed by Mr Sanna (and Mr Russo).
3. Ms Gray also confirmed that her signature appears on the Deed of Loan and the General Security Agreement as witness to the signatures of Mr Sanna and Ms Sanna, and that she in fact witnessed them sign those documents, and the associated mortgages, at Mr Dimitriou's office at Bella Vista. She said that she merely witnessed their execution of those documents (the Deed of Loan and the General Security Agreement) and did not give advice about them, as distinct from the BFA in connection with which she had given advice to Ms Sanna; she explained that she practised family law and criminal law, not commercial law. She did not recall whether she was present when the Sannas signed on behalf of their various corporate entities (which signatures she did not attest), as distinct from when they signed in their personal capacities, which signatures she did attest.
4. It was put to her that she did not see the Sannas sign the documents on which her signature appeared as a witness; she responded that it was not worth her practising certificate to purport to witness signatures that she had not seen. She firmly rejected, as "absolute nonsense", the suggestion that she had not witnessed the signatures against which her signature appeared as a witness. She also firmly rejected the proposition that she would take instructions from Mr Dimitriou without meeting her clients personally. Her office moved from 275 Church Street Parramatta to 8/32 Albert Street sometime in the first half of 2012.
5. As to the sale of Copacabana, she had a vague recollection of her office having acted, by a clerk, on the conveyance for Ms Sanna, and that the sale did not complete.
6. She identified Mr Sanna in court, said that she recalled Ms Sanna (who was not in court) quite well, for reasons that were credible, and gave an accurate description of her.

Mr Russo

1. Mr Russo recalled having met Mr Sanna, at Mr Dimitriou's office, in the company of Ms Sanna, and provided advice to him and "signed him up" to the BFA. He confirmed having witnessed Mr Sanna sign the BFA and that he certified it. However, the dates on the document are not his writing. He issued an invoice on 7 August 2012, which confirmed 7 August as the date of the attendance.
2. Mr Russo was prompted to recall that there had been a problem with the BFA, and for some reason it had to be changed; he was not sure whether there was a misdescription, or whether the parties agreed to change it, but it resulted in the matrimonial home being changed from the Green Valley property to the Copacabana property. He said that he could not understand why both BFAs bore the same date, "because they definitely weren't done the same day". It was his recollection that they were not dated when he saw Mr Sanna, because at that stage "the wife had not yet signed". His recollection, however, is that the second was done within a few weeks of the first.
3. It was Mr Russo's recollection that Mr Sanna "almost lived at" Mr Dimitriou's office, and at least was there "pretty often".
4. He opened a file for a purchase by APH from Ms Sanna of Copacabana. In that respect he received instructions mainly from Mr Dimitriou, but initially from Mr Kalischer or Mr Sanna; he accepted that it was more likely Mr Kalischer, but he has some recollection of Mr Sanna have some association or connection with APH. He said "Mr Kalischer is a person of means and I am aware that Mr Dimitriou has used him on many occasions for the purposes of assisting people who are in financial difficulty. And he buys the properties and pays out mortgages and whatever in order to be able to give some stability to the system and then six, 12, 18 months later, or years later, if the client can afford it they buy it back, and if they can't he sells it". As has been noted, on 26 June 2012, he issued a tax invoice to APH, care of Mr Dimitriou's office, and on 17 July, he issued a further invoice. As best he can tell, his firm did not complete the matter, and there is no record of any settlement. He has no recollection of any deposit or purchase money being paid.

Discussion

1. The submission that the First Costs Agreement could not have been executed on the date it bore - namely 21 October 2011 - and at the least must have been backdated, was founded on Ms Sanna's evidence, summarised above, that she did not meet Mr Dimitriou before 2 December 2011.
2. Mr Dimitriou deposed: On or about 21st October 2011 I saw Andrew Jetson give Corrado Sanna and Lepa Sanna the originals of the "first cost agreement" document … . I saw them read that document. I believe that both of them signed the document at the places indicated. Each I believe signed their own document separately. After signing the documents they were handed to me and I signed them.
3. In cross-examination it was put to him that he had said that the agreement was made by Andrew Jetson. Mr Dimitriou said that in 2011 Mr Jetson "was in consultation with the Sannas more often than not", which I take to mean that Mr Jetson rather than Mr Dimitriou was their most usual point of contact at that stage. Ms Sanna's evidence did not address when she first met Mr Jetson, and whether that was before she met Mr Dimitriou.
4. Mr Dimitriou said that though he would probably have been in the office when the agreement was executed, he did not have an actual recollection of it. To the proposition that, had he witnessed the Sannas execute the agreement, he would have included that in his affidavit, he answered: Yes, but I didn't say that I witnessed them executing the affidavit [sic, agreement].
5. In other words, he did not assert that the First Costs Agreement was executed in his immediate presence such that he was a witness. The reference in his affidavit to "on or about 21 October" is suggestive that the date has been reconstructed from the document, as distinct from being a matter of recollection.
6. The First Costs Agreement was not stamped until 3 August 2012; the explanation proffered for this was that it was only then that it was decided to lodge a caveat, which made it necessary to have it stamped. That explanation being quite plausible, the date of stamping does little to assist in resolving the date of execution.
7. The only other evidence is the date the agreement bears, and Ms Sanna's evidence. To my mind, the appearance that the date has been inserted, against all the signatures, by a single hand, detracts from its reliability. However, the document contains at its head the printed date "21 October 2011", and that date appears in the printed form just above the signatures of Mr and Ms Sanna to the clause in which they acknowledge having received a full explanation. While the fluctuations and inconsistencies in Ms Sanna's evidence on the topic detract from her reliability, the eventual production of the funeral notice gives it some support.
8. For those reasons, I am not satisfied that Ms Sanna met Mr Dimitriou before 2 December 2011. Although it does not necessarily follow that the agreement was not executed before 2 December 2011 - Mr Sanna had met Mr Dimitriou before then, and the agreement may have been executed before Mr Jetson - the most probable scenario is that it was executed on or about 2 December 2011, at Ms Sanna's first meeting at Mr Dimitriou's office, when Ms Sanna said that she signed many documents, and though she did not know whether they included a retainer, it is very likely that they would have. Mr Dimitriou was not questioned about the circumstances of the insertion of the date, and indeed it was not suggested to him that he had not met Ms Sanna by 21 October 2011 - that suggestion was first raised in the course of Ms Sanna's evidence. However, based on the printed date 21 October 2011, which appears twice in the document, it is likely that it was prepared on that date, and the same date was subsequently inserted against the various signatures so as to correspond with the printed date on the document. There is no evidentiary basis for any conclusion that its insertion was sinister.
9. Quite apart from the First Costs Agreement, I consider that the BFAs were probably backdated - though by whom is not at all clear. As explained below, it is also likely that at least Ms Huybers' signature as a witness to the Second Costs Agreement was placed on the copy retained by Mr Dimitriou after the date that agreement bears. Reference has also been made to Ms Sanna's evidence of having observed Mr Dimitriou engage in the cutting and pasting, and tracing, of signatures, and there are some documents which bear what I regard as highly dubious signatures. One is the cover page of the contract for sale of the Copacabana property from Ms Sanna to APH, a facsimile of which was provided to Gadens to evidence that a sale was proceeding. There are several versions of the cover sheet, and the signatures on it that purport to be those of Mr Kalischer and Ms Sanna, and also of Mr Sanna as witness, bear no resemblance to their usual signatures, and I believe have been forged, and though I cannot tell by whom, it is probable that it was someone in Mr Dimitriou's office. In addition, the purported signatures of Mr Kalischer as sole director of APH on the Deed of Loan and on the General Security Agreement are highly suspicious and inconsistent. While those signatures were not in issue in these proceedings, as no liability was asserted against APH, and the expert evidence did not address their authenticity, nonetheless, their appearances, together with the other matters just mentioned, have caused me very seriously to consider the possibility that the Sannas' signatures on the documents in issue were forged, whether by Mr Dimitriou or by someone in his office; to approach the issue on the basis that forgery is far from inherently improbable in the circumstance; and thus to scrutinise the evidence very carefully.
10. Having done so, however, I am satisfied, on balance of probabilities, that the signatures that appear to be those of Mr Sanna and Ms Sanna, on each disputed document, are indeed their genuine signatures. My reasons for this conclusion include that: 1. The starting point is that the Court is entitled to compare handwriting and draw its own conclusion, although where there is expert evidence that will assist the court in the exercise. The disputed signatures each closely resemble signatures that are indisputably those of Mr Sanna and Ms Sanna respectively, and appear authentic, not bearing any obvious indicia of forgery or copying; it is clear that the originally signed copies that were produced to the Court were originally signed and that the apparent signatures of the Sannas on them, which closely resemble their undisputed signatures, have not been photocopied or otherwise reproduced onto them. 2. That conclusion is greatly fortified by the expert evidence of Mr Anderson, set out above, which was not challenged or contradicted. 3. It is also fortified by the circumstance that the endeavours of Mr Sanna and Ms Sanna to distinguish signatures that were theirs from apparent signatures that were not was totally undermined in their cross‑examination, rendering their blanket denials of having signed any of the disputed documents highly implausible. 4. It is highly improbable that both Ms Gray and Mr Russo, two solicitors, would falsely attest signatures of one or both of the Sannas, on different occasions, on a diverse range of documents, including some (the BFAs) which are of limited relevance to liability in these proceedings, except potentially as to credit. 5. Moreover, Mr Russo's evidence - which was not invariably favourable to the plaintiffs - of his recollection of the circumstances about the BFAs is compelling, and supported by contemporaneous invoices. Mr Sanna's affidavit evidence that he had never met Mr Russo was false (indeed he eventually accepted that, contrary to his affidavit evidence, he had at least met Mr Russo). [3] 6. It is highly improbable that Mr Dimitriou would have engaged in the cutting and pasting, or tracing, of a signature in the presence of Ms Sanna, as she claimed. I am compelled to conclude that this aspect of her evidence was invented to enhance the forgery case.
11. However, the most important evidence on this question is that of Ms Gray, because she is the apparent witness to the signatures of the Sannas on the disputed documents. The defendants submitted that, even if Mr Sanna and DCL executed the Deed of Loan and the General Security Agreement, their execution was not witnessed by Ms Gray. Both Mr Sanna and Ms Sanna denied that they had ever met Ms Gray. Mr Dimitriou rejected the proposition that the Sannas had never executed the deed of Loan or the General Security Agreement; he said that Ms Gray was present in the office with the Sannas at the time of execution, very late in the evening.
12. Ms Gray identified and authenticated her own signature as a witness on the various documents which appeared to be witnessed by her. This excluded the suggestion that her signatures as a witness were themselves also forgeries.
13. The defendants pointed to a number of matters which were said to tell against Ms Gray's evidence that she in fact witnessed the Sannas' signatures.
14. First, it was submitted that her evidence in cross-examination, to the effect that she did not give the Sannas legal advice about the security documents but only witnessed their signatures - her expertise being limited to criminal and family law and not commercial matters - was inconsistent with what she had said in her affidavit. However, the relevant paragraph in her affidavit did not assert that she had actually given advice about the security documents: On 26th July 2012 Corrado Sanna and Lepa Sanna again approached me for legal advice and support relating to the execution of quantity of security documentation that included a Deed of Loan, a General Security Agreement Personal Property and several Mortgages. I witnessed Corrado Sanna and Lepa Sanna's signature on each of a number of originals of each of those documents. I annexed hereto and marked "TG5" are true copies of one of the originals of the executed Deed of Loan, General Security Agreement Personal property and the Mortgages that I witnessed on 26th July 2012.
15. Secondly, it was submitted that the fact that she could not recall whether or not she was present when New DCL (as distinct from the Sannas personally) executed the Deed - which New DCL did by its sole director Mr Sanna ­- is supportive of the proposition that she also would not recall whether she witnessed any signatures - in particular those of Mr and Ms Sanna personally - to the Deed. I do not agree: given that she did not attest execution by New DCL, but did attest execution by Mr and Ms Sanna personally, and that this was some five years before she was asked to give evidence about it, it is entirely consistent with her adoption of a cautious and conservative approach to what she was prepared affirmatively to testify - a characteristic which was apparent on several occasions during her oral evidence - that she would not commit to having been present when signatures that she did not attest were placed on the documents (though I think she probably was).
16. Thirdly, it was submitted that the absence of any contemporaneous document to confirm her attendance on the Sannas on 26 July 2012 told against its having occurred. It is true that Ms Gray did not make any file note of the attendance, and produced no file. However, the absence of contemporaneous documents would be telling only if the circumstances were such that one would expect such records to have existed, and to be available. In the context that she was merely asked to witness signatures, and may well not have charged a fee, it would be unsurprising if a file were not opened and no costs disclosure made. She was not asked to produce any records, until in the course of her cross-examination, when she then explained that her old files were stored in Darwin, where she also has a practice.
17. On the other hand, while Ms Gray's recollection of the detail is lacking, her evidence was not uniformly favourable to the plaintiffs; in particular, she readily accepted that she had not given the Sannas advice about the 26 July documents, but merely witnessed their execution of them. Her identification in court of Mr Sanna, and even more so her description of Ms Sanna who was not in court, tend to confirm that she had previously met them, contrary to their denials. Her insistence that she would not have attested signatures not made in her presence, and thereby jeopardised her entitlement to practise law, was convincing, and I accept that she would not have done so. I conclude that she did attest their signatures on the documents on which her signature appears as a witness. It follows that the Sannas' evidence that they had never met her was false.
18. It may well be that, in the stressful and distressing circumstances in which they found themselves between late 2011 and through 2012, including the financial failure of Ms Sanna's companies, the proceedings for possession of their Copacabana home, and the breakdown of their marriage and consequent separation, the Sannas were content to do what they were advised to do and sign the requisite documents, while paying scarce attention to the detail and events. As will emerge in considering the DPI case, in my view considerable reconstruction has taken place on their part, from documents which they have since discovered, and from their belief that they were not advanced $1.2 million because there is no such deposit in their bank accounts. It is possible that they are surprised now to discover that they signed the disputed documents - although, as will emerge, there are reasons for doubting that. But that they did sign them is, in my judgment, very plainly established.
19. Indeed, in final submissions, the forgery case was advanced faintly, if at all; the following transpired in discussion with Mr Polese, who appeared for the defendants on the occasion of the concluding oral submissions, to speak to Mr Lee's written submissions: HIS HONOUR: Your submissions have been conspicuously silent on the question of signature, probably with good reason, otherwise, so why would I not accept that they'd signed it? Anyway, we can think about that. POLESE: I would like to address your Honour on what, I think it's already been addressed in Lepa and Corrado Sanna's own evidence and the way the evidence did flow. My submission is that even though semantically it might have changed, the evidence has always been that if they had signed it, they didn't realise what they were signing. I think that was well maintained throughout. I think I shouldn't put it any higher than that. HIS HONOUR: Yes.
20. I therefore reject the defence that the documents on which the plaintiffs sue - in particular the First Costs Agreement, the Deed of Loan and the General Security Agreement, and the Saving Fee Agreement - were not executed by the relevant defendants; I am satisfied that they were so executed. There was no plea of non est factum. It follows that, subject to the other defences referred to below (including in particular, in the case of the Deed of Loan and General Security Agreement, breach of fiduciary duty and the CRA), the defendants are bound by those documents. This does not apply to the Second Costs Agreement, which the plaintiffs do not allege was executed, but contend was accepted by conduct.

