Youssef Taouk and Najibi Taouk v Najib Louis

The transaction asserted by the plaintiffs 7The first plaintiff, who will henceforth be referred to as Mr Taouk, deposed that in about November 2004, Mr Louis approached him and said words to the following effect: "I need $50,000 to cover some debts of my business. Can you sponsor me to get a loan from the bank." 8Mr Taouk says that he understood that such "sponsoring" would involve Mr Louis borrowing money but that if he could not repay it then the plaintiffs would be responsible for repayment. Mr Taouk states that he initially resisted Mr Louis' request. He says, however, that some time later (when he was approached whilst working on a building site) Mr Louis made a further request that the plaintiffs agree to "go guarantor for me" in respect of a loan of $50,000 which he said he would repay within six months. Mr Taouk says that on this occasion, he agreed to help Mr Louis and told him that he would sign papers so that the bank would provide the money to Mr Louis. 9Mr Taouk further deposed that on the next day, Mr Louis approached him at the building site again, and asked him to sign a document so that Mr Louis could obtain a loan for $50,000. Mr Taouk says that he signed the document, which he described as being approximately 28cm by 24cm in size with some small print typed upon it. Mr Taouk says that his wife's signature was not on the document at the time he signed it. 10Mr Taouk says that on the next day, Mr Louis came to the building site with another document for him to sign. Mr Taouk says that Mr Louis told him that it was another piece of paper which Mr Taouk had to sign so that Mr Louis could borrow the $50,000. He further says that Mr Louis mentioned something about obtaining a lower interest rate. Mr Taouk says that he also signed this document, which he described in similar terms to the document which he says he signed on the previous day. Mr Taouk deposed that the pieces of paper he signed were not translated into the language with which he is most familiar, namely, Arabic. Mr Taouk says that the two pieces of paper he signed at the building site were the only documents he signed in relation to the proposed $50,000 loan to Mr Louis. He states that he had no understanding that he would be a borrower, that any loan would be for $460,000, or that a mortgage would be required. 11The second plaintiff, who will henceforth be referred to as Mrs Taouk, deposed that in late 2004, Mr Louis approached her and asked whether she and Mr Taouk would help him to borrow $50,000. Mrs Taouk says that she told Mr Louis that she would need to talk to Mr Taouk and her children about it. She says that later that afternoon, Mr Louis came back to her and said words to the following effect: "Your husband has signed this paper so that I can get the loan for $50,000." 12Mrs Taouk says that she told Mr Louis that if her husband had signed, then she would sign too. She says that she then proceeded to sign a piece of paper "that may or may not have had fine print on it" but contained her husband's signature. 13Mrs Taouk further deposed that about three days later, Mr Louis requested her to accompany him to "the bank" to sign papers so that he could get the $50,000 loan. Mrs Taouk says that she agreed to do so, and went with Mr Louis to an office in Parramatta. Mrs Taouk says that she told Mr Louis that the office was "not a bank", to which Mr Louis is said to have said that it was "a branch of the bank". 14Mrs Taouk states that when inside the office, they met a woman called "Fay" who spoke to Mrs Taouk in Arabic and asked her to sign a piece of paper. Mrs Taouk does not recall whether the paper had any writing on it, but she states that she did not see any figures written on the paper. Mrs Taouk says that she signed the paper, about which no explanation was given to her. 15Mrs Taouk deposes that she signed only two pieces of paper, and that she did so only in order to assist Mr Louis to borrow $50,000. She states that she did not understand that she or her husband were borrowing money or entering into a mortgage.

The first defendant's version of events 16A very different account is provided by Mr Louis in his affidavit. He deposed that in the second half of 2004, Mrs Taouk told him that she needed $50,000 to pay some debts and medical bills and asked whether Mr Louis knew anyone who could help. Mr Louis states that he knew a person called Fay Baker who might be able to help in obtaining a loan. Mr Louis says that Mrs Taouk wanted to see Fay Baker so he organised an appointment to meet her a few days later in her Merrylands office. 17Mr Louis states that he introduced Mrs Taouk to Fay Baker and that Mrs Taouk and Fay Baker had a conversation in Arabic about obtaining $50,000 through a refinance of the Taouk's existing mortgage (to Westpac). Mr Louis further states that there was discussion between Mrs Taouk and Fay Baker about borrowing more than $50,000. He states that during this discussion, Fay Baker spoke about a loan split into two accounts, one being to cover the payout of the existing mortgage debt of $113,000 and a further $50,000, the other being for $297,000 which would be ready to use when needed. Mr Louis states that Mrs Taouk said that such a loan would be good. Mr Louis further states that Fay Baker gave Mrs Taouk a loan application and told her to take it home and discuss the matter with Mr Taouk, and to sign and return the application together with identification evidence if they wanted to proceed. 18Mr Louis states that a few days later, Mrs Taouk told him that the paperwork was ready for her and Mr Taouk to sign, and requested Mr Louis to accompany them to Fay Baker's office. Mr Louis states, however, that he was not able to do so. He further states that a few weeks later, Mrs Taouk said to him words to the following effect: "Everything is fine with the loan, we've signed all the documents, they paid out Westpac and I have $297,000 in another account I can use if I need it." 19Mr Louis deposed that it was not until February 2005 that he had discussions with Mr and Mrs Taouk about helping him to obtain $50,000. Mr Louis states that due to financial difficulties he was experiencing as a consequence of problems in his business relationship with John Taouk (who is also related to Mr and Mrs Taouk), he asked Mrs Taouk whether he could borrow $50,000 from her. Mr Louis states that she said that she would be happy to help, but that Mr Louis would first need to obtain Mr Taouk's agreement. Mr Louis states that arrangements were made to obtain the necessary form from DMS, and that he took that form to a building site where he spoke to Mr Taouk. Mr Louis states that he told Mr Taouk that he needed $50,000 to pay some debts and to help his parents to travel to Australia. He deposes that he said words to the following effect to Mr Taouk: "Help me with this $50,000 you have the money ready in to draw from your loan and I will pay you back after I fix the problem with your nephew John." 20Mr Louis states that Mr Taouk agreed to lend the money, and proceeded to sign the DMS form. Mr Louis states that he then obtained Mrs Taouk's signature on the form. Mr Louis further states that the form was sent by facsimile to DMS. 21The document which Mr Louis says that Mr and Mrs Taouk signed is a Redraw Request Form which was completed in handwriting and dated 12 February 2005. It provided for $50,000 to be paid into Mr Louis' account with the National Australia Bank. 22Mr Louis states that from February 2005 to about February 2006, Mr and Mrs Taouk signed further Redraw Request Forms to enable money to be transferred into his own account. Over that period, a total of $193,000 was drawn on the loan account and paid into Mr Louis' account with the National Australia Bank. Of that amount, $158,000 was credited to his account pursuant to five Redraw Request Forms, copies of which are in evidence. Mr and Mrs Taouk claim that they did not sign any of those Redraw Request Forms. The evidence is not clear as to the mechanism by which the remaining $35,000, which was credited to Mr Louis' account in two tranches in December 2005 and January 2006, was transferred. It is likely that these transfers were effected pursuant to other Redraw Request Forms. The statements of account issued by DMS record the transfers as "Redraw Advances". 23I interpolate here that a further nine Redraw Request Forms were used to draw upon the loan account and credit Mrs Taouk's own account with the Commonwealth Bank. At least $72,204 was credited to Mrs Taouk's account pursuant to those Redraw Request Forms in the period from April 2005 to August 2006. Mr and Mrs Taouk claim that they did not sign those Redraw Request Forms either. A further $44,500 was drawn on the loan account and credited to Mrs Taouk's account in the period from January 2005 to July 2006. The evidence is not clear as to the mechanism by which such transfers were effected. The statements of account issued by DMS record the first four of these transfers as "Fnds Transfer", and the last three as "Redraw Advances". It is clear, however, that $116,704 was drawn upon the loan and received into Mrs Taouk's account in 2005 and 2006. That amount is in addition to an amount of $50,000 that was paid into Mrs Taouk's account on settlement of the loan on 3 December 2004. 24Mr Louis made numerous repayments to Mrs Taouk in the period from 2005 to 2012. There is some dispute as to the precise total of those repayments but it is clear that they are in the order of at least $116,000. 25Before dealing with the differing versions of events, reference should be made to the evidence adduced by DMS and Perpetual concerning the loan and mortgage transaction.

