Equity One Mortgage Fund Limited v Ilford Tower Pty Ltd

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

S CI 2010 02864

EQUITY ONE MORTGAGE FUND LIMITED (ACN 106 720 941)	Plaintiff
v
ILFORD TOWER PTY LTD (ACN 087 591 017) and TERESA DINC	Defendants

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JUDGE:	RANDALL AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	28-30 November; 1, 9 December 2011
DATE OF JUDGMENT:	26 February 2013
CASE MAY BE CITED AS:	Equity One Mortgage Fund Limited v Ilford Tower Pty Ltd
MEDIUM NEUTRAL CITATION:	[2013] VSC 68

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REAL PROPERTY — Mortgages and guarantees securing advances by the plaintiff to the defendant — Default in repayment — Action for possession — Defence denying funds were advanced to the defendant — Allegation that the defendant’s directors, the second defendant, did not sign mortgages, guarantees and documents which the plaintiff required to be completed prior to making any advance — Incompetence of legal practitioner purportedly retained by the defendant to give advice to the defendant, to complete certificates and make out, take declarations and provide proof of identity — With respect to the mortgages; indefeasibility — Exception to s 42 of the Transfer of Land Act 1958 (Vic) — Party to fraud — Wilful blindness.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr G.W. Moffatt	Mills Oakley Lawyers
For the Defendants	Mr N.P. Jones	Radebe and Associates

HIS HONOUR:

The plaintiff is a finance provider. By a Facility Agreement and Guarantee dated 23 April 2009 (“the first loan agreement”) between the plaintiff as lender and the first defendant (“Ilford Tower”) as borrower and the second defendant (Ms Dinc) as guarantor, the plaintiff advanced the sum of $100,000 to Ilford Tower (“the first advance”).

The first loan agreement was supported by a mortgage dated 23 April 2009 by Ilford Tower (“the first mortgage”) over land situate and known as 105 Ordish Road, Dandenong South in the State of Victoria (“the Ordish land”). The first mortgage was subsequently varied on 10 June 2009 when the plaintiff advanced a further $50,000 to Ilford Tower.

By a Facility Agreement and Guarantee dated 23 September 2009 (“the second loan agreement”) between the plaintiff as lender and Ilford Tower as borrower and Ms Dinc as guarantor, the plaintiff advanced the sum of $105,000 to Ilford Tower (“the second advance”).

The second loan agreement was supported by a mortgage dated 23 September 2009 given by Ilford Tower over the Ordish land (“the second mortgage”).

The plaintiff, in its statement of claim, has alleged that the defendants made default in payment of the total amount owing pursuant to the first loan agreement on or about 1 March 2010. The requisite notices were served and not complied with resulting in the total amount of $263,455 being owed by the defendants to the plaintiff. The non‑compliance with the applicable notices also gave rise to a claim by the plaintiff as against Ilford Tower for possession of the Ordish land.

The defence filed 25 June 2010, in essence is as follows:

Further, they say as follows:
A.the first and second defendants have no knowledge of the existence of the first loan agreement and guarantee with the plaintiff;
B.the first defendant has not received any financial accommodation from the plaintiff and has not requested any financial accommodation from the plaintiff;
C.the first and second defendants require production of all documents evidencing the alleged loan agreement and the alleged guarantee within 7 days;
D.the first and second defendants state if any document relied upon by the plaintiff contains the purported seal of the first defendant and the purported signature of the second defendant, any such seal has not been affixed with the knowledge, authority or consent of any director and shareholder of the first defendant and any purported signature of the second defendant is a forgery; and
E.in the premises, the first and second defendant deny any liability to the plaintiff under the alleged first loan agreement and guarantee.[1]

[1]Defence dated 25 June 2010, paragraph 5.

The same matters are set out in relation to the second loan agreement and guarantee. The mortgages are denied.

The defendants filed a counterclaim on 28 July 2010. The salient paragraphs of the counterclaim are as follows:

…
6.Each of the purported mortgages are null and void as neither Ilford Tower, not its director, have executed any instrument of mortgage in favour of Equity-One.
7.By reason [sic] the matters alleged in paragraph 6 hereof, any purported signature or seal on the mortgages are forgeries and of no legal effect.
8.In the premises, the first mortgage and the second mortgage ought to be set aside forthwith.

In the separate reply to the defence and in the defence to counterclaim, the plaintiff relied upon solicitors’ certificates given at the time of executing the document and upon ss 42 and 43 of the Transfer of Land Act 1958 (Vic).

By reference to the defendants’ outline of submissions,[2] the issues for determination in this proceeding are as follows:
[2]Defendant’s outline of submissions dated 8 December 2011 (“defendant’s submissions”).

· Were any funds advanced by the plaintiff to Ilford Tower pursuant to the first loan agreement or the second loan agreement? The defendants contend that on the evidence funds were advanced to Ilford Pty Ltd and not to Ilford Tower.

· Was the signature of Ms Dinc on the various documents and, in particular, the mortgages and the guarantees forged?

· If yes with respect to the guarantees, the concept of indefeasibility is not germane and therefore the guarantees cannot be enforced if the Court accepts that it is a forgery.[3]
[3]Vassos v State Bank of South Australia [1993] 2 VR 316 at 321.

· If yes with respect to the mortgages, are the provisions of s 42 of the Transfer of Land Act 1958 determinative irrespective of any finding that there has been a forgery? The defendants recognise: “It is established law that the provisions of s 42 of the Transfer of Land Act 1958 provide that a title obtained by a mortgagee on a forged instrument of mortgage cannot be defeated on the ground of fraud if the mortgagee is not a party to the fraud …” [4]

· Was an exception to indefeasibility invoked on the basis that the transactions which formed part of the mortgages and loans in this proceeding were so obviously defective that the plaintiff should have been put on notice of such irregularities and the need to make further enquiries? The defendant’s contend that “… to abstain deliberately from reasonable enquiry for fear of what the enquiry will reveal, to choose to shut one’s eyes to the obvious – to assume a state of ‘wilful blindness’ – or otherwise to generate a state of contrived ignorance, may of course be dishonest. It has well been said that wilful blindness – deliberately turning a blind eye to the obvious or obviously ascertainable facts is akin to fraud.”[5]

[4]Defendant’s submissions, paragraph 1, referring to Vassos at 326.

[5]Defendant’s submissions, paragraph 4, referring to Macquarie Bank Ltd v Sixty Fourth Throne Pty Ltd [1998] 3 VR 133 at 143-4.

Hina Pasha

Ms Dinc consistently contended that she had not signed any of the relevant documents. However, counsel for the defendants properly recognised insofar as the mortgages were forged, Ilford Tower had to demonstrate that the plaintiff was wilfully blind in abstaining to make reasonable enquiries about the circumstances of the execution of the mortgages. The circumstances relied upon were the conduct of Hina Pasha (“Ms Pasha”) in attending to her role in completing the various certificates and documents required by the plaintiff with respect to the first and second loan agreements and the first and second mortgages, and how the plaintiff dealt with such certificates and documents. Accordingly, it is appropriate to set out what Ms Pasha did or did not do to provide context for the evidence of Ms Dinc.

Ms Pasha is an Australian legal practitioner who was admitted to practice in 1995.[6] She commenced employment at Starnet Legal in about 1999 or 2000 and ceased employment with that firm in about January 2010.[7] Ms Pasha is now the principal of the firm, Pasha Legal, at 605 Doncaster Road, Doncaster.[8] In April and June 2009, Ms Pasha purported to complete various documents and take various declarations. Those documents are set out in the following subparagraphs. I have referred to documents being signed by, or in the handwriting of, Ms Dinc or Ms Pasha for convenience at this juncture, and make findings with respect to the authenticity of the same from paragraphs 16 onwards.
[6]T 76.
[7]T 76.
[8]T 76.

