Commonwealth Bank of Australia v Palermo
[2019] WASC 28
•13 FEBRUARY 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: COMMONWEALTH BANK OF AUSTRALIA -v- PALERMO [2019] WASC 28
CORAM: ARCHER J
HEARD: 4, 5 and 6 FEBRUARY 2019
DELIVERED : 13 FEBRUARY 2019
FILE NO/S: CIV 1986 of 2017
BETWEEN: COMMONWEALTH BANK OF AUSTRALIA
Plaintiff
AND
DIANA TINA PALERMO
Defendant
Catchwords:
Loan agreement - Default - Bank's entitlement to relief - Defendant's claims of forgery
Legislation:
Nil
Result:
Judgment for the plaintiff
Category: B
Representation:
Counsel:
| Plaintiff | : | J Taylor |
| Defendant | : | In Person |
Solicitors:
| Plaintiff | : | Dentons Australia |
| Defendant | : | In Person |
Case(s) referred to in decision(s):
Meates v Attorney‑General [1983] NZLR 308
Palermo v Palermo [2015] WASCA 49
ARCHER J:
Introduction
The plaintiff, the Commonwealth Bank of Australia (Bank), claims that it lent money to the defendant Ms Palermo under various loan agreements, secured by a mortgage over the land at 12 Tempo Way, Aveley (Property). Ms Palermo is the registered proprietor of the Property. The Bank claims that Ms Palermo has defaulted under a loan agreement dated 24 October 2013 (Final Loan Agreement), and seeks to enforce its rights under the mortgage.
Ms Palermo refused to file a proper defence,[1] but submitted that she did not enter into a loan agreement with the Bank. During the trial, Ms Palermo admitted, from the bar table, that she was the registered proprietor of the Property but denied entering into a contract to buy the land.[2] Ms Palermo also denied, from the bar table, that she owed the Bank, or any bank, money. She denied receiving a notice of default or a letter from the Bank advising that it intended to take enforcement proceedings if the money owing was not repaid.[3]
[1] See ts 144 ‑ 145.
[2] ts 180.
[3] ts 180 and 319 ‑ 321.
Ms Palermo also submitted that a number of documents were invalid because they had not been witnessed or were forgeries.
In addition, Ms Palermo raised issues relating to procedure, jurisdiction and treason.
The issues
The following issues arise:
1.Did Ms Palermo sign documents that appear to bear her signature? Did she send or receive emails that appear to have been sent or received by her?
2.Is the mortgage over the Property dated 14 December 2012 (Mortgage) a forgery?
3.Did Ms Palermo enter into any agreements with the Bank? Is Bankwest an unconnected entity to the Bank?
4.Did the Bank and Ms Palermo enter into the Final Loan Agreement?
a.Did Ms Palermo sign the Final Loan Agreement?
b.Was there a concluded agreement?
5.Did the Bank advance money to Ms Palermo pursuant to the Final Loan Agreement?
6.Did Ms Palermo default in her obligation to repay the loan amount?
7.If the answer to question 6 is yes, is the Bank entitled to enforce its rights under the Mortgage?
8.Are any of the other matters raised by Ms Palermo relevant to the determination of the proceedings?
The evidence
The Bank relied primarily on documentation. The Bank also called four witnesses: Tibor Kiss, Julie Carroll, Steve Edwards and Jessie Klaric.
Tibor Kiss is the Managing Director of Kiss Finance, an independent finance broker engaged by Ms Palermo. He said that his firm assisted Ms Palermo with three loan applications relating to the Property. The first loan was to enable Ms Palermo to buy the land, the second was to construct the house and the third was a 'top‑up' loan for some additional items. He explained the process his firm followed in seeking the loans on her behalf. He explained the information Ms Palermo provided to his firm to enable various documents to be completed. In relation to the construction loan, he explained the process by which progress payments were submitted to the Bank to enable payments to be made to the builder. While most of his contact with Ms Palermo was by email, he met with her on two or three occasions in his office.[4] She gave him her passport as verification of her identity, and he copied the relevant page.
[4] ts 187.
Julie Carroll gave evidence that she witnessed what appears to be Ms Palermo's signature on the Mortgage.
Steve Edwards is a Senior Manager in Recoveries at the Bank, who verified various documents were true copies of documents in the Bank's records. He also explained the manner in which the Bank retains records and the documents the Bank required to be witnessed.
Jessie Klaric is a solicitor employed by the law firm which acts for the Bank, Dentons. She gave evidence that she arranged for a default notice to be sent to Ms Palermo. She identified the records held by Dentons in relation to the sending and collection of that notice.
I accept the evidence of each of the witnesses called by the Bank. Each witness' evidence was consistent with the documentary evidence. None of the witnesses were damaged in cross‑examination.
Most of the documents tendered in evidence came from the records of Kiss Finance or the Bank.
The Bank documents were patently business records. Mr Edwards identified the copies in the trial bundle as being true copies of Bank records. The Bank also tendered the originals of the first two loan contracts and the Bank's original of the Mortgage (the other being held by Landgate).
The Kiss Finance records were also business records. Mr Kiss identified the copies as being true copies of Kiss Finance records.