The loan and mortgage transaction 26Fay Baker deposed that in 2004 she was the Operations Manager for Sky Home Loans Pty Ltd ("Sky"). Sky was at that time a loan introducer to DMS. As such, Sky would complete loan applications on behalf of clients and submit such applications, together with supporting documents, to DMS for assessment and approval. 27Fay Baker states that she first met Mr and Mrs Taouk in 2004 when they were referred to her by their son George Taouk. She deposed that there was a conversation (which took place in Arabic) in which she was told that Mr and Mrs Taouk wanted to refinance their existing loan, and were interested in purchasing a property in Picton. According to Fay Baker, she told Mr and Mrs Taouk that she could not assess a loan until further information was provided including identification documents, rates notices, and taxation returns. Fay Baker says that the conversation included the following: Fay Baker: "Do you understand the commitment you'll be entering into. You are getting old." Mrs Taouk: "We will not utilise the funds unless we are going to benefit from the investment. If we purchase another property, we will make sure we will get money from it." 28Fay Baker deposed that during October 2004, Mr and Mrs Taouk attended her office again. She states that on this occasion they were accompanied by Mr Louis. She further states that she used information provided by Mr and Mrs Taouk in order to complete a form of application for loan to DMS. The information included drivers licences and a Medicare card, a council rates notice and a Sydney Water bill, and unsigned copies of taxation returns. She states that Mr and Mrs Taouk each signed the application form in her office. It is dated 15 October 2004. 29The loan application included details of the drivers licence numbers of Mr and Mrs Taouk as well as their occupations, which were described as truck driver and florist respectively. It also included information concerning annual income which was stated to be $46,918 for Mr Taouk, and $44,813 for Mrs Taouk. Plainly, those figures were obtained from taxation returns which had apparently been prepared by an accountant by the name of Trevor Ward. There was evidence that the returns were in fact prepared by a Mr Bernard Moussa who, at least for a time, had an association with Mr Ward. The plaintiffs claim that they did not give instructions for the preparation of the taxation returns. 30Fay Baker recalls that during the meeting there was discussion in which a loan amount of $460,000 was referred to. She says that she explained that it was an amount made up of $163,000 to satisfy the existing loan and other debts, and $297,000 for future investments. She also recalls that, in relation to the obtaining of a valuation of the property, Mr Louis' details were given as the appropriate person to contact in that regard. 31It appears from the electronic recording system maintained by DMS (known as the "EMMS" system) that DMS was processing the loan application and its supporting documents (including the taxation returns) by no later than 18 October 2004. Those records indicate that in the course of the assessment of the loan, a discrepancy was noticed between Mr Taouk's name on the identification documents and his name as it appeared on the taxation returns. A Statutory Declaration was called for to confirm that the persons were indeed one and the same. It appears that a Statutory Declaration to that effect was received by DMS. A copy of a Statutory Declaration dated 20 October 2004 is in evidence. This copy, which is not of high quality, does not show the signature of a declarant, and the signature of the witness has been partially cut off. 32A further discrepancy was noticed between Mrs Taouk's date of birth as shown on a CRAA document (presumably a reference to Credit Reference Association of Australia) and as shown on the loan application and the taxation returns. DMS dealt with this discrepancy by calling for an explanation from the accountant who prepared the taxation returns. Ms Baker informed DMS that the date of birth on the application form had been copied from the taxation return, and that she had spoken to the accountant (who had advised that it was an error at his end) and had arranged for him to send in a letter of explanation. On 28 October 2004, DMS received a letter, apparently written by Trevor Ward, which explained that his firm had made an error. 33By 28 October 2004, the loan had been conditionally approved. On that date, instructions were given to Liang & Simmons to undertake a valuation of the Property. The market value was assessed by Liang & Simmons as $1,200,000. This was less than the $1,400,000 which was the estimate contained on the application form. Accordingly, the loan to value ratio increased from about 32% to about 38%. Formal approval for the loan was obtained on 2 November 2004, and on the following day DMS retained solicitors to carry out the necessary conveyancing work. 34Fay Baker recalls that Mr and Mrs Taouk returned to her office for a third time. She does not recall the details of that visit, but suggests that it may have been when the Loan Contract and the mortgage were signed. That suggestion is based upon the fact that the signatures on those documents, which purport to be that of Mr and Mrs Taouk, appear to be witnessed by her husband, Mr Sam Manafikhi, who was a director of Sky and who assisted his wife in the running of its business. It appears that the Loan Contract was signed on 16 November 2004. The mortgage is dated 3 December 2004. Mr Manafikhi gave evidence that both the Loan Contract and the mortgage were executed by Mr and Mrs Taouk in Sky's office in his presence on the one occasion. If that is correct, it is likely that the documents were executed on 16 November 2004, rather than 3 December 2004 which was the date of settlement of the transaction. That conclusion is reinforced by the existence of documents, apparently executed by Mr and Mrs Taouk on 16 November 2004, headed "Identification Record for a Signatory to an Account". Those documents were also executed by Fatme El Bakkar as an "acceptable referee". That name is Fay Baker's official name, and one she uses when she executes documents as a Justice of the Peace. 35On 23 November 2004, Mr and Mrs Taouk apparently signed a Request to Release Mortgage form in relation to the Westpac mortgage. That form appears to have been sent by facsimile by Sky to Westpac on that day. Also on 23 November 2004, Mr and Mrs Taouk apparently signed a direction to the effect that upon settlement, after the payout of Westpac, $4,000 should be credited to an account in the name of Ms Claudia Moussa and $50,000 should be credited to Mrs Taouk's Commonwealth Bank account. Finally, on 26 November 2004, Mrs Taouk apparently signed a Real Property Act Change of Name Form in relation to the Property. That document was witnessed by Fatme El Bakkar as a Justice of the Peace. 36The transaction was completed on 3 December 2004. The credit facility had two components. The first component (account number 965XXXXXXXX) was for $163,000. It was fully drawn down on settlement to effect the discharge of the Westpac mortgage and to pay approximately $50,000 into Mrs Taouk's Commonwealth Bank account. The second component (account number 674XXXXXXXX) was for $297,000. It was drawn down on settlement to the extent of $7,658.39. The evidence does not establish where those funds were applied. 37As noted earlier, in 2005 and 2006 the loan account was further drawn upon for considerable sums by way of redraw advance or other transfers of funds. By the end of 2005, account number 674XXXXXXXX was in debit in the sum of $225,904.26. By the middle of 2006, the account was in debit in the sum of $288,048.08, and was thus almost fully drawn. 38It should be noted here that Mrs Taouk, in her affidavit in reply, admitted that "when the loan was approved" $50,000 was placed into her Commonwealth Bank account. She says, however, that such amount was withdrawn and paid to Mr Louis. She further says that when Mr Louis would from time to time ask her for money, she would telephone DMS and (speaking with an Arabic speaking person) arrange for money to be placed into her Commonwealth Bank account, which money would then be withdrawn and paid to Mr Louis in cash. Mrs Taouk deposed that "because my nephew [Mr Louis] told me he was also making deposits into my accounts, I accepted that when he wanted money it was within the agreement for $50,000". 39It should also be noted that since the establishment of the loan, the interest repayments have been met, mostly on time. These repayments have almost all been made directly from Mrs Taouk's Commonwealth Bank account.