22 April 2009

With respect to the letter of offer dated 17 April 2009 , Ms Pasha seems to have dealt with the following:

(a)Statutory declaration, property already owned, declared by Ms Dinc on 22 April 2009. The instructions for completion of paragraph 9 is to tick the appropriate one of the following:
The Property is:
§ vacant
§ occupied by the mortgagor
§ tenanted as per Annexure “A”.

None of those alternatives have been ticked. The declaration clause has not been completed by setting out where the same was declared.[9]
[9]Court Book (“CB”) 69-71.

(b)Solicitor’s certificate 1 dated 22/April (sic) given by Ms Pasha to the plaintiff.[10] The solicitor’s certificate sets out that a driver’s licence was used as evidence of identification. Notwithstanding, the form of acknowledgement given by a borrower or surety to the certifying solicitor, signed by Ms Dinc on 22 April 2009, the certificate has not been completed so to properly identify or at all, the solicitor to whom the acknowledgement is provided.
[10]CB 72-75.
(c)Solicitor’s certificate 2, dated 22 April 2009, given by Ms Pasha to the plaintiff.[11] Part E, referring to evidence of identification produced by Ms Dinc as guarantor is not completed. The certification that the borrower was not present during the interview with the guarantor is signed by Ms Dinc who also signed the acknowledgement of receipt of the certificate. The form of acknowledgement given by Ms Dinc to Ms Pasha has not been completed in any way.
[11]CB 76-79.

In that Part B of the solicitor’s certificate 2, it is set out that explanations were given by the certifying solicitor “… in the absence of the borrower and before the guarantor signed the document.” As Ms Dinc was the sole director of Ilford Tower, that part of the certification needed to be modified.

(d)Financial waiver[12] which acknowledges that there has been an election not to obtain independent financial advice. The financial waiver is signed by Ms Dinc in her capacity as director of Ilford Tower and signed by her for herself as guarantor on 22 April 2009.
(e)Ms Pasha completed a 100 point identification form on 22 April 2009.[13] The documents appearing at Court Book (“CB”) 83 and 84 are identical in form but have been completed differently. At CB 83, only the driver’s licence, without giving any particulars of the same, is referred to as a means of identification. The total points (minimum 100 points) said to have been offered are “40”. The same form, at CB 84, refers to the current passport and particulars thereof are given (although an expired passport seems to have been presented), a financial institution pass book, debit or credit card with particulars given, and again the driver’s licence box is ticked without particulars being provided. Again the total points obtained are set out as “40”. At CB 85 there is a page with photocopies of Ms Dinc’s driver’s licence and MasterCard in the name of Ms Dinc and a copy of the information page of her expired passport in her maiden name (“Teresa Strangio”). There appears upon the page a certification by Ms Pasha as follows:
I certify that this is a true copy of the original document. 22/4/09.

(f)A company verification statutory declaration.[14] The declaration has been signed by Ms Dinc. Ms Pasha has completed the declaration clause but has not completed the opening words of the declaration to identify Ms Dinc as the declarant, nor has she completed where the declaration was declared or on what date it was declared.
[12]CB 80.
[13]CB 83-85.
[14]CB 86-89.

June 2009

With respect to the letter of offer dated 26 May 2009 and the consequent variation to the facility agreement, variation to the mortgage and guarantee and to the mortgage, Ms Pasha seems to have dealt with the following:

(g)A company verification statutory declaration.[15] The opening part of the declaration has not been completed save to insert T. Dinc in the handwriting of Ms Dinc. The details of the declaration as to where it was declared and on what particular date have not been completed.
(h)Solicitor’s certificate 1 dated 4 June 2009.[16] The certificate was signed by each of Ms Dinc and Ms Pasha on 4 June 2009. The identification relied upon only refers to the driver’s licence.
(i)Solicitor’s certificate – guarantor.[17] Again there is certification that the explanations were given in the absence of the borrower. As Ms Dinc was also the director of the borrower that provision ought to have been modified. The identification relied upon was only a driver’s licence. Ms Pasha has not signed the certification. Ms Dinc has signed in two places as both being the guarantor and as the certifying solicitor.
(j)The 100 point identification form.[18] The 100 points identification form has been completed to only refer to the driver’s licence. The box where the number of points is referred to has not been filled out. The photocopy, apparently certified by Ms Pasha, appears to be the same as the photocopy of those documents at CB 85. However, it is clear from the position and the physical structure of the certification that the certification in June of 2009 is different to that of April 2009.
(k)An undated statutory declaration, property already owned.[19] Clause 9 has not been completed to distinguish whether the property is vacant, occupied by the mortgagor or tenanted. The declaration has not been completed so as to designate the place at which the declaration is made and its date.
[15]CB 146-149.
[16]CB 166-169.
[17]CB 170-173.
[18]CB 174-175.
[19]CB 176-179.

18 September 2009

On 18 September 2009, Ms Pasha was provided with the documents as listed hereafter. She partially completed some of the documents in anticipation of an attendance by Ms Dinc which did not eventuate. Ms Pasha maintained that what appears to be her signature on this set of documents was forged.

(l)Company verification statutory declaration.[20]
[20]CB 277-280.
(m)Solicitor’s certificate 1.[21]
[21]CB 281-284.
(n)Solicitor’s certificate 2.[22]
[22]CB 285-289.

That certificate seems to include a certified copy of the passport, driver’s licence and MasterCard which appeared at CB 175.

(o)Statutory declaration property already owned.[23] That declaration includes a certified copy of a lease of real estate with respect to the Ordish land.
(p)100 point identification form.[24] This form which was completed on 18 September 2009 includes reference to a current passport without the details being completed, the expired passport with the particulars completed, the driver’s licence with particulars completed, reference to a Medicare card without particulars and reference to the same MasterCard. The total points (minimum 100 points) box has been ticked. The certified copies of the expired passport, the driver’s licence and the MasterCard appears to be a photocopy of the document at CB 175 but it has been re-initialled and dated 18 September 2009.
(q)Company verification statutory declaration.[25]
(r)Solicitor’s certificate 2.[26] That certificate initially recorded Ms Dinc’s name as the provider of the certificate. That is crossed out and Ms Pasha’s name and details are inserted. At CB 319 Ms Dinc has signed both as the provider of the certificate and as acknowledging receipt of the same. The identification documents relied upon include the driver’s licence, Medicare card and passport. The acknowledgement at CB 321 is completed in full even though the stamp usually affixed by Ms Pasha appears at the bottom of the page as well.
[23]CB 290-308.
[24]CB 309-310.
[25]CB 313-316.
[26]CB 318-321.

Ms Pasha’s evidence
22 April 2009

Ms Pasha only had a recollection of what occurred because the issue had been raised recently.[27] “A client of the firm who I was not personally acting for, by the name of Bruno Strangio (Ms Dinc’s brother) came into my office with a woman who was the Director of Ilford Tower and they presented some ID and I witnessed some documents”. [28] Otherwise, Ms Pasha’s evidence was fairly much confined to looking at the documents which had been presented to her on that day and commenting on the same. Ms Pasha identified her handwriting where it occurred and gave explanations for any omissions or anomalies. As to the omissions and anomalies, Ms Pasha said as follows:
[27]Transcript of proceeding (‘T”), 76.
[28]T 77.

(a) As to the failure to complete the declaration clause in the statutory declaration dated 22 April 2009:

The reason I can only think of now is that Bruno and the declarant came in a hurry and unfortunately I’m usually in a hurry because I only work part-time and from recollection I may have been in a hurry or in-between clients or something like that.[29]
[29]T 77-78.

(b) As to Ms Dinc signing as the certifying solicitor as well as the recipient of the certificate in the Solicitor’s certificate 1 dated 22 April 2009:

I don’t really recall, but certainly it’s a mistake.[30]
[30]T 78.

(c) As to satisfaction as to identification:

I believe that Bruno Strangio, when he attended that day, would have had photocopies with him and the identification and I would have certified them in the usual manner.

…I would have been produced with the documents and I believe I would have been produced with a number of photocopies.[31]
[31]T 79.

