Ierino v Gutta - [2012] WASCA 222

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: IERINO -v- GUTTA [2012] WASCA 222

CORAM: PULLIN JA
NEWNES JA
EDELMAN J

HEARD: 10 OCTOBER 2012

DELIVERED : 14 NOVEMBER 2012

FILE NO/S: CACV 12 of 2011

BETWEEN: ANTONIO GUISEPPE IERINO
Appellant
AND
MARIA TERESA GUTTA
Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :MAZZA J
Citation  :GUTTA -v- IERINO [2010] WASC 402
File No  :CIV 1168 of 2007

Catchwords:

Equity - Equity of exoneration - Application of equity of exoneration beyond situations of husband and wife - Nature of the equity of exoneration as the objective intention of the parties that between them the burden of a joint debt should fall only upon one of them and the other should be exonerated of the burden of any payment of the debt - Existence and extent of equity of exoneration to be assessed at the time the debt is incurred - Meaning of presumption of exoneration - Evidence of intention of the parties that the Appellant would use part of borrowed money for his own purposes - Respondent entitled to the equity of exoneration

Legislation:

Nil

Result:

Appeal dismissed

Category: A

Representation:

Counsel:

Appellant: Dr P MacMillan
Respondent: Mr A Aristei

Solicitors:

Appellant: Gibson Lyons Lawyers
Respondent: Carlo Primerano & Associates

Case(s) referred to in judgment(s):

Bagot v Oughton (1717) 1 P Wms 347; 24 ER 420
Boyd v Hummelstad [1996] NSWSC 93
Burch v Cone [2009] NSWSC 1430
Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253
Caldwell v Bridge Wholesale Acceptance Corp (Australasia) Ltd (1993) 6 BPR 13,359
Calverley v Green [1984] HCA 81; (1984) 155 CLR 242
Dinsdale BHT Protective Commissioner v Aethur [2006] NSWSC 809
Duncan, Fox, & Co v North and South Wales Bank (1880) 6 App Cas 1
Farrugia v Official Receiver in Bankruptcy (1982) 43 ALR 700
Gee v Liddell [1913] 2 Ch 62
Gee v Smart (1857) 8 El and Bl 313; 120 ER 116
Glazier v Australian Men's Health [2000] NSWSC 253
Gray v Dowman (1858) 27 LJ Ch 702
Hall v Hall [1911] 1 Ch 487
Hudson v Carmichael (1854) Kay 613; 69 ER 260
Knight v Lawrence [1993] BCLC 215
Murray v Barlee (1834) 3 My & K 209; 40 ER 80
Official Trustee in Bankruptcy v Citibank Savings Ltd (1995) 38 NSWLR 116
Paget v Paget [1898] 1 Ch 470
Parsons v McBain [2001] FCA 376; (2001) 109 FCR 120
Pit v Cholmondeley (1754) 2 Ves Sen 565; 28 ER 360
Re Kiely (1857) 6 Ir Ch R 394
Re Pittortou (a bankrupt) [1985] 1 All ER 285
Robb Evans of Robb Evans & Associates v European Bank Limited [2004] NSWCA 82; (2004) 61 NSWLR 75

PULLIN JA: I agree with Edelman J.
NEWNES JA: I agree with Edelman J.
EDELMAN J:

Introduction

The appellant in this case, Mr Ierino, was knowingly involved in the forgery of a transfer of title which transferred into his sole name the title to a property which he owned jointly with the respondent, Ms Gutta. It is common ground that Mr Ierino must account for the proceeds received from the sale of that property. The sum awarded by the primary judge on the taking of the account was $36,487.66. Mr Ierino submits that in the taking of the account Ms Gutta should not have been exonerated for an amount of $90,000. The $90,000 represented part of their joint debt, secured by the property, which Mr Ierino drew down and used for his own benefit. Mr Ierino submits that the relevant time for the assessment of the equity of exoneration of the debt is at a time prior to when the debt was incurred.
The appellant abandoned an appeal in relation to the primary judge's indemnity costs order. The only issue in relation to costs on this appeal was the costs orders which should be made if the appeal were allowed. For the reasons below, the appeal is dismissed.