Determination 40In essence, there are three basic propositions which underpin the plaintiffs' case as presented. These are: (1)that neither of them agreed to enter into the loan and mortgage transaction, and that such transaction was a fraud, implemented without their knowledge, to benefit Mr Louis; (2)that once the transaction had been put in place, Mr Louis drew upon the loan to obtain benefits for himself without the knowledge or consent of the plaintiffs; and (3)that the fraud did not come to their attention until 2011 when they were advised by Mr Louis' estranged wife that he had been stealing money from them. 41Acceptance of the proposition that the making of the loan and mortgage transaction was a fraud perpetrated upon the plaintiffs faces numerous hurdles, including: (1)in circumstances where the processing of the transaction entailed the use of documents and information personal to the plaintiffs such as drivers licences, rates notices, water bills and Medicare details, and details concerning the plaintiffs' existing loan and mortgage with Westpac, a credible explanation as to how such documents and information came into the hands of the fraudsters was called for; (2)the need to establish that the signatures, apparently of Mr Taouk and Mrs Taouk, on the Loan Contract and mortgage and other documents associated with the transaction, were forgeries; (3)in circumstances where Sky was running a successful loan introduction business in 2004, introducing loans to a value of about $5 million per month, there is little reason to think that Sky (through Ms Baker and Mr Manafikhi) would engage in serious fraud in order to obtain the relatively modest commissions which would be earned in respect of the loan; and (4)there is no apparent reason why the fraudsters would arrange for statements of account in respect of the loan to be directed to each of the plaintiffs at the plaintiffs' home address if they were intended to be the victims of a fraud. 42Acceptance of the proposition that Mr Louis drew down upon the loan to obtain benefits for himself without the knowledge or consent of the plaintiffs faces the hurdle of needing to establish that the signatures, apparently of Mr Taouk and Mrs Taouk, on the Redraw Request Forms, were forgeries. 43Acceptance of the proposition that the alleged fraud did not come to the attention of the plaintiffs until 2011 faces numerous hurdles, including: (1)in circumstances where $116,704 was drawn upon the loan and paid into Mrs Taouk's Commonwealth Bank account in 2005 and 2006, an explanation as to why no query was raised is called for; (2)in circumstances where the electronic recording system maintained by DMS indicated that from 2006 there were numerous contacts made by Mrs Taouk (and other members of her family, including her son George and daughter-in-law Sandra) concerning the loan, an explanation as to how such records came to be made was called for; and (3)an explanation is also called for as to how it came to be that, since the establishment of the loan in December 2004, the interest payments on the loan were largely made directly from Mrs Taouk's Commonwealth Bank account, and no further payments were made by the plaintiffs to Westpac. 44Clearly, the strength of each of those propositions depends in large measure upon the credibility and reliability of the testimony given by each of the plaintiffs. For the reasons which follow, I have concluded that the evidence given by the plaintiffs on these matters was neither credible nor reliable. In the absence of reliable corroborating evidence from other sources, the basic propositions described above, which involve allegations of serious wrongdoing, must be rejected. 45I formed an unfavourable impression of both Mr Taouk and Mrs Taouk as witnesses. In each case, the impression is based, in part, upon the evidence each gave concerning their signature. 46Mr Taouk was cross-examined at length on that issue. I found his evidence to be wholly unconvincing. He was shown what was apparently his signature on copies of numerous documents which were produced by Westpac. He firmly denied that any of the signatures were his. He also stated that he "knew" his signature. One of the documents is a Loan Application dated 2 December 2003 in relation to an application to borrow $15,000 for the stated purpose of home renovations. The information which appears on the document concerning the plaintiffs seems to be accurate, and there is no reason to doubt that the document concerns an application in fact made by the plaintiffs. I do not accept that Mr Taouk did not sign that document. Amongst the other documents produced by Westpac were three Requests for Progress Payments apparently executed in December 1999, February 2000 and June 2000. They concern payments to be made to Romanous Constructions Pty Limited who were then building the house on the Property. Again, there is no reason to doubt that these documents concern requests in fact made by the plaintiffs, and I do not accept that Mr Taouk did not sign them. 47Later in his cross-examination, Mr Taouk was shown a signature, apparently his, on a handwritten agreement dated 21 February 2005. Mr Taouk denied that the signature was his. However, in his affidavit in reply, Mr Taouk swore that he had signed the document and, when confronted with the affidavit, he agreed that he had indeed signed the handwritten agreement. 48At one stage, Mr Taouk was shown a signature at the foot of the second page of his own affidavit sworn on 1 October 2013. Mr Taouk was prepared to say that "maybe" the signature was his "because it is close to my signature". He later gave similar evidence about the signature at the foot of the first page of the affidavit. I gained the firm impression that Mr Taouk was not prepared to clearly admit that any signature was his for fear that such an admission might damage his case. 49Variations between many of the signatures apparently made by Mr Taouk can be plainly observed. However, Mr Taouk gave no clear evidence as to how the various signatures which he claimed were not his, differed from his genuine signature. No expert handwriting evidence was adduced. In essence, the Court was left with little more than his denials, which he gave firmly and repeatedly. 50I regard Mr Taouk's evidence on this topic to be most unsatisfactory. In the light of other unsatisfactory aspects of his evidence, and the absence of reliable corroborating evidence, I am not prepared to accept his evidence that he did not sign the various documents in relation to the loan and mortgage transaction, including the Loan Contract and the mortgage itself. Neither do I accept his evidence that he did not sign any Redraw Request Forms. 51I also found Mrs Taouk's evidence concerning her signature to be unconvincing. In cross-examination, Mrs Taouk was shown a copy of the loan application form which apparently bore her signature. She strongly denied that the signature was hers. She maintained that denial when confronted with the content of some particulars provided by her solicitor which indicated that she had admitted the possibility that she had signed a loan application. Mrs Taouk said that she would know if it was her signature. 52Mrs Taouk was then shown her affidavit verifying the Statement of Claim. Initially, she evaded the question whether it was her signature that appeared there, but then said that it was "possible" that it was. After a few more questions, Mrs Taouk then clearly said that it was her signature and that she recognised it as such. Mrs Taouk was then pressed as to what it was about that particular signature which allowed her to say that it was genuine. She was not able to offer any reasons other than "because I signed the right way". There was no re-examination on the topic. As was the case with her husband's evidence, the Court was left with little more than her repeated denials. 53Mrs Taouk's evidence on this topic was singularly unimpressive. Her evidence, particularly when viewed alongside other unsatisfactory aspects of her testimony, provides no reliable basis for a conclusion that she did not sign the various documents in relation to the loan and mortgage transaction, including the Loan Contract and the mortgage itself. In the absence of reliable corroborating evidence, I do not accept her evidence that she did not sign those documents. I also do not accept her evidence that she did not sign any Redraw Request Forms. 