Elaborating further as to how she was satisfied that the person she met, namely Ms Dinc, was consistent with the photo in the driver’s licence, Ms Pasha responded:

I satisfied myself at the time, but I don’t believe I paid too much attention…

… Bruno, who attended our office and was there nearly every day, my husband, who is actually the principal of Starnet Legal, was conducting several matters for him at the time. He did most of the talking and I believed that to be Teresa Dinc and it was only afterwards that I came to know that it was actually his sister, too. I hadn’t met her before.[32]
[32]T 79-80.

(d) As to not completing the details of the declarants in the relevant pages of the Company verification statutory declaration:

I can’t explain it, I’m sorry.” [33]
[33]T 80.

(e) As to the failure to complete the declaration:

I can’t say, but I probably didn’t see it. I do recall being in a hurry because I don’t normally act for Bruno or his sister at the time, and I would have seen him in a hurry.[34]
[34]T 80.

(f) As to the documents referred to in the solicitor’s certificate 1 with regard to the borrower:

I don’t have an exact recollection of that particular day, but in the normal course of events, and I have done this on several occasions, normally clients bring all these documents in and particularly if it has a solicitor’s certificate generally it comes before these documents, but I can’t exactly remember on that particular day. But I would assume that those documents would have been there, but I probably didn’t look at them.[35]

[35]T 81.

Ms Pasha did not retain any notes or other document recording what happened at the time of the attendance.[36]
[36]T 96.

Notwithstanding what is set out in the solicitor’s certificate 2, the explanations provided by Ms Pasha were scant at the best:

No one asked me to explain those documents on the day. They may have been presented to me. I don’t have a recollection as to whether these documents were there, but I imagine they were there. But I didn’t give a specific explanation of anything in those documents other than the fact that it was a loan and that there was security offered.[37]

[37]T 97

Ms Pasha did not read any of the documents. As to the explanation as to the obligations which were being undertaken as a guarantor, Ms Pasha said:

My normal practice is to gauge the nature of the person that I am advising and it may be on some occasions that I say ‘you are borrowing this amount of money, this is what is offered as security and if you don’t pay it back your property is gone.’ Sometimes I explain it just like that, because sometimes they do not understand the legal jargon that is contained within these documents. But I always say that.[38]

[38]T 97-98.

Ms Pasha did not accept that Ms Dinc was her client:

I merely witnessed documents and explained to her the danger in signing these if the loans were not repaid. … I believe that my duty of care towards Mrs Dinc was limited to my explanation of what was the nature of these documents, not beyond that. I have never seen her again.[39]

[39]T 98

The defendant submitted that her evidence should not be accepted as in many respects it was “unconvincing, incredible and inconsistent”.[40] Ms Pasha had given evidence that she saw between five and ten clients on the days she worked and she described the practice in which she worked as being like a fish market.[41] This may be an explanation for her poor memory in this case. However, Ms Pasha’s memory is not the issue. The issue is whether she deliberately certified that she had provided advice to a person whom she had not met and completed the declaration clause in declarations that had not been made by Ms Dinc before her.
[40]Defendant’s submissions, paragraph 14.
[41]At T 95

June 2009

By letter of offer dated 26 May 2009, the plaintiff offered to vary the existing facility by advancing further funds. It seems Ms Pasha attended to certification of documents on 4 June although some documents are dated 10 June 2009.

Ms Pasha was taken to the solicitor’s certificate – guarantor, commencing at CB 170. At CB 171 Ms Dinc has certified both as the solicitor giving the certificate and the guarantor receiving the certificate. To that, Ms Pasha conceded that it was a mistake but noted that the form was otherwise completed in her hand writing at CB 170 and 171.[42] Ms Pasha could not explain why she only referred to the driver’s licence identification when she had seen the originals of the three forms of identification referred to in the photocopies at CB 175. Ms Pasha’s explanation for the failures and omissions was the same as proffered in relation to the April attendance:

I can’t explain. Perhaps I was just in a hurry. … well, on both occasions I was not expecting Mr Strangio to rock up and I was not particularly involved in any of his matters. I normally only work from 10 until 3, so I’m usually in a hurry.[43]

[42]At T 83.

[43]At T 84.

As for not completing the declaration clause on the statutory declaration, property already owned, Ms Pasha said that “probably because I expected Mrs Dinc to have done it and I probably wasn’t as alert as I probably should have been.”[44]
[44]At T 85.

September 2009

Ms Pasha was taken to the company verification statutory declaration made on 18 September 2009. Ms Pasha denied that any of the hand writing on that document was hers and, more importantly, denied that her signature appeared thereon as a person before whom the declaration was made.[45] She had no idea how her identifying stamp was affixed to that declaration.[46]
[45]T 86.
[46]T 87.

Ms Pasha denied that her handwriting or signature appears upon the form of acknowledgment given by borrower or surety to certifying solicitor in the solicitor’s certificate 1.[47] Ms Pasha also denied that her signature appeared on the statutory declaration, property already owned.[48] However, she agreed that her handwriting appears upon a copy of the lease of real estate certifying that it was a copy of the original.[49] That certification was dated 18 September 2009 and her signature appears thereon.[50] Ms Pasha said “I imagined that Bruno would have attended at some point during the day and brought with him the original lease and asked me to certify copies.”[51]
[47]CB 281-284.
[48]CB 290-308.
[49]CB 293.
[50]T 88.
[51]T 88.

The 100 point identification form which appears at CB 309 was dated 18 September 2009. Ms Pasha denies that her signature appeared thereon.[52]
[52]T 89.

The next document Ms Pasha was taken to was the solicitor’s certificate 2.[53] She agreed that her handwriting appears on the first page and on the second page where identification is referred to where she had recorded “driver’s licence” and “Medicare card” but not the word “Passport”.
[53]CB 285-289.

Cross Examination

The forceful and effective cross-examination of Ms Pasha elicited that Ms Pasha had not opened any file, had not kept any other record in relation to the subject attendances and that each attendance lasted about 10 minutes with Mr Strangio attending without making an appointment. Ms Pasha had satisfied herself that she was dealing with Ms Dinc as she had been introduced by Mr Strangio as his sister. She accepted that to be the case. However, she also had her Passport and driver’s licence. When asked when she obtained those, Ms Pasha said that “I had them right from the beginning when I had certified the first lot of documents.[54]
[54]T 101.

Ms Pasha could not explain why the revised disbursement order dated 23 April 2009 included a provision “Borrower’s Solicitor (no details advised) $500.00” and maintained that she did not charge for witnessing documents.[55] When it was directly put to her that she did not meet Teresa Dinc on 22 April 2009 or at all, her response was “that’s a matter for Teresa Dinc. Mr Strangio came into my office with whom he said was Teresa Dinc. So it may very well be you need to seek some instructions from Mr Strangio, who I have seen outside the court today.”[56] Ms Pasha also denied that the proof of identification was provided by Mr Neil Pinney, the broker.[57] Ms Pasha contended that she received the April 2009 documents when Ms Dinc first attended her office. It seems that the same may have been forwarded by the plaintiff. I have determined that nothing turns on the distinction, particularly as Mr Strangio regularly attended the office and dealt with Ms Pasha’s husband.
[55]CB 124
[56]T 104.
[57]T 104

As to the attendance in September 2009, she recalls that Mr Strangio attended without his sister, Ms Dinc. Ms Pasha was informed that Ms Dinc was on her way. She spoke to Ms Dinc on the telephone, who said she was at work and not coming. Accordingly, she gave the documents back to Mr Strangio.[58] When handed back to Mr Strangio the documents were partially complete “…because I was expecting her to come and I was probably trying to save time because I normally go and pick up my children at 3.30.”[59] Ms Pasha conceded that some of the writing on the September 2009 documents was her own. Ms Pasha conceded that she’d made a mistake in referring to the Medicare card as a means of identification. She had written in only driver’s licence and Medicare card at CB 319 and may have mistook the credit card for a Medicare card which had been produced to her on the photocopies.[60]
[58]T 107.
[59]T 107.
[60]CB 310.