The Bank also tendered certified copies of the Transfer of Land, Certificate of Title and Mortgage relating to the Property. These are prima facie proof of the documents and the matters set out in them, by s 239B(2) of the Transfer of Land Act 1893 (WA).
Ms Palermo called an expert document examiner, Mr Justin Watts. He gave evidence in relation to a number of documents. I accept his expertise and evidence. However, as will be seen, his evidence did not assist Ms Palermo.
Ms Palermo elected not to give evidence herself.
Factual findings
Later in these reasons, I will explain why I am satisfied that documents which appear to have been signed by Ms Palermo were signed by her. I will also explain why I am satisfied that emails that appear to have been sent or received by Ms Palermo were sent or received by her.
From the evidence, I am satisfied of the following.
The Land Loan and Mortgage
On or around 4 August 2012, Ms Palermo signed a form titled 'Home Loan Finance Application' for the purchase of a first home, seeking $351,000.[5] This form was created by Kiss Finance for its internal use. Mr Kiss identified some of the handwriting on the form as his, namely, the name and contact details of a 'Bronwyn Heather Palermo'. He said that he had obtained those details from Ms Palermo and that he believed that person was Ms Palermo's parent.
[5] Exhibit 1.4 page 24 ‑ 31.
Mr Kiss explained that Kiss Finance's process was to obtain from a loan applicant the data required by the Bank and then enter the data on to the Bank's online platform.[6] Mr Kiss said that he obtained Ms Palermo's current financial information from her, and that he applied for a loan for the purchase of the Property on Ms Palermo's behalf.[7]
[6] ts 195. See also ts 237 ‑ 239.
[7] ts 189 and 191.
On or around 16 August 2012, Ms Palermo signed a Contract for Sale of Land with Stockland Development Pty Ltd with a purchase price of $184,000 (Land Sale Contract). The contract was said to be subject to finance from Kiss Finance in the amount of $400,000.[8]
[8] Exhibit 1.10.
Mr Kiss signed a 'Customer Identification Form' in relation to Ms Palermo,[9] which was part of the Bank's application form.[10] The form attached a copy of Ms Palermo's passport.
[9] Exhibit 1.15.
[10] ts 191.
The Bank gave conditional approval for a loan of $327,600. Later in these reasons, I explain why I am satisfied that the credit provider, in each of the relevant agreements, was the Bank.
Due to a delay in preparing the contract to build a house on the land, Kiss Finance amended the loan application to seek funding for the land purchase only. Ms Palermo emailed to Kiss Finance a copy of her bank statement (then ANZ) and the receipt for the deposit she had paid for the Property.[11]
[11] Exhibits 1.22 and 1.23.
Kiss Finance received the Transfer of Land document from the settlement agent and arranged for it to be signed by Ms Palermo. Mr Kiss saw Ms Palermo sign it and witnessed her signature. Kiss Finance then returned it to the settlement agent on 30 November 2012.[12]
[12] ts 195, 211, 214 ‑ 215, 217 and Exhibits 1.31 and 2.124.
On 29 November 2012, Ms Palermo signed two documents which had been prepared by the Bank.[13]
[13] ts 194.
The first was a document summarising the information she had provided and the nature of the loan. I will refer to these types of documents as 'Application Forms'.
The other document was a loan agreement for $157,997.63.13 (Land Loan Agreement).
On 14 December 2012, the Mortgage was signed by Ms Palermo and witnessed by Julie Carroll.[14] Later in these reasons I will explain why I am satisfied that the Mortgage was not a forgery.
[14] Exhibit 3.168.
At settlement, Stockland was paid $155,509.00 by Bank cheque. The property was transferred to Ms Palermo and the Mortgage was registered on 20 December 2012.
The Construction Loan
Mr Kiss then applied for a second loan for the construction of the house at the Property on Ms Palermo's behalf.
On 24 January 2013, Ms Palermo applied for a First Home Owner grant. Mr Kiss saw her original passport, which had been given to him by Ms Palermo, and certified a copy of it. He also witnessed her signature on the application for the grant.[15]
[15] Exhibit 1.40 and ts 196 ‑ 197.
On 28 January 2013, Mr Kiss signed another 'Customer Identification Form' in relation to Ms Palermo, which again attached a copy of Ms Palermo's passport. [16] Mr Kiss said that Ms Palermo gave him her passport at this time.[17]
[16] Exhibit 1.43.
[17] ts 197.
The second loan application was approved, and a loan contract (Construction Loan Agreement) and associated documents were sent to Ms Palermo.
The associated documents included an Application Form. It described the primary purpose of the loan as the construction of a new dwelling ($201,102.23) and the refinance of the existing loan ($157,897.77). Ms Palermo signed the Construction Loan Application Form and dated it 26 February 2013. Ms Palermo signed the Construction Loan Agreement, which was for $363,958.86, the same day.
The Bank also provided Ms Palermo with a blank copy of a document titled 'Customer Authority to Make Progress Payment' (Progress Payment Authority document) which, when submitted with the necessary details, would enable the Bank to make a progress payment to the builder. Mr Kiss explained that his firm's standard practice was to have the owner sign blank copies of the Progress Payment Authority document at the same time as the loan contract documents were signed. He said the blank copies were retained by his firm. Then, when the owner submitted an invoice and an authority to pay the invoice to his firm, he or his staff used the invoice to complete the necessary details in the Progress Payment Authority document, and would then submit it to the Bank. He said that is what he did in Ms Palermo's case.[18]
[18] ts 199 ‑ 200.