54My general assessment of Mr Taouk is that he was a less than satisfactory witness. His testimony featured a number of inconsistencies and implausibilities. His evidence about the handwritten agreement dated 21 February 2005 is an example of the former. Another example concerns his evidence as to his ability to read English. He swore in an affidavit that he could not read English, and whilst being cross-examined about his 1998 taxation return, he seemed to confirm that impression. However, later in his cross-examination, he conceded that he could read in English and that he had a reasonable although not full understanding of documents written in English. 55Mr Taouk's evidence that he did not know anything about a change in lender from Westpac struck me as highly implausible. His evidence to the effect that he never saw any of the letters which were undoubtedly addressed to him and sent by DMS to the Property from 2005 also struck me as implausible. 56His denial that an application had been made to Westpac for finance in December 2003 was in my view plainly false. 57Mr Taouk seemed to approach his cross-examination in a guarded and defensive manner. He was not a witness who appeared to be making an effort to candidly answer the questions asked of him. Rather, Mr Taouk appeared to me to be quite ready to give answers in accordance with what he saw was advantageous to his case, even if those answers were untruthful. I am unable to regard Mr Taouk as a reliable or credible witness, and would not be prepared to accept his evidence on any matter of importance unless it was corroborated by reliable evidence. 58My general assessment of Mrs Taouk as a witness is no less unfavourable. Indeed, the evidence which clearly establishes that she received a substantial amount of the loan funds into her own bank account, had contact with DMS concerning the loan on a number of occasions, and was using her bank account to make monthly repayments to DMS (not to Westpac), renders her evidence about her lack of knowledge of the loan and mortgage transaction even less credible than her husband's. Mrs Taouk was unable to explain away that evidence, which showed that she knew all about the new loan. Her evidence to the effect that she understood only that there was a loan for $113,000 and an additional $50,000 "for my nephew" must be regarded as falsely given. 59Mrs Taouk's evidence about Mr Louis taking letters relating to the loan, so that after the first few months she did not receive any statements, was most implausible. I also found implausible her evidence about always speaking to an Arabic speaker when she telephoned DMS to arrange money for Mr Louis. I gained the impression that Mrs Taouk gave that evidence in order to play down her level of ability with spoken English. 60Numerous parts of Mrs Taouk's evidence were unsatisfactory. Her answer that she had no knowledge of the $116,704 that went into her account is a clear example. She had claimed, in her affidavit in reply, that she had arranged for money to be deposited into her account, which she then withdrew and paid to Mr Louis in cash. Her answer that she had no knowledge of $50,000 being paid into her account in December 2004 is another example. That payment was something she had admitted in her affidavit in reply. The evidence she gave, when confronted with an entry in the DMS electronic recording system which suggested that she had wanted to arrange a $20,000 increase in the loan, that she had no knowledge of the matter, is a further example. Her evidence that she had no knowledge of the in excess of $100,000 that Mr Louis paid into her Commonwealth Bank account is yet another example. Mrs Taouk went so far in that answer to claim that Mr Louis "withdrew $400,000". 61Mrs Taouk seemed to be a witness less intent on giving honest answers than giving answers thought to be favourable to her case. On occasions, she was quite dismissive of the questions, and made no real effort to answer them. At one stage, Mr Louis' affidavit was mentioned and she answered "I haven't seen it. I wouldn't know", yet she had responded to the affidavit in her own affidavit in reply. 62Mrs Taouk was, like her husband, willing to give untruthful evidence to support her case. Her testimony was neither credible nor reliable. As is the case with Mr Taouk, I would not be prepared to accept her evidence on any matter of importance unless it was corroborated by reliable evidence. 63I note that, in making the above assessments, I have made some allowance for the difficulties which often accompany the giving of evidence through an interpreter. 64Quite apart from the above, the evidence given by Mr and Mrs Taouk was significantly undermined by the evidence called in their case from their daughter-in-law, Ms Sandra Taouk. Sandra Taouk, in the course of her cross-examination, stated that in 2005 she was making telephone calls to DMS on behalf of Mrs Taouk and, further, that Mrs Taouk knew that she was making repayments to DMS and "obviously" knew that she had a mortgage with DMS. Sandra Taouk further gave evidence to the effect that on occasions when the paperwork in respect of the loan was not received, telephone calls would be made to ascertain the amount of the loan repayment required in that month. When asked about the nature of the paperwork which was received, Sandra Taouk answered: "A document requiring the payments for both loans, I would add them up for my mother-in-law, give her the total and she would take them to the bank to pay it." 65Sandra Taouk was also asked about some of the entries in the DMS electronic recording system. Her answers indicated that insofar as those records contained details relating to her, they were accurate. However, in relation to an entry dated 7 August 2009, Sandra Taouk could not recall whether she was informed on that occasion by Michael Connolly that the amount outstanding was $439,373.11. Similarly, she did not recall being informed on 15 May 2008 that the current balance was $446,586.98. Sandra Taouk did, however, accept that, during a separate conversation held on that day, she was informed that the next monthly repayment for the two accounts totalled almost $4,000. 66I have little doubt that the DMS electronic recording system is, by and large, accurate. Two witnesses gave evidence about the system. These were Colin Whybourne and Michael Connolly. Neither of those witnesses was challenged concerning the accuracy or reliability of the system. 67A number of the entries in the system further undermined the version of events given by the plaintiffs, in particular, Mrs Taouk. Amongst those entries are the following: (1)Entry dated 21 August 2006 made by Amy McKendrick. This entry refers to a redraw request sent through by the borrower for $3,000 and the fact that the account only had $2,204 available. The entry records Ms McKendrick speaking to Mrs Taouk about the matter and Mrs Taouk advising her to "go ahead with the redraw of $2,204". A redraw in that amount was in fact made on that day. A redraw request for $3,000 dated 18 August 2006, apparently signed by Mr and Mrs Taouk, was in evidence. In her cross-examination, Mrs Taouk denied that she signed the Redraw Request Form and stated that she had no knowledge of any conversation with Ms McKendrick about the request. Mrs Taouk's evidence on these matters must be rejected. (2)Entry dated 1 February 2008 made by Irene Xexenis in the following terms: "Najibi Taouk called wanting to confirm Bal on acc 965XXXXXXXX $157,980.58 Bal on account 674XXXXXXXX $288,348.00". The two figures recorded in the entry accurately state the account balances as at that date. In her cross-examination, Mrs Taouk said that she had no knowledge of such a communication. I also reject that evidence. In my view it is clear that in February 2008 Mrs Taouk was aware that the total amount outstanding on the loan was in excess of $446,000. (3)Entry dated 1 May 2008 made by Minyoung Kim. This entry refers to the "client" advising that a payment due today will dishonour due to insufficient funds, and arrangements being made for the payment to be made on 9 May 2008. Payments were in fact made in accordance with that arrangement. (4)Entry dated 2 September 2008 made by Michael Connolly in the following terms: "Najibi