The WYI claims

1. WYI sues Mr Sanna and New DCL for $136,472.64, being fees for services said to have been rendered by WYI to Mr Sanna and DCL. The claim is founded primarily on the First Costs Agreement (as to $47,077.64, against Mr Sanna) and on the Second Costs Agreement (as to $89,395.20, against Mr Sanna and New DCL); alternatively it is advanced as a quantum meruit.
2. Mr Sanna and New DCL accept that they retained WYI to perform professional accountancy services, but deny that there was any written agreement between either of them and WYI. They say that the only retainer was oral, and that WYI did not render any invoices to them, until the commencement of earlier proceedings, in May 2015, in the duty list before Darke J. [4]

The First Costs Agreement

1. The First Costs Agreement was, as I have found, executed by Mr Sanna, on his own behalf and on behalf of DCL(NSW) and Coastwide, and by Ms Sanna, on her own behalf and as sole director of Danic, DLD, and Old DCL. New DCL was not incorporated until 16 May 2012, and could not be a party to the First Costs Agreement. As I have also found, although it bore the date 21 October 2011, the First Costs Agreement was probably executed on or about 2 December 2011. It was not suggested that the insertion of a date, in a space left for that purpose on a document, which corresponded with the date of the letter of offer, affected its enforceability. None of the invoices in respect of which the plaintiffs claim under the First Costs Agreement antedated January 2012.
2. The claim is particularised by reference to invoices, issued by WYI variously to Mr Sanna, Ms Sanna, Mr & Ms Sanna, DLD, Old DCL, Danic, and Danic in its trustee capacity. Many of these, amounting to $89,286.28, were paid out of the loan advance of 26 July 2012 and applied to identified invoices. A few other invoices are admitted to have been paid. The sum claimed of $47,077.64 represents the remaining balance, comprised as follows: Invoice Date Client/Debtor Balance 13773 16/07/2015 C Sanna 939.92 9300 15/11/2013 C Sanna 4235.00 8914 28/06/2012 C Sanna 628.00 9299 15/11/2013 L Sanna 6710.00 8944 23/06/2012 DLD 5014.22 8902 17/05/2012 Old DCL 1335.50 9174 02/04/2013 Old DCL 6050.00 9173 16/05/2013 Old DCL 1485.00 9175 16/05/2013 Old DCL 20,680.00 Total 47,077.64

1. At least for billing purposes, WYI appears to have treated each of the entities as a separate client, and to have invoiced each for work done for that entity. The defendants submitted that the First Costs Agreement contained no clause of joint and several liability or personal guarantee, and so the only claim that could be maintained was against Mr Sanna, for less than $6,000, based on the first three invoices listed. However, the retainer was a joint one. While I accept that there was no guarantee clause, the joint retainer has the consequence that each party is liable for the fees for work done for any of them. [5]
2. In respect of many of the invoices, both under the First and under the Second Costs Agreements, the defendants submitted that the only evidence of what work was carried out by WYI was contained in the various affidavits of Mr Dimitriou, which did not set out the work done by WYI in such a manner as to allow it to be assessed by the Court, and that to establish an entitlement, either on a contractual basis or a quantum meruit basis, WYI must prove it did the work, which required evidence of the work done from the person or persons whom carried out it, or, at least, observed those persons carrying it out.
3. The answer to this is that the invoices, which describe the work done and the time incurred and charged, are business records, which themselves are some proof that the work was done and the time spent, so as to justify the charge. While more might have been necessary if it were seriously disputed that the work was done, and evidence adduced that it was not - rather than it being submitted that there was merely an absence of proof - the invoices are sufficient to defeat the proposition that there was no evidence. Moreover, the plaintiffs tendered voluminous work product, which evidenced that work was indeed done.
4. Particular submissions were made in respect of some invoices. Invoice 13773 dated 16 July 2015, for $939.92, is for searches carried out by WYI after the commencement of, and for the purposes of, these proceedings. Mr Dimitriou sought to justify it on the basis that the First Costs Agreement was still in force, [6] and that it authorised such a charge. However, this was not work done pursuant to the retainer, but for the conduct of the proceedings. I cannot see anything in the First Costs Agreement that authorises such a charge, even if it remained on foot, which in my view it did not; the Sannas had ceased to retain WYI not later than the commencement of these and related proceedings. Invoice 8914 dated 28 June 2012, for $628, is admitted on the pleadings to have been paid, on 30 June 2012, for which receipt 1300 was issued. [7] Those two invoices will be disallowed.
5. In respect of some invoices it was said that work appeared to be "legal work", but no defence of illegality was pleaded, and the work in question could be described as "litigation support" work.
6. Otherwise, save for the generic submission that it was not proved that the work was done, and the point that there was no guarantee or joint and several liability clause, no particular submissions were made in respect of the other invoices.
7. For those reasons, I accept that Mr Sanna entered into the First Costs Agreement and is bound by it, and (excluding the first and third invoices) WYI has established an entitlement under it against him to the extent of $45,509.72.

The Second Costs Agreement

1. The Second Costs Agreement is expressed to be between WYI and Mr Sanna, Ms Sanna, DLD ATF the Danic Family Trust, New DCL (ABN 70 158 381 821) trading as DCL Construction Group, and DCL(NSW). At its head it bears the printed date "16 May 2012". Above the signature of Mr Dimitriou beneath the clause that confirms detailed explanation to the clients appears the printed matter "Dated this 16th day of May 2012". The Second Costs Agreement purports to have been executed by WYI by its director Mr Dimitriou, whose execution of the document purports to have been witnessed by Ms Susan Huybers. WYI does not contend that the Second Costs Agreement was executed by any party other than itself, but pleads that the other parties to it accepted its terms by conduct. [8] As there is no evidence of any relevant conversation between Mr Dimitriou and either of the Sannas regarding the Second Costs Agreement, any acceptance by conduct would depend on the giving of instructions by or on behalf of Mr Sanna and/or New DCL for work to be done, with notice of the terms of the Second Costs Agreement. This in turn requires that its terms came to their attention, which both Mr Sanna and Ms Sanna dispute.
2. 16 May 2012 was the day on which New DCL was incorporated. The raison d'etre of the Second Costs Agreement was that the incorporation of New DCL meant that there was an additional client, which was not a party to the First Costs Agreement. The plaintiffs' case is that the Second Costs Agreement came to the notice of the defendants, having been sent to them by mail on 17 May 2012.
3. Mr Dimitriou's evidence was that the Second Costs Agreement was prepared by Andrew Jetson and/or Jessica, an administration manager, signed by him, and sent to the Sannas by mail on 17 May 2012. He did not claim to have an actual recollection of signing it, but said it would more than likely have been in his office. When asked whether anyone else was with him, he said "I believe Susan [Huybers] might have been around at the time, yeah". Mr Dimitriou did not profess to have personally mailed the document, but said that there was a "mail out log", which had been adduced in earlier proceedings and recorded that the document was mailed out on 17 May 2012. Counsel for the defendants subsequently called for that document.
4. It was put to him that neither he nor anyone else at WYI mailed the Second Costs Agreement to Mr and Ms Sanna, to which he replied: A. Yes, they did. Yes, they would have received it, and yes it was sent. Q. I suggest to you that neither you nor anyone else at your direction mailed the 16 May 2012 costs agreement to DCL? A. If it's in the mail out it's been sent. I relied on the mail out.
5. The following day, after his cross-examination, Mr Dimitriou produced (pursuant to the call which had been made) and tendered the document he had described as the "mail out", which appears to be a printout of a log maintained on a computer which records documents received on behalf of and sent to clients by Mr Dimitriou's office to clients, between 10 July 2011 and 24 June 2013. The names of clients other than the Sannas and their entities have been redacted. It includes the following, apparently regular, entry: Date received Name Document Date Sent DCL Construction Group Pty Ltd Cost Agreement 17/05/2012