The loan was disbursed to Ms Palermo's Bankwest loan account on 1 March 2013.
As construction of the house advanced, Ms Palermo sent the builder's invoices to Kiss Finance, requesting that they be forwarded to the Bank so that the builder could be paid. Ms Palermo made the first such request by email on 3 April 2013 to Ms Kiss (an employee of Kiss Finance) attaching a copy of the builder's progress claim invoice and asking it to be forwarded to the Bank for the builder to be paid.[19]
[19] Exhibit 1.64 (see also 1.66) and ts 201-203.
The Bank made progress payments to the builder, in accordance with the Progress Payment Authority documents, on 12 April 2013 ($33,294), 3 June 2013 ($55,490), 17 June 2013 ($44,392), 15 July 2013 ($44,392) and 2 September 2013 ($44,391).
The Final Loan
On 12 July 2013, Ms Palermo contacted Kiss Finance to arrange a third 'top‑up' loan to finance additional items, including a swimming pool.[20]
[20] Exhibit 1.76.
She provided additional information to Kiss Finance on 27 and 28 August 2013.[21] Kiss Finance prepared an internal form containing the data the Bank would need, which Ms Palermo completed and signed.[22] On 28 August 2013, Ms Palermo provided additional information that had been requested by Kiss Finance.[23] Kiss Finance then applied for a loan on her behalf.
[21] Exhibits 1.78, 2.82 and 2.83.
[22] Exhibit 2.83 and ts 204 ‑ 205.
[23] Exhibit 2.83.
On 2 September 2013, Ms Palermo sent emails checking on the progress of her loan application and providing additional information.[24] She also emailed Mr Kiss saying she was attaching 'signed documents as requested'. Attached to her email was a Bank form titled 'Privacy & Spam Statement Consent', which she had signed and dated.[25]
[24] Exhibits 2.85 and 2.86.
[25] Exhibit 2.87.
On 3 September 2013, Mr Kiss signed another 'Customer Identification Form' in relation to Ms Palermo, which attached a copy of Ms Palermo's driver's licence.[26] The same day, Ms Palermo emailed Mr Kiss forwarding an email from a valuer. The valuer said he was responding to her request for a valuation of her Property as 'you are getting a loan for your pool'.[27]
[26] Exhibit 2.88 and ts 206.
[27] Exhibit 2.90.
The Bank sent a pre‑approval letter to Ms Palermo the same day.[28]
[28] Exhibit 2.91.
On 4 September 2013, Ms Palermo emailed Kiss Finance to find out when the loan was likely to be finalised. On 10 September 2013, she inquired about the progress of the loan.[29]
[29] Exhibits 2.92 and 2.93.
On 18 September 2013, Ms Palermo emailed Mr Kiss saying she was attaching a letter 'as promised'. The letter was from her employer setting out her salary. She had told her employer she needed it for the bank.[30]
[30] Exhibit 2.94.
On 2 October 2013, Ms Palermo again enquired about the loan.[31]
[31] Exhibit 2.96.
On 3 October 2013, the Bank advised Mr Kiss that the amount sought to be borrowed would exceed the loan‑value ratio and that it needed to be reduced.[32] Mr Kiss discussed with Ms Palermo which items she would proceed with, and advised the Bank.[33]
[32] Exhibit 2.98.
[33] ts 207 and Exhibit 2.97.
The Bank granted conditional approval. One of the conditions was a satisfactory valuation.[34] Ms Palermo and Mr Kiss exchanged emails about when the valuation would occur.[35]
[34] Exhibit 2.100.
[35] Exhibit 2.101.
Ms Palermo asked Mr Kiss if the loan documents could be sent to Karratha as she was not going to be in Perth for some time. At that time, Ms Palermo lived in Onslow. Mr Kiss asked the Bank if this could be done, and the Bank agreed.[36]
[36] Exhibit 2.102 and ts 208.
On 20 October 2013, Mr Kiss advised Ms Palermo that her loan application had been approved and that she should receive her 'mortgage documentation' in the next few days. Ms Palermo replied 'Thank you I will let you know once I have signed my documents for tracking purposes'.[37]
[37] Exhibit 2.105.
On Monday 21 October 2013, the Bank advised Mr Kiss that the documents would be sent by internal mail and should be in Karratha by Wednesday.[38]
[38] Exhibit 2.106.
The Bank's loan contract document offered to enter to enter into a loan contract in the sum of $408,495.82.[39]
[39] Exhibit 2.159. The 'disclosure date' was 19 October 2013.
The Bank also provided an Application Form, which described the primary purpose of the loan as being to refinance the existing loan ($363,958.86) and home improvements ($23,041.14).
Both the loan contract (Final Loan Agreement) and the Application Form were signed by Ms Palermo on 24 October 2013. Later in these reasons, I explain why I am satisfied that a concluded agreement was reached.
On 28 October 2013, Ms Palermo emailed Mr Kiss saying 'Loan Documents were signed at the Karratha Branch on Thursday morning 24th October 2013'.[40]
[40] Exhibit 2.107.