has called and put her son on to discuss they want to close the second split confirmed we would post close of split form to XX Terrace Road Dulwich Hill NSW 2203." In an affidavit, Mrs Taouk denied that there was any such discussion. Mr Connolly, for his part, deposed to such a conversation in his affidavit. Neither witness was challenged on their account. However, I find that a conversation to the effect recorded in the entry did take place. (5)Entry dated 3 August 2009 made by Michael Connolly in the following terms: "Spoke to Najibi she wanted to arrange an increase for the loan of $20,000 transferred to Kaitlyn to set up an appointment." In an affidavit, Mrs Taouk denied that she sought such an increase in the amount of the loan. She also expressly denied in her cross-examination that she had such a conversation with Mr Connolly. Although Mr Connolly does not depose to the terms of the conversation in his affidavit, I am satisfied that the entry accurately records a request made by Mrs Taouk for an increase in the amount of the loan. 68The evidence plainly demonstrates that, some years before the plaintiffs claim to have discovered that they were the victims of a fraud, Mrs Taouk was well aware of the existence of the loan, the fact that it was divided into two accounts, and that the amount borrowed was as much as $446,000. One of the entries further demonstrates that at least one of the Redraw Request Forms, which the plaintiffs deny they signed, was the subject of discussion between Mrs Taouk and an officer of DMS. Numerous other entries in the recording system show contact with DMS about direct debit arrangements, and the making of payments after some of the monthly repayments had not been met on time. 69I formed a generally favourable impression of Mr Louis as a witness. The reasonably detailed account in his affidavit was not shown to be incorrect in any material way, and his recollection of the detail of the events of 2004 and 2005 appeared to be quite reasonable. Mr Louis gave his evidence in what appeared to be a candid fashion, and appeared to be attempting to accurately answer the questions put to him. He readily accepted that Mr and Mrs Taouk had been very good to him and had welcomed him into their home, and that he started to have financial problems in 2004. Where there is direct conflict between Mr Louis' evidence on the one hand, and the evidence of Mr Taouk or Mrs Taouk on the other, I prefer the evidence of Mr Louis. 70Specifically, I accept Mr Louis' evidence to the effect: (1)that in the second half of 2004, Mrs Taouk told him that she needed $50,000 and asked Mr Louis whether he knew someone who could help, and that in response Mr Louis suggested Fay Baker; (2)that Mr Louis was present in Fay Baker's office when there was a discussion in Arabic about a loan which would refinance the existing loan with Westpac and provide an additional sum of about $50,000, and a further loan of $297,000 which could be drawn upon when needed; (3)that Mrs Taouk later told him that everything was fine with the loan, Westpac had been paid out, and $297,000 was available in another account to use if necessary; (4)that in February 2005 Mr Louis approached Mrs Taouk and then Mr Taouk, seeking to borrow $50,000, and they agreed to help; (5)that arrangements were then made for Mr Taouk and then Mrs Taouk to sign a Redraw Request Form, requesting that $50,000 be paid into Mr Louis' account with the National Australia Bank; (6)that the Redraw Request Form was sent to DMS by facsimile and $50,000 was received into his account on 11 February 2005 (although the form itself appears to be dated 12 February 2005); (7)that on numerous occasions between October 2005 and February 2006, Mr and Mrs Taouk signed Redraw Request Forms to enable money (totalling a further $143,000) to be paid into Mr Louis' account; and (8)that between about May 2005 and July 2011, Mr Louis repaid in excess of $116,000 into Mrs Taouk's Commonwealth Bank account. 71I specifically reject the evidence given by the plaintiffs to the effect that Mr Louis asked them to help him or sponsor him to obtain a loan of $50,000. I further specifically reject their evidence to the effect that Mr Louis took their drivers licences, a Medicare card, a council rates notice and a water bill and gave them to Fay Baker in order to obtain a loan and mortgage without the plaintiffs' knowledge, and later took letters containing the loan statements. There is no doubt that from the beginning of 2005, loan statements were sent by DMS to the Property, addressed to Mr Taouk and Mrs Taouk separately. The evidence given by Sandra Taouk suggests that such "paperwork" was generally received and dealt with. 72There is no credible evidence to support the suggestions that Mr Louis was involved in a fraud against the plaintiffs, that he obtained money from them without their knowledge, or that he forged their signatures. Those suggestions have been shown, in my view, to be totally without foundation. 73I also formed a favourable impression of Fay Baker as a witness. She presented as a capable and experienced loan introducer. Her account of the events of late 2004 rested partly on recollection and partly upon what she described as her usual practices. She appeared to be genuinely trying to recall the events, and answer the questions put to her. I generally accept her evidence as honest and reliable, and where there is direct conflict between her testimony and that of either the plaintiffs, I unhesitatingly prefer her account. 74Specifically, I accept Fay Baker's evidence to the following effect: (1)that she met the plaintiffs (accompanied by their son George, who had recently been a client of Sky) in her office in 2004 and, in the course of a discussion in Arabic about a refinance transaction, advised them about what information would be needed in order to assess a loan; (2)that the plaintiffs subsequently provided various documents to her (including drivers licences, a Medicare card, a council rates notice and a water bill) and unsigned copies of taxation returns for each of them in respect of the years 2003 and 2004; (3)that at a meeting in her office attended by the plaintiffs and Mr Louis, she prepared a loan application largely based upon the information so provided; (4)that on that occasion there was a discussion in Arabic concerning a loan of $460,000, $163,000 of which would be used to pay off the existing mortgage and provide further funds of about $50,000, and $297,000 of which would be available for future investments, following which each of the plaintiffs signed the loan application form in Fay Baker's presence; (5)that each of the plaintiffs attended her office together on at least one other occasion to sign documents in connection with the proposed loan, including the Loan Contract and mortgage, and a Direction to Pay (which contains Fay Baker's handwriting on the page); and (6)that when she acts as a Justice of the Peace she uses the name Fatme El Bakkar, and she so acted in relation to Identification Records for a Signatory to an Account which were signed by each of the plaintiffs in relation to the loan, and a Real Property Act Change of Name form which was signed by Mrs Taouk. 75In making the finding in (1), above, I am preferring the evidence of Fay Baker to that of George Taouk. He was an unimpressive witness, who gave his evidence in a rather belligerent and unhelpful manner, and did not appear to have a good recollection of the events. In making the findings at (3) and (4), above, I am preferring the evidence of Fay Baker to that of Mr Louis who recalls attending the office only in the company of Mrs Taouk. I do not find it necessary to resolve the various conflicts in the evidence as to who it was who referred the plaintiffs to Fay Baker. 