The background

The background which follows is taken from the findings of fact in the primary judge's decision and the evidence at trial.
Between 2001 and 2006, Mr Ierino and Ms Gutta were in a personal relationship. But they did not live together as a de facto couple. From July 2004, Mr Ierino ran a water‑carting business. Ms Gutta was an office administrator in a different business, but during their relationship she assisted Mr Ierino with matters such as bookwork and internet banking.
On 24 February 2004, Mr Ierino and Ms Gutta jointly entered a loan agreement with the Home Building Society (HBS) for a $150,000 line of credit.
On 5 March 2004, Mr Ierino and Ms Gutta acquired a property in Hartog Road, Dalyellup as joint tenants. The purchase price was $58,000. The purchase was funded by a draw down of 56,685.72 from the HBS line of credit. HBS secured the line of credit by a first registered mortgage

over the Dalyellup property as well as a mortgage over a property owned by Mr Ierino at Lalor Road, Kenwick.

The Dalyellup property was vacant land. It was purchased by Mr Ierino and Ms Gutta as an investment. They had discussed building a house on the property but this never occurred.
The primary judge accepted Ms Gutta's evidence that $90,000 subsequently drawn down from the line of credit was used by Mr Ierino for his own purposes. He also accepted Ms Gutta's evidence that a small sum, about $2,000, was drawn down to be used for their mutual purposes.
An exhibit at trial was the HBS loan account. That running account shows that the line of credit was drawn down on 25 March 2004 in the amount of $3,158.19 and on 28 April 2004 in the amount of $88,100.
Between March 2004 and April 2005, Mr Ierino and Ms Gutta divided the mortgage repayments between themselves in accordance with agreed proportions: Ms Gutta paid about $400 per month and Mr Ierino paid about $650 per month. Over this period, Ms Gutta's repayments were $5,200.
In early 2005, Mr Ierino decided to refinance the HBS loan and to obtain a further advance to buy a water‑carrying truck. He engaged a finance broker, Mr Mark D'Silva. Mr D'Silva obtained an agreement for finance from Tonto Home Loans Australia Pty Ltd (Tonto). Tonto agreed to lend $220,000 to Mr Ierino: $147,136.24 was to be used to discharge the loan from HBS and $71,500 was to be used for the purchase of the water‑carrying truck. The new Tonto loan was to be secured by a first registered mortgage over the Dalyellup property as well as a property owned by Mr Ierino at Park Street, Kenwick.
Mr Ierino thought that refinancing would only be possible if title to the Dalyellup property were transferred from the joint ownership of Mr Ierino and Ms Gutta to his sole ownership. The reason for this belief may have been that Ms Gutta had an adverse credit rating.
On 21 April 2005, a transfer of title to the Dalyellup property was registered, transferring title into the sole name of Mr Ierino.
Although Ms Gutta was aware in general terms of Mr Ierino's desire to refinance the loan and discharge the HBS loan, she did not consent to the transfer of title and gave no indication to Mr Ierino that she agreed to the transfer.
After hearing substantial expert and non‑expert evidence on the issue of forgery, the primary judge found that the signature of Ms Gutta had been forged on the transfer of title document. The forgery occurred between 15 and 21 April 2005 at a meeting at which Mr Ierino, Ms Gutta and Mr D'Silva were present. But Ms Gutta did not see the forgery occur. Prior to late 2005, Ms Gutta was unaware of the transfer of title.
The primary judge found that Mr D'Silva forged Ms Gutta's signature on the transfer of title document and that Mr Ierino knew that it had been forged, and authorised the registration of the transfer.
The findings of forgery were unchallenged on appeal. This included the findings that (i) Mr D'Silva forged the transfer document, and (ii) Mr Ierino knew of the forgery.
On 21 April 2005, the following transactions were settled:
(i)Tonto lent money to Mr Ierino which was used to discharge the HBS loan ($147,136.24) and to purchase a water‑carrying truck ($71,500);
(ii)the HBS mortgage was discharged;
(iii)the Dalyellup property was transferred into the sole name of Mr Ierino; and
(iv)a first mortgage was registered over the Dalyellup property in favour of Tonto.
On 19 December 2005, the Dalyellup property was sold for $140,000 to a bona fide purchaser without any knowledge of the forgery. The proceeds of sale payable to Mr Ierino were $131,288.04. Those proceeds were used to discharge part of Tonto's loan. Mr Ierino had also made loan repayments to Tonto between April and December 2005 of $20,520 and outgoings of $1,800. Ms Gutta had not made any repayments to Tonto.

