ANZ v Loftus
[2016] VSC 58
•26 February 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S CI 2013 02884
| AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (ACN 005 357 522) | Plaintiff |
| v | |
| MICHAEL DAVID LOFTUS | Defendant |
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JUDGE: | CAMERON J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 16 and 17 November 2015 |
DATE OF JUDGMENT: | 26 February 2016 |
CASE MAY BE CITED AS: | ANZ v Loftus |
MEDIUM NEUTRAL CITATION: | [2016] VSC 58 |
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MORTGAGE – Judgment debt – Fraud – Registered mortgage secured against the defendant’s property – Where the defendant denies granting the property as security nor signing the mortgage – Where original applications and letters of offer were lost by the plaintiff - Whether fraud brought home to the bank – Where judgment debt was upheld previously – Where all moneys mortgage secured the judgment debt – Transfer of Land Act 1958 s 42, s 76 and s 78.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R.L. Moore | HWL Ebsworth |
| For the Defendant | In person |
HER HONOUR:
Introduction
The defendant, Michael Loftus, is the registered proprietor of a property at Unit 2, 5 Briar Court, South Morang, Victoria (volume 11029 folio 533) (‘the Property’).
On 18 April 2008, Mr Loftus applied for a business loan with the plaintiff, Australia and New Zealand Banking Group Limited (‘ANZ’), for a sum of $90,000.00. The facility was subsequently approved and a letter of offer dated 6 May 2008 was sent to and signed by Mr Loftus on 9 May 2008. The amount of $90,000 was advanced to Mr Loftus on or about 13 May 2008.
On 28 July 2008, in purported reliance on the executed letter of offer dated 6 May 2008, ANZ lodged a mortgage (dealing no. AF993578G) over the Property at the Land Titles Office, which was subsequently registered (‘the 2008 mortgage’).[1]
[1]Exhibit P2.
The letter of offer dated 6 May 2008 contains a condition stipulating that the Property be provided as security for the loan amount.
On 7 October 2008, after further negotiation with ANZ for an increase in loan amount, Mr Loftus received and executed a new letter of offer dated 7 October 2008 for a revised sum of $96,267.00 (‘the loan agreement’).
The parties are in agreement that Mr Loftus signed the loan agreement, and received the monies advanced thereunder.
Mr Loftus later defaulted in his repayment of the principal and interest due under the loan agreement, and ANZ served a notice of default under s 76 of the Transfer of Land Act 1958 (Vic) (‘the TLA’). The default was not remedied by Mr Loftus, and ANZ now seeks an order for possession of the Property.
ANZ alleges that as security for the loan, Mr Loftus agreed to grant a registered mortgage over the Property in its favour.
Mr Loftus resists ANZ’s claim on the basis that he was never asked to (nor did he) provide ANZ with security for the loan. Most significantly, Mr Loftus says that he never signed the 2008 mortgage, that his signature was forged on it, and therefore ANZ’s mortgage security is defeasible for fraud.
On 2 April 2014, Zammit AsJ (as she then was) gave judgment in favour of ANZ, and ordered that Mr Loftus pay it the sum of $132,309.51 (‘the judgment debt’).[2] Her Honour’s orders in relation to the judgment debt were not disturbed by Ginnane J, when the matter came before his Honour on appeal.
[2]Australian and New Zealand Banking Group Limited v Loftus (Unreported, Supreme Court of Victoria, Zammit AsJ, 27 March 2014).
Accordingly, the only issue remaining for the Court’s consideration in this case is whether the 2008 mortgage was procured by fraud and whether ANZ can enforce its judgment debt over the Property relying on the 2008 mortgage.
For the reasons set out in this judgment, I find that ANZ can enforce the judgment debt over the Property, that the 2008 mortgage is valid, and that ANZ’s security interest in the Property is not defeasible for fraud.
Background
On 18 April 2008, Mr Loftus and his business partner, Mr Moses Sakr, approached ANZ for a business loan. They proposed to purchase a retail take away food business located at Westfield Shopping Centre in South Morang.
They met with Mr Carlo De Cesaris, a small business specialist at the ANZ South Morang branch. They requested a loan of $180,000 to finance the purchase of the business and associated start-up expenses. During the meeting, Mr De Cesaris completed an ANZ Express Business Credit Application on Messrs Loftus and Sakr’s behalf, which was based on the information that they provided to him. The monies would be advanced under two separate loans – one to Mr Loftus for $90,000 and the other to Mr Sakr for $90,000.
On Mr Loftus’ application:
(a) he was named as the borrower;
(b) the business was listed as a retail take away partnership in which he owned 50%; and
(c) security for the loan was expressed as ‘5A Briar Crt Sth Morang’ given by ‘D. Loftus’.
The application was signed by both Messrs Loftus and Sakr as business partners.[3]
[3]Exhibit P3.