When asked as to why she would partially complete a document which enabled any person to insert the name of a recipient of the advice, Ms Pasha said:

To some extent it is an error on my part that I should have placed any kind of trust in Mr Strangio, but I simply would have started to complete these documents on the basis that I was expecting Mrs Dinc to come in and I would have been trying to leave the office very quickly, in fact, that’s exactly what happened, and I would have simply left him with the documents and refused to sign anything or fill in anything further. I couldn’t have kept them with me.[61]

[61]T 111-112.

It was also put to Ms Pasha that “…it seems that what you are doing is signing a blank document or a document that you are allowing to be completed by someone else at a later stage?” Ms Pasha denied that proposition but regretted not having checked the documents.[62] She said that it was her normal practice to complete the documents. In these particular instances she responded “I probably haven’t done it on that occasion because once again I was probably in a rush and had clients waiting and I wasn’t expecting to have to squeeze in this particular client.”[63]
[62]T 126.
[63]T 122-126.

Ms Pasha was clearly reliant upon the documents put to her to reconstruct what had occurred in April, June and September of 2009. After considering these documents she conceded that she had a duty of care to explain what was the nature of the documents. Notwithstanding her acknowledgment, she did not attend to properly completing the documents in April and June 2009 and failed to provide anything but the most rudimentary explanation of documents which she had been furnished with and had set out in the various solicitors’ certificates. Her evidence demonstrated that she gave the barest of explanation of the general import of such documents without any regard to any actual provision of the same. Irrespective of the obligations which arose by agreeing to explain the documents to Ms Dinc, she also failed to understand that she had obligations to the plaintiff as a lender whom she knew, or ought to have known, would rely upon her certifications and the taking of various declarations.

However, although I conclude that Ms Pasha is a less than competent legal practitioner it doesn’t follow that I reject her evidence as to having dealt with Ms Dinc in April and June of 2009. Although it was put to her that Ms Dinc never attended Ms Pasha’s office and that she may have received documents from a source other than Mr Strangio providing the same, it is clear that Ms Pasha had received the photocopy of the Passport, driver’s licence and Master Card and had certified that they were true copies. Each of the driver’s licence and Passport contained a photograph of Ms Dinc. To accept that Ms Pasha did not attend upon Ms Dinc in April and June of 2009 and was willing to sign off on declarations as the witness in blank or without checking the identity of the declarant in circumstances where she had certified the photocopies of the identification documents, effectively leads to a conclusion that Ms Pasha was involved in some undertaking to deceive either the plaintiff, Ilford Tower or Ms Dinc. That proposition or a proposition in like terms, was not put to Ms Pasha. Further, Ms Pasha’s conduct in refusing to sign off on the partially completed documents in September 2009 is corroborative of her evidence that Ms Dinc was present in April and June 2009 when she did complete documents, albeit incompetently.

Ms Dinc

Ms Dinc was at all material times, a director of Ilford Tower. She resides at Lalor and her current occupation is a food and beverage attendant. In 2009, she worked at Big W, Broadmeadows. The ASIC Historical Organisation Extract records that Ms Dinc was appointed on 4 April 2007.[64] Bruno Strangio is recorded as having been appointed in 1 September 2008. However, notification of the appointment was not lodged with ASIC until 1 October 2010. The plaintiff had proceeded on the basis that Ms Dinc was the sole director, which it was entitled to do.
[64]Exhibit P-3.

Ms Dinc maintained that she only became aware that she was a director of Ilford Tower once she “got the proceedings for whatever is happening here today”.[65] She said that she was not aware of the business of Ilford Tower.[66] She had been involved in trying to obtain a re‑finance for Ilford Tower insofar as it related to the Dromana property. The loan was with the ANZ Bank in 2009 and that loan was under her name. That loan had been re‑financed by Mr Pinney. Otherwise, she had no knowledge of Equity One Mortgage Fund Ltd.[67] Ms Dinc denied signing any of the relevant documents relied upon in this proceeding, denied meeting with Ms Pasha or being involved in a telephone conversation with her and denied receipt by Ilford Tower of any of the funds or knowledge of the same.[68]
[65]T 219.
[66]T 219, 220.
[67]T 223.
[68]T 223

Ms Dinc was not a witness of truth and I do not accept any of her evidence. Although Ms Dinc steadfastly maintained that she had not signed any of the relevant documents nor met with Ms Pasha during cross examination, when she was caught out with respect to other facets of her evidence, she sought to explain what were apparent untruths or inconsistencies by relying upon a lack of understanding, semantic differentiations as to what her responses meant and otherwise being pressured to swear affidavits.[69]
[69]T 293. Ms Dinc says: “I had no other choice. My hands were tied. I didn’t want to. This is what I was told to do and this is what I did.”

Not her signature

Neil William Holland (“Mr Holland”) of Scientific Document Services Pty Ltd was called by the plaintiff to proffer his opinion about the authenticity of Ms Dinc’s signatures on various documents. His findings are found in a report in two volumes dated 27 October 2011 (“the Holland Report”).[70] Mr Holland received some 46 documents apparently bearing the handwriting or handwriting and signature as the case may be, of Ms Dinc. He also received a certified photocopy of an Australian passport bio-data page in the name of “Strangio, Teresa” and a driver’s licence Victoria, Australia in the name of Teresa Dinc together with the original notice of appearance in this proceeding. On 26 September 2011, Mr Holland attended at the Land Titles Archives, Laverton and examined the original documents being a mortgage of land dated 23 April 2009, variation of mortgage or charge dated 10 June 2009 and a mortgage of land dated 23 September 2009. On 11 October 2011 Mr Holland received four further documents sent to him by email.
[70]Exhibit P-4

Mr Holland reported that he had been provided with a mixture of original and photocopied signatures and, with respect of standard “Teresa Dinc” signatures, the following was noted:

(a) The dates of the standard signatures range from 1993 to 2010 which cover the time frame that the alleged questioned documents were signed.

(b) The original standards have all been fluently written, although some controlled signatures are photocopies these do show similar traits in signature fluency.

There are three different signature types and I have grouped the signatures into Group 1, Group 2 and Group 3 signatures…

(c) Apart from the natural variation in the signature constructions for these Group 1 signatures, these signatures are consistently written and do show remarkable similarities over the time period.

(d) A particular stroke sequence pattern was observed and has been adhered to for the standard Group 1, Group 2 and Group 3 signatures, apart from the natural variation observed.

Mr Holland grouped the questioned signatures into two groups. Most of the documents save for one, fell within Group 1. The Group 2 signature was part of the One Stop Finance Solutions Pty Ltd documentation relating to finance of $300,000 secured by first mortgage over the Ordish land and supported by a Director’s Guarantee. The signature appearing thereon is a more cursive style. Ms Dinc readily accepted that this signature was hers.[71]
[71]T 269.

Of the Group 1 questioned signatures Mr Holland observed:

(i)Similarities were observed between the questioned Group 1 “T. Dinc” original ink signatures and the Group 1 “T. Dinc” signature standards.
(ii)The similarities are significant as it is my opinion that these questioned Group 1 “T. Dinc” signatures have been written by the writer of the Group 1 standard “T. Dinc” signatures.[72]
[72]The Holland Report, Vol 1, page 16.

As to the Group 2 questioned signatures, Mr Holland set out:
(i)Similarities were observed between the questioned Group 2 “T. Dinc” copied signature, item 8 and the Group 2 “T. Dinc” signature standard, item “F”.
(ii)These similarities are significant and it is my opinion that it is probable that the questioned Group 2 “T. Dinc” signature has been written by the writer of the Group 2 “T. Dinc” signature standard. [73]

I do not need to delve into the Group 2 questioned signature as Ms Dinc freely admitted that it was her signature and I assume she did so on the basis that she sought to distinguish the same from the Group 1 questioned signatures.

[73]Above, n 73, page 16.