On 31 October 2013, Ms Palermo asked Mr Kiss when the funds would likely be in her account.
The loan was disbursed to Ms Palermo's Bankwest loan account that day.[41]
[41] Exhibit 2.108.
The Final Loan Agreement provided that Ms Palermo would repay the loan over a 30 year period by 360 minimum monthly repayments. Ms Palermo initially made regular repayments on the loan. However, her repayments became irregular in late 2014 and the loan fell into arrears.
On 29 August 2016, the Bank issued a notice of default. Ms Palermo failed to rectify the default, and, by letter dated 19 May 2017, the Bank demanded that Ms Palermo pay the debt or face legal action. Ms Palermo did not pay.
Issues
Did Ms Palermo sign the documents? Did she send the emails?
Ms Palermo denied, from the bar table, signing the documents that appear to bear her signature. She also denied, from the bar table, sending or receiving the emails that appear to have been sent or received by her.
The evidence is overwhelming that she did.
The most compelling piece of evidence is the fact that Ms Palermo is, as she admits, the registered proprietor of the Property.
The documentary evidence is also compelling.
Ms Palermo's expert witness, Mr Watts, identified the documents Ms Palermo had sent him containing her own handwriting (specimen documents) for the purposes of comparing that handwriting to documents in the Bank's records.[42]
[42] ts 332 ‑ 340 and Exhibits 7 and 13.
In the specimen documents, Ms Palermo had written numerous details about herself that are reflected in the Bank documents she disputes. These details included the following:
(a)that she was employed by WBHO/Civil, by offer dated 8 April 2013 (being the employer noted on, for example, the Final Loan Application Form.[43] Further, some of the emails said to have been sent by or to Ms Palermo were sent from or to an email address concluding with 'wbho.com');
(b)that her postal address was PO Box 98 Onslow (being the same address as on, for example, the Land Sale Contract);[44]
(c)her phone number (being the same as appears on, for example, the Final Loan Application Form[45]);
(d)her date of birth (being the same as appears on, for example, the Final Loan Application Form);[46]
(e)her driver's licence number (being the same number that appears, for example, on one of Mr Kiss' Customer Identification documents and on the annexed copy of her licence);[47]
(f)her tax file number (being the same number that appears on the PAYG payment summaries in her name attached to an email sent by a Hotmail email address to Mr Kiss.[48] The Hotmail address is the same address from which the specimen documents were sent to Mr Watts);[49]
(g)her ANZ bank account BSB and account number (being the same as the bank account details in the Home Loan Finance Application);[50]
(h)that her previous employer, until March 2013, was Bechtel (listed as her employer in the Home Loan Finance Application. That document also gave her email address as concluding with 'bechtel.com'.[51] Some of the emails said to have been sent by or to Ms Palermo were sent from or to this email address);
(i)the address she provided to Bechtel (being the same address as what was said to be her previous address in the Home Loan Finance Application);[52]
(j)her passport number (being the same number that appears on two of Mr Kiss' Customer Identification documents and on the annexed copies of her passport).[53]
[43] Exhibit 2.156.
[44] Exhibit 1.10.
[45] Exhibit 2.156.
[46] Exhibit 2.156.
[47] Exhibit 2.88.
[48] Exhibit 1.83.
[49] Exhibit 13.
[50] Exhibit 1.4 page 27.
[51] Exhibit 1.4 page 26.
[52] Exhibit 1.4 page 25.
[53] Exhibits 1.15 and 1.43.
Further, in one specimen document, Ms Palermo provided the contact mobile phone number for a Bonnie Palermo. In a different specimen document, Ms Palermo gave her mother's name as 'Bronwyn H Palermo', with the same mobile number, and with an email address that began 'bonniepalermo'. As noted earlier, Mr Kiss wrote on the Home Loan Finance Application the name 'Bronwyn Heather Palermo' and a mobile phone number. He said he had obtained those details from Ms Palermo. The mobile number he wrote was the same as the number written on those specimen documents.
Further, Mr Kiss witnessed Ms Palermo's signature on the Transfer of Land document (and the application for a First Home Owner grant). Mr Kiss was adamant that he had been with Ms Palermo in his office when she signed the Transfer of Land document and that he had witnessed her signature. He said that he did not witness a document without actually seeing the person sign it.[54]
[54] ts 215, 217.
I am satisfied that Ms Palermo signed the documents that appear to bear her signature. I am satisfied that Ms Palermo sent and received the emails that appear to have been sent and received by her.
Is the Mortgage a forgery?
The Bank tendered a certified copy of the Mortgage. As noted earlier, this is prima facie proof of the document and the matters set out in it.
The Mortgage appears to bear Ms Palermo's signature.
The witness to Ms Palermo's signature is 'Julie Carroll'. Ms Carroll and her husband own the 'Postie's General Store' in Onslow, which includes the post office, newsagency and Lotterywest agency. In that capacity, Mr and Ms Carroll witness signatures from time to time. Ms Carroll said that 'if we know the person, we get that person to sign in front of us and then we sign it as well. If we don’t know the person, we ask for ID and they sign in front of us and then we sign'.[55]
[55] ts 229
Ms Carroll said she had known Ms Palermo for a long time and considered her a friend. Ms Carroll said she could not remember seeing Ms Palermo sign the document, it being so long ago.[56]
[56] ts 229 ‑ 231.