76I reject the evidence given by the plaintiffs to the effect that Fay Baker only met Mrs Taouk on one occasion in relation to the loan (on which occasion Mrs Taouk signed only one document), and never met Mr Taouk at all in relation to the loan. 77I reject the suggestions made to Fay Baker to the effect that she processed the loan application with Mr Louis without the involvement or authority of the plaintiffs, and that she requested Mr Bernard Moussa (who was a shareholder in Sky and had a business relationship with that company involving the referral of clients and the sharing of the profits of such) to prepare taxation returns to be used in connection with the loan. It is far more likely that the plaintiffs gave the instructions to Mr Moussa to prepare the returns. Insofar as these returns contain inaccurate information, I do not doubt that the plaintiffs would have been quite prepared to supply such information if they saw it as necessary to do so in order to obtain the loan. 78The suggestions that Fay Baker was involved in a fraud against the plaintiffs, and that she may have been responsible for placing the plaintiffs' forged signatures on documents in connection with the loan, have been shown, in my view, to be totally without foundation. I reject the further suggestion that Fay Baker has attempted to conceal the fact that she also uses the name Fatme El Bakkar. 79I accept the evidence given by Mr Manafikhi that he witnessed Mr and Mrs Taouk sign the Loan Contract and the mortgage, and that before he signed those documents as a witness, he requested and obtained some evidence to confirm their identities. I find that those documents were executed by Mr and Mrs Taouk on 16 November 2004. Mr Manafikhi had some recollection of meeting Mr and Mrs Taouk in 2004 but his evidence concerning the signing of the documents was based, not upon a specific recollection of the signing process, but rather his invariable practice when witnessing the execution of loan documents, a task he has carried out on many occasions. Mr Manafikhi gave his evidence in a clear and forthright manner and I have no hesitation in accepting his evidence. I reject the suggestions that he never met Mr and Mrs Taouk, and that they did not sign the Loan Contract and mortgage in his presence. I reject the further suggestion that Mr Manafikhi may have requested Mr Bernard Moussa to prepare taxation returns for Mr and Mrs Taouk. 80I also find that when the Loan Contract and mortgage documents were executed, Mr and Mrs Taouk were at least aware: (a)that they were to obtain a loan for a total amount of $460,000, $163,000 of which was to be used to repay their loan to Westpac and provide an additional $50,000, and $297,000 of which was to be available to draw upon if required; (b)that monthly repayments would need to be made in respect of the amount borrowed; and (c)that there would be a mortgage over the Property in favour of the new lender. 81Knowledge of those matters must have been gained from the discussions held with Fay Baker in relation to the loan, the content of the Loan Contract (which clearly shows the amount of the loan, and refers to monthly repayments), the form of the mortgage, and the plaintiffs' prior experience of borrowing money secured by a mortgage, including the servicing of the existing Westpac mortgage over the Property. In earlier years, the plaintiffs had given mortgages over real property to the Commonwealth Bank and St George Bank. The St George Bank mortgage was given over a property at Picton in respect of which Mr and Mrs Taouk were part owners. 82The plaintiffs pleaded various causes of actions or claims against each of the defendants. The claims against each defendant will be dealt with in turn.

The claims against Mr Louis 83The essential basis of the case against Mr Louis may be summarised as follows. It is alleged that the plaintiffs agreed to assist Mr Louis by acting as sponsors or guarantors in relation to a loan of $50,000 to be made to him, and that in that context, Mr Louis procured their signatures. It is then alleged that Mr Louis, without the consent of the plaintiffs, made arrangements for a loan and mortgage transaction to be effected. It is further alleged that, in so doing, Mr Louis made arrangements so that he would be able to withdraw amounts (in excess of $50,000) from the loan account. It is contended that the loan and mortgage transaction was a fraud and that the signatures appearing on the Loan Contract and the mortgage purporting to be those of the plaintiffs were forgeries. It is then contended that the amount of the loan (apart from the amount of about $113,000 which was used to discharge the Westpac mortgage) was wholly obtained by Mr Louis. 84The various findings which are set out above inevitably mean that the essence of the case against Mr Louis must be rejected. Nevertheless, I will deal in turn with the five claims which are pleaded against him. 85The first claim invoked the doctrine of undue influence. It is alleged by the plaintiffs that due to the influence exercised by Mr Louis over each of them, they agreed to assist him to borrow $50,000, and that as a consequence, Mr Louis effected the loan and mortgage transaction and took the benefit of it, leaving the plaintiffs with a substantial debt secured over the Property. 86The factual basis for such a claim has not been made out. Even if the relationship between Mr Louis and the plaintiffs in late 2004 was such that the plaintiffs might be prepared to place considerable trust in him, I have not accepted that the loan and mortgage transaction was effected in the manner alleged by the plaintiffs. They were not acting at the behest of Mr Louis. Rather, the plaintiffs entered into the transaction freely and of their own accord, and only later agreed to provide financial assistance to Mr Louis. 87The second claim advanced against Mr Louis is that the arrangements made by Mr Louis constitute an unconscionable bargain. It is alleged that Mr Louis took unconscientious advantage of the plaintiffs, each of whom it was said was labouring under a special disadvantage arising from their age, economic circumstances, educational background and level of literacy. Again, the factual basis for the claim has not been made out. It may be accepted that both of the plaintiffs had very little formal education, have limited ability to speak and read English and, despite some experience of borrowing money and servicing a mortgage over their home, could not be described as economically sophisticated. Nevertheless, the loan and mortgage transaction was not entered into at the behest of Mr Louis or as the result of any conduct on his part. Again, the transaction was entered into freely and voluntarily by the plaintiffs, presumably in their own interests as they saw them. 88The third and fourth claims again Mr Louis may be dealt with together. These are a claim for moneys had and received and a claim for conversion. Both of those claims rest upon an allegation that Mr Louis obtained some or all of the proceeds of the loan for his own benefit without the permission, authority or consent of the plaintiffs. It is alleged that Mr Louis so received the sum of $193,000 pursuant to forged Redraw Request Forms, and further sums in cash from Mrs Taouk (presumably on the basis of her understanding that such sums fell within the scope of the arrangement whereby the plaintiffs would assist Mr Louis to borrow $50,000). I have rejected the evidence given by the plaintiffs to the effect that they did not sign the Redraw Request Forms pursuant to which amounts were paid into Mr Louis' account. I find that the sum of $193,000, which was credited to Mr Louis' account, was paid to him with the consent and pursuant to the authority of the plaintiffs. Moreover, I am not prepared to accept the evidence given by Mrs Taouk to the effect that additional sums were paid out of the proceeds of the loan to Mr Louis. I accept Mr Louis' evidence that he received only $193,000, and I accept his denials, given in cross-examination, that he received further amounts from Mrs Taouk, including large sums in cash. These claims have also not been made out. 89The fifth claim made against Mr Louis is that he engaged in misleading and deceptive conduct which caused the loan and mortgage transaction to be effected. In essence, it is alleged that Mr Louis, in making the arrangements for the transaction, misled DMS and Perpetual by representing that the plaintiffs were consenting to the transaction when in fact they were not. Again, the factual basis for the claim has not been made out. The loan and mortgage transaction was entered into freely and voluntarily by the plaintiffs. 90Accordingly, each of the claims pleaded against Mr Louis must fail. No claim was brought against Mr Louis to the effect that the moneys he received were lent to him and that he had failed to repay the moneys in accordance with the terms of the loan.