On 6 May 2008, Mr De Cesaris issued a letter of offer to Mr Loftus. Enclosed with the letter was:
(a) the business banking and finance conditions of use dated September 2006;[4]
(b) a mortgage of land; and
(c) the terms and conditions of the mortgage being the memorandum of common provisions AA816.[5]
[4]Exhibit P5.
[5]Exhibit P6.
On 9 May 2008, Mr De Cesaris met with Mr Loftus at the branch office, where Mr Loftus signed the letter of offer in his presence. On the second page of the offer, security for the loan was stated as follows:
Second Registered Standard Mortgage by Michael David Loftus over the property situated at 5A Briar Court, SOUTH MORANG Vic 3752 (To be taken)[6]
[6]Exhibit P4.
Importantly, at the same meeting, Mr Loftus was said to have signed the mortgage in Mr De Cesaris’ presence, and Mr De Cesaris witnessed Mr Loftus’ signature. On 28 July 2008, the 2008 mortgage was lodged at the Land Titles Office for registration.
In September 2008, Mr Loftus contacted Mr De Cesaris and requested an additional loan of $10,000 for unforeseen business set-up costs. On 7 October 2008, Mr De Cesaris issued a new letter of offer in respect of the additional sum.[7] Although funds had previously been advanced by ANZ to Mr Loftus, this new letter of offer was in respect of the sum of $95,267. The letter of offer was purportedly signed by Mr Loftus on the same day. On the second page of this offer, security for the loan was stated in exactly the same terms as the letter of offer dated 9 May 2008, being the 2008 mortgage.
[7]Exhibit P7.
Since 17 December 2010, Mr Loftus has failed to make any of the repayments under the loan agreement. On 18 March 2013, ANZ served a default notice on Mr Loftus pursuant to s 76 of the TLA, demanding that Mr Loftus pay the outstanding debt he owed ANZ. Mr Loftus did not pay the outstanding debt.
On 5 June 2013, ANZ issued proceedings in this Court against Mr Loftus seeking:
(a) possession of the Property;
(b) payment of the sum of $111,996.63 (being the indebted sum plus interest calculated at the time of the issuing of the writ);
(c) interest; and
(d) costs.
On 6 December 2013, ANZ filed and served a summons on Mr Loftus’ then solicitor seeking orders that it have summary judgment against Mr Loftus for the sum of $111,960.63 (and interest) and possession of the Property.
On 2 April 2014, the summons came on for hearing before Zammit AsJ (as she then was), who granted ANZ summary judgment, and ordered that:
…
(2)The plaintiff recover [from] the defendant possession of all that piece of land being Lot 2, on Plan of Subdivision 607016C and being the whole of the land contained in Certificate of Title Volume 11029 Folio 533 and known as Unit 2, 5 Briar Court, South Morang in the State of Victoria.
(3) The defendant pay the plaintiff the sum of $132,309.51.
(4)The defendant pay the plaintiff’s costs of the proceedings (including the costs of this application) on an indemnity basis.
…
On 23 April 2014, Mr Loftus filed a notice of appeal against her Honour’s orders.
On 18 July 2014, the appeal came on for hearing in the Practice Court before Ginnane J.[8] On appeal, new evidence was led and Ginnane J determined that the new evidence should be put before a trial judge. On that basis, his Honour allowed the appeal in part and ordered that:
(a) paragraphs two and four of Zammit AsJ’s orders (as she then was) be set aside; and
(b) the proceeding be referred back to her Honour for further directions.
[8]ANZ Banking Group Ltd v Loftus [2014] VSC 342.
Relevantly, his Honour held:
[T]he Associate Justice gave judgment for ANZ against Mr Loftus in the sum of $132,309.51. That debt was incurred under the loan agreement and was not dependent on the validity of the mortgage. None of the submissions that I received related to that judgment for debt. Ultimately, in submissions after I delivered judgment, counsel did not suggest that I set that part of the judgment aside. I will therefore only allow the appeal against the order for possession and the costs orders that were made.[9]
[9]Ibid [70].
The effect of his Honour’s order was that the judgment debt in favour of ANZ in the sum of $132,309.51 remains undisturbed and is not the subject of this judgment. As Mr Loftus is now a bankrupt, and unable to pay the judgment debt, ANZ wishes to take possession of the Property.
Two issues must be decided namely whether -
(a) Mr Loftus’ signature on the 2008 mortgage was forged; and
(b) the 2008 mortgage secures the judgment debt.
Applicable legal principles
Section 42(1) of the TLA provides:
Notwithstanding the existence in any other person of any estate or interest (whether derived by grant from Her Majesty or otherwise) which but for this Act might be held to be paramount or to have priority, the registered proprietor of land shall, except in case of fraud, hold such land subject to such encumbrances as are recorded on the relevant folio of the Register but absolutely free from all other encumbrances whatsoever…[10]
[10]Transfer of Land Act 1958.