Mr Holland observed in relation to the handwriting as follows:

(i)Similarities were observed between the questioned original ink handwriting as mentioned above and the “Teresa Dinc” handwriting standards.
(ii)These similarities are significant and it is my opinion that the questioned handwritten entries listed above have been written by the writer of the “Teresa Dinc” handwriting standards. In particular when examining comparable word forms as with the address written on some documents compared to the same address written on the handwriting standard item “B”.
(iii)Also, the letter forms of the printed handwritten name “Teresa Dinc” are generally written beside or under a “T. Dinc” questioned signature and a comparison of these revealed that the writer of the “Teresa Dinc” name wrote the “T. Dinc” signature generally written above.[74]

[74]Above, n 73, page 21.

Insofar as Mr Holland was asked to examine photocopied entries, he observed much the same similarities but because of the examination being hindered by the copies rather than originals, he formed the view that it was highly probable that the questioned handwriting are by the one writer and by the writer of the “Teresa Dinc” handwriting standards.[75]
[75]T 196.

The defendants chose not to elicit their own expert evidence to assist the court but sought to rely upon cross-examination of Mr Holland. During cross-examination Mr Holland accepted that the Group 2 signature was of a different style to the Group 1 questioned signatures and, using his terminology, it was inconclusive whether the Group 1 questioned signatures were written by the writer of the Group 2 questioned signature.[76] Mr Holland also conceded that the handwriting control document was primarily document “B”. It was put to him that Ms Dinc did not write the worlds on document “B”. [77]
[76]T 205.
[77]T 200-202.

However, the gravamen of Mr Jones’ very poignant cross-examination was that none of the Group 1 controlled documents were signed by Ms Dinc.

I have not commented upon any issue arising from Ms Pasha’s allegation that her signature was forged on various September 2009 documents. Mr Holland was not asked to offer any opinion with respect to the same.

The Group 1 signature controlled documents include form 205 notifications to ASIC. Given the evidence which was ultimately elicited from Ms Dinc during cross-examination with respect to her involvement with Ilford Tower, I do not accept that Ms Dinc did not sign the Group 1 controlled signature documents. I further note that although the effect of Ms Dinc’s evidence is that her signature has been forged, she concedes that she has made no complaint to the police in relation to the same.[78]
[78]T 259.

Accordingly, I accept that Ms Dinc’s signature appears on the relevant documents necessary for the plaintiff to make out its claim. In making that observation, I do not make any determination whatsoever as to the validity of Ms Pasha’s signature on the September 2009 documents. Although Mr Jones put it to her that the signature on the documents was remarkably like hers he did not press it and I was not called upon to make any determination with respect to the same.

Mr Jones, in his closing address, conceded that there was no evidence one way or the other about Ms Pasha’s motivation for completing the documents when it was contended that she had not seen Ms Dinc. He conceded that he really couldn’t take the matter much further but submitted that he did not have to cross-examine her about that issue as he submitted it was sufficient to put it to her that Ms Dinc did not attend upon Ms Pasha.

Ms Pasha witnessed Ms Dincs’ signature on the June Variation of Facility Agreement and Guarantee.[79] The April Facility Agreement and Guarantee was witnessed by Joe Vangolo.[80] Ms Dinc said she did not know that person. The September Facility Agreement and Guarantee was witnessed by Villon Bajra.[81] Ms Dinc said she had never met that person.[82] From July 2009 to December 2009 there were 11 payments from Ilford Tower’s account 252601806 to Mr Bajra. It was put to Ms Dinc that Mr Bajra was employed at Ilford Tower’s Chadstone business. Ms Dinc responded that she had no idea but did not explain why the payments were made.[83] Mr Bajra was not called.
[79]CB 189, signature at 210.
[80]CB 102, signature at 122.
[81]CB 333, signature at 355.
[82]T 237.
[83]T 272.

Mr Jones pursued the issue of Ms Pasha’s signature on the June Variation of Facility Agreement and Guarantee but did not touch upon the other two save to submit that Ms Dincs’ evidence was that she did not sign the same.

Knowledge of Ilford Tower

Ms Dinc gave evidence that she was not aware of the company called Ilford Tower until she received the documents in this proceeding. She was not aware that she was a director until she received the proceedings for “whatever is happening here today”. Further, she said she had no idea of what the business of Ilford Tower was.[84]
[84]T 219.

She denied having been involved in a proceeding on behalf of Ilford Tower relevant to a claim by Coffex Coffee Pty Ltd (“the Coffex Coffee proceeding”).[85] The judgment in that proceeding was put to her as follows:

… she [Ms Dinc] said that she has read the affidavit of Ms Wort and states that the agreement dated 15 April 2009 does not bear her signature. She has not signed any agreement with the plaintiff … she denies that the first defendant [Ilford Tower] received any coffee machine or coffee grinder from the plaintiff. She was referred to the delivery document which was exhibited to the affidavit of Ms Wort and states that the document does not contain her signature or the signature of any officer or employee of the first defendant. … Ms Dinc admits that the first defendant commenced trading with the plaintiff in September 2009 which is the date upon which the first defendant commenced trading.

[85]T 240; S CI 2010 06610 Coffex Coffee Pty Ltd v Ilford Tower (de-registered)

After reading that extract of the judgment of Associate Justice Efthim delivered on 20 April 2011, it was again put to Ms Dinc that she was involved in the proceeding on behalf of Ilford Tower. Again she said “no”.[86]
[86]T 241.

Ms Dinc was then shown the judgment of Justice Ferguson which was with respect to the appeal from the Associate Justice. When asked whether she was involved in this proceeding her response was “I am not aware of any of these documents either”.[87] A further passage was put to Ms Dinc as follows:

…There was no other evidence as to Mr Strangio’s role in connection with Ilford other than an affidavit sworn by Ms Dinc in support of her application for approval to prosecute the appeal. She stated that since her appointment as a Director she has had control of Ilford and managed its affairs. According to her, she asked her brother to manage two businesses owned by the company and he has done so under her control and direction.[88]

After putting the further passage Ms Dinc was asked: “Were you involved in this proceeding?” Her response was “No”. She was then asked: “Did you file an affidavit to that effect in this proceeding?” Her response was “No. Not that I am aware of anyway.” Subsequently it was put to her “Are you saying that somebody has assumed your identity in order to swear that affidavit?” Ms Dinc’s response was “Well, if I didn’t sign any affidavit, how can I say someone assumed or what? I don’t know.”[89]

[87]T 241.

[88]T 242.

[89]T 242.

The affidavit of Teresa Dinc sworn on 22 February 2011 in the Coffex Coffee proceeding, which was obtained during her cross examination pursuant to the Notice to Produce that was directed to the Prothonotary, was put to Ms Dinc. The solicitors on record for Ilford Tower Pty Ltd (de-registered) in the Coffex Coffee proceeding were the same solicitors as for the defendants in this proceeding, namely Radebe and Associates. Ms Dinc agreed that her signature appeared on the affidavit. It was then put to her: “So the denial that you gave yesterday in regard to your knowledge of this proceeding was wrong?” – “No, because I misunderstood you and I got confused with what you were saying. I thought you were talking about beforehand, not after the fact and I got totally confused about exactly what you were on about.”[90] When asked, “So it says here at page 240 of the transcript, a question I put to you yesterday: ‘Have you previously been involved in a proceeding on behalf of Ilford Tower relevant to a company by the name of Coffex Coffee Pty Ltd? – no’.” Ms Dinc’s response was “I didn’t actually go to court so that’s what I was referring to. I know the affidavit was signed but I didn’t actually go to the court when this happened.”[91]
[90]T 289.
[91]T 290.

When asked further about the affidavit, which is described dated 21 February 2011, taken from the date in the solicitor’s box rather than the dates in the jurat of 22 February 2011, Ms Dinc conceded that she had sworn the affidavit, “…but again, I thought you were talking beforehand. Look, I don’t know…..” and when asked whether yesterday’s evidence was false she responded “It’s not false. I didn’t understand and I don’t know anything about legal – what you threw at me yesterday about Coffex. I never read it, and I’ve never seen it. I never went to court. I signed an affidavit for Mdu [of Radebe & Associates] to do what he had to do. Further, she said “I filed more than one regarding many court proceedings… I got confused. I apologise. I’ve been accused of something I’ve never done and now I’ve been thrown in the middle of it. I just want my life back.”[92]
[92]T 293.