The claims against DMS 91The first claim made against DMS is in negligence. It is alleged that DMS owed duties of care to the plaintiffs to ensure that any loan application, Loan Contract or mortgage facilitated by DMS was in fact consented to and signed by each of the plaintiffs. Even if DMS owed such duties to the plaintiffs, it was not in breach of them. I have found that each of the plaintiffs signed numerous documents in support of the loan and mortgage transaction, including the loan application, the Loan Contract and the mortgage. I further find that each of the plaintiffs executed those documents freely and voluntarily in support of a transaction which they themselves wished to enter into. 92The second claim made against DMS is that it engaged in misleading and deceptive conduct in its dealings with Perpetual in circumstances where the loan application, Loan Contract and mortgage documents had not in fact been signed by the plaintiffs, and Perpetual, in deciding whether to advance the loan would likely assume that each of those documents had been duly signed by each of the plaintiffs. The findings I have made concerning the execution of those documents means that this claim must also fail. 93The third claim made against DMS is that it engaged in unconscionable conduct within the meaning of either s 51AA of the Trade Practices Act 1974 (Cth), ss 12CA and 12CB of the Australian Securities and Investments Commission Act 2001 (Cth), or s 43 of the Fair Trading Act 1987 (NSW). There is a lack of clarity in the pleading as to what conduct is said to be unconscionable, and the claim was referred to only fleetingly in the final written and oral submissions of the plaintiffs. However, as I understand it, the basis of the claim is that DMS failed to undertake adequate enquiries in relation to the plaintiffs and failed to ensure that the plaintiffs received independent legal and financial advice before the transaction was entered into. I do not think that any unconscionable conduct, within the meaning of any of the abovementioned provisions, has been established. 94The loan application was processed by DMS, a loan originator with whom Perpetual has a contractual relationship. It is clear that DMS relied upon the loan application and supporting documents which were provided to it by Sky. The documents included information confirming the identities of each of the proposed borrowers by way of a "100 Point Checklist" verified by Fay Baker and supported by copies of the documents relied upon. As noted earlier, in the course of the assessment of the application, some discrepancies were noticed. DMS made enquiries about such discrepancies and it received explanatory information which it apparently found satisfactory. It does not seem to me that DMS has been shown to have acted improperly or inadequately in relation to the information which was provided to it. As far as the taxation returns are concerned, I have found that they were provided to Fay Baker by the plaintiffs. I infer that the plaintiffs were content for the information contained in those returns (some of which was included on the loan application they both signed) to be used as part of the assessment of the loan. This is what in fact occurred. DMS carried out an assessment of loan serviceability and found it to be adequate. It was not suggested in cross-examination to Mr Whybourne (who gave evidence on this topic) that it was unreasonable for DMS to place reliance upon the taxation returns for that purpose. 95It is true that there was no requirement that the plaintiffs receive independent legal and financial advice. However, I do not see this as something for which DMS may be criticised. It is the province of the lender to set the requirements which need to be satisfied in order for a loan to be approved.

The claims against Perpetual 96The first claim made against Perpetual is that the mortgage should be set aside because neither the Loan Contract nor the mortgage contain the signatures of the plaintiffs and are thus forgeries. It was submitted that where the Loan Contract is a forgery, and the mortgage is an "all moneys mortgage", the indefeasibility acquired by Perpetual upon registration of the mortgage does not enable Perpetual to enforce the mortgage to recover any sum and, accordingly, the forged mortgage should be set aside. The various findings I have made above concerning the execution of the Loan Contract and mortgage by the plaintiffs means that this claim must fail. 97The second claim made against Perpetual is in negligence. It is alleged that Perpetual owed a duty of care to the plaintiffs to ensure that any loan application submitted to it was in fact completed by each of the plaintiffs. Even if Perpetual was under such a duty, and even if the duty extended to the Loan Contract and the mortgage itself, the duty was not breached in this case. All of those documents were executed by each of the plaintiffs. 98The third claim made against Perpetual is a claim under the Contracts Review Act 1980 (NSW). The plaintiffs allege that the mortgage was a contract within the meaning of that Act and that it was unjust in the circumstances relating to it at the time it was made within the meaning of section 7 of that Act. Perpetual made the point that such an allegation was not made in relation to the Loan Contract. However, having regard to the way in which the case was presented, I would be minded to treat the claim under the Contracts Review Act as one which extended to the Loan Contract. 99The circumstances which are relied upon in the Statement of Claim are essentially: (a)that the plaintiffs were under a special disadvantage due to their age, economic circumstances, educational background and literacy; (b)that neither the plaintiffs, nor anyone authorised on their behalf, executed either the Loan Contract or the mortgage; (c)that neither of the plaintiffs had any knowledge of the Loan Contract or the mortgage; and (d)that neither of the plaintiffs was provided with any explanation of the nature and effect of the Loan Contract or the mortgage. 100The matters referred to in (b) and (c) above are foreclosed as a result of the findings I have made. The plaintiffs in that event advanced a case in the alternative. It was submitted that the plaintiffs had little education, limited ability in English, little experience in relation to loans and mortgages, and were pensioners who did not have the financial ability to service a large loan. It was further pointed out that the plaintiffs received no independent legal or financial advice about the transaction, no translation of any of the relevant documents, no information as to the commission that Sky would earn, and no real understanding of the nature of the transaction. 101Perpetual contended in closing submissions that it was not open to the plaintiffs to run this alternative claim. Reference was made to Adamson v Ede [2009] NSWCA 403 at [29] - [31] per Allsop P, Basten JA and Sackville AJA where their Honours referred to the principle that a party may not plead two inconsistent sets of facts when one set is known to be false. However, I do not think that the maintenance of the alternative case is precluded by the principle, which is one of the pleading. I propose to deal with it. 102Perpetual submitted that the transaction should be viewed as a straight forward refinance in which the plaintiffs wished to borrow some additional money. It was submitted that the plaintiffs had some experience in financial matters, including loans and mortgages, and the evidence they gave in support of their primary case suggested they were familiar with the concept of a guarantee. It was submitted that they were under no relevant disadvantage, that Sky was their agent acting for them in relation to the loan application, and that Fay Baker explained the nature of the transaction to them. 103It was also submitted that the plaintiffs led no evidence to the effect that they did not understand any particular aspect of the transaction, their evidence being to the effect that they did not understand that any such transaction was being entered into at all. 104In considering the question whether a contract is "unjust" within the meaning of section 7 of the Contracts Review Act, it is necessary to consider the public interest and all of the relevant circumstances which existed at the time the contract was made (see s 9 of the Act; Provident Capital Ltd v Papa [2013] NSWCA 36; (2013) 84 NSWLR 231 at [7] per Allsop P). In this case, the Loan Contract and associated mortgage were entered into on 3 December 2004 and may be taken to have been made on that day. Mr and Mrs Taouk were then aged only 64 and 62 respectively. 