1. The defendants submitted that this was not a contemporaneous record, but was prepared in August 2015, for the purposes of an application heard by Darke J, and that there was no evidence as to the source of the information which was compiled into that document for the purposes of earlier Court proceedings, and should be given little weight. However, Mr Dimitriou's evidence was that it was a reprint of a document which had been prepared for the proceedings before Darke J, from which the names of clients unrelated to the Sanna group had been redacted, and that the original document was extracted from the Wyse & Young server on which the administration manager/secretary maintained a record of outwards mail. As the defendants' counsel conceded, the redaction of the names of clients unrelated to the defendants could not operate adversely to the defendants' interests. Incidentally, if Mr Dimitriou were the prolific forger that the defendants would suggest, it is difficult to understand why their signatures would not have been forged on the Second Costs Agreement, so as to relieve the plaintiffs of the need to prove acceptance by conduct, rather than (as appears to be implicit in the submission) manufacture the "mail out".
2. Because whether and, if so, when the Second Costs Agreement was forwarded to the clients is relevant to that issue, there is an issue as to the authenticity and date of Ms Huybers' signature as a witness. Ms Huybers deposed that the signature appeared to be hers, but "I am unable to say that it is my signature that appears on that page. I do not recall witnessing George Dimitriou's signature on that document". She said that she was not in New South Wales on 16 May 2012, or at all between 3 January 2012 and February 2013.
3. Ms Huybers was not required for cross-examination. The defendants submitted that in the absence of her being cross-examined, there was no basis or logical reason for the Court to reject her evidence, which should therefore be accepted, and that it followed that Ms Huybers did not witness Mr Dimitriou execute the Second Costs Agreement. The defendants further submitted that once Ms Huybers' evidence was accepted, it followed that the evidence of Mr Dimitriou in relation to this issue should be rejected, as it is inconsistent with that of Ms Huybers - it being no part of WYI's case that the Second Costs Agreement was sent to Mr Sanna and New DCL unexecuted, or on any date other than 16 May 2012 - and thus that the Sannas did not receive it and did not have notice of its terms.
4. It was put to Mr Dimitriou that his reason for not requiring Ms Huybers for cross-examination was that he accepted her evidence, and that she did not witness him sign the document on or about 16 May 2012, to which he answered: No, that's not why I've asked her not to come [sic]. The reason that I don't want her for cross-examination is because she would say anything that would disgrace me at the moment, to advantage her position and she'd do anything to assist her solicitor Mr Kekatos, who is your instructing solicitor. So there's no relevance to us, we can ask her three questions in cross-examination and she'll deny those three questions. So it was a waste of - would have been a waste of my time and it would have been a waste of his Honour's time.
5. Mr Anderson examined Ms Huybers' signature as witness attesting Mr Dimitriou's signature on the Second Costs Agreement (which bore the date 16 May 2012), and compared it with specimen signatures of Ms Huybers, and concluded that it was more likely that the questioned signature was written by Ms Huybers than by someone else. The conclusion was expressed in limited terms because only reproductions and a paucity of specimens was available, but he added that he observed no evidence to support the hypothesis that the questioned signature was written by anyone else. On Mr Anderson's unchallenged and uncontradicted evidence, on a comparison of Ms Huybers' questioned signature with other signatures which are indisputably hers, and on her own evidence that it could be her signature, I find that it is. Contrary to Mr Dimitriou's submission, however, she did not write the date 16 May 2012 on the document; it was typewritten, and the conclusion that it is her signature does not resolve the question of its date.
6. I cannot rely on the Sannas' denials of having ever seen the document, because of their implausible blanket denials of having received documents from Mr Dimitriou, and (in particular) Ms Sanna's demonstrably incorrect assertion that she only ever executed documents in Mr Dimitriou's office. Ms Sanna recalled having at some stage met Ms Huybers, in Mr Dimitriou's office. However, she could not recall whether it was before or after her separation from Mr Sanna. In any event, as it is not suggested that the Sannas were present when she witnessed Mr Dimitriou's signature, and as the Sannas were in Mr Dimitriou's office many times between December 2011 and mid-2013, this does not assist.
7. The printed date of 16 May 2012 on the document appears to conform with the style and layout of the document, and appears regular. Based on that, and on the mail log, I find that it was created on 16 May, and mailed to the Sannas on 17 May 2012. I infer that the original would have been signed by Mr Dimitriou, but whether his signature on it was witnessed is another matter; however, it did not need to be witnessed. The document tendered in evidence is presumably a copy retained by Mr Dimitriou. I am unable to determine when he signed that copy, and on Ms Huybers' unchallenged evidence I accept that it was probably not on or about 16 May 2012. But that does not detract from the proposition, supported by the mail log, that the original of the Second Costs Agreement was sent to the Sannas on or about that date, as Mr Dimitriou says.
8. It follows that I accept that the Sannas, and through them New DCL, had notice of the Second Costs Agreement and its terms, and with that notice instructed WYI to continue to perform work for them. In accordance with the terms of the Second Costs Agreement, that constituted an acceptance of its terms.
9. The claim under the Second Costs Agreement is in respect of ten invoices to New DCL for fees for professional services, as follows: [9] Invoice Date Client/Debtor Balance 8916 3/07/2012 New DCL 726.00 8945 23/07/2012 New DCL 38,906.34 8949 1/08/2012 New DCL 4962.25 8969 25/09/2012 New DCL 3773.00 9142 9/05/2013 New DCL 50.00 9143 9/05/2013 New DCL 33203.84 9144 9/05/2013 New DCL 2420.00 9145 9/05/2013 New DCL 6600.00 9172 16/05/2013 New DCL 1485.00 9205 31/07/2013 New DCL 113.52 9221 22/08/2013 New DCL 2117.50 Total 94,357.45

1. The defendants generally submitted that the evidence does not prove the claims, in that the only witness called by WYI, Mr Dimitriou, conceded that he is not an accountant, did not do the work (though others, he said, did), and did not prepare the invoices. For the reasons advanced in respect of the First Costs Agreement, the invoices themselves being business records are sufficient evidence, in the absence of evidence to the contrary, that the work described in them was done as described; moreover, extensive work product that proves that much of the work claimed was done was tendered. No dispute was raised about the work done until institution of proceedings.
2. Specific submissions were made in respect of some particular invoices.
3. Invoice 8945 dated 23 July 2012 is for $38,906.34, claimed as a "success fee" for finance sourced from APH in the amount of $1.2 million. While it is correct that ultimately finance was not sourced from APH, it was sourced from DPI. Under the Costs Agreements, WYI was entitled to a fee of 3% for sourcing such finance.
4. Invoice 8949 dated 1 August 2012, for $4,962.25, has admittedly been paid, [10] and I therefore disallow this invoice.
5. Invoice 8969 dated 25 September 2012, for $3,773, is for professional services rendered in connection with the incorporation of Kangoo Property Holdings Pty Limited. That entity is not a party to the Second Costs Agreement. As the work involved the incorporation of Kangoo, instructions could not have been given (pre-incorporation) by Kangoo. That the invoice was issued to DCL indicates that the work was done at the request of DCL.
6. Invoice 9143, dated 9 May 2013, is for $33,203.84, in respect of the discharge of mortgages to DPI and La Trobe. This is reliant upon a term of the Second Costs Agreement which entitles WYI to a 3.3% fee for negotiating an unconditional loan approval to discharge a liability. The defendants submitted that WYI did not negotiate any such loan approval, but merely introduced Mr Sanna to Anne Borton at Westpac. However, Mr Sanna was adamant in cross-examination that Mr Dimitriou had done everything to procure this refinance, while Mr Sanna had merely signed the documents. [11] The fee was earned.
7. It follows that, after deducting the one invoice which I have disallowed, WYI is entitled under the Second Costs Agreement to $89,395.20.
8. The defendants submitted that there were additional payments made which had not been brought to account. While it is by no means clear to me that this is so, I will reserve leave to make further submissions on that issue before judgment is formally entered.

The quantum meruit

1. Given the conclusions reached in respect of the two Costs Agreements, it is unnecessary to consider the alternative claim on a quantum meruit.

The DPI claims and the Cross Claim

1. The claims propounded by DPI against Mr Sanna and New DCL are founded on the Deed of Loan and the General Security Agreement. Consideration of those claims is intertwined with the cross claim brought by Mr Sanna and New DCL for avoidance (on the ground of breach of fiduciary duty) or variation (under CRA) of those instruments.
2. The Deed of Loan recited that the Borrower (defined as APH, New DCL, DCL(NSW) and DLD) and the Guarantor (Mr and Ms Sanna) had requested the Lender (DPI) to lend to the Borrowers the Principal Sum, defined as $1,200,000 (Recital B), which the Lender agreed to do on the terms and conditions of the Deed (Recital C). The Borrower acknowledged receipt of the Principal Sum (clause 1.1), and covenanted to repay it, "or so much thereof as shall have been advanced and shall remain unpaid", on the Principal Repayment Date (defined as the date which is 30 days after the date of the deed) (clause 2.1), and also to pay an establishment fee (of $18,000), and interest monthly in advance at the "Lower Rate" (being 20% per annum), and if the loan was not fully repaid by the Principal Repayment Date then at the "Higher Rate" (being 30% per annum) on so much as remains outstanding, until fully repaid (clause 2.2). The Borrower agreed to cause to be executed, stamped, registered and put into effect, as further and better security for the Lender, first registered mortgages of Copacabana and Green Valley by the Borrower or Guarantor as mortgagor to the Lender as mortgagee, and a General Security Agreement Personal Property by the Borrower and Guarantor as grantor to the Lender as secured party (clause 7). The Guarantor guaranteed the due and punctual performance by the Borrower of all the Borrower's obligations (clause 19.1)
3. The General Security Agreement recited that the Secured Party (DPI) had agreed to provide financial accommodation to the Grantor (APH, New DCL, DCL(NSW) and DLD) at the request of the Guarantor (Mr and Ms Sanna) (Recital A). It contained a summary of the facility, which included: Description of collateral The security interest taken by the secured party under this Deed extends to all of the collateral being all of the Guarantor's or the Grantor's present and after acquired property Location of collateral Principally at 1/21 Kangoo Road, SOMERSBY NSW 2250 Purpose of loan Business purposes Date of loan 26th July 2012 Principal $1,200,000.00 Term of Loan 30 days Date of repayment 25th August 2012 Higher rate of interest 30% per calendar month Lower rate of interest 20% per calendar month Instalments interest only or principal and interest Interest only Amount of higher rate instalment $30,000.00 per calendar month Amount of lower rate instalment $20,000.00 per calendar month

1. The address at Somersby was the premises from which the Sanna's companies traded. The Grantor acknowledged receipt of the Principal Sum (clause 4(a)), and charged the collateral (defined as the personal property and other property described in the summary) with payment to the Secured Party of the moneys owing and the performance of the Grantor's obligations under the deed (clause 4(b)). The Grantor was obliged to repay the Principal Sum or the remaining balance on the repayment date shown in the summary, and in the meantime interest at the higher rate, unless paid within 7 days of the due date in which case the lower rate would be accepted (clause 6).
2. There is an apparent inconsistency between the interest rates referred to in the Deed of Loan (20% and 30% per annum), and those referred to in the General Security Agreement (20% and 30% per month). However, while the terms of the General Security Agreement provide that it prevails in the event of any inconsistency, the references to per month rates in it were plainly mistakes, as is demonstrated by the "Amount of higher rate instalment" and "Amount of lower rate instalment" stated in the summary in the General Security Agreement, set out above, of $30,000 per month and $20,000 per month respectively - which respectively correspond with interest rates of 30% and 20% per annum (as in the Deed of Loan), not per month. Thus, reading the documents together, the intention was plainly that the rates be 30% and 20% per annum, not per month. Moreover, the plaintiffs never sought to enforce the rates referred to in the General Security Agreement, and have claimed interest only at the rates provided for by the Deed of Loan.
3. The plaintiffs' case is that pursuant to the Deed of Loan, on 2 August 2012, DPI advanced $1.2 million to New DCL, by discharging the AETL mortgage which then encumbered the Copacabana property with a payment to (or as directed by) AETL of $913,473.65, and paying various other liabilities of DCL and the Sannas in conformity with the Direction letter.
4. By their ASOC, the plaintiffs pleaded: [49] On or about 26th July 2012 [DPI], as lender, provided [New DCL] and others, as the borrowers, with a financial facility in the amount of $1.2 M pursuant to a Deed of Loan. … [51] At that same time on or about 26th of July 2012, the Deed of Loan was further Secured by Lepa Sanna, [Mr Sanna] and certain the [sic] entities and companies associated with them including [New DCL] entering into a General Security Agreement Personal Property ("the General Security Agreement") with [DPI]. … [54] On or about 26th July 2012 [DPI] discharged the Australian Executors Trustees Ltd that then encumbered 'The Copacabana Property'. The discharge amount paid to Australian Executors Trustees Ltd on settlement was $913,473.65. From the proceeds of [DPI's] Loan Advance that was pursuant to the executed Direction to pay advice dated 26 July 2012 those payments were made and from the payment to [WYI] about $28,000 that [DPI] also paid to third parties in related discharge expenses as particularized in table "N" …
5. As has been mentioned, until the late amendment of the defence and filing of the cross claim, the only pleaded defence to DPI's claim was a denial of the Deed of Loan, the General Security Agreement and the making of the advance pursuant to them. The amended defence denies (inter alia) paragraphs 47, 51 and 54 of the ASOC, and further pleads: a. No documents were executed by [Mr Sanna], Lepa Sanna and others as borrowers and guarantors; b. The purported Deed of Loan of 24 July 2012 was not executed by the purported clients and Thelma Gray did not witness the signatures of the clients and has falsely purported to have done so, or someone else has signed purporting to be her, probably George Dimitirou [sic]; c. The purported General Security Agreement of 24 July 2012 was not executed by the purported clients and Thelma Gray did not witness the signatures of the clients and has falsely purported to have done so, or someone has signed purporting to be her; d. The mortgage of 27 July 2012 was not executed by the purported clients and Thelma Gray did not witness the signatures of the clients and has falsely purported to have done so, or someone has signed purporting to be her, probably George Dimitirou [sic]; …
6. Above, I have found that Mr and Ms Sanna did indeed execute those documents, and that Ms Gray did attest their execution where the documents purport to bear her signature as a witness. It follows that those defences fail and that, subject to the other defences considered below, including breach of fiduciary duty and the CRA, the Sannas are bound by the Deed of Loan and the General Security Agreement. However, the defendants raised a number of additional objections to DPI's claims under the Deed of Loan and the General Security Agreement for money judgments against Mr Sanna and New DCL.