In Breskvar v Wall, Barwick CJ held:
The Torrens system of registered title ... is not a system of registration of title but a system of title by registration. That which the certificate of title describes is not the title which the registered proprietor formerly had, or which but for registration would have had. The title it certifies is not historical or derivative. It is the title which registration itself has vested in the proprietor. Consequently, a registration which results from a void instrument is effective according to the terms of the registration. It matters not what the cause or reason for which the instrument is void.[11]
[11](1970) 126 CLR 376, 385-386.
Upon registration of the mortgage, the mortgagee enjoys statutory protection which cannot be challenged or set aside on the ground of any defect in the way that the registered mortgage was acquired, except in cases of fraud.[12]
[12]See Pamela O’Connor, ‘Deferred and Immediate Indefeasibility: Bijural Ambiguity in Registered Land Systems’ (2009) 13 Edinburgh Law Review 194, 196.
The meaning of statutory fraud (such as that in s 42 of the TLA) was considered by Lord Lindley in Assets Co v Mere Roihi,[13] which was subsequently endorsed by the Court of Appeal in Pyramid Building Society (In Liquidation) v Scorpion Hotels Pty Ltd.[14] The relevant principles may be summarised as follows:
[13][1905] AC 176.
[14][1998] 1 VR 188, 191 (Hayne JA, Brooking and Tadgell JJA agreeing).
(a) Actual dishonesty – Statutory fraud means actual fraud, that is dishonesty of some sort, not what is termed constructive or equitable fraud.
(b) Fraud must be ‘brought home’ – In order to impeach the title of the registered proprietor, the fraud must be ‘brought home’ to the person whose registered title is impeached or their agents. So, for example, if a fraudster approaches a bank, takes out a loan over the registered proprietor’s property, and the bank registers a mortgage; the fraud must be brought home to the bank as it is their registered interest which you are trying to impeach.
(c) Lack of diligence not enough – It is not enough to show that the registered proprietor could have discovered the fraud had he or she been more diligent in making enquiries.
(d) ‘Wilful blindness’ – If the registered proprietor deliberately failed to make diligent enquiries for fear of learning the truth, known as ‘wilful blindness’, then he or she may be said to have acted fraudulently. The person attempting to impeach the registered proprietor’s interest must prove that the suspicions of the registered proprietor or their agents were actually aroused. It is not enough to show that a reasonable person in the registered proprietor’s position would have been suspicious – the registered proprietor must actually be suspicious.
(e) Genuine belief – A person who presents for registration a document which is forged or has been fraudulently or improperly obtained is not guilty of fraud if he honestly believes it to be a genuine document which can be properly acted upon.[15]
[15]Assets Co v Mere Roihi [1905] AC 176, 210.
Accordingly, Mr Loftus must prove that ANZ acted with actual fraud, and that that fraud had been ‘brought home’ to ANZ.[16]
[16]Pyramid Building Society (in liq) v Scorpion Hotels Pty Ltd [1998] 1 VR 188, 191 (Hayne JA, Brooking and Tadgell JJA agreeing).
Standard of proof for fraud
In a civil proceeding, s 140(1) of the Evidence Act 2008 obliges a court to be satisfied, in entering judgment for a party, that the case has been proved on the balance of probabilities. Section 140(2) then provides the following non-exhaustive list of matters which a court may take into account in deciding whether it has the requisite satisfaction:[17]
[17] Evidence Act 2008.
(a) the nature of the cause of action or defence;
(b) the nature of the subject matter of the proceeding; and
(c) the gravity of the matters alleged.
However, where an allegation of fraud is made, the standard of proof is raised and the allegation of fraud must be proved to the Briginshaw standard.[18]
[18]Briginshaw v Briginshaw (1938) 60 CLR 336.
In Briginshaw v Briginshaw,[19] Dixon J made the following well known observations concerning proof of a fact:
The truth is that, when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality. No doubt an opinion that a state of facts exists may be held according to indefinite gradations of certainty; and this has led to attempts to define exactly the certainty required by the law for various purposes. Fortunately, however, at common law no third standard of persuasion was definitely developed. Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters ‘reasonable satisfaction’ should not be produced by inexact proofs, indefinite testimony, or indirect inferences.[20]
[19]Ibid.
[20]Ibid 361-362.
The Briginshaw standard was further explained by the majority of the High Court in Neat Holdings Pty Limited v Karajan Holdings Pty Ltd:[21]
The ordinary standard of proof required of a party who bears the onus in civil litigation in this country is proof on the balance of probabilities. That remains so even where the matter to be proved involves criminal conduct or fraud... On the other hand, the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Thus, authoritative statements have often been made to the effect that clear proof is necessary ‘where so serious a matter as fraud is to be found’. Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct.
… There are, however, circumstances in which generalisations about the need for clear and cogent evidence to prove matters of the gravity of fraud or crime are, even when understood as not directed to the standard of proof, likely to be unhelpful and even misleading. In our view, it was so in the present case.[22]
[21](1992) 110 ALR 449.
[22]Ibid 449-450 (Mason CJ, Brennan, Deane and Gaudron JJ).