Ms Carroll said that the witness signature on the Mortgage 'looks very much like mine' and identified her handwriting of her name (in uppercase), address and occupation. On the Mortgage, after the uppercase printing of Ms Carroll's name, there appears in brackets 'Julie Elizabeth Carroll'. Ms Carroll said she did not write the words in the brackets.[57]
[57] ts 231.
The same day as the date on the Mortgage, Mr Kiss emailed Ms Palermo to find out what Ms Carroll's middle name was. Ms Palermo responded the next day that it was 'Elizabeth.'[58] I infer that, after the Bank was advised of Ms Carroll's middle name, someone wrote it in brackets on the document. While undesirable, this did not mean that the Mortgage was a forgery.
[58] Exhibit 1.35.
The other documentary evidence shows that Ms Palermo was seeking to borrow money to buy the Property. As described earlier, Ms Palermo signed a Home Loan Finance Application, an Application Form and the Land Loan Agreement. She also provided Ms Carroll's middle name when told that it was necessary that full names be used on the mortgage.
Ms Palermo did not give evidence. However, from the bar table, Ms Palermo drew attention to the fact that there are two copies of the Mortgage, with slightly different signatures and detail. Ms Palermo alleged that this demonstrated fraud.
Mr Watts, Ms Palermo's expert witness, confirmed that there were differences in the handwriting and signatures on the two documents and in the placement of the wet stamp. He also noted that only one had a barcode on it.[59]
[59] ts 344 ‑ 345 and Exhibit 10.
Mr Edwards explained that the Bank's practice, which he believed was a requirement of Landgate, was to have two originals executed of a mortgage. One is kept with the original certificate of land document and the Bank keeps the other.[60] As I have said, I accept his evidence. In addition, his evidence on this point accords with common sense. Further, Mr Watts' evidence is not inconsistent with this evidence. The fact that there are two originals does not demonstrate any fraud.
[60] ts 268. See also Mr Kiss at ts 221.
I also note that Ms Palermo asked Mr Watts questions about her own signature and the writing of Ms Carroll's name. Mr Watts' reports did not address these issues. However, I permitted Ms Palermo to ask.
Mr Watts said he was unable to say whether Ms Palermo had signed the documents or someone had simulated her signature because her signature was a simple one.[61]
[61] ts 368 ‑ 369.
Mr Watts said that the uppercase printing of Ms Carroll's name had been written by the same author on each Mortgage.[62] Ms Carroll identified the uppercase printing of her name as being her handwriting.
[62] ts 346.
I am satisfied Ms Palermo signed each Mortgage and that the documents were not forgeries.
Did Ms Palermo enter into any agreements with the Bank, as distinct from Bankwest?
Ms Palermo submitted, from the bar table, that she did not enter into any agreements with the Bank. Ms Palermo submitted, in effect, that the Bank was a different entity to Bankwest.
A Certificate of Transfer was issued by the Australian Prudential Regulation Authority on 7 September 2012, coming into force on 1 October 2012. It demonstrates that the Bank acquired the business of the Bank of Western Australia Ltd ACN 123 123 124.[63]
[63] Exhibit 4.170.
The Mortgage itself, which Ms Palermo signed, names the Mortgagee as 'Commonwealth Bank of Australia trading as Bankwest' with ABN 48 123 123 124.[64]
[64] Exhibit 4.174.
The Certificate of Title for the Property records the registered mortgage to 'Commonwealth Bank of Australia'.
The Final Loan Agreement, which Ms Palermo signed, is titled Bankwest Home Loan Contract. It states 'Credit provider: Bankwest is a division of the credit provider Commonwealth Bank of Australia ABN 48 123 123 124 AFSL/Australian credit licence 234945 ("the Bank") offers to enter into a loan contract' with Ms Palermo.[65]
[65] Exhibit 2.159 page 584.
The 'General Terms and Conditions' to the Final Loan Agreement provide that 'We, us, the Bank or Bankwest means Bankwest, a division of Commonwealth Bank of Australia ABN 48 123 123 124 AFSL/Australian credit licence 234945 and its successors and assigns'.[66]
[66] Exhibit 2.159 page 592.
I am satisfied that the parties to the agreements were Ms Palermo and the Bank.
Did the Bank and Ms Palermo enter into the Final Loan Agreement?
Did Ms Palermo sign the Final Loan Agreement?
Ms Palermo submitted:
Construction of my home was completed in August 2013 and I received my home keys in September 2013. Why would I have signed a loan contract for $408,495.82 when I was already living in my home?
The documentary evidence shows that Ms Palermo was seeking to borrow additional money to, among other things, put in a swimming pool. The Application Form described the primary purpose of the loan as being to refinance the existing loan ($363,958.86) and home improvements ($23,041.14). This is entirely consistent with Ms Palermo already being in her home at the time.
Ms Palermo further submitted:
On the 24th of October 2013 I was away at work in Onslow.
Jandakot charter flight manifests, WBHO Civil Onslow Salt Project site roster and Face book time line of events can verify I was not in Perth to have sign [sic] this documentation.
It would be impossible for me to have signed any documents as the closest Bank West branch is located 307km from Onslow.