The effect of the forgery and Ms Gutta's interest in the proceeds

The primary judge explained that there was no real debate about the effect of two findings he made that (i) the transfer of title was forged, and (ii) that Mr Ierino knew of the forgery. His Honour held that the effect of those findings was that Mr Ierino held his sole title to the Dalyellup property on constructive trust for Ms Gutta as to a half interest. This conclusion was not disputed on appeal; it is well established, although the trust arising from the fraudulent transfer of rights without the transferor's consent has also been described as a resulting trust: Robb Evans of Robb Evans & Associates v European Bank Limited [2004] NSWCA 82; (2004) 61 NSWLR 75, 99 ‑ 100 [111] ‑ [115] (Spigelman CJ; Handley & Santow JJA agreeing).
There were some submissions concerning the approach taken by the primary judge to the calculation of the value of Ms Gutta's interest, as a beneficiary, in the sale proceeds of the Dalyellup property. The primary judge's award followed the approach to equitable accounting which has been applied for centuries.
A party, such as a trustee, who is accountable in equity must account for proceeds received from sale of trust assets. The common form of order for an account was the account of what had been received: A Birrell, The Duties and Liabilities of Trustees (1896) 147. That account can be surcharged or falsified. A beneficiary can surcharge the account by proving a matter had been omitted which ought to have been included in the account. The account can be falsified if the beneficiary can show that a reduction in the account ought not to have been allowed: Pit v Cholmondeley (1754) 2 Ves Sen 565, 565 ‑ 566; 28 ER 360, 360 (Lord Hardwicke LC); Glazier v Australian Men's Health [2000] NSWSC 253 [150] ‑ [159] (Austin J); P Millett 'Equity's Place in the Law of Commerce' (1998) 114 LQR 214, 226.
The primary judge held that an account was to be taken of the proceeds from the sale of the Dalyellup property. The parties agreed that the amount due on the taking of the account, based on the primary judge's reasons, was $36,487.66. This figure was derived as follows, with the reductions in brackets:
(1)The proceeds from the sale of the Dalyellup property were $131,288.04.
(2)A disbursement was allowed for the expenditure by Mr Ierino (with the Tonto loan finance) in discharging the HBS loan, secured by the Dalyellup property: ($147,136.24).
(3)$90,000 of the disbursement above was falsified by the equity of exoneration, so the disbursement was ($57,136.24).
(4)Consequent upon (1) and (3), when the proceeds of sale $131,288.04 are reduced by ($57,136.24) the account is 74,775.33.
(5)A further disbursement to the balance in (4) should be allowed for the outgoings on the Dalyellup property paid by Mr Ierino while he was a trustee of the property ($1,800). The account is then $72,975.33.
(6)Ms Gutta's beneficial interest in half the sum in (5) is $36,487.66. This was the award made by the primary judge.
The only aspect of this process and calculation which is disputed by Mr Ierino on this appeal is step (3). Counsel for Mr Ierino submitted that Ms Gutta is not entitled to the benefit of the equity of exoneration.