ANZ’s position
ANZ submits that Mr Loftus had duly executed the 2008 mortgage, that it is valid and enforceable and that it is entitled to an order for possession of the Property under s 78 of the TLA.
Mr Loftus’ position
Mr Loftus resists ANZ’s claim for possession of the Property on the basis that the 2008 mortgage is void and unenforceable.
It was submitted to the Court by Mr Loftus that he was never requested to provide security for the loan by ANZ. Mr Loftus maintains that he never signed the 2008 mortgage and that his signature was forged on that document.
Mr Loftus says that a $40,000 term deposit provided by Mr Sakr was the only security provided to ANZ for the whole amount advanced by ANZ to both of them.
Further, Mr Loftus alleges that ANZ has acted fraudulently as evidenced by failure to produce a number of documents, including the original applications and letters of offer.
The Evidence
Mr Loftus’ evidence
Mr Loftus’ evidence was that he never signed an earlier mortgage dated 28 November 2007, nor did he sign the 2008 mortgage as ANZ had not requested him to provide security for the loan agreement. Mr Loftus said that his loan was only secured by the $40,000 term deposit given by Mr Sakr. Mr Loftus further deposed that the 2008 mortgage did not exist, given that he had not received a mortgagor and witness acknowledgment form from ANZ, which is said to be an automatically generated form for an applicant to sign on loan application.
Mr Moses Sakr’s evidence
Mr Sakr gave evidence of meetings that occurred with Mr De Cesaris on 18 April 2008 and 9 May 2008. His evidence was that on neither of those occasions was the necessity of a mortgage raised; that is, according to his evidence, he had done well in only providing limited security, by way of a term deposit, to secure both loans.
In cross-examination, Mr Sakr maintained his position that his security of $40,000 was for both loans – that is, for the full $180,000. He stated that he had a strong recollection of this as it was a ‘significant time’ in his life.[23]
[23]Transcript 146.
Mr Sakr entered into a separate loan agreement in a similar form to Mr Loftus’ agreement, for his share of the finance, being $90,000. He states that he was never asked to provide mortgage security for his loan.
As I have said, Mr Sakr was adamant that Mr Loftus was never asked to provide ANZ with security for his loan advance, and that Mr Sakr’s $40,000 secured the entire $180,000.
Mr Carlo De Cesaris’s evidence
Mr De Cesaris was, at the time, a small business specialist employed by ANZ and assisted Mr Loftus in applying for the business loan. Mr De Cesaris gave evidence that he helped Mr Loftus complete the application form, and witnessed Mr Loftus’ signatures on both the application form and the 2008 mortgage notwithstanding that the print of Mr Loftus’ name and the date was not Mr De Cesaris’ handwriting.
Mr De Cesaris gave evidence that it was his normal practice to witness a signature only when the document was actually signed before him. He said that he never deviated from this practice as it was standard practice, ‘common sense’ and to do otherwise would be to call his integrity and that of ANZ into question.
In respect of the 2008 mortgage, Mr De Cesaris, in his affidavit, deposed as follows:
On 9 May 2008, at the same meeting with the Defendant… I believe that the Defendant signed the Mortgage in my presence. After signing the Mortgage, I signed same as witness. I have no doubt that the Defendant signed the Mortgage in my presence, as if he had not, I would not have signed same as witness to the Defendant’s signature. My practice has always been never to sign any documents as a witness unless I have actually witnessed the person first signing the document of which I am to be witness. Under no circumstances do I deviate from that practice.[24]
[24]Affidavit of Carlos De Cesaris sworn 2 December 2013, [16].
Mr De Cesaris gave evidence at trial consistent with this position. He had no specific recollection of Mr Loftus signing the 2008 mortgage, however he had no reason to believe that he would have deviated from his usual practice to witness a document only when it was signed in his presence. He stated that this was standard bank practice, on which he received training, and was also a matter of ‘common sense’.[25] Additionally, he stated that his integrity and that of ANZ would be called into question if the practice was ever deviated from. Mr De Cesaris stated that he was well aware of the significance of a mortgage and the requirements that it be signed and witnessed properly.
[25]Transcript 42.
Mr De Cesaris stated that the practice was to fax the mortgage to ANZ’s settlement team after it had been signed, and then send the originals by post within 14 days.
Mr Neil Holland’s evidence
Mr Holland, a handwriting expert, considered the authenticity of Mr Loftus’ signature on various documents and gave evidence at trial in support of ANZ’s claims.
Mr Holland prepared a report dated 24 October 2014,[26] in which Mr Holland has performed a forensic examination regarding Mr Loftus’ signatures on a mixture of photocopies and originals of 25 documents. In the process, Mr Holland attended the Land Titles Registry in Laverton in person to examine the signatures on a number of original documents, including the 2008 mortgage, a transfer of land document numbered P915479S dated 4 July 1990 and a mortgage numbered P915480S dated 4 July 1990. Mr Holland examined the registered mortgages by using a stereo microscope which allowed him a three dimensional magnified view of the signatures. Mr Holland compared the signature standards of Mr Loftus, that he set up using original and photocopied signatures of Mr Loftus, to the signatures on both the mortgage dated 28 November 2007 and the 2008 mortgage, Mr Holland came to the conclusion that the signatures on both the mortgage dated 28 November 2007 and the 2008 mortgage were written by the same writer of the signature standards of Mr Loftus.