Does DPI have standing to sue on the Deed of Loan?

1. The defendants submitted that DPI did not execute the Deed of Loan or the General Security Agreement, and is not named as a party on the execution page of those instruments, and therefore has no standing to sue upon them on that basis. The party stated in the attestation clause to have executed those documents is, as has been noted above, Defined Property Holdings Pty Limited ("DPH"), the corporate name and ACN of which differ from those of the plaintiff DPI. The defendants submitted that the present case was distinguishable from the authorities that hold that a party may be able to rely upon a deed for its benefit despite not having executed it, if named as a party to the deed, [12] on the basis that those cases were concerned with situations in which deeds had been executed by one party and not the other, but the other party was a named party on the execution page of the relevant deed; whereas here there was no provision on the execution page for DPI to execute at all, but instead provision was made for execution by DPH, which in fact executed the instruments as a named party in the place provided for that purpose.
2. The raising of this issue in the defendants' amended defence provoked the even later second amendment of the statement of claim, to seek rectification of the Deed of Loan and the General Security Agreement by substitution, in the attestation clause on the execution page of each of them, of reference to DPI in place of DPH.
3. The defendants submitted that the Court could not be satisfied that DPI was or was intended to be the named party to the Deed, rather than DPH. This was said to be supported by the circumstance that it is DPI that is named on the execution page of both the Deed of Loan and the General Security Agreement, and that it is unlikely that the same mistake was made twice by Mr Dimitriou in executing the documents; and also by the circumstance that no evidence was adduced from Mr Foley, who drafted the documents, as to any mistake, or as to what were his instructions in respect of who were to be the parties to the Deed.
4. However, it is obvious that the reference to DPH was mistaken, and that it was intended to be a reference to DPI. DPI, not DPH, was named as a party in the list of parties at the head of both instruments, in the same sequence as the parties were listed on the execution page. The references to DPH appear precisely where, having regard to the head of the documents, one would expect to see reference to DPI. All the other 26 July documents, including the mortgages of Copacabana and Green Valley, referred to DPI, not DPH. When the entire suite of documentation of 26 July 2012 is considered, there is no room for doubt that the intended party was DPI, and that the reference on the execution page to DPH was mistaken. It did not need Mr Foley's evidence to demonstrate this.
5. The plaintiffs are entitled to rectification, and it follows that the submission that DPI was not a party to the Deed of Loan and does not have standing to sue on it is rejected. It is therefore unnecessary to resolve whether, if it had not executed the Deed, DPI could nonetheless have sued on the Deed of Loan.

Was the 26 July transaction a sale or a refinance?

1. The defendants submitted that what occurred between June and 2 August 2012 was a sale of the Copacabana property to APH, not a refinance whereby DPI became the mortgagee in place of AETL. There were essentially two competing explanations of the facts, both having as their starting point that prior to 26 July 2012, Ms Sanna was the registered proprietor of the Copacabana property, which the Sannas occupied as their family home, subject to a mortgage to AETL, which was in default with the consequence that the Sannas were facing eviction. Thereafter, the versions depart. The plaintiffs' version is: 1. to avoid eviction, the Sannas (through their company New DCL) on or about 26 July 2012 obtained an advance of $1.2 million from DPI - the proceeds of which were applied, as directed by the Sannas, to discharge the AETL mortgage (for $913,473 plus costs of $10,016) and to pay other liabilities - on a short term loan at 20% per annum. This advance is the subject of the Deed of Loan, and is secured by mortgages of Copacabana and Green Valley, and by the General Security Deed. Upon discharge of the AETL mortgage, Mr Dimitriou received the certificate of title on behalf of DPI and held it as mortgagee; 2. the Sannas made periodic fortnightly repayments of principal, by direct deposit into DPI's Westpac Business One account, where they are recorded as "DEPOSIT DCL CONST GROUP RENT UP TO [DATE]"; 3. on 9 May 2013, the Sannas obtained a loan from Westpac, the proceeds of which were, to the extent of $823,031.99, applied to reduce the DPI loan; 4. the balance of the DPI loan and interest remains outstanding, and is the subject of the claim.
2. The defendants' version is: 1. by arrangement with AETL, the Sannas offered Copacabana for sale, first by auction (which was unsuccessful), and then (upon Mr Dimitriou's expression of interest) privately to APH, a company they understood to be associated with Mr Dimitriou; 2. on or about 26 July 2012, APH purchased Copacabana from AETL as mortgagee, for $948,520. Mr Dimitriou received the certificate of title on behalf of APH as purchaser, but (in order to avoid incurring stamp duty) did not register a transfer; 3. in about December 2012, Mr Dimitriou offered to resell Copacabana to the Sannas, and Mr Sanna, with the assistance of Mr Dimitriou, obtained finance of $1,008,000 from Westpac for that purpose, which was applied as directed by Mr Dimitriou/APH (including, as to $820,662.60, to DPI) in satisfaction of the purchase price; 4. the Sannas did not personally nor through DCL ever borrow any funds from DPI, and their apparent signatures on the transaction documents have been forged.
3. Rejection of the forgery case entails rejection of a very important element of the defendants' version, and has the consequence that the formal documentation accords with the plaintiffs' version. Nonetheless there are some matters which are consistent with defendants' version, and which could provide a reason for thinking that their strongly expressed views were always their genuine belief, although ultimately in my judgment the better view is that they have reconstructed their belief from the documents.
4. Mr Sanna's affidavit evidence was to the effect that a writ of possession and Notice to Vacate Copacabana was received by Ms Sanna on 23 February 2012; they subsequently vacated the property on 2 April 2012; and they retained real estate agents to sell the property on 14 April 2012, following which the property was listed for auction on 14 May 2012, but did not sell. He continued: 42. In or about early June 2012, [APH] made an offer to purchase the Copacabana Property from AET for the sum of $948,520.00. A 5% deposit of $47,426.00 was paid on exchange of Contracts. 43. This offer was accepted by AET. Gadens Lawyers … acted for AET. 44. It is my understanding that on 25 July 2012, the Copacabana Property was transferred in equity to [APH] by AET as mortgagee in possession. 45. On or about 25 July 2012, [APH] provided AET with 2 cheques totalling $932,490.27. … 49. [APH] received the transfer however did not attempt to register the transfer … . It is my understanding that the transfer was not registered as the director, George, did not want to incur the liability of stamp duty owing pursuant to the purchase. 50. In or about late November 2012, I had a conversation with George consisting of words in or to the following effect: GD: "Corrado, I am prepared to sell Copacabana to you for whatever [APH] paid for it. I really need the funds right now". CS: "George, if I can raise the funds I will buy it". GD: "I know a manager by the name of Anne Barton who works at Westpac. She can get the loan for you. Also, I have not transferred the property into [APH's] name as yet. I will arrange all the paperwork so you don't have to pay any stamp duty" CS: "Okay, that sounds great".
5. Ms Sanna's affidavit evidence was that, having been served with a writ of possession on 23 February, she and Mr Sanna vacated the Copacabana property in or around April 2012. She continued: 34. In or around May 2012, George and I had a conversation consisting of words in or to the following effect: GD: "Lepa, I like the Copacabana Property. I am going to negotiate the purchase of the property for myself with the mortgagee. Do you have a problem with that? LS: "No, we have already moved out of the property. We have moved on with our lives". 35. In or around November 2012, Corrado and I had a conversation consisting of words in or to the following effect: CS: "George has approached me and wants to sell Copa back to me. It is was [sic] our family home and I want to buy it back". LS: "Okay. Do what you want. I have moved on with my life".
6. Notable features of this include that it involved their having vacated Copacabana by April 2012; it included no hint that the purpose of any sale to APH or Mr Dimitriou was to "save" the property from AETL and preserve it so that the Sannas could retrieve it; and it conveyed that the suggestion of a resale to them in November 2012 was, in effect "out of the blue". As will become apparent, in these respects their evidence was grossly misleading.
7. Undoubtedly, Mr Russo was retained to act on behalf of APH in relation to a purchase of the Copacabana Property. Although he received initial instructions from APH's director Mr Kalischer, it was Mr Dimitriou who gave most of the instructions to Mr Russo's firm. Mr Kalischer was a wealthy gentleman, who (according to Mr Russo) had been used by Mr Dimitriou on many occasions to assist people in financial difficulty by purchasing their homes, paying out the mortgages, and holding the property for resale at a later date to the clients if they could afford it. Similarly, it appears that Ms Gray was retained to act on behalf of Ms Sanna in relation to the sale of the Copacabana property to APH. Ms Gray says that the matter was handled by her conveyancing clerk, and has a recollection that the transaction did not proceed.
8. The front page of the contract for sale by Ms Sanna to APH was prepared - by whom is not apparent - and apparently executed by Ms Sanna as vendor and Mr Kalischer on behalf of APH, and witnessed by Mr Sanna. I have the gravest reservations about the authenticity of the signatures on that document, although I cannot determine by whom they were placed on the document. A facsimile of that page was provided to Gadens, on 7 June 2012, with a letter apparently from Ms Gray's firm that confirmed that contracts had exchanged unconditionally and a deposit had been paid. However, it was not the recollection of either Mr Russo or Ms Gray that a deposit was ever paid, and the letter that appeared to be from Ms Gray's office bore a reference (ref srkl:33/718953) which Ms Gray did not recognise, and was signed "pp Thelma Gray".
9. While there are numerous documents which refer to a sale by Ms Sanna to APH, referred to in the Background section above, it was the recollection of Mr Russo as well as of Ms Gray that the sale of the Copacabana property to APH did not proceed. [13] Mr Dimitriou explained that while it was originally intended that the funds be sourced from APH, Mr Kalischer became uncomfortable and pulled out, with the result that it looked for a while as if the property would be lost, until DPI came up with the money.
10. Mr Dimitriou agreed that he never told Gadens the sale had fallen through and a re-finance would be taking place. [14] He said that he did not tell them essentially because they did not need to know; in my view it was because it is clear that had there been any suggestion of the sale not proceeding, that would likely have triggered Gadens and its client to take further steps for enforcement of the writ of possession.
11. As noted above, the Sannas both deposed to having vacated Copacabana by April 2012. This was not correct; and they eventually came to admit that on 13 or 14 June 2012 lawyers retained on their behalf by Mr Dimitriou procured from Campbell J a last-minute stay of the writ, while the eviction was under way, after most but not all of the locks had been changed, whereupon the keys were returned by the Sheriff to Ms Sanna, who was still waiting outside.
12. Despite Ms Sanna's affidavit evidence that Mr Dimitriou said that he would purchase the property for himself, and Mr Sanna's affidavit evidence which gave the appearance that the offer to resell it came out of the blue in November 2012, it eventually emerged - towards the end of the second day of Mr Sanna's cross-examination, on day 9 of the trial - that he had always understood that the purpose of the transaction was to preserve the property for the benefit of the Sannas, and that Ms Sanna was aware of this. [15]
13. At some stage by June 2012, premises at 35 Daley Avenue, Daley's Point were rented by New DCL. The Sannas claimed that they vacated Copacabana and moved there. This was advanced as evidence that they had no further interest in Copacabana, in connection with the proposition that Mr Dimitriou had acquired it for himself. However, their furniture and effects were never removed from Copacabana. Mr Sanna at least did not change his address for official purposes (such as his driver's licence) from Copacabana. At one stage, both Mr Sanna and Ms Sanna said that she was living at Green Valley during this period, but then reverted to saying she was at Daley's Point. Their evidence as to whether they were separated during this period was also inconsistent and variable. It is possible that they did not live in Copacabana for a while, while some repairs and renovations were conducted. It is possible that they, or one of them, lived for a while at Daley's Point. But I am satisfied that if they did so, it was always on a temporary basis, and that the writ having been stayed they did not permanently vacate Copacabana.
14. In my view, the true explanation for the evidence given by the Sannas in their affidavits, as summarised above, is that it is an ex post facto reconstruction from documents discovered, quite divorced from their actual knowledge and understanding. In particular, Mr Sanna's statement, quoted above, that "It is my understanding that on 25 July 2012, the Copacabana Property was transferred in equity to [APH] by AET as mortgagee in possession" is the work of a lawyer, and not something Mr Sanna would have thought or said. Similarly, his explanation for why a transfer was not registered is reconstruction, probably informed by legal advice. This view is fortified by the fact that stamp duty was paid, on the loan and security documentation, on 3 August 2012. That their evidence is the product of retrospective reconstruction is supported by the reference, in Mr Sanna's affidavit, to the payment of a deposit by APH: as will appear, no such deposit was ever paid, and Mr Sanna could only have said what he did because he had seen a letter which incorrectly asserted that a deposit had been paid. Ms Sanna's suggestion that Mr Dimitriou said that he would purchase the property for himself is fantasy, and the suggestion that in November 2012 he offered, unexpectedly, to resell it to them was misleading - though he might well have said that he needed to be repaid, and offered to assist with a refinance which would facilitate that.
15. The purpose of the transaction was always to "save" the Copacabana property from the mortgagee. This required persuading AETL to release its security at a significant discount from the amount which it secured. Such persuasion would require satisfying them that exercise of their power of sale would not generate a better outcome. An arm's length sale at valuation could do that. Thus, the initial concept was that APH would provide the funds, and would purchase the Copacabana property from AETL, based on a valuation. However, the APH purchase did not proceed and was never completed. When it fell through, in order to avoid the imminent risk of AETL taking possession, DPI offered to provide the funds on a short-term loan. In that context, I do not agree that the absence of Mr Kalischer as a witness is of much significance. His involvement at the outset was confirmed by Mr Russo, and given the evidence of Mr Russo and Ms Gray that the transaction did not proceed, a further witness to say so was unnecessary.
16. Such scruples as Mr Dimitriou might have did not prevent him from being less than full and frank in his dealings with AETL. The true nature of the transaction was not disclosed to AETL or its lawyers, and he was more than content for them to labour under the misapprehension - which, if anything, he reinforced - that there was an arms-length sale, and not a refinance. The manner in which the transaction was represented to AETL and Gadens does Mr Dimitriou no credit; but in my view it was motivated by the circumstance that disclosure of any problem with or obstacle to the sale would likely have resulted in AETL proceeding to execute the writ of possession, and explains the inconsistent documentation that continues to refer to a sale to APH.
17. On balance of probabilities, I am satisfied that at least Mr Sanna understood the true nature of the transaction. While my above conclusions as to the reconstruction of the Sannas' version contribute to this conclusion, there are three important objective indicia which permit a conclusion that the objective facts are more consistent with the plaintiffs' version than with the defendants'.
18. The first is that, even with the advance from DPI, there was a shortfall of some $60,000 against the amount required by AETL to release its security. This was sourced by Mr Sanna. If the property was being purchased outright by APH, or by Mr Dimitriou for his own benefit, as the Sannas claim to have believed, and given that Ms Sanna was required to acknowledge that she remained liable for the outstanding balance of the AETL debt after the mortgage was released, then there is no good reason or explanation why, in order to facilitate completion of the transaction, Mr Sanna would have contributed some $60,000, at the last moment - unless he understood that he (or his family) was to have an ongoing interest in the property.
19. The second is that after 2 August 2012, regular periodic fortnightly payments were made by New DCL to DPI, which appeared in DPI's account as "Rent". These payments, and the description that accompanied them, must have originated from transactions authorised by those who controlled New DCL's accounts. Each of Mr Sanna and Ms Sanna said that it was the other of them. While "rent" might not have been a precisely accurate characterisation of mortgage instalment payments, there is no reason why New DCL would have been paying rent to DPI if the Sannas had vacated Copacabana and had no continuing interest in it. But if it was the borrowed under the Deed of Loan, there is every reason why it would have been making payments to DPI.
20. The third is that, when Westpac was approached for a loan in late 2012, Mr Sanna's loan application specifically disclosed indebtedness to DPI secured on Copacabana of $1.2 million. Although Mr Sanna contended that Mr Dimitriou had some involvement in the preparation of this document, that was not established, and it appears to be a document generated by Westpac; in any event, Mr Sanna signed it to obtain the refinance from Westpac.
21. In my view, therefore, the objective facts are more consistent with, and better explained by, the plaintiffs' version. The ultimate transaction was in the nature of a refinance by DPI, and at least Mr Sanna knew that that was so.