The nature of the equity of exoneration

In Duncan, Fox, & Co v North and South Wales Bank (1880) 6 App Cas 1, 11, Lord Selborne LC described three classes of case where suretyship principles apply: (1) where there is an agreement creating the relationship of principal and surety to which the creditor is a party; (2) where there is an agreement creating the relationship of principal and surety to which the creditor is not a party; and (3) where there is no agreement but that there is nevertheless a primary and secondary liability of two persons, the debt being 'as between the two, that of one of those persons only, and not equally of both, so that the other, if he should be compelled to pay it, would be entitled to reimbursement from the person by whom (as between the two) it ought to have been paid'.
The cases usually refer to the 'equity of exoneration' in relation to the third class of case to which Lord Selborne LC referred. Although the third class is not strictly one of suretyship, the general principles apply in the same way between the parties in the positions of surety and principal debtor. The equity of exoneration is a right as between surety and principal debtor to have the principal debtor's estate resorted to first for the purpose of satisfying the debt. An equitable charge can arise over the estate of the principal debtor to secure the surety's right.
In one of the most commonly quoted passages concerning the equity of exoneration, Deane J said in Farrugia v Official Receiver in Bankruptcy (1982) 43 ALR 700:
Where the property of a married woman is mortgaged or charged in order to raise money for the benefit of her husband, it is presumed, in the absence of evidence showing an intention to the contrary, that, as between her husband and herself, she meant to charge her property merely as security. In such a case, she is, as between her husband and herself, in the position of surety and entitled both to be indemnified by the husband and to throw the debt primarily on his estate to the exoneration of her own (702).
Farrugia also involved the application of the equity of exoneration in circumstances in which the exoneration concerned only that part of the debt which had been used for the benefit of the husband. Although on this appeal there was a challenge to the primary judge's factual finding about the division of the debt, there was no dispute that the equity of exoneration could apply if the debt could be 'in effect subdivided' into the borrowing of Mr Ierino for his own benefit and the borrowing used for the joint benefit of the parties: see Farrugia (702 ‑ 703), and the primary judge at [187].
It was also common ground on this appeal that the modern expression of the equity of exoneration is not confined to the relationship of husband and wife. This assumption is correct.
In one of the cases to which reference was made on this appeal some doubt was expressed about the continued operation of a principle 'established in an earlier age when a wife's property existed only in equity, and equity, in a number of special rules including this one, protected property interests of wives against the legal and social dominance of their husbands': Official Trustee in Bankruptcy v Citibank Savings Ltd (1995) 38 NSWLR 116, 129 ‑ 130 (Bryson J). However, the doctrine now exists on a much wider, and more principled, basis.
Prior to the enactment of the Married Women's Property Act 1870, and its extension in the Married Women's Property Act 1882, English common law did not generally permit a married woman to hold property. The married woman was under coverture. Her legal personality was merged with that of her husband: Murray v Barlee (1834) 3 My & K 209, 220; 40 ER 80, 84 (Lord Brougham LC). But in the Court of Chancery it was recognised that in various situations the husband would hold legal rights on trust for his wife. One of those was where there was a deed of settlement between the husband and wife.
The most common instance in which the equity of exoneration was historically applied was that described by Deane J in Farrugia where the property (usually the equitable rights) of a wife were charged to raise money for the benefit of her husband. But from the earliest cases the equity of exoneration was held to apply to the estate of a husband as well as that of a wife: Bagot v Oughton (1717) 1 P Wms 347; 24 ER 420 (Cowper LC); Gee v Smart (1857) 8 El and Bl 313; 120 ER 116 (Coleridge J); Gray v Dowman (1858) 27 LJ Ch 702 (Kindersley VC). And, at least by the time of the Married Women's Property Acts, the view had developed that the equity of exoneration was a general principle which was not confined to husband and wife.
In the 1st edition of Snell's Equity in 1887, Edmund Snell explained the principle on a general basis of the intention of the parties, giving only as an example of where the question had 'generally arisen' the situation of a husband who mortgages his wife's estate although the intention is that the equity of redemption be reserved on a different basis from that which is manifest in the mortgage: 'her estate being in equity deemed only a security for his debt' (261 ‑ 262). And in Robbins' 1897 rewrite of Coote's Law of Mortgages, he placed the doctrine upon the usual principle 'that where one person mortgages his property to secure an advance made to another person, it is the debt of the latter': L Robbins, A Treatise on the Law of Mortgages (1897) 351.
The equity of exoneration has since been applied to brothers: Gee v Liddell [1913] 2 Ch 62 (Warrington J). It has been applied as between two couples: Caldwell v Bridge Wholesale Acceptance Corp (Australasia) Ltd (1993) 6 BPR 13,359 (Cole J). It was equated by Browne‑Wilkinson VC with the equitable principle of marshalling: Knight v Lawrence [1993] BCLC 215, 231. And, in a case to which reference will be made below, the Full Federal Court expressed the doctrine on a broad basis not confined to husband and wife: Parsons v McBain [2001] FCA 376; (2001) 109 FCR 120, 127 [20] (the court).
This principled basis for the equity of exoneration is the simple notion that effect should be given to the intention of the parties that, as between them, it is intended that the burden of a debt should be borne by one, and the other should be exonerated.
The intention with which the equity of exoneration is concerned is a manifest, or objective, intention. Although the equity of exoneration gives rise to an indemnity secured against the principal debtor's estate, rather than a resulting trust of that estate, it shares the feature with a resulting trust that it is not concerned with unexpressed, subjective intentions of the parties but with objective manifest intentions: see, in relation to resulting trusts, Calverley v Green [1984] HCA 81; (1984) 155 CLR 242, 261 (Mason & Brennan JJ), 270 (Deane J); Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253, 286 ‑ 287 [105] ‑ [106] (Heydon & Crennan JJ).
It may be that, like a resulting trust which arises where a transferor has no intention to benefit the recipient, there are circumstances in which the intention of both parties is not necessary for the equity of exoneration to arise. One such circumstance may be where the plaintiff and defendant agree that jointly borrowed funds will be applied for their joint benefit, but the defendant then applies the money for his or her own benefit without the knowledge of the plaintiff. But it is not necessary to consider that situation or the basis in that circumstance for any exoneration of the plaintiff in respect of a benefit received by the defendant at the plaintiff's expense.