[26]Exhibit P14.
Mr Holland stated that while he usually undertook an ink analysis on original documents, that was not requested, nor required, in the present case. This was because the only issue for determination was whether Mr Loftus’ signatures were authentic.
Ultimately, after examining the signature pattern, stoke sequences and indentations of all documents, Mr Holland was of the opinion that both registered mortgages but, more relevantly, the 2008 mortgage, contained the true signature of Mr Loftus.
Mr Yunous Shair’s evidence
Mr Shair is a manager in ANZ’s Commercial Collection Services Department. He deposed an affidavit affirmed 6 December 2013 and 16 July 2014, and gave evidence at trial.
Mr Shair gave evidence of Mr Loftus’ indebtedness to ANZ, and the various steps taken by ANZ to recover the loan monies advanced to Mr Loftus under the loan agreement. On the evidence, at 6 December 2013, Mr Loftus was indebted to ANZ in the sum of $124,190.17.
Mr Shair produced a bundle documents which were contained in ANZ’s customer file in relation to Mr Loftus. These documents had not previously been discovered. One of the documents is a letter from Cathy Loftus (Mr Loftus’ sister) to Bert Gratton, Manager at ANZ Lending Services dated 7 December 2009. Mr Gratton was one of Mr Shair’s predecessors. The letter relevantly states:
Michael would like to amalgamate the Home Loan and Business Saver loan.
The Business loan was taken out for a Business that is no longer in operation and has no income to support the loan. Security for the Business loan has always been the home.
Mr Desmond Ryan’s evidence
Mr Ryan was Mr Loftus’ trustee in bankruptcy. He swore an affidavit dated 11 July 2014 and gave evidence at trial.
Mr Ryan’s evidence was that throughout his dealings with Mr Loftus, Mr Loftus acknowledged that the Property was encumbered by the 2008 mortgage in favour of ANZ. Mr Ryan stated that he went through the statement of affairs with Mr Loftus, and confirmed the figures in it, with respect to the 2007 and 2008 mortgages, by sighting various bank account statements. Mr Ryan gave evidence that if he was ever told by Mr Loftus that there were no security interests over the Property the statements of affairs would have drastically changed as there would be a larger sum of unsecured equity in the Property available to Mr Loftus’ creditors. Furthermore, Mr Ryan gave evidence that he also assisted Mr Loftus with attempting to refinance his debts with ANZ.
Was Mr Loftus’ signature on the 2008 mortgage forged?
According to s 42 of the TLA,[27] the registered proprietor of land only has to be subject to the encumbrances recorded on the title, except in the case of fraud. In the present case, a mortgage was registered over the Property. The onus of proof lies with the registered proprietor of the Property, Mr Loftus, to satisfy the Court that the 2008 mortgage was procured fraudulently.
[27]Transfer of Land Act 1958 s 42.
In closing submissions, Mr Loftus urged me to accept the evidence of Mr Sakr as evidence which corroborates his own account of the meetings on 18 April and 9 May 2008. Mr Loftus submits:
The reliability of Mr Sakr’s memory in this regard was strengthened by his clear recollection of boasting to the Defendant to the effect that they were lent $180,000 because Mr Sakr put up $40,000 as security, and that he would not have put up $40,000 if they could only get $90,000 as Mr Sakr could have borrowed the whole $90,000 from his brother (TS 151 [10]-[17]).[28]
[28]Defendant closing submissions [4].
Mr Loftus submits that Mr Sakr’s account of the meetings should be preferred to Mr De Cesaris’s evidence:
With a large number of customers whom Mr De Cesaris would need to deal with every day and over many years, it is understandable that he could not recall the circumstances of each individual case. This raises a query as to what else Mr De Cesaris might have failed to recall but which is important in this instance. It would not be unlikely that he might also have forgotten whether he departed from his normal practice of witnessing signatures in the Defendant’s case. The same query was raised in Beatty v ANZ Banking Group Ltd. There were strong indications in Mr De Cesaris’ testimony that he might have mentally restructured (perhaps subconsciously) what happened at the two meetings based solely on the documents which were put before him. Accordingly, the reliability of the evidence of Mr De Cesaris is very doubtful, and the evidence of the Defendant and Mr Sakr about the two meetings should be preferred.[29]
[29]Ibid [8].