Ms Palermo did not adduce any evidence of this. In any event, the documentary evidence compels the conclusion that she did sign the Final Loan Agreement.
The Final Loan Agreement appears to bear Ms Palermo's signature. I have earlier explained why I find that Ms Palermo signed the documents that appear to bear her signature.
Further, the evidence shows that:
1.Ms Palermo was seeking to borrow additional money.
2.Ms Palermo emailed Mr Kiss stating: 'Loan Documents were signed at the Karratha Branch on Thursday morning 24th October 2013.'
3.On 31 October 2013, Ms Palermo asked Mr Kiss when the funds would likely be in her account.
4.The loan was disbursed to her Bankwest loan account on 31 October 2013.
5.Ms Palermo made repayments on the loan for several years.
I am satisfied Ms Palermo signed the Final Loan Agreement.
Finally, I note that the Bank was unable to produce an original hard copy of the Final Loan Agreement, although it produced the originals of the first two loan agreements. In relation to the third, Mr Edwards said that he was able to ascertain, from the Bank's system, that the third contract was signed at the Bank's Bankwest Karratha branch and either emailed or faxed into the Bank's head office. He said he could not tell from the system whether it was faxed or emailed. He said that there were comments on the file that said that the funds were needed urgently and requesting that the loan be disbursed as soon as possible. He said there were further comments that said that the loan had now been disbursed. Mr Edwards said that the Bank disbursed the funds because the Karratha branch had the hard copy original contract at the time.[67]
[67] ts 296. See also ts 297 ‑ 298.
I am satisfied from Mr Edwards' evidence that the copy of the Final Loan Agreement is a true copy of the original.
Was there a concluded agreement?
Ms Palermo submitted that expert evidence showed that the signature of the Bank's representative, Andrew Banks, appears to have been copied and pasted on to the Final Loan Agreement. Her expert witness, Mr Watts, confirmed that Mr Banks' signatures were identical on various documents.[68]
[68] ts 360 ‑ 361 and Exhibit 11.
The Bank does not dispute that Mr Banks' signatures are identical. Mr Edwards gave evidence that it was, and still is, the Bank's standard practice to sign offers with a digital signature.[69] However, the Bank points out that an agreement can be inferred from all of the circumstances.
[69] ts 276.
The 'acid test' is 'whether, viewed as a whole and objectively from the point of view of reasonable persons on both sides, the dealings show a concluded bargain'.[70]
[70] Meates v Attorney‑General [1983] NZLR 308, 377, cited in Palermo v Palermo [2015] WASCA 49 [186] (Neither of the parties in that case, although sharing Ms Palermo's surname, were Ms Palermo).
The offer to enter into the Final Loan Agreement stated 'By signing this offer and returning it to the Bank you will be taken to have accepted a loan from the Bank on the terms set out in this offer'.[71] Ms Palermo accepted the offer by signing it on 24 October 2013. The Final Loan Agreement was concluded on that date, despite the fact that Mr Banks did not personally sign it.
[71] Exhibit 2.159 page 584.
The acid test is satisfied.
Did the Bank advance money?
The Bank records show that the loan funds were disbursed in accordance with the Final Loan Agreement. After bank fees and charges and an insurance payment,[72] the remainder of the funds was paid to Ms Palermo's Bankwest transaction account. The statement for that account records that, five days later, $17,687.00 was withdrawn by way of a Bank cheque to Buccaneer Pools.[73]
Did Ms Palermo default?
[72] See Exhibit 2.159.
[73] Exhibits 2.116 and 2.149.
The Bank records show that Ms Palermo defaulted in her obligation to repay the loan amount prior to August 2016.[74]
Is the Bank entitled to enforce its rights under the Mortgage?
[74] See, in particular, Exhibits 2.116 and 2.159.
The Mortgage incorporated the Memorandum of Common Provisions,[75] which provided that the Mortgage secured 'all money which you [Ms Palermo] owe the Bank for any reason, under or in relation to a Bank Document'.[76]
[75] Exhibit 4.174 cl 2.1.
[76] Exhibit 2.115 cl 1.1 (definition of 'Amount Owing') and cl 3.1.
'Bank Document' was defined to mean 'an agreement or arrangement under which, you [Ms Palermo] incur or owe obligations to the Bank or under which the Bank has rights against you and includes … any other agreement which you acknowledge in writing to be a Bank Document for the purposes of this Mortgage'.[77]
[77] Exhibit 2.115 cl 1.1.
Where an agreement was entered into after the date of the Mortgage, the Memorandum required the Bank to give Ms Palermo a copy of the Bank Document and that she acknowledge in writing that it was a Bank Document for the purposes of the Mortgage.
The Final Loan Agreement expressly incorporated the 'Home Loans – Terms and Conditions' booklet.[78] Clause A.12.4 contained the relevant acknowledgment. As noted earlier, the Final Loan Agreement also stated 'By signing this offer and returning it to the Bank you will be taken to have accepted a loan from the Bank on the terms set out in this offer'.
[78] Exhibit 2.159 page 584.