Ms Dinc also swore a further affidavit in the Coffex Coffee proceeding on 7 July 2011. Paragraph 5 of that affidavit was put to Ms Dinc as follows:

I believe that the company was denied natural justice by being wound up on a basis which was not notified to me earlier. I have had the control of the company and managed its affairs since my appointment as a director. I had asked my brother to manage two businesses owned by the company at Chadstone Shopping Centre and Monash Homemaker Centre and he has done so under my control and direction.

Mr Moffat then asked “That’s the position, isn’t it? You were in this company up to your eyeballs from the day that you were appointed?” Ms Dinc’s response was:

After I found out. After that. Beforehand I did not know anything and I still don’t know anything so I can’t answer any of these questions because company or no company, I didn’t even know there was a shop at Chadstone, one at Monash. I found out all after and I was told to sign based on what was happening with the Coffex issue. I don’t know anything else apart from that and I can’t answer any other questions about anything else from what you are telling me.[93]

That response apart from seeking to circumvent what had been set out in her July affidavit, confirmed that she did have involvement in the Coffex litigation. She said “I found out all after and I was told to signed based on what was happening with the Coffex issue.”[94] Her affidavit in the Coffex Coffee proceeding are inconsistent with her denial of that position in this proceeding.

[93]T 298.

[94]T 298.

Another example of Ms Dinc contriving evidence, or at least in the way she presented it, was in relation to the meeting with Ms Pasha on 22 April 2009. During examination-in-chief she had been asked a simple question, namely, “Are you able to say what you were doing on 22 April 2009?”[95] That question was obviously asked upon instructions. Instead of responding to the same directly, her response was attended by dramatics. First, she sought to find out what day it fell on. After pausing, and as if conveying the impression she was contemplating what might have occurred on that particular day, she provided an explanation that her cousin had died on that day. She said that she had been at work all day and then went to attend the hospital but got there too late so went to her mother’s house thereafter. She produced the death certificate. Plaintiff’s counsel in submissions submitted that the response was contrived, that is, she had collected the death certificate and clearly intended to rely upon the same. During the course of the defendant’s submissions I said to Mr Jones, “No, but what’s put against you is the theatrics as to coming to that response rather than just making that response.”[96] In any event, even if it is accepted that she wished to visit her cousin, it does not exclude the possibility of seeing the solicitor for a short time. Likewise, I determine that her explanation that she could not have attended upon Ms Pasha on 4 June to be equally contrived. On this occasion she said she had swine flu at the time and was pretty much bed ridden.[97] I do not accept either reason as definitively contradicting Ms Pasha’s evidence of an attendance on each date for what was 10 minutes or less.
[95]T 227
[96]T 362-363.
[97]T 231.

Neil Gregory Pinney

Ms Dinc had contact with Mr Pinney who was called as a witness on behalf of the plaintiff. That contact occurred as Mr Pinney was a finance broker who in 2009 had been employed by One Stop Finance and One Stop Finance Solutions. Initially he had received instructions from Mr Strangio with respect to an application for finance in 2008. Ilford Tower owned two properties. One in Safety Beach (also referred to as the Dromana property) and the Ordish land. Mr Strangio was looking to refinance Safety Beach which secured approximately $450,000 which had been advanced by the ANZ Bank. Subsequently, Ilford Tower sought to borrow funds as against the Ordish land. At that time Mr Pinney had been dealing with Mr Strangio and his sister, Ms Dinc.[98] Mr Pinney had dealings with Ms Dinc in relation to the Safety Beach property and subsequently in relation to the loan relevant to Dandenong. Despite Ms Dinc denying contact with Mr Pinney other than in relation to the re-finance of the Dromana property, prior to lodging the first loan application with the plaintiff, Ms Dinc had entered into an agreement between Ilford Tower and One Stop Finance Solutions Pty Ltd to arrange finance of $300,000 secured by a mortgage over the Ordish land. An extract of that agreement appears in Mr Holland’s report and it is one of the documents which Ms Dinc admitted signing.[99] That sets out –
[98]T 140 – 141.
[99]T 221-222.

Schedule 1:

Amount of finance required - $300,000 or such sum as the applicant deems acceptable.
Schedule 2:
Security: (i) First mortgage on 105 Ordish Road, Dandenong South
(ii)Director’s guarantee[100]

In examination in chief, Ms Dinc denied that she had any dealings at all with Neil Pinney about obtaining finance by way of a mortgage over the Dandenong South property.[101] However, the agreement with One Stop Finance Solution Pty Ltd is unambiguous in that it clearly designates the Ordish land and is referable to $300,00 which was insufficient to pay out the ANZ loan.

[100]Above, n 72, Vol 2.

[101]T 233.

Mr Pinney gave evidence that after the Dromana loan was funded he had further contact with Ms Dinc and that contact was in relation to the loan relevant to Dandenong. He had telephone discussions with her and the occasional meeting. In cross‑examination Mr Pinney was asked:

Are you able to say on how many occasions you think you spoke to her?

His response was:

Not specifically, no. But I do recall a couple of instances where I met her out at Broadmeadows. She subsequently last year, so after these loans, she did come to my office in Pascoe Vale with her sister on a couple of occasions, and my colleague was also there in attendance.

… It was after loans [were signed], yes, but she says she has never met me since, according to you. It’s not quite right.[102]

[102]T 171.

Mr Pinney did not attempt to embellish any of his evidence with respect to meetings, he was frank in his acceptance that he did not have a clear recollection of the circumstances of the signing of any documents and, in particular, whether documents were executed in his presence even if his signature appeared thereon as the witness. I accept that Mr Pinney is a witness of truth.

With respect to attending to documentation, Mr Pinney said that he relied upon his usual practice but save for one instance did not have a recollection of the circumstances.[103]
[103]T 156.

On 18 April 2009, Mr Pinney witnessed the acceptance of the terms and conditions of a letter of offer from the plaintiff. He did not recall the circumstances. He said his usual practice was to discuss the terms and conditions with the client “and, if they agreed, have them execute the document and then return it to the lender.”[104] The acceptance of the letter of offer was then transmitted back to Dean Koutsoumidis of the plaintiff by facsimile transmission on the same day. Part of the documentation that had been received from Mr Koutsoumidis included a loan application which, at CB 58, 59 and 61, bears Ms Dinc’s signature. Mr Pinney said that he did not have any recollection of this document being signed in his presence. However, he had a recollection of discussing this document with Mr Dinc at the time he received the email back from Mr Koutsoumidis. He said that the discussion was “again the broad terms of the offer, the amount, the term, the rate, the lender. … To go over the critical points of the offer, which is the amount, the term, the lender and the rates.” He did not remember when the discussion occurred but put it at prior to returning the document back to Mr Koutsoumidis.[105]
[104]T 149.
[105]T 152.

The first loan agreement was for a term of three months. Later in May 2009, Mr Pinney received instructions from both of Mr Strangio and Ms Dinc to refinance the first loan. He also received instructions to look for an extension of $50,000 on the loan. He initially prepared an ANZ application for take out but that did not proceed. After that, he spoke to BankWest and a subsidiary of Bendigo Bank but does not recall any other enquiries. He was unable to arrange refinance with another lender. At that time, he had received instructions to request the advance of a further $50,000 for the remaining term of the existing loan on the same terms and conditions. He did not recall the purpose for that loan.

For the reasons stated in paragraph 62 hereof, I found Mr Pinney to be a truthful witness. Even if he could not remember the circumstances of having witnessed Ms Dinc’s signature on the acceptance of the terms and conditions of the first letter of offer (18 April 2009) and the acceptance of the terms and conditions of the extension letter of offer (27 May 2009), I accept his evidence that he received instructions from both Mr Strangio and Ms Dinc, attended upon Ms Dinc in relation to the plaintiff’s loans and met with Ms Dinc after the loan funds had been advanced.