Mr Loftus relied, in submissions, on Beatty v Australia and New Zealand Banking Group Ltd.[30] In that case, the plaintiff's signature was forged on a mortgage to a bank of property she owned jointly with her husband. A bank officer falsely attested as a witness to the plaintiff’s signature. The mortgage was also amended after execution by adding the words ‘nee Susan Elizabeth Beatty’ after the plaintiff’s name. The plaintiff’s name on the mortgage was her married name but her name on the certificate of title was her maiden name. The bank registered the mortgage. The plaintiff and her husband divorced and the Family Court ordered by consent that the husband transfer his interest in the property to the plaintiff. The plaintiff became aware of the forged mortgage and brought proceedings for a declaration that the mortgage was null and void against her and against the property.
[30][1995] 2 VR 301.
This case may be distinguished from the present case in a number of ways. Firstly, in Beatty, there was actual evidence before the Court that the signature on the mortgage was not Ms Beatty’s and was forged by her then husband which bore no resemblance to Ms Beatty’s signature. Evidence tendered in Court by way of an expert report supporting that conclusion was accepted by the trial judge and remained unchallenged. Secondly, the bank was implicit in the fraud through the action of the bank’s employee, who witnessed the mortgage. During cross-examination, it was clear to the Court that the bank employee simply signed as witness for the mortgage, but had not witnessed the plaintiff executed the mortgage.
Mr Loftus complained that there was never any ‘mortgagor and witness acknowledgement form’ generated and provided to him. He alleged that such a form does not exist, and therefore:
It follows from the non-existence of the form in relation to the alleged mortgage granted by the Defendant that a mortgage was not generated for the Defendant to sign to obtain the business loan. The Plaintiff provided no explanation as to the non-existence of the form in this case.[31]
[31]Defendant closing submissions [9].
This issue was the subject of cross-examination. Mr Loftus appeared to link this issue to his submission that ANZ forged the 2008 mortgage because, according to him, it believed that Mr Loftus’ business was at risk. Mr Loftus also linked this issue with the length it time it took between the loan advance and registration of the mortgage at the Land Titles Office. I do not consider that the existence or otherwise of the mortgagor and witness acknowledgment form is determinative of whether the 2008 mortgage is valid. They are two distinct documents. Mr Loftus did not advance any compelling reason as to why the 2008 mortgage is unenforceable by virtue of the non-existence of the mortgagor and witness acknowledgment form. I do not consider that anything turns upon the delay between the date upon which funds were advanced and the registration of the 2008 mortgage. Ultimately, that is a commercial risk for ANZ and does not bear upon the validity of the 2008 mortgage.
In the course of cross-examination, Mr Loftus maintained that certain documents which appeared to be signed by him were photocopies and did not contain ‘real ink’. Even though he did not deny signing certain documents, he denied that it was his signature on the documents shown to him. The evidence was:
Can you have a look at the front of it? That’s a mortgage that you gave St George Bank isn’t it?---Yes. I believe so, yes.
For the loan of funds so you could acquire the government's remaining interest in 5 Briar Court?---Yes.
If you’d just go over the page, that’s your signature isn’t it?---Well, we’re going back 16 years. My signature’s changed so much. It looks similar but the M’s - the M looks more like a W. I honestly couldn’t say if it’s mine or it isn’t and it’s not in biro. Like the front page is in blue biro.
But that’s a mortgage that’s registered against that title?---Yeah, but it’s a photocopy. It’s not – it’s not an ink signature. The front page is ink - is - - -
All right, I’ll - - -?---And the second page is showing - I did - I did go through Geoffrey Allsman but looks like a photocopy.
You’re not suggesting that you didn’t sign a mortgage to St George Bank?
---Not all. I’m not saying that at all. You asked me is that my signature.
I did?---And I’m saying I’m not sure if it’s my signature or not.
That’s the only mortgage on title; St George Bank?---Well, as I said - - -
I’m asking you whether that’s your signature?---Well, that I can’t answer. I just answered your question. I can’t say if it’s my signature or it’s not and to me it’s a photocopy and it’s not real ink. The front page is real ink and I’ve got no problem with it and if you have a look at the signature that’s - ah, well, it’s 15 – it’s 15 years old and it’s a photocopied page; this back page.[32]
[32]Transcript of proceedings, Australia and New Zealand Banking Group Limited v Loftus (Supreme Court of Victoria, S CI 2013 2884, Cameron J, 16 and 17 November 2015) 159-160 (‘Transcript’).
Mr Loftus also gave evidence about the 2007 mortgage:
That’s a mortgage of land between yourself and the plaintiff, dated 28 November 2007. Correct?---This document I have?
Yes?---I have this document unsigned, and it’s in – it was in the appeal book.
All right, just – you can just answer – that’s what the document purports to say?---It purports to say - - -
And I’m asking the questions – I’m asking you does that document have your signature on it?---I’ve never signed this document, but it - - -
No, does that - - -?---looks to have – it looks like my signature, and I had said in my affidavit. I’ve never signed it and my affidavit came before exhibits – that affidavit comes before exhibits which the plaintiff has and I put in the court book, and one of them exhibits is the plain document.
But it looks like your signature you say?---Purports to look like my signature, but I don’t, I don’t cross me sevens on the date.