The Bank sent a default notice to Ms Palermo pursuant to s 88 of the National Credit Code[79] and s 106 of the Transfer of Land Act. Ms Klaric, a solicitor at Dentons, gave evidence that she settled the default notice and arranged for it to be sent to Ms Palermo at the address provided by the Bank (the address of the Property) and at the address shown for Ms Palermo on the Certificate of Title (PO Box 98, Onslow). Dentons' records indicate that the letter was sent by registered post to both addresses. Dentons received a card from Australia Post confirming that the letter sent to the post office box address was collected.[80] Ms Klaric said that the letter sent to the Property address was returned, having not been collected.[81]
[79] Schedule 1 to the National Consumer Credit Protection Act 2009 (Cth).
[80] Exhibits 2.163, 4.171, 4.172 and 4.177.
[81] ts 305 ‑ 306.
Ms Palermo did not give evidence. I infer that she received the letter sent by registered mail to her postal address.
The default has not been remedied. Therefore, the Bank is entitled to enforce its rights under the Mortgage.
The final amount owing as at the start of the trial was $485,732.06. Interest accrues on Ms Palermo's account at the rate of 4.82% per annum under the Final Loan Agreement.[82]
[82] Exhibits 6, 2.159 (cl A.20.1) and 2.115 (cl 9.8).
Other allegations
As noted earlier, Ms Palermo refused to file a proper defence. Ms Palermo filed a document titled 'Defence' on 9 February 2018. This was not a proper defence. It appeared to be a cut and paste from her objection to the Bank's earlier application for summary judgment.
This document raised the following issues.
First, Ms Palermo alleged that the Bank had failed to file and serve a valid Writ of Summons. Ms Palermo filed a conditional appearance to the Writ. Ms Palermo did not apply to the court to have the question raised by her conditional appearance decided within 14 days. Accordingly, the conditional appearance became unconditional.[83]
[83] Rules of the Supreme Court 1971 (WA) O 12 r 6.
Second, Ms Palermo asserted that she did not sign the Final Loan Agreement. This has been dealt with earlier.
Third, Ms Palermo denied having signed a contract for the sale of the Property. She asserted that the Land Sale Contract is not dated or witnessed.
This assertion appears to refer to an early version of the document held in the Bank's records. The final version is signed, dated and witnessed[84] and was contained within the records of Kiss Finance, Ms Palermo's finance broker.[85]
[84] Exhibit 1.10.
[85] ts 190.
The documentary evidence compels the conclusion that Ms Palermo signed the Land Sale Contract. There is a wealth of evidence showing that she was seeking to purchase the Property, that the Transfer of Land document was signed by her and her signature was witnessed by Mr Kiss, and she is now the registered proprietor of the Property. She also wrote an email to Mr Kiss asking for a copy of 'my land Contract so I can email through to Domenic? I don't have mine with me at the moment'.[86] Domenic was employed by Hotham Conveyancing, Ms Palermo's settlement agent.[87] Ms Palermo later sent an email to Hotham saying 'Please find attached my Land Contract Lot 3049 Tempo Way'.[88] The Property is described as Lot 3049 on the Certificate of Title, with a street address of 12 Tempo Way.[89]
[86] Exhibit 1.9. See also Exhibits 1.11, 1.12 and 1.13.
[87] Exhibit 1.13 page 98.
[88] Exhibit 1.13.
[89] Exhibit 4.175.
In any event, the transfer has in fact occurred, Ms Palermo is now the registered proprietor, and the Bank is the registered mortgagee.
Fourth, Ms Palermo asserted that, after she questioned the Final Loan Agreement (dated 24th October 2013), in circumstances where she had been told she had all of the Bank Documentation, the Bank then 'produced newly back dated alleged Loan Contract dated February 2013'. The loan agreement dated February 2013 was the Construction Loan Agreement. This was a different agreement to the Final Loan Agreement.
Fifth, Ms Palermo asserted that the Bank 'has failed to provide a copy of an "Original" Loan Application Form (LAF) of these allege [sic] loans'. Mr Edwards said that most of the Bank's documents (apart from the Landgate documents) were kept as digital copies and that original hard copies were not retained.[90] As I have said, I accept his evidence.
[90] ts 281.
Sixth, Ms Palermo asserted that it is not possible for a loan application form and a loan agreement to be dated the same day. It is possible. As noted earlier, all three of the loan agreements were signed on the same day as the relevant Application Form. In each case, prior to the date on which the two documents were signed, Mr Kiss had obtained the necessary details from Ms Palermo and submitted them to the Bank electronically, and the Bank had advised it approved the loan.[91]
[91] See the factual findings above and ts 237 ‑ 239.
Seventh, Ms Palermo asserted that she does not hold an account with the Bank. This has been dealt with earlier.
Eighth, Ms Palermo asserted that her expert evidence showed that the Progress Payment Authority documents are fraudulent.
Mr Watts concluded that it was more likely than not that the details section of the Progress Payment Authority documents, except the signatures, were written by someone other than Ms Palermo. He was unable to express an opinion on the signatures 'primarily due to the especially poor resolution of the scan'.[92] The documents were provided to him by Ms Palermo.[93]
[92] Exhibit 7 page 5.
[93] ts 334.
In his oral evidence, Mr Watts said that the other reason he could not express an opinion on the signatures was because Ms Palermo's signature was relatively simple. He said:[94]
Ms Palermo's signature is not particularly complex, which would open it up to being simulated without too much effort and without leaving evidence that that may have taken place.