What moneys were advanced?

1. The defendants submitted that there was no evidence that DPI advanced any money to Mr Sanna or New DCL, or for the benefit of those parties (no bank statement had been tendered demonstrating that DPI had advanced any moneys), and that there was manifestly insufficient in its bank account at the relevant time for it to have done so (they pointed to documents produced on subpoena by Westpac which show that between 29 June and 1 August 2012 DPI had between $1,946 and $433 in its Westpac bank account). Thus it was submitted that, in the context of the covenant in clause 2.1 of the Deed of Loan to repay the Principal Sum "or so much thereof as shall have been advanced and shall remain unpaid", it was not established that any, or at least all, of the $1.2 million had been advanced.
2. The short and wholly sufficient answer to this is that the Deed of Loan contains an acknowledgement, in clause 1.1, of receipt of the Principal Sum. However, I will consider the arguments in a little further detail.
3. It is clear, at the very least, that two bank cheques, totalling approximately $923,000, were provided to AETL and Gadens on completion on 2 August 2012. To that extent, they reduced the liability of Ms Sanna (and any guarantors) to AETL, and plainly were for her benefit. Once it is accepted, as I have accepted, that the transaction was ultimately, as between the defendants and the plaintiffs, in the nature of a refinance (regardless of how it was made to appear to AETL and Gadens), it cannot seriously be disputed that at least that amount was advanced. As between the Sannas and DPI, from what account it was actually sourced is of no importance; the documentation attributes it to DPI, and the Sannas acknowledged receipt of it. However, Mr Dimitriou explained that the bank cheques paid to AETL and Gadens were sourced from NAB accounts of DPI, not Westpac. Again, as between the defendants and the plaintiffs, how those funds were obtained - and whether they were obtained from Ms Huybers - is also irrelevant.
4. The defendants submitted that at the highest, an advance of $923,000 had been proved, and that the plaintiffs had not proved that DPI advanced any moneys to WYI or to Wolgan for the benefit of Mr Sanna or DCL, and had not proved that the sums pleaded out of the sum of $1.2 million were received by WYI or Wolgan.
5. However, application of the remaining funds advanced (after the $923,000 paid to AETL) is evidenced by the settlement Direction letter of 26 July 2012, addressed to DPI, which shows the various amounts which comprise the advance of $1,200,000, as follows: At settlement your company is directed to pay the Mortgage advance, namely $1,200,000.00 as follows:- (a) $ 10,016.62 to Gadens Lawyers - fees for acting for the Mortgagor (b) $ 18,000.00 to Defined Properties Investment Pty Ltd - establishment fee (c) $ 20,000.00 to Defined Properties Investment Pty Ltd - interest for one month (d) $ 89,286.28 to Wyse & Young International Pty Ltd (part payment) (e) $ 149,223.39 to Wolgan Consulting Pty Ltd - saving fee; and (f) $ 913,473.65 to Australian Executor Trustees Ltd - Mortgage discharge The total of these amounts is $1,200,000.00.
6. The defendants submitted that there was nothing - and in particular no bank statement - tendered demonstrating that DPI had advanced any such moneys, or that WYI or Wolgan had received them, and that it should be inferred that those moneys were never advanced; and further, that Mr Dimitriou conceded that DPI did not in fact advance the sum of $1.2 million, but "advanced knowledge of that sum". However, the full context of that evidence shows that what Mr Dimitriou was saying was that, in part, the advance was represented by the refinancing of liabilities of the Sannas to WYI and Wolgan: Q. Mr Dimitriou, you knew that you didn't actually advance the sum of $1.2 million, did you, Defined didn't advance that sum? A. No, it crystallised the initial - it crystallised the - it's Wyse & Young's fees, and Wolgan's fees into the new mortgage and it granted that mortgage. So therefore, Defined didn't advance that sum, no, but they advanced the knowledge of the sum. Q. They became entitled to payment secured under a mortgage for sums that they hadn't advanced? A. Yes, that was the instructions of Michael Foley and it was agreed on by all parties.
7. The amounts payable to WYI were credited against outstanding invoices and receipted as such, and the amount payable to Wolgan against the Saving Fee. Even if no money changed hands or passed through a bank account, other liabilities of the Sannas or their entities were discharged. There is no need to show, beyond that, that there was a transfer of funds between bank accounts.
8. In any event, as I have observed, the acknowledgement of receipt of the Principal Sum in the Deed of Loan is sufficient answer to this submission.
9. However, for reasons to which I shall come when considering Wolgan's claim, I have concluded that Wolgan was not entitled to a Saving Fee. The $149,223.39 paid to Wolgan out of the proceeds of the advance should be regarded as having been paid in error. The correct amount, for the purpose of calculation of interest and repayments, is therefore $1,050,776.61.

Breach of fiduciary duty

1. By their cross claim, the defendants claimed rescission of the Deed of Loan and the General Security Agreement on the footing that DPI entered into them with knowledge of breaches by WYI of fiduciary obligations owed by WYI and Mr Dimitriou to Mr Sanna and DCL. This gives rise to issues whether: 1. the relation between the defendants and the plaintiffs was a fiduciary one, and if so whether its fiduciary character extended to the impugned transactions (namely the Deed of Loan and the General Security Agreement); 2. if so, whether those transactions can now be rescinded; 3. if so, whether the plaintiffs are entitled to some, and if so what, "just allowance".