The primary judge's reasoning about the equity of exoneration

The learned primary judge held that Ms Gutta was entitled to rely on the equity of exoneration. The primary judge explained the nature of the equity of exoneration including that it is not limited to husband and wife and that it can apply when only part of the money jointly borrowed has been applied for the benefit of one of the borrowers. His Honour then concluded that $90,000 of the funds which were drawn down from the HBS line of credit had been used for Mr Ierino's own purposes, and that it was this application of the borrowed money which was important rather than any earlier discussions or plans by the parties about how the debt which might be incurred could be used. His Honour then said that although Ms Gutta was aware of, and acquiesced in, Mr Ierino's use of $90,000 of the borrowed funds for his own purposes this did not rebut the presumption that Ms Gutta was entitled to be exonerated by Mr Ierino.

The grounds of appeal

The grounds of appeal asserted that the primary judge erred in law and in fact in relation to reasoning concerning the equity of exoneration. The alleged errors of law by the primary judge in Mr Ierino's grounds of appeal can be summarised as follows:
(i)the primary judge considered how the funds were ultimately applied rather than considering the intention of the parties as to the use of the funds when the Dalyellup land was mortgaged;
(ii)the primary judge held that the presumption of intention would not be rebutted by agreement about the use of land prior to the time the land was mortgaged;
(iii)the primary judge relied upon a rebuttable presumption that Mr Ierino was lending the $90,000 to Ms Gutta rather than going 'into the facts of the case to see whether there is a prima facie inference to be drawn that the mortgagor and the party who used the funds intended that the funds be a loan, and that the mortgagor is entitled to have his or her property exonerated from the charge created'.