105I accept that each of the plaintiffs had only very limited formal education. I am also prepared to accept that the plaintiffs have only limited capacities to understand spoken English (particularly technical or sophisticated language) or written English, although it does appear that Mr Taouk has at least an ability to read basic English. It also seems to be the case that the plaintiffs did not receive any legal advice or financial advice (other than what they were told by Fay Baker) prior to entering into the transaction. It also appears to be the case that in December 2004 Mrs Taouk was a pensioner, and had been so for a number of years. The position is unclear in relation to Mr Taouk. He swore in an affidavit that he was a pensioner in 2004 but in cross-examination said that that was not right and that he became a pensioner in 2005. There is evidence that in February 2005 Mr Taouk was doing some work on a building site, and there is further evidence that he was doing building related work in 2004. 106The plaintiffs did not adduce evidence of their financial circumstances to an extent which might permit a comprehensive assessment of their position and the ability they may have had (possibly with support from other members of the family, some of whom lived at the Property) to service a loan. Neither did the plaintiffs adduce any evidence to the effect that they did not understand any particular aspect of the loan and mortgage transaction which Perpetual maintained was valid and enforceable. No evidence was given, for example, that they did not understand the nature of a loan or a mortgage, or any particular feature of this loan and mortgage transaction. There was no evidence to the effect that the commission payable to Sky was a matter of significance to the plaintiffs. 107This lack of evidence (which is likely due to the heavy emphasis placed by the plaintiffs upon their primary case) makes it somewhat difficult to conduct the assessment which must be undertaken of the relevant circumstances which pertained at the time of the entry into the loan and mortgage transaction. 108I have found that the plaintiffs were aware of the main features of the transaction they were entering into. That is, they were aware that the loan was in two parts, one part being a loan of $163,000 to pay out the Westpac mortgage and provide an additional $50,000 to the plaintiffs, and the other part being an amount of $297,000 which was available to draw upon if required. I have also found that the plaintiffs were aware that there would be a mortgage over the Property in favour of the new lender. Having regard to the plaintiffs' experience with mortgages (prior to the Westpac mortgage, the plaintiffs had given mortgages to the Commonwealth Bank and St George Bank), I would infer that the plaintiffs understood in 2004 that if the monthly repayments to the lender were not made as required, the lender would be able to sell the Property in order to cover what was owed. It is certainly not possible to conclude on the evidence that either of the plaintiffs had some other understanding about mortgages. 109It is also relevant to note that page 12 of the Loan Contract (which was executed by the plaintiffs) includes a recommendation that the proposed borrowers obtain independent legal and financial advice. It is also likely that Fay Baker suggested to the plaintiffs that they obtain legal advice. I accept the evidence she gave about that during her cross-examination. It appears that the plaintiffs chose not to obtain legal advice. 110Whilst the Loan Contract and mortgage are written in English, the plaintiffs had the benefit of meetings with Fay Baker during which the transaction was discussed in the Arabic language. The plaintiffs also had the opportunity to discuss the transaction with their children who speak and read English. The evidence of the subsequent dealings of the plaintiffs in relation to the loan, including the making of drawings upon the second part of the loan, and the making of regular monthly repayments, do not indicate that the plaintiffs did not understand the transaction they entered into. 111The plaintiffs had been servicing the Westpac loan for a number of years. The amount of that loan was about $113,000 in late 2004. The immediate effect of the transaction entered into in December 2004 was that the level of the debt increased to $163,000. Having regard to the sparse state of the evidence concerning the plaintiffs' financial position and their ability to service a loan, I would not be prepared to conclude that the plaintiffs would have found it difficult to service a loan of that magnitude. Again, there is nothing in the subsequent history of dealings in relation to the loan which would suggest that such a conclusion should be reached. 112It is true that the transaction gave the plaintiffs the opportunity to draw upon the loan for further amounts of up to $297,000. There was therefore the capacity to significantly increase the level of the debt. Again, however, the extent to which any such additional debt would be likely to cause difficulty for the plaintiffs is practically impossible to determine on the evidence which has been adduced. Even if it was the case that, based on the immediate financial resources available to the plaintiffs, it might be expected that they would face difficulties servicing a debt of a particular level, account would need to be taken of other available sources of support, notably the plaintiffs' children. The evidence suggests that the plaintiffs' children and other family members have in fact provided considerable assistance to the plaintiffs in relation to the servicing of the loan since its inception. 113Viewing the circumstances overall, I am unable to conclude that either the Loan Contract or the mortgage was "unjust" at the time it was made within the meaning of section 7 of the Contracts Review Act. The transaction was one which the plaintiffs wished to pursue for their own purposes. They understood the essential nature and effect of the transaction and had a reasonable opportunity to obtain further explanation or advice, including legal advice, about the transaction if required. The absence of legal advice in this case does not lead to the conclusion that the contracts were unjust. I also do not think that the absence of financial advice leads to any conclusion of unfairness in relation to the contracts. The evidence concerning the plaintiffs' financial resources is not sufficient to suggest that the terms of the Loan Contract, which provided the potential for a significantly increased level of debt, were relevantly unfair. The plaintiffs were already indebted to Westpac for about $113,000, so the immediate effect of the transaction was only that the level of debt would increase by $50,000. Any borrowings beyond that level would only occur if the plaintiffs chose to call upon those extra funds. I am not satisfied on the evidence that the plaintiffs were in any way incapable of making such decisions in their own interests, in the absence of financial advice. 114It seems to me that, viewed overall, the plaintiffs were in a position to adequately protect their interests in relation to the transaction. I do not think that the failure of Perpetual or DMS (which, whilst not strictly an agent of Perpetual, was utilised by Perpetual as part of its overall lending business: see Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389 at [255] per Allsop P; Provident Capital Ltd v Papa (supra) at [101] per Macfarlan JA) to insist upon the obtaining of further advice, or undertake any further enquiries, gives rise to any relevant unfairness in this case. Perpetual (or DMS) has not acted in any predatory or misleading fashion towards the plaintiffs. I do not consider that it would be in any way contrary to the public interest to uphold the Loan Contract and mortgage. For these reasons, the plaintiffs' claim under the Contracts Review Act must also fail. 115Accordingly, the plaintiffs' Statement of Claim will be dismissed with costs.

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: 20 June 2014