The fiduciary relationship and its scope

1. In his classical statement in Hospital Products Ltd v United States Surgical Corporation, Mason J (as he then was), said (citations omitted): [16] The accepted fiduciary relationships are sometimes referred to as relationships of trust and confidence or confidential relations, viz trustee and beneficiary, agent and principal, solicitor and client, employee and employer, director and company, and partners. The critical feature of these relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position. The expressions 'for', 'on behalf of' and 'in the interests of' signify that the fiduciary acts in a 'representative' character in the exercise of his responsibility, to adopt an expression used by the Court of Appeal. It is partly because the fiduciary's exercise of the power or discretion can adversely affect the interests of the person to whom the duty is owed and because the latter is at the mercy of the former that the fiduciary comes under a duty to exercise his power or discretion in the interests of the person to whom it is owed …
2. Similarly, in Breen v Williams, Gaudron and McHugh JJ said: [17] ..., the categories of fiduciary relationship are not closed, and the courts have identified various circumstances that, if present, point towards, but do not determine, the existence of a fiduciary relationship. These circumstances, which are not exhaustive and may overlap, have included: the existence of a relation of confidence; inequality of bargaining power; an undertaking by one party to perform a task or fulfil a duty in the interests of another party; the scope for one party to unilaterally exercise a discretion or power which may affect the rights or interests of another; and a dependency or vulnerability on the part of one party that causes that party to rely on another.
3. As Mason J said, the critical factor is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. Importantly, a relationship may be fiduciary only as to some and not all of its aspects. [18]
4. It was submitted that there was a fiduciary relationship between Mr Dimitriou (including his corporate alter egos WYI, DPI and Wolgan) and the Sannas (including DCL and their other relevant entities), by reason that Mr Sanna and DCL retained Mr Dimitriou, through various corporate entities but chiefly WYI, to provide them with financial advice from time to time, and thereby reposed trust and confidence in Mr Dimitriou as his accountant and advisor in relation to financial matters; that Mr Sanna was vulnerable to Mr Dimitriou, as given the trust and confidence he reposed in Mr Dimitriou, Mr Sanna would listen to and act on advice on financial matters given to him by Mr Dimitriou; and that Mr Sanna relied upon advice given by Mr Dimitriou in relation to financial matters, and Mr Dimitriou was aware that he would do so.
5. The relationship between an accountant or financial consultant and a client is not ordinarily a fiduciary one, although it can be, as I sought to explain in Torlonia v Wright, [19] in which I held that the particular features of the relationship in that case rendered it a fiduciary one: 19. ... Although the relationship of accountant and client is not one of the classic fiduciary relationships, it can in particular circumstances be or become a fiduciary relationship [Townsend v Roussety Co (WA) Pty Ltd [2007] WASCA 40; (2007) 33 WAR 321; Pavan v Ratnam (1996) 23 ACSR 214 at 224-225 (Beazley JA; Meagher JA concurring); Sliteris v Ljubic [2014] NSWSC 1632 at [43] (Black J). While no fiduciary relationship was found to be established in those cases, each acknowledged the potential. A fiduciary relationship was found in Thomas v SMP International (No 4) [2010] NSWSC 984 (Pembroke J) at [68]-[69]]. In Pavan v Ratnam [(1996) 23 ACSR 214 at 224-225], the Court of Appeal held that in the circumstances of that case a tax accountant did not owe fiduciary obligations to his client in respect of advice to a client to invest in a property which the accountant proposed to develop, so as to reduce the client's tax liability. However, Beazley JA (as her Excellency then was) (with whose judgment Meagher JA agreed) said: The cases establish that a number of factors may characterise a relationship as being of a fiduciary nature. They include: vulnerability, reliance and the presence of loyalty, trust and confidence. The notion of vulnerability, as used in this context, is not to be understood in the sense of any "weaker party" concept. Rather, it refers to the circumstance where another party agrees (not necessarily contractually) "to act on behalf of or in the interests of another and, as such, is in a position to affect the interests of that other person in a legal or practical sense. As such, fiduciary relationships are marked by vulnerability in that the fiduciary can abuse the power or discretion given him or her to the detriment of the beneficiary": see Hodgkinson per La Forest J at 168. Reference is also usefully made to Professor Finn's (now Justice Finn of the Federal Court of Australia) description in "The Fiduciary Principle" at 50-1: ...fiduciary responsibilities will be exacted where the function the advisor represents himself as performing, and for which he is consulted, is that of counselling an advised party as to how his interests will or might best be served in a matter considered to be of importance to his personal or financial well-being, and in which the adviser would be expected both to be disinterested, save for his remuneration, and to be free of adverse responsibilities unless the contrary is disclosed at the outset. 20. The formal relationships - created by and on the advice of Mr Wright - were undoubtedly that Leccino was established as the trustee of the Phoenix Trust, of which Ms Torlonia was but one discretionary beneficiary (albeit the "specified beneficiary", to whom income and capital would default in the absence of the trustee not exercising its discretion to direct it to another beneficiary). However, focussing on these formal arrangements distracts from the overarching relationship between Mr Wright and Ms Torlonia, which long preceded the establishment of Leccino and the Trust in 2003, and within which their establishment and management arose and was nested. So far as Ms Torlonia was concerned, she was dealing with and relying on Mr Wright; Leccino and the Trust were merely vehicles in a structure created by and on his advice for the more effective management of her affairs - including to ensure that she was not for taxation purposes a resident of Australia. While those entities were interposed, it was Mr Wright who, in a real practical sense, controlled the receipt and disbursement of the Wambo Royalties on behalf of Ms Torlonia. The net royalties were paid to Leccino, which received them not as trust income, but on behalf of Ms Torlonia, and - at the instigation of Mr Wright - treated them as an advance by her to the Trust. 21. In my judgment, Ms Torlonia's reposing of trust and confidence in Mr Wright, her vulnerability arising from her overseas residence and limited understanding of commerce and finance, and her entrusting of her Australian affairs to him in such a manner as gave him practical control over them - in particular, the Wambo Royalties - amply supports the conclusion that the relationship between them was a fiduciary one, and that - regardless of the corporate vehicles that might be interposed - he was obliged to deal with the Wambo Royalties in her interest and for her benefit. Though the royalties were banked into Leccino's bank accounts and treated as loans by Ms Torlonia to Leccino, in the context of the overarching fiduciary relationship this was but a device for the management by Mr Wright of her affairs, and the interposition of a corporate trustee controlled by him to receive her royalties does not relieve him of the obligation to account to her for the moneys the receipt and application of which he effectively controlled.
6. In a factual context quite closely connected with the present protagonists, White J (as his Honour then was), in Rubino v Pineview Property Holdings Pty Ltd, [20] held that the relationship between Ms Huybers and Mr Dimitriou was a fiduciary one. His Honour said: 258. In his dealings with Huybers, Dimitriou has acted through Wyse & Young and Wyse Accounting. The retainer with Pineview and Huybers was with Wyse & Young. Wyse Accounting rendered the invoices to Frank Rubino, Alfio Rubino and Biagina Rubino for the three per cent loan fee on the loan of $1,050,000 and to Pineview for the three per cent loan fee on the loan of $2,000,720. Wyse Accounting received $1,867,491.50 of the moneys Pineview borrowed from the ANZ Bank and disbursed most of it. Both Wyse & Young and Dimitriou owed fiduciary duties to Pineview and Huybers to act loyally in their interests and to avoid a sensible possibility of conflict between their duty to Pineview and Huybers and their personal interest, and to avoid a conflict of their duties to Pineview and Huybers on the one hand, and the Rubinos who were their clients on the other.
7. His Honour referred to the passages which I have set out above from Hospital Products and Breen v Williams, and continued: 261. Dimitriou had undertaken to act for or on behalf of and in the interests of Huybers in arranging for her to borrow moneys that he held out could be used to generate rewards that would reduce her liability to the ANZ Bank for the moneys she had borrowed to assist her brother. She left everything to Dimitriou. She was vulnerable to the abuse by Dimitriou of his position. There was a relationship of confidence, and inequality of bargaining power. Dimitriou undertook to act in the interests of Huybers. He had the scope to exercise powers which affected her interests by exposing her to a new liability to the ANZ Bank, both as borrower under a new loan for $570,000 and as guarantor of Pineview's loan. He owed a fiduciary duty to Huybers. He also owed a fiduciary duty to Pineview that was established as a company, the shares in which were owned by Huybers, to implement the transaction. 262. Wyse & Young owed the same duty as Wyse & Young made the retainer agreement with Huybers and Pineview.
8. However, every case depends on its own facts as to whether the relationship is a fiduciary one - and also, importantly, if it is fiduciary, in what respects. While at first sight there are similarities between the present case and Rubino, there are very important and fundamental differences. Both in Torlonia and in Rubino, the accountant/financial adviser was retained to advise the client about the management of their affairs and investments. In White J's words, vis-à-vis Ms Huybers, Mr Dimitriou "had undertaken to act for or on behalf of and in the interests of Huybers in arranging for her to borrow moneys that he held out could be used to generate rewards that would reduce her liability to the ANZ Bank for the moneys she had borrowed to assist her brother", and "had the scope to exercise powers which affected her interests by exposing her to a new liability to the ANZ Bank, both as borrower under a new loan for $570,000 and as guarantor of Pineview's loan".
9. In the present case, at least in respect of the impugned transactions, Mr Dimitriou (and his companies) were not acting in a representative capacity; they were not acting on behalf of the defendants. They were, in reality, lenders of last resort, who offered to assist the Sannas to save their property by advancing the requisite funds to procure the release of the AETL security when another source had fallen through and mortgagee possession and sale was imminent. Whatever might be the position concerning other aspects of their relationship, qua lenders they did not undertake or agree to act for or on behalf of or in the interests of the Sannas in the exercise of any power or discretion, and they were not obliged to act exclusively in the interests of the Sannas. At least in that respect, Mr Dimitriou was no more a fiduciary than is a bank manager who enjoys the trust and confidence of his or her clients, and who in the course of the banker-customer relationship approves a loan to them on security of their home.
10. Assuming that there were fiduciary obligations, the defendants submitted that they were breached by the plaintiffs because it was in the interests of Mr Dimitriou, via the plaintiffs, that Mr Sanna and DCL enter into the Deed of Loan and the General Security Agreement, while it was contrary to the defendants' interests to do so, in that (1) Mr Sanna and DCL assumed a liability they did not previously have (as Ms Sanna was the sole registered proprietor of Copacabana, and was solely liable for the mortgage to AETL), [21] and (2) those parties assumed that liability in circumstances where $1.2 million exceeded the value of the Copacabana Property as at 26 July 2012. This was said to be aggravated by the circumstances that (3) the plaintiffs took advantage of the vulnerability of Mr Sanna, DCL and Ms Sanna, being aware that Ms Sanna was at risk of losing the Copacabana property, and (4) that the interest rate in the General Security Agreement was an exorbitant 30% per month on that sum, or 360% per annum.
11. As to the first proposition, Mr Sanna was, obviously enough, Ms Sanna's husband. Though he was not a registered proprietor, the Copacabana property was their family home, and even if he were not directly liable, the encumbrance on the Copacabana property was an encumbrance on their joint matrimonial estate. Whether or not he was a beneficial owner (and in that way had an interest in removing the AETL mortgage), he wanted to preserve the property. Indeed under the BFA he was entitled to receive the Copacabana property, which gave him an equitable interest in it. While neither DCL nor Mr Sanna was liable under the AETL mortgage, Mr Sanna as well as Ms Sanna had an interest in ridding the property of the AETL mortgage, and in preserving it for the future. DCL was the creature of Mr and Ms Sanna; for example it appears to have taken the lease, referred to above, of the Daley's Point property in the second half of 2012. Indeed, this is effectively acknowledged by the third proposition: advantage could have been taken of Mr Sanna and DCL as alleged only if they had some interest - not limited to a legal interest - in preserving the property. Mr Sanna, as one with a claim on the joint matrimonial estate, plainly had a financial interest in doing so, and he also had an emotional connection with the home.
12. As to the second proposition, the defendants submitted that Mr Dimitriou conceded that the valuation as at June 2012 for the Copacabana property was $950,000. In fact, while he acknowledged that that was what was stated in the valuation obtained, which was used to persuade AETL to sell at that price, he believed, and he understood the Sannas to believe, that it was worth more, and in the BFA it was said to be worth $1.9 million. [22] Additional security was provided by the mortgage over Green Valley, and by the General Security Agreement. This proposition is therefore misconceived, because Copacabana was not the only security; but even if it was, for a lender to advance $1.2 million on security worth $950,000 is disadvantageous to the lender rather than to the borrower.
13. As to the third proposition, DPI assumed a considerable risk to refinance the Copacabana property, in circumstances where the AETL mortgage was in default, the Sannas' financial position was in distress, and they were in the middle of a matrimonial breakdown. The Sannas - or at least Mr Sanna - wanted to preserve the Copacabana property. It was for that reason that they sought Mr Dimitriou's assistance. I do not accept that advancing funds in circumstances of considerable risk to the lender (confirmed by what has happened since, including these proceedings), in order to assist the Sannas to achieve their object of saving the property, amounts to taking advantage of them.
14. As to the fourth proposition, had the interest rate been 30% per month, there would have been much to be said for the proposition that advantage was taken of the Sannas. But as I have explained above, that was never the interest rate, and the reference to "per month" was a mistake, as the amounts of the monthly instalments in the summary schedule shows.
15. The defendants submitted that in circumstances where Ms Sanna remained liable for the outstanding balance of the debt to AETL, and the Copacabana property was worth $950,000, by assuming the $1.2 million liability to DPI the Sannas were effectively $300,000 worse off than they had been before. That submission ignores the fact that the difference between the amount paid to AETL and $1.2 million - being $250,000 - was represented in part by other liabilities that they already had (namely the WYI fees that were satisfied, of $89,286.28). As a result of my conclusion that Wolgan was not entitled to the Saving Fee, a further $150,000 approximately is to be deducted; the result is that in terms of principal their position was barely different, but critically they bought time and rid themselves of a mortgagee with a writ of possession. The interest rate (at 20%, then 30%) was higher, but so was the risk to the lender.
16. Accordingly, I do not accept that entry into the Deed of Loan and the General Security Agreement involved any breach of fiduciary duty on the part of Mr Dimitriou or his companies. It was not "in the interests of Mr Dimitriou but contrary to the interests of Mr Sanna and DCL". It is true that WYI obtained payment of some outstanding fees, but they were already liabilities of the Sannas. There was benefit for both sides of the transactions, and the benefit for the plaintiffs was not disproportionate to the risk they incurred.

Is rescission available?

1. A transaction entered into by a fiduciary with his or her principal in breach of duty may be rescinded at the election of the principal, if restitution remains possible. [23]
2. The defendants submitted that at best DPI had proven that it advanced $923,000; that DPI had been repaid around $960,000 (more than the amount advanced at settlement); and that Mr Dimitriou had conceded as much. However, that concession was qualified by pointing out that there were also expenses on the other side of the ledger, which I take to refer, in particular, to interest: Q. If you advanced $923,000 at settlement, you have been paid back a greater amount than that, haven't you? A. Yes, but we may have been paid back a greater amount. Q. A greater amount than $923,000? A. Yes, but we've incurred also expenses in relation to the loan of that money. Q. Yes, Mr Dimitriou? A. So we - yeah, there's no balance there, Mr Lee. You are only looking at - Q. That's up to his Honour, Mr Dimitriou? A. You are looking at it one aside, Mr Lee.
3. In any event, as I have explained, DPI advanced, if not $1.2 million, then at least $1,050,776.61.
4. By far the greater part of the advance - some $923,000 - was disbursed to a third party, AETL, from which it cannot be recovered or returned. The parties cannot be restored to the position in which they were before the transaction, and indeed the defendants would not wish to be, as that would involve reinstating the mortgage debt secured on Copacabana to AETL. The defendants submitted that DPI had been repaid the funds advanced, principally through the Westpac loan. However, the amount repaid to DPI as a result of the Westpac loan was only $823,031.99, which did not fully cover the amount paid to AETL, let alone the total advance. DPI has released its mortgage over the Copacabana property, which was then mortgaged to Westpac.
5. The parties cannot be restored to the status quo ante. Mere repayment of any difference between the amount advanced and what has already been repaid would not do so, as it would involve the defendants retaining the benefit of the transactions. Moreover, when the impugned transactions were effected, the AETL mortgage over the Copacabana property was in default and incurring interest at the default rate of 11.7% per annum, and by refinancing the property, DPI relieved the property and Ms Sanna of that obligation; restitution would require payment to DPI of interest at that rate.
6. For those reasons, rescission is not now available, because restitution is not possible.