No, I’m [not] talking about the date, I’m asking about your signature. Don’t worry about the date, just the signature. Focus on the signature, not the date?
---I’ve already answered that question in my affidavit.
No, I want to know what your answer is today before Her Honour?---Before Her Honour, it looks to be - it looks like my signature but I have never signed this document.[33]
[33]Transcript 165.
Mr Loftus’ arguments were of a technical nature. When showed an original document and a photocopy of the same document, he would admit his signature on the original, but deny his signature on the photocopy as it was ‘a copy’. Mr Loftus put great weight on the provision of original documents, whether those documents contained ‘real ink’, and the various stamps and reference numbers contained on those documents. He also pointed out several minor details which were not determinative such as whether or not an individual had crossed their ‘7s’ to suggest the handwriting was not his own on the documents.
In determining whether Mr Loftus signed the documents in question, I find the evidence of Mr Holland convincing. His report contained a thorough analysis of several samples of Mr Loftus’ signature. Mr Holland was of the opinion that both registered mortgages, but relevantly for this present proceeding, the 2008 mortgage, contained the true signature of Mr Loftus.
In cross-examination, Mr Holland explained that despite the analysis not being definitely accurate, the result was ‘highly probable’ meaning that the possibility that the signature was made by another person was remote and negligible.
I found Mr Holland a considered and careful witness. His analysis, as described, was thorough and, in my opinion, professional. There was nothing in the rigorous cross-examination of Mr Holland by Mr Loftus that disturbed my view of the veracity of Mr Holland’s evidence. Accordingly, in my opinion, Mr Holland’s evidence ought be accepted and preferred to that of Mr Loftus.
Mr Loftus attempted to impugn the methodology in Mr Holland’s report by relying on a paper entitled ‘The Expert Examination of Signatures’ from 1961.[34] Mr Loftus submitted that the paper demonstrated that Mr Holland’s method ‘was prone to error’.[35] Counsel for ANZ objected to the use of the paper based on its age and the fact that author’s evidence was unable to be tested. I have given no weight to this paper in reaching my decision, given its age and the inability of the Court to test the underlying premises outlined in it.
[34]Jacques Mathyer, ‘The Expert Examination of Signatures’ (1961) 52(1) Journal of Criminal Law and Criminology 122.
[35]Transcript 134.
As I have observed, Mr Sakr was adamant that his $40,000 term deposit was the only security required by ANZ in respect of both his and Mr Loftus’ loans.
In cases such as this, it is incumbent upon the Court to weigh the evidence in its entirety.
I found the evidence of Mr De Cesaris convincing and credible, notwithstanding that he did not have a specific recollection of witnessing the 2008 mortgage. Given the demands placed on a professional commercial banker, this, in my opinion, is entirely understandable.
I did not find any reason to doubt that Mr De Cesaris would have deviated from his normal practice in relation to the witnessing of Mr Loftus’ signature on the 2008 mortgage and, accordingly, I accept his evidence in preference to that of Mr Sakr.
The evidence of Mr Ryan also cast doubt over Mr Loftus’ version of events. Mr Ryan gave convincing evidence that Mr Loftus knew of the existence of the 2008 mortgage over the Property and that the unsecured equity of the Property would have been distributed to the unsecured creditors should the Property not be subject to any mortgage in favour of the ANZ. If the Property was not secured by the 2008 mortgage as argued by Mr Loftus, ANZ would have been included in the statement of affairs as an unsecured creditor.
I do not accept that Mr Loftus did not read or understand or give instructions about the completed statement of affairs. As I observed at trial, how would Mr Loftus’ sister have known what amounts were to be put in the statement of affairs, and which bank held security, had she not been instructed by Mr Loftus. Mr Loftus did not give any evidence in relation to this matter. On the evidence, I cannot accept that Mr Loftus was completely ignorant about the content of the statement of affairs.
As I previously noted, Mr Loftus also submitted that ANZ forged the 2008 mortgage because it believed that Mr Loftus’ business was at risk. This was not founded on any evidence and did not rise above mere assertion.
Mr Loftus referred to ANZ’s submission to the Senate Economics References Committee dated 31 March 2010, which states at page 9:
ANZ lends to start-up small businesses and offers a range of unsecured small business lending products. In some cases, this involves lending to small businesses with limited history of financial success.
There is no utility in considering ANZ’s submissions to the Senate Economics References Committee, nor its findings, in the context of this proceeding. The issue before the Court is clearly whether the 2008 mortgage was forged and, consequently, whether ANZ is able to enforce the 2008 mortgage.
Finally, as I have noted, the letter from Ms Loftus to Bert Gratton dated 7 December 2009, states that ‘Security for the Business loan has always been the home’. Mr Loftus acknowledged that his sister had authority to communicate with ANZ, but denied that this statement was true. He could not provide a satisfactory answer as to why Ms Loftus would have been incorrect, or why she had not been called to give evidence.