… The gross features are consistent with this – the model of signature that Ms Palermo uses, but there's no minutiae that I can examine to ascertain whether the stroke direction is correct, pressure variation, whether there’s any tremor. Unfortunately, resolution is too low for me to be able to determine that.
[94] ts 333-334.
I earlier set out Mr Kiss' evidence as to the process by which the Progress Payment Authority documents were submitted to the Bank. In short, Ms Palermo signed the blank forms and then, when she received a progress payment invoice from the builder, she would send it to Mr Kiss' firm asking that it be forwarded to the Bank for the builder to be paid. Mr Kiss or a member of his staff would put the details from the invoice on to a Progress Payment Authority document and send it to the Bank.
The fact that the details on the Progress Payment Authority documents were completed by someone from Kiss Finance does not make the documents fraudulent. It was simply a function of the system used by Kiss Finance.
The signatures appear to be Ms Palermo's. While Mr Watts was unable to say whether or not they were her signatures, he said that the gross features of the signatures were consistent with Ms Palermo's signature. Mr Kiss said Ms Palermo signed the blank Progress Payment Authority documents. I am satisfied that she did.
The documentary evidence shows that Ms Palermo forwarded the builder's invoices to Kiss Finance and requested that they be forwarded to the Bank so that the payments could be made. The Bank made progress payments to the builder for the construction of Ms Palermo's residence, in accordance with the invoices she submitted and in accordance with the Construction Loan that she took out from the Bank.
I find that the Progress Payment Authority documents are not fraudulent.
Ninth, Ms Palermo asserted that expert evidence showed that the signature of Andrew Banks appears to have been copied and pasted on to the Final Loan Agreement. This has been dealt with earlier.
Tenth, Ms Palermo asserted that this 'matter of misconduct has been report [sic] with ASIC and the Western Australian Police. Further, that there 'appears to be a well establish [sic] Fact Pattern in relation to fraudulent activity on the part of Plaintiff', citing articles in the Sydney Morning Herald. Ms Palermo did not adduce evidence in relation to these assertions, and they are not relevant to the issues I must determine.
Ms Palermo also filed a document titled 'Affidavit of Diana Tina Palermo' on 11 January 2019. Despite the title, it purported to be a defence, but again was not a proper defence. This document raised a number of matters, including an allegation that the court documents were 'counterfeit' and 'a criminal offence' because they used 'both descriptive text and "debase Latin"'. None of the matters contained in that affidavit are relevant.
During the hearing, Ms Palermo sought to argue that the loan contracts were invalid because her signatures had not been witnessed. There is no legal reason why they needed to be. Nor is the fact that Ms Palermo's signatures were not witnessed a cause for suspicion. Mr Edwards gave evidence that the Bank did not require loan contracts to be witnessed.[95]
[95] ts 282, 291. See also Mr Kiss at ts 236.
Ms Palermo further pointed to differences between the original of the Land Loan Agreement and a copy of that agreement. Although her expert witness had not been asked to provide a report on that topic, I permitted her to ask him about it.
Included in the Bank's trial bundle for the court was a copy of the Land Loan Agreement (tab 121[96]) and the original Land Loan Agreement (tab 167[97]). In the copies of the trial bundle provided to Ms Palermo and for the use of the court, tab 167 contained a copy of the original. Mr Watts noted that there were some handwritten markings on the original and its copy that were not on the copy in tab 121. These were several ticks, an 'X' and some numbers written at the top of the first page.[98] I infer that, after the copy at tab 121 was made, the handwritten notations were made on the original. There is nothing sinister in that.
[96] Exhibit 2.121.
[97] Exhibit 3.167.
[98] ts 356 ‑ 357.
Finally, on the third day of the trial, Ms Palermo said she did not intend to give evidence, but that she wanted to say something. She then made a speech alleging a 'massive conflict of interest' between the Bank and the Court. She alleged that this arose because, among other things, the State receives funds from the Bank and the Bank is the State's sole supplier of transaction banking services. She then made various submissions about the duty of a judge to disqualify themselves if required to do so by law, that orders issued by a judge who failed to do this would be invalid, and that a judge who 'wars against the Constitution or if he or she acts without the jurisdiction … has engaged in treason to the Constitution'.[99] At the conclusion of her speech, Ms Palermo left the courtroom and did not return for the remainder of the trial.
[99] ts 384.
To the extent that Ms Palermo's speech could be characterised as a closing submission, it did not raise any issue of relevance.
To the extent that Ms Palermo was implicitly making an application that I disqualify myself on the ground of bias, I do not do so. No conflict of interest arises.
After Ms Palermo had left the court, but before the hearing concluded, she emailed my associate repeating, in effect, her allegations. Her email did not raise any additional matter of relevance.
Relief
The Bank claims from Ms Palermo the amount owing pursuant to the Loan Agreement and Mortgage as at the date of judgment, interest continuing after judgment in the manner specified in cl A21.3 of the Loan Agreement, possession of the Property, and costs.
I would make those orders, and will hear from the parties as to the appropriate form of the orders.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
JS
Associate to the Honourable Justice Archer13 FEBRUARY 2019
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