Mr Pinney also recalled attending the Preston branch of the ANZ with Ms Dinc.[106]
[106]T 168.

Ms Dinc agreed that she had opened a business saver loan in her name at the ANZ Banking Group. She maintained that that account was through the Preston Branch of the bank. Ms Dinc agreed that the sum of $452,000 debited from that account on 25 March 2009 was the amount advanced by ANZ with respect to Ilford Towers’ property at Dromana.[107]
[107]T 254.

In April 2009 the interest rate charged to the account maintained by Ms Dinc with respect to the Dandenong property was 7.07%. That equated to approximately $2,700 per month. In addition to that amount there was an administration fee of $20 per month. The interest rate steadily increased at the end of 2009 and during 2010 so that by May 2010 the rate had increased to 8.62%. The monthly payment correspondingly increased to more than $3,000 per month. Having agreed that she opened the business saver loan account with respect to the Dromana property, Ms Dinc did not give evidence how it was proposed to service that loan. When it was put to her that “ … What’s happening here is the money to meet your loan on Dromana or Safety Beach is being taken from the account into which the Equity One loan was deposited?” She responded, “All I know is Dromana was to re-finance. There rest I have no idea.”[108] The response is odd in that she conceded that she knew that with respect to the Dromana loan instalments were to be paid to the ANZ Bank for that loan.[109] As Ms Dinc was personally liable for the loan and as Ms Dinc swore in the Coffex Coffee proceeding that she had the control of Ilford Tower and managed its affairs, I do not accept her evidence that she did not understand that in part the plaintiff’s loans were to service her Dromana loan. This is particularly so when it is noted that she said that originally the thought was to redevelop the Dromana land. The redevelopment would have required further funds. Ms Dinc failed to explain how she proposed to service the ANZ loan. Even if it were accepted that the ANZ loan was to be repaid from refinancing, Ms Dinc failed to explain how might that be done. I have accepted that the instructions to refinance given to Mr Pinney by Ms Dinc were with respect to the plaintiff’s April first loan agreement as referred to in paragraph 65 and not with respect to the Dromana property.
[108]T 255.
[109]T 258.

Mr Jones did not seek to re-examine Ms Dinc, which was hardly surprising in circumstances where his instructing solicitors in this proceeding had fostered the position that Ms Dinc knew nothing of the dealings of Ilford Tower other than partly in relation to the Dromana land and yet, in the Coffex Coffee proceeding which had commenced after this proceeding, filed affidavits by Ms Dinc supporting the polar position that she was in control of Ilford Tower. In making that observation I note that Mr Jones appeared to be first aware of the Coffex Coffee proceeding when it was produced to court during the course of the cross‑examination of Ms Dinc.

Bruno Strangio

Mr Strangio was called by the defendants. In response to the first question of substance asked of him, whether he knew Ms Pasha, Mr Strangio declined to answer the question and said “before I answer any questions, Sir, I will take the fifth amendment and I won’t answer any questions in relation to the ones that might self-incriminate me”.[110]
[110]T 302.

Although I observed that I could not see how it could be possibly incriminating whether or not he did or didn’t know Ms Pasha, the matter was stood down to obtain separate representation for Mr Strangio. In the best traditions of the Bar, Mr Herskope, in the capacity of duty barrister, appeared for Mr Strangio. In addition to submitting that I may not have had jurisdiction to grant a certificate under s 128 of Evidence Act, Mr Herskope submitted that it was only a matter of time before the objection to answering questions was properly taken. Prior to the asking of any further question, I discussed the position with Mr Herskope and with Counsel for the parties. The agreed position was that no adverse inference or favourable inference would be taken by the lack of evidence by Mr Strangio. Further, no submission based upon Jones v Dunkeld would be made based upon the absence of any evidence from Mr Strangio. That left a neutral position. Counsel for the parties agreed to that course being taken.

Dean Dimos Koutsoumidis

Mr Koutsoumidis, the Managing Director and Executive Chairman of the plaintiff was called. He dealt with a number of formal requirements in his evidence to which I will not refer.

The Advances

The plaintiff clearly demonstrated the advances to Ilford Tower and the entitlement to prosecute this proceeding, all the requisite steps being proved. Mr Jones did not seek to address any of those matters in his closing submissions save to contend that the funds were advanced by the plaintiff to Ilford Pty Ltd rather than Ilford Tower and that certain demands did not constitute demands as they were not signed.

I am satisfied that the ASIC historical organisational extract demonstrates that for a short period in March 2009, Ilford Tower conducted business under the name of Ilford Pty Ltd. Further, the account 252601806 conducted at the ANZ which is in the name of Ilford Pty Ltd and not Ilford Tower, was partially used to service the interest payment and fees on Ms Dinc’s account with respect to Ilford Tower’s property at Dromana. A representative of the ANZ was not called by the defendants and it is clearly open to conclude that Ilford Tower failed to notify the ANZ of the change of name. This is a non-issue.

Mr Gordon, an accountant at Mills Oakley, the plaintiff’s solicitors, was called to demonstrate how funds were remitted. The advance in June of 2009 was paid by cheque of which the payee was Ilford Tower.[111] The advances in April and September were completed by electronic transfer. Albeit, that with respect to the 23 April 2009 transfer, the beneficiary was designated as Ilford Tower, the account name is designated as Ilford Pty Ltd at the ANZ. The beneficiary name and account with respect to the September advance both designated Ilford Tower. Remitted funds with respect to each of the electronic transfers were to account 252601806. The cheque of which Ilford Tower was payee, was also deposited into that account.[112]
[111]CB 214.
[112]CB 441.

The Demands

The original demands were not produced by the defendant’s. The defendant’s contention that the demands were not signed is relied upon by reference to the file copies produced on discovery. Ms Flannagan, an administration team leader with Mills Oakley, was called. Her role with the firm included the posting of letters of demand. Ms Flannagan frankly admitted that she could not give evidence about whether any particular demand had been signed before being posted. However, Ms Flannagan was able to explain the process. “When we were given a letter to send there is a file copy and an original. We send the original. The next day we stamp the file copy and then we photocopy that file copy and we – administration keeps the file copy and the original stamped goes back to the solicitor.” She agreed that the file copy may not necessarily be signed by Mills Oakley. I am not willing to determine that the demands were not signed given the denial set out in the defendant’s defence which included a denial of service of each of the relevant demands.

Wilful blindness

Mr Jones cross-examined Mr Koutsoumidis and took him to the various deficiencies in the documentation which was relied upon by the plaintiff. I will not repeat those deficiencies as I have outlined the same with respect to the evidence of Ms Pasha. Mr Koutsoumidis only found out about the forged signature of Ms Pasha in relation to the September 2009 documentation on the day of giving evidence. Mr Jones also established through Mr Koutsoumidis that although it had been reported by Mr Pinney, acting on instructions, that the Ordish land was un-tenanted, a valuation report dated 18 August 2009 procured prior to the September 2009 advance, demonstrated that there had been a lease in place with respect to the Ordish land since 1 April 2009. Mr Koutsoumidis agreed that he had been given false information about the lease through the broker.[113]
[113]T 69-70.

Mr Jones then put it to Mr Koutsoumidis that the documents that he had received were riddled with errors. Mr Koutsoumidis responded “I wouldn’t go so far as to say all the documents are riddled, but I can see that there are some that could have been executed a bit better and we could have checked them much better, yes.”[114] . Mr Koutsoumidis was taken to was certificates purportedly given by the solicitor which were not signed by the solicitor. Mr Jones then questioned as follows: “I put it to you that these documents were so poorly completed that you should have been put on notice that they were regular?” Mr Koutsoumidis’ response was “Well, you know, in hindsight, yes, I think we should have addressed the certification differently.”[115]
[114]T 71.
[115]T 72.