Mr Loftus submits that the letter from Ms Loftus to Mr Gratton dated 7 December 2009 has no probative value as its authenticity cannot be confirmed. As I have said, Ms Loftus was not called to give evidence. Mr Loftus’ submission that her letter dated 7 December 2009 could not be authenticated again did not rise above mere assertion. Accordingly, I did not find this submission credible. Mr Loftus entrusted his sister with authority to communicate with ANZ in relation to his affairs. There was no evidence led that she made a mistake, told an untruth or misled ANZ in her letter acknowledging that the 2008 mortgage secured the loan. The only conclusion that the Court can reach, on the evidence, is that the communication (being the letter from Ms Loftus to ANZ) reflected the situation as it stood.
My Loftus’ account of what happened cannot withstand scrutiny. He has failed to persuade me that his signature on the 2008 mortgage was not his or that it was procured by fraud. There is no evidence before me upon which I could be satisfied that any fraud should be ‘brought home’ to ANZ to impeach the indefeasibility of its security interest. Accordingly, I find that the 2008 mortgage is valid and enforceable.
Does the 2008 mortgage secure the judgment debt?
Zammit AsJ (as she then was) determined that, at the time of her judgment, Mr Loftus owed ANZ the sum of $132,390.51. This was not disturbed on appeal.
Clearly if the judgment debt was secured by the 2008 mortgage, ANZ is entitled to possession of the Property for the repayment of the judgment debt.
The 2008 mortgage is an ‘all moneys mortgage’. By reference, the 2008 mortgage specifically incorporated the memorandum of common provisions being AA816 (‘MCP’).
The MCP operates to define the reach of the 2008 mortgage and specifies what advances would be secured under it.
The MCP relevantly provides as follows:
1 Mortgage
(a)By signing this Mortgage, I mortgage the Property to ANZ as security for payment of the Secured Money.
(b)I enter into this Mortgage in return for ANZ providing banking accommodation or other services.
2 Payment obligations
2.1 What I will pay
I will pay the Secured Money to ANZ on time.
2.2 What is Secured Money?
…
Unregulated Arrangements
This Mortgage secures all my obligations in relation to all Unregulated Arrangements.[36] To the extent it does so, Secured Money means all money owing to ANZ for any reason:
[36]Compared with ‘regulated arrangements’ which apply to credit used wholly or predominately for personal, domestic or household purposes: cl 11.1.
(a) by me;
(b) now or in the future;
(c)actually or contingently (money is ‘contingently’ owed where I have an obligation to pay ANZ if something happens or is discovered),
Other than under a Regulated Arrangement.
It includes:
(i)principal and interest;
(ii) fees, costs, charges and expenses;
(iii) liability under a guarantee or indemnity;
(iv) liquidated and unliquidated damages; and
(v) amounts payable under clause 9 [‘other payments’].
The ambit of the MCP is very wide capturing all present and future indebtedness owed to ANZ by Mr Loftus. The validity of this clause was not disputed by the parties.
Courts have accepted that all moneys clauses are enforceable.[37] These clauses routinely appear in mortgages in order to provide additional protection to mortgagees and are a common feature of commercial life.
[37]See Pamebianco v Bendigo Bank Limited and Anor [1999] VSC 50, [14]-[16]; Ronan & Ors v Australia and New Zealand Banking Group Limited (2000) VR 531 [52]; Oversea Chinese Banking Corporation Limited v Malaysian Kuwaiti Investment Co [2003] VSC 495 [31]-[36].
It is clear from the evidence that Mr Loftus signed the 2008 mortgage on 9 May 2008. The 2008 mortgage was executed to enable him to borrow money from ANZ to fund his retail take away business.
On the basis of the evidence and the reasons set out in this judgment, I conclude that the judgment debt is secured by the 2008 mortgage.
Conclusion
Mr Loftus failed to persuade the Court that the signature on the 2008 mortgage was not his. There was no evidence to justify the conclusion that the 2008 mortgage was signed by any other person but Mr Loftus.
Mr Loftus’ case relied heavily on a number of minor surrounding circumstances on or about when the loan was advanced to him. Throughout his proceeding, Mr Loftus questioned the plaintiff on why there was such a long time gap between the date of execution of the 2008 mortgage and the date of its lodgement at the Land Titles Office and why the original applications and letters of offer went missing.
The evidence adduced by Mr Loftus may point to some administrative imperfections, oversights or indeed unexplained errors. The evidence certainly does not establish that the signature that appeared on the 2008 mortgage produced by the Land Titles Office was forged by an employee or agent of ANZ, that the 2008 mortgage was obtained by fraud or that the signature was not that of Mr Loftus. In my opinion, the signature on the 2008 mortgage was that of Mr Loftus and this mortgage secured the outstanding monies owed by Mr Loftus to ANZ.
Accordingly, I order that:
(a) The plaintiff have possession of the Property.
(b) The proceeding is otherwise dismissed.
I will hear the parties on the question of costs and the form of orders.
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