Just allowance

1. A fiduciary who is held liable to account, or on whom a constructive trust is imposed, is nonetheless entitled to a just allowance for his or her work or skill. [24]
2. In refinancing the Copacabana property, DPI assumed a risk, and was entitled to a reward, at least equivalent to that which was reflected in the default interest rate payable to AETL of which the transactions relieved the property and Ms Sanna. If payment of such interest were not a requirement of restitution, then DPI would be entitled to interest, at least at that rate, by way of just allowance.

Contracts Review Act

1. The defendants' case under the CRA was a narrow one: in written [25] and oral [26] submissions, it was confined to a case that the Court should vary the interest rate payable to a rate it sees fit, it being said that the interest rate of 360% per annum in the General Security Agreement was truly extortionate, while that in the Deed of Loan attracted only the description of "extraordinarily high". It was submitted that the rates applicable to judgment debts under the (NSW) Civil Procedure Act 2005 would be an appropriate substitute.
2. The plaintiffs submitted that CRA was not available by reason of s 16, which prescribes the time periods within which an application for relief under the Act can be made. It provides that an application for relief under the Act may be made only within (a) the period of 2 years after the date on which the contract is made, (b) the period of 3 months before or 2 years after the time for the exercise or performance of any power or obligation under the contract, or (c) the period of pendency of maintainable proceedings arising out of the contract pending against the party seeking relief. These proceedings are proceedings against the defendants, being the parties seeking relief under the Act, and the cross claim seeking such relief was instituted during the pendency of those proceedings. The cross claim for relief under CRA was therefore made within the period referred to in s 16(c).
3. The plaintiffs also submitted that CRA was not available by reason of s 6, which provides inter alia that a corporation may not be granted relief under the Act, and that a person may not be granted relief in relation to a contract entered into for the purpose of a business carried on by the person. It follows that New DCL, being a corporation, cannot invoke the Act. Although the purpose of the loan was said to be "for business purposes", it is not apparent that it was for the purpose of a business carried on by Mr Sanna. Mr Sanna has not been shown to be disentitled to make an application under CRA.
4. The determination of applications for relief in respect of contracts under CRA involves two questions. The first is whether or not the relevant contract (or provision of a contract) was unjust in the circumstances at the time it was made, which is a conclusion of mixed fact and law; and the second, which arises only if the first is answered affirmatively, is what if any relief should be granted, which involves the exercise of discretion in the particular circumstances of the case. [27]
5. A contract (or a provision of a contract) may be unjust because of the way it operates in respect to the relevant claimant for relief ("substantive unfairness"), or the circumstances in which the contract was entered into ("procedural unfairness"), but most unjust contracts will be the product of a combination of both. [28] It would not have been difficult to conclude that an interest rate of 240% or 360% per annum was harsh, and that in the circumstances in which the agreements were made the result was unjust. However, for reasons already explained, the (default) interest rate in the General Security Agreement was not 360% per annum; the rates in that agreement conformed with those in the Deed of Loan and were 20% per annum if paid promptly, rising to 30% in the case of default.
6. Such a conclusion is not so easily reached about a rate of 20% (or a default rate of 30%). 20% per annum is within the range charged by credit card providers, and although that is an unsecured rate and the advance here was secured, the security was - in the light of Ms Sanna's then financial position - somewhat precarious. Those rates are well within - and indeed towards the lower end of - the range seen by the Court in the context of "caveat lenders" or "lenders of last resort". Against that, again, here there was substantial if somewhat precarious security.
7. Context is provided by the AETL mortgage, under which Ms Sanna was incurring interest at the default rate of 11.7%. If anything, the risk to a lender had increased since AETL had taken its mortgage on that basis of that rate, given the deterioration in the Sannas' financial position overall, and their matrimonial issues.
8. The Sannas were far from commercially unsophisticated. On this occasion, and not for the first time in connection with borrowing transactions, they expressly waived the opportunity to obtain independent legal and financial advice. Mr Dimitriou submitted that they "did not care to know", and there is some force in that.
9. I have concluded, above, that Mr Sanna understood that DPI was in effect taking out the AETL mortgage. But while I have accepted that Mr Sanna was aware of the substance of the refinancing transaction, there is nothing to suggest that the detail was explained to him. Ms Gray said that she did not provide explanation and advice, but merely witnessed his signature. There is no suggestion that anyone else provided such advice. Willing as he was to sign documents in haste and without a detailed explanation in the urgency of saving their home, I do not believe that he understood that an interest rate of 11.7% was being replaced with one of 20%, which after a month would rise to 30%. In my judgment, that was something which, in fairness, ought to have been specifically brought to the Sanna's attention, and if they chose not to obtain independent advice, then DPI ought to have specifically alerted them to it.
10. To that extent only, I conclude that the contract contained in the Deed of Loan and the General Security Agreement was unjust.
11. The appropriate relief, to address that injustice, is to vary the applicable interest rate, as against Mr Sanna (but not as against New DCL) to 11.7%, being the default rate under the AETL mortgage upon its inception.

Outcome

1. As the sum of $149,223.39 advanced by part satisfaction of the Saving Fee must be regarded as paid in error, the amount of principal that Mr Sanna and New DCL were obliged to repay was $1,050,776.61 (comprised of $923,490.27 paid to AETL and their solicitors Gadens, an $18,000 establishment fee, $20,000 being interest in advance, and $89,286.28 by satisfaction of outstanding WYI invoices).
2. Repayments have admittedly been made, as far as I can tell totalling $65,500, [29] plus $823,031.99 on 9 May 2013 from the proceeds of the Westpac refinance. Although the Deed of Loan provides that payments made would be applied to interest due and owing prior to principal, DPI has - favourably to the defendants - applied moneys received to the principal debt. [30]
3. While it is clear that, as some of the Principal Sum remains outstanding, DPI will be entitled to a judgment on this claim, it will be necessary to recalculate the amount, using as the starting point a principal sum of $1,050,776.61, and adding interest at the rate of 11.7% against Mr Sanna (but at 20% and 30% against New DCL), and debiting repayments. I will afford the parties an opportunity to make submissions in respect of the amounts referred to in the above two paragraphs, in connection with that recalculation.
4. Had the claim for relief for breach of fiduciary duty succeeded, the consequences would have been the same, save that the interest rate applicable would have been 11.7% in respect of New DCL as well as Mr Sanna.

The Wolgan claims

1. Wolgan seeks judgment against Mr Sanna pursuant to the Saving Fee Agreement, in the amount of $78,000. [31]
2. The Saving Fee Agreement bears the date 15 December 2011. The named parties are Ms Sanna (called the "Client"), and Wolgan; Danic, DCL(NSW), DLD and Mr Sanna are named as guarantors. The Saving Fee Agreement recited that Ms Sanna had retained Wolgan to deliver the Services (defined as "mortgage or debt buyout at a reduced amount") on the terms contained in it. In the "Details", "Saving Fee" is defined as: 20% of the reduction in the debt of $1,797,071.95 owed to Australian Executor Trustees Limited as at 11 October 2011 (Please Note - interest on the facility Mortgage and until the date of Discharge, Sale or refinance).
3. In clause 1.1 (Definitions), "Fees" were defined as follows: "Debt" means the amount owed by the Client to the Mortgagee [defined as AETL]. "Fees" means the fees listed in clause 2.1(a) and the Costs. "Settlement" means settlement of the finance to discharge the Mortgagee
4. Clause 2 included the following provisions: 2.1 The client agrees to pay the following fee on or before settlement: (a) Headings are for convenience of reference only and do not affect the interpretation of this Deed; (b) Where an expression is defined, another part of speech or grammatical form of that expression has a corresponding meaning. 2.2 Payment of Fees The client will be liable to pay the Fees to ("Wolgan") on or before Settlement. Any Fees that are not paid by the due date will constitute a debt by the client to ("Wolgan") subject to the terms of this agreement. … 2.7 Period This agreement will be for a period of not less than six (6) months from the date upon which it is signed, unless extended by mutual signed agreement.
5. By clause 2.8, the client and guarantor agreed and accepted liability to pay the Fees and to sign the authority to disburse in Schedule A. Clause 5 contained an acknowledgement that the client and the guarantor had been given an opportunity to obtain independent financial and legal advice and understood the effect of the agreement. By clause 9, each guarantor guaranteed to Wolgan the due performance by the client of all its obligations including the payment of all amounts due to be paid.
6. Above, I have rejected the defence that the apparent signature of Mr Sanna where it appears on the Savings Fee Agreement was not his signature. No relief was sought in respect of the Saving Fee Agreement for breach of fiduciary duty or under the CRA.
7. The defendants submit that Mr Sanna is not liable under the Saving Fee Agreement because he is not a party to it, except in the capacity of director of DCL(NSW). It is correct that Mr Sanna did not execute the agreement at its foot separately in his personal capacity; the document did not make provision for him to do so. However: 1. Mr Sanna is named as a guarantor, in item 3 in the "Details"; 2. he signed the execution page as Director of DCL(NSW), another named guarantor; 3. he signed Schedule A (Authority to Disburse) - as did Ms Sanna - above the description "Signature of Guarantor"; and 4. at the foot of each page of the Saving Fee Agreement appear the words "Read and understood - please initial", followed by the initials of Mr Sanna, Ms Sanna and Mr Dimitriou. Thus he initialled every page as "read and understood".
8. In circumstances where he was named as a party, though not on the execution page, and executed not only the execution page but throughout, he is to be taken to have assented to and accepted, and to be personally bound by, the agreement and its terms.
9. Wolgan contends that: 1. by 24 July 2012, the debt due from Ms Sanna to AETL had risen to $1,981,353.62; 2. on or about 26 July 2012, it procured the discharge of that debt for $948,520 (the amount paid to purchase Copacabana from AETL), thereby effecting a reduction of $1,032,833.62; 3. Wolgan is entitled to the Saving Fee, being 20% of that reduction, which is $206,566.72, plus GST of $18,778.79, [32] totalling $227,223.39; 4. $149,223.98 was paid to Wolgan out of the loan advance on completion, leaving an outstanding balance of $78,000.
10. At the outset, there is an obvious difficulty in that the subparagraphs of clause 2.1 are a repetition of those of the preceding clause 1.3 (Construction). The plaintiffs claim rectification of the Saving Fee Agreement, so that clause 2.1 refers to the "Saving Fee" as defined in the "Details". Whether or not rectification is necessary for that purpose, it is plain that the objective intention of the parties was that upon achieving a reduction in the debt, on settlement Wolgan would be entitled to the Saving Fee of 20% as defined. Evidence from the person who drafted the Saving Agreement is not necessary to establish that, as it is self-evident on the face of the agreement that the contents of clause 2.1 are completely out-of-place and have mistakenly been replicated from the preceding clause, and that the agreement as a whole makes sense only if clause 2.1 were to refer to the Saving Fee defined in Item 7 of the "Details".
11. However, there are in my judgment two reasons why Wolgan's claim must fail.
12. The first is that under clause 2.7 (which has been set out above), the Saving Fee Agreement was effective only for a period of six months from 15 December 2011, unless extended (of which there is no evidence), and there was no refinance or discharge of the AETL debt within that period. Thus, as the defendants submitted, the Saving Fee Agreement had terminated by operation of its own terms prior to 26 July 2012, so that a refinance on that date did not entitle Wolgan to any Saving Fee.
13. The second turns on the definition of Saving Fee. The fee was "20% of the reduction in the debt of $1,797,071.95 owed to Australian Executor Trustees Limited as at 11 October 2011". "Debt" means the amount owed by the Client to the Mortgagee; that definition directs attention to the client's personal indebtedness to AETL, as distinct from the amount of the encumbrance on the property. Upon completion of the 26 July 2012 transaction, although the mortgage to AETL was discharged for an amount less than was owed, the personal liability of Ms Sanna for the balance was not extinguished. Indeed, as a condition of AETL permitting the transaction to proceed, Ms Sanna was required to, and did, acknowledge that she remained liable for the outstanding balance after the mortgage was discharged. Accordingly, there was no reduction of the debt owed by Ms Sanna to AETL, within the terms of the Saving Fee Agreement. No Saving Fee was earned.
14. Wolgan's claim under the Saving Fee Agreement must therefore be dismissed.
15. The plaintiffs contended that, in the alternative, WYI was entitled to the Saving Fee under the provisions of the First and/or Second Costs Agreement. [33]
16. The First Costs Agreement included, under the heading "Finance Fee Referral Mandate Reduction in Mortgage Discharge, discharge in Reduction to outgoing Mortgagee", the following provision: I/we Danic Holdings Pty Ltd, DLD(NSW) Pty Ltd ATF Danic Unit Trust, D C L Constructions Pty Ltd, D C L Constructions (NSW) Pty Ltd, Coastwide Concrete Panels Pty Ltd, Corrado Sanna and Lepa Sanna authorise Wyse & Young International Pty Ltd to negotiate the discharge from the current 1st Registered Mortgagee and the Second registered Mortgagee or Caveator, all charges over any companies, and any other security over any other goods or chattels to make way for Finance to a new incoming Mortgagee. In doing this we agree to pay a fee payable of no less than 20% plus GST of the amount negotiated off the current balance of debt payable and the negotiated amount paid ("the saved debt").
17. The authority dated 21 October 2011 signed by Ms Sanna included the following: I/we hereby give my/our irrevocable authority to have (3%+GST) of the total loan amount, plus G.S.T, deducted from the proceeds of the loan, payable to Wyse & Young International Pty Ltd, and any or at all out of pocket expenses and save as to cost 20% + GST of the saved debt amount.
18. The Second Costs Agreement contained a substantially identical provision: RECONSTRUCTION DIVISION 6. Finance Fee Referral, Mandate, Reduction in Mortgage Discharge, Debt negotiation, discharge in Reduction to outgoing first Mortgagee, Any Legal Support Referral Work, Consultancy Works, Separation Consultancy Business advisory, Relevant searches and all travel expenses … I/we Corrado Sanna of … …, Copacabana, NSW 2251, Lepa Sanna of … …, Copacabana, NSW 2251, DLD(NSW) Pty Ltd ATF Danic Unit Trust, DCL Construction Group ABN 70 158 381 821 T/As DCL Construction Group, DCL Constructions Pty Ltd ABN 35 072 499 426 & DCL Constructions (NSW) Pty Ltd ABN 71 085 544 627 authorise Wyse & Young International Pty Ltd to negotiate the discharge from the current 1st Registered Mortgagee, all charges over any companies, and any other security over any other goods or chattels to make way for Finance to a new incoming Mortgagee. In doing this we agree to pay a fee payable of no less than 20% plus GST of the amount negotiated off the current balance of debt payable and the negotiated amount paid ("the saved debt").
19. Unlike the Saving Fee Agreement, those provisions of the Costs Agreements are not expressly limited in time to a term of six months, or any other period. If WYI were otherwise entitled to a saving fee under these provisions, it would be necessary to consider how those provisions of the more general retainers operate, in the context that there is a Saving Fee Agreement which specifically provided for Wolgan to receive the same saving fee, but only during a limited term, which had expired before the fee was earned.
20. However, WYI is not otherwise entitled to a saving fee under the Costs Agreements, because under both Costs Agreements, the basis for entitlement to a saving fee is that there is a "saved debt", which is defined as "the amount negotiated off the current balance of debt payable and the negotiated amount paid". Unless an amount was "negotiated off" the current balance of the debt payable, there is no "saved debt". As I have explained, although the mortgage was discharged for less than the total amount secured, the debt was not reduced, and Ms Sanna remained liable for the total outstanding balance after the mortgage was discharged. Nothing was "negotiated off" the debt, and so there was no "saved debt", and no entitlement to the saving fee.
21. It follows that the alternative claim to a saving fee, on the part of WYI, must also fail.