Mr Koutsoumidis did note some deficiencies with respect to the April documentation and requested Mr Pinney to attend to the same by email of 22 April 2009.[116] The email noted deficiencies in the response to requisitions on title, minutes of meeting, identification and the direct debit request but not with respect to any other document. Mr Pinney said that he referred the email to Mr Strangio for attention. Although Mr Koutsoumidis request to attend to some matters rather than all deficiencies is inexplicable, it is illustrative of carelessness rather than a design to remain ignorant of the circumstances surrounding the execution of the April documents.
[116]CB 64.

Mr Jones then said “I put it to you that, in at least one instance in relation to the lease, that you knew before you made the second loan and a second mortgage, that you had not been given correct information about the tenant?” Mr Koutsoumidis responded “Yes, that is correct, and we addressed that with the broker and we had no reason to believe that it was intentionally withheld from us and it was of no – it didn’t materially affect the first mortgage transaction, so it wasn’t a piece of information that gave us grave concerns about the conduct of the broker or the transaction.”[117]
[117]T 72.

Mr Jones then came to the crux of his cross-examination: “I put it to you that these documents were so irregular that you should have been put on notice that there was a possibility that some of them were fraudulent?” Mr Koutsoumidis responded “I can see that the certification needs improvement, but our lawyers and we had no clear signs that there was any foul play going on. Otherwise we wouldn’t have proceeded.”[118]
[118]T 73

Mr Koutsoumidis gave evidence that once the documentation is received at the plaintiff’s office or if they go straight to Mills Oakley, all such documents inevitably go back to Mills Oakley and are checked by that firm of solicitors. Settlement details are obtained:

Mills Oakley also complete their due diligence and send to us what we refer to as the final certification. Provided all our credit requirements are satisfied and Mills Oakley’s due diligence is complete, we certify it, which is essential in approval for the transaction to proceed. Mills Oakley then, as part of that certification, email a revised disbursement order, which we also refer to as an RDO, which clearly spells out where the moneys are to go.[119]

Mills Oakley attended to settlements and remitted funds or issued cheques accordingly.

[119]T 39.

The submissions put on behalf of the defendant do not address the role of Mills Oakley acting for the plaintiff during the course of these transactions. In effect, Mills Oakley, a reputable firm of solicitors, had confirmed that it was in order to settle each of the loans. Mr Jones’ response to that observation was that “Perhaps the client, being the plaintiff, should not have accepted that advice.”[120]
[120]T 343

Wilful blindness submission

Given my determination that Mr Dinc signed each of the relevant documents, I do not need to deal with the defendant’s submissions that, with respect to the mortgages, the exception to the indefeasibility on the basis of wilful blindness was enlivened.

Mr Jones relied upon Assets Co Ltd v Mere Roihi [1905] AC 176 at 210 where Lord Lindley said:

…the fraud which must be proved in order to invalidate the title of a registered purchaser for value….must be brought home to the person whose registered title is impeached or to his agents.
…But if it be shown that his suspicions were aroused, and that he abstained from making inquiries for fear of learning the truth, the case is very different, and fraud may be properly ascribed to him.

Mr Jones also relied upon Macquarie Bank Ltd v Sixty Fourth Throne Pty Ltd:[121]

Similarly to abstain deliberately from reasonable enquiry for fear of what the enquiry will reveal, to choose to shut one’s eyes to the obvious – to assume a state of “wilful blindness” – or otherwise to generate a state of contrived ignorance, may of course be dishonest. It has well been said that wilful blindness – deliberately turning a blind eye to obvious or obviously ascertainable facts is akin to fraud.

[121][1998] 3 VR 133 at 143-4.

In Pyramid Building Society (in liq) v Scorpion Hotels Pty Ltd,[122] Hayne JA (as His Honour was then) was dealing with the following: “the mortgagor alleged the mortgage instrument had not been validly executed as the affixation of its Company Seal was attested by a person who was not a director. It further alleged that the mortgagee had been fraudulent in procuring the registration of the mortgage because of its (or its solicitors’) wilful blindness or reckless indifference to the truth or falsity of the mortgage.” Hayne JA at 194 said “The expressions ‘reckless indifference’ and ‘wilful blindness’ are useful shorthand expressions to describe some kinds of cases of fraud. As the classical exposition by Lord Herschell in Derry v Peek (citation omitted) shows, fraud can be proved by showing that a false statement has been made without belief in its truth, or recklessly, carelessly whether it be true or false.” But as what was said in the Assets Co Ltd case, “The mere fact that a person might have found out fraud if further inquiries had been made does not of itself prove fraud. The inquiry is an inquiry for actual dishonesty, not for want of due cares.”
[122][1998] 1 VR 188 at 194.

In Russo v Bendigo Bank Ltd,[123] a mortgage of real estate to secure a loan to a company had been given. The mortgagor’s signature on the mortgage had been forged by her son-in-law. Although not present when the document was signed, a clerk employed by the bank’s solicitor signed the attestation clause to the mortgagor’s purported signature but she was unaware of the forgery. Neither the bank nor the solicitor was aware of the forgery or the false attestation. The Court of Appeal held that the trial judge did not err in holding the clerk was not guilty of fraud within the meaning of s 42 of the Transfer of Land Act… Although her attestation of the mortgagor’s signature was false, there was no dishonesty or moral turpitude on her part, in the sense of a wilful and conscious disregard and violation of the rights of other persons. Of note, is the court’s finding at (4) “In the circumstances, a finding of fraud cannot be made against the bank on the basis of a mere aggregation or accumulation of acts”.
[123][1999] 3 V.R. 376.

I said to Mr Jones, “do I take it that the acme of your submission is that wilful blindness… is constituted by not having regard to and properly completed documents, notwithstanding that Mills Oakley had been retained to vet these documents and notwithstanding that you really don’t press the director of Equity One on any dishonest attempt, there was just noting that there were shortcomings in the document.” Mr Jones replied “it was put to him that he should be on notice that a fraud may have been committed by the irregularities in the document and he said he acknowledged that the documents were not terribly well completed but denied he was on notice of any fraud.”

In this proceeding the funds had been advanced in three tranches. The duplicate certificate of title had been made available by Ilford Tower. After disbursement of the funds in April 2009 there was no complaint made by the company about the registration of the plaintiff’s mortgage. The funds in the company’s account remitted by the plaintiff were utilised to make interest payments in Ms Dinc’s account. The same applies after the second advance in June of 2009. I said to Mr Jones that “there [are] no surrounding circumstances that would put anybody on notice, save as to the incompetency of Hina Pasha and that’s the only thing that enables you to run this argument, isn’t it?”[124] Mr Jones responded “Yes, I would have to concede that there were no surrounding circumstances that were put…the reliance I have placed in paragraph 6 is solely directed to the documentation that was provided to the lender and which was the subject of the evidence at the trial.” Further, the defendants did not submit that the plaintiff, whether by Mr Koutsoumidis or its solicitors, had any dishonest intent. In effect, that is the end of the matter and Justice of Appeal Hayne’s observation in Pyramid is germane. The second defendant does not demonstrate, nor lay the foundation to demonstrate any dishonesty or moral turpitude on the part of any officer or agent of the plaintiff, nor Mills Oakley. At its highest, each of the plaintiff and Mills Oakley were careless. Ms Dinc was recorded as the sole director of Ilford Tower when it received the funds. A guarantee by a director is usually appropriate. The concession of the plaintiff in not appreciating the omissions and errors in the documents provided by Ms Pasha, a legal practitioner, is not put by Mr Jones as “wilful and conscious disregard and violation of the rights of [Ms Dinc]” in circumstances where a director provides the guarantee. Further, Ms Pasha witnessed only one of the Facility Agreement and Guarantees. Nothing was put as to why the plaintiff ought to have made enquiries with respect to the attestation of the other two Facility Agreement and Guarantees. I determine that the carelessness of the plaintiff in not making anything but the limited enquiry about the circumstances of the execution of the documents does not constitute “wilful blindness” in the sense referred to by Hayne JA.
[124]T 348.

There will be judgment for the plaintiff.

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[2013] VSC 68

26 February 2013