Conclusion

1. My conclusions may be summarised as follows.
2. Mr Sanna entered into the First Costs Agreement and is bound by it, and WYI is entitled to judgment against Mr Sanna for $45,509.72, and interest.
3. The Sannas and DCL had notice of the terms of the Second Costs Agreement, which was posted to them as the mail log records on 17 May 2012. WYI is entitled to judgment against them for $89,395.20, and interest.
4. It is unnecessary to consider the alternative claim for a quantum meruit. However, as there is a submission that there were additional amounts paid which have not been credited, I will reserve leave to make further submissions on that point when short minutes are brought in.
5. Mr and Ms Sanna executed the Deed of Loan and General Security Agreement, and Ms Gray witnessed them do so. Subject to their other defences, the defendants are bound by the Deed of Loan and the General Security Agreement.
6. The references in the attestation clauses in the Deed of Loan and the General Security Agreement to Defined Property Holdings as distinct from Defined Property Investments were clearly mistakes, and the plaintiffs are entitled to rectification. It follows that the submission that DPI was not a party to the Deed of Loan and does not have standing to sue on it is rejected. It is therefore unnecessary to resolve whether, if it had not executed the Deed, DPI could nonetheless sue on the Deed of Loan.
7. The 26 July 2012 transaction was, in its ultimate form, a refinance (by DPI) and not a sale (to APH or Mr Dimitriou), and Mr Sanna at least knew it to be so in substance.
8. DPI advanced the $1.2 million referred to in the Deed of Loan. However, the sum of $149,223.39 advanced by part satisfaction of the Saving Fee must be regarded as paid in error, on account of my conclusion that Wolgan was not entitled to the Saving Fee. The correct amount for the purpose of calculation of interest and repayments is therefore $1,050,776.61.
9. At least in respect of the transactions embodied in the Deed of Loan and General Security Agreement, the relationship between the defendants and Mr Dimitriou (and his companies) was not a fiduciary one. And even if it had fiduciary aspects, I do not accept that entry into the Deed of Loan and the General Security Agreement involved any breach of fiduciary duty on the part of Mr Dimitriou or his companies: it was not "in the interests of Mr Dimitriou but contrary to the interests of Mr Sanna and DCL", because there was benefit for both sides of the transactions, and the benefit for the plaintiffs was not disproportionate to the risk they incurred.
10. In any event, rescission is not now available, because restitution is not possible. But if it were, restitution would require, as well as return of principal, payment of interest at the default rate that would otherwise have been payable to AETL, of which the transactions relieved the property and Ms Sanna. Alternatively, DPI would be entitled to interest at that rate by way of "just allowance".
11. The Contracts Review Act is not available to New DCL, being a corporation. As to Mr Sanna, although he was far from commercially unsophisticated, and although he (and Ms Sanna) were content to sign documents in haste and without a detailed explanation in the urgency of saving their home, and although he understood broadly that DPI was "taking out" the AETL mortgage, I do not believe that he understood that this involved replacing an interest rate of 11.7% with one of 20%, which would rise to 30% after a month. That was something which, in fairness, ought to have been specifically brought to his attention, and if (as DPI knew was the case) he chose not to obtain independent advice, then DPI ought to have alerted him to it. To that extent only, the contract contained in the Deed of Loan and the General Security Agreement was unjust. The appropriate relief, to address that injustice, is to vary the applicable interest rate as against Mr Sanna (but not against New DCL), to 11.7%, being the default rate under the AETL mortgage.
12. While it is clear that, as some of the Principal Sum remains outstanding, DPI will be entitled to a judgment on this claim, it will be necessary to recalculate the amount, using as the starting point a principal sum of $1,050,776.61, and adding interest at the rate of 11.7% against Mr Sanna (but at 20% and 30% against New DCL), and debiting repayments. I will afford the parties an opportunity to make submissions in respect of that recalculation. Had the claim to set aside the transaction for relief for breach of fiduciary duty succeeded, the consequences (given the requirement for restitution or a just allowance) would have been the same, save that the interest rate applicable would have been 11.7% in respect of DCL as well as Mr Sanna.
13. Wolgan's claim under the Saving Fee Agreement, and the alternative claims for a saving fee under the Costs Agreements, fail, essentially because there was no saved debt: the debt which Ms Sanna owed to AETL was not reduced, but was preserved, notwithstanding the discharge of the mortgage, and the definition of saved debt upon which entitlement to a saving fee depended was concerned with personal indebtedness, not the amount of any encumbrance.
14. I direct the parties to bring in short minutes to give effect to this judgment, on a date to be fixed, upon which occasion submissions may be as to: 1. any amounts said to have been paid in respect of WYI's claim for which credit has not been given; 2. the total amount of repayments made in respect of the Principal Advance under the Deed of Loan; 3. the recalculation of the debt under the Deed of Loan in conformity with this judgment; 4. interest; 5. costs; and 6. any issues arising from New DCL having (as the Court has been informed) gone into liquidation, which might necessitate that leave to proceed be obtained before judgment could be entered.

Endnotes

1. Ms Sanna became a bankrupt prior to commencement of the proceedings, and no plaintiff sought leave to proceed against her. The Amended Statement of Claim removed all references to her as a named defendant. She was discharged during the pendency of the proceedings, but a very late suggestion by the plaintiffs that she should be reinstated as a party was rejected.
2. In the matter of DCL Construction Group Pty Ltd [2017] NSWSC 839.
3. T678-680.
4. Sanna v Wyse and Young International Pty Limited (No 2) [2015] NSWSC 581.
5. Absent provision for joint and several liability, the presumption is of joint liability. In contract, a plaintiff is entitled to judgment for the full amount of its established claim against each defendant who is jointly liable: Spicer v Carmody (1948) 48 SR (NSW) 348; Speirs v Caledonian Collieries Ltd (1956) 57 SR (NSW) 483 at 512; Barisic v Devenport [1978] 2 NSWLR 111; (NSW) Civil Procedure Act 2005, s 95.
6. T86.45-50.
7. ASOC [17], Table L. The reason for it not being treated as credited here is that it appears to have been credited against the DPI loan: see ASOC [60], Table O. A consequence of treating it as paid is that the corresponding amount must be debited from the DPI loan where it has been credited.
8. ASOC [24].
9. ASOC [17], Table F.
10. See Table F, entry 5.
11. T719-720.
12. See, for example, Mirzikinian v Tom & Bill Waterhouse Pty Ltd [2009] NSWCA 296 at [50]-[52]; Matouk v Entrance Seabreeze Pty Ltd [2010] NSWSC 649 at [60].
13. T32.35-40.
14. T124.37-45.
15. T775-778.
16. (1984) 156 CLR 41 at 96-97; [1984] HCA 64.
17. (1996) 186 CLR 71 at 107; [1996] HCA 57.
18. NZ Netherlands Society "Oranje" Inc v Kuys [1973] 2 All ER 1222; Hospital Products v USSC (in which the difference between the majority and that of Mason J turned on whether in respect of one aspect of the relationship between manufacturer and distributor, the distributor was obliged to act exclusively in the interest of the manufacturer); Noranda Australia Ltd v Lachlan Resources NL (1988) 14 NSWLR 1 (Bryson J, as he then was, holding that while parties to a mining joint venture might be fiduciaries, as to some aspects of the business, as to others they were entitled to act in their separate interests).
19. [2016] NSWSC 1139.
20. [2016] NSWSC 904.
21. While other corporate entities were also liable as guarantors, Mr Sanna and DCL were not.
22. T132.45-50.
23. Haywood v Roadknight [1927] VLR 512; McKenzie v McDonald [1927] VLR 134.
24. Phipps v Boardman [1967] 2 AC 46; Green & Clara Pty Ltd v Bestobell Industries Pty Ltd (No 2) [1984] WAR 32; Fraser Edmiston Pty Ltd v AGT (Qld) Pty Ltd [1988] 2 Qd R 1.
25. Defendant/Cross Claimant's Closing Submissions of 14 February 2018, at [93]-[97].
26. T927.49-928.05.
27. Contracts Review Act, s 7.
28. West v AGC (Advances) Ltd (1986) 5 NSWLR 610 at 620-621.
29. The receipts referred to in Mr Dimitriou's Affidavit of 18 October 2016 at [28]-[31] and listed in "Table B" appear to add up to $66,128, from which $628 should be deducted: see [127] and fn7 above.
30. ASOC [60].
31. ASOC [41].
32. However, GST of $18,778.79 implies a principal amount of $187,787.90, and a total of $206,566.72 GST inclusive.
33. ASOC [43]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 June 2019