The time at which the equity of exoneration is assessed: particulars (i) and (ii)

The first two particulars above assume that the relevant time for the assessment of the equity of exoneration is the time when the HBS line of credit was drawn down for the purchase of the Dalyellup property, and the Dalyellup property mortgaged, on 5 March 2004. This assumption is incorrect.
The equity of exoneration is concerned with the $90,000 debt from which Ms Gutta sought exoneration from Mr Ierino. On 5 March 2004, that debt did not exist. The debt arose only when Mr Ierino later drew down that further amount from the HBS line of credit.
The intention of the parties at a date prior to the date of the $90,000 debt might be relevant, but only if that earlier intention continued at the date the $90,000 debt arose.
Mr Ierino's submission that the relevant intention must be determined at 5 March 2004 relied heavily upon statements in various cases suggesting that the equity of exoneration 'usually arises where a person has mortgaged his property to secure the debt of another, whether or not that other has covenanted to pay the debt': Parsons v McBain [2001] FCA 376; (2001) 109 FCR 120, 127 [20] (the court), and that the equity arises 'at the time she charges her estate' (Hall v Hall [1911] 1 Ch 487, 498 (Warrington J)) or that the property is charged 'in order to raise money for the benefit of [another]': Farrugia (702) (Deane J).
In each of these cases the mortgage was given at the time that the relevant debt was incurred. Nothing was said in these cases to deny that the intention of the parties in relation to a debt subsequently incurred should be considered at the time the relevant debt is incurred. In cases where the relevant debt is an apportionable part of a line of credit, the relevant time for assessing the intention of the parties is the time when that part of the debt is drawn down and incurred: Dinsdale BHT Protective Commissioner v Aethur [2006] NSWSC 809 [24] ‑ [25] (Brereton J); Burch v Cone [2009] NSWSC 1430 [24] ‑ [32] (Barrett J); Boyd v Hummelstad [1996] NSWSC 93 (Brownie J).
Almost all of the $90,000 debt to HBS was drawn down on 28 April 2004 and used solely for Mr Ierino's benefit, about two months after the HBS line of credit was granted. On 28 April 2004, the discussions which the parties had previously had about building a house of the Dalyellup property did not reflect the parties' intention for the use of the funds.
On the appeal, counsel for Mr Ierino accepted that at the date of drawdown it was Mr Ierino's intention to use the money for his own purposes.
This was also Ms Gutta's evidence of the parties' intention. Ms Gutta said that the reason for borrowing $150,000 rather than just the cost of the Dalyellup property was because Mr Ierino needed extra money to 'buy other things'. Ms Gutta said that she thought the extra money was for his business and for his property in Lalor Road, Kenwick. She had no financial interest in either his business or in the Lalor Road property.
The equity of exoneration must be assessed at the date the debt was incurred in relation to which exoneration is sought. In relation to almost all of the $90,000 debt, that date is 28 April 2004. The intention of the parties at 28 April 2004 was that Ms Gutta would be entitled to be exonerated as to that amount. Each of these particulars must fail.

The 'presumption' of exoneration: particular (iii)

The third basis upon which Mr Ierino asserted an error of law by the primary judge concerned whether the primary judge should have considered whether there was a prima facie inference of intention rather than applying a rebuttable presumption.
There is little of substance in this particular. It is purely a semantic matter. A presumption in this context is a standardised inference which is drawn because common experience shows that the presence of one fact generally means that another will arise. Whether the presumption is described as a prima facie inference, as counsel for Mr Ierino contended, or as a standardised inference (presumption) will make little difference.
Whether courts use the language of 'presumption', or that of 'inference', or whether they refer simply to a construction of intention from all the circumstances, the point being made in this context will invariably be the same. The point is that the use of borrowed funds for the sole benefit of one joint debtor can be a significant factor indicating the parties' intention that, as between them, the person not obtaining the benefit will be treated as a surety and exonerated by the other.
In Hudson v Carmichael(1854) Kay 613, 620; 69 ER 260, 263, the Vice Chancellor, Sir William Page Wood (as the Lord Chancellor was then), said that 'the real question in the case is, did the husband receive the money or was it applied to the use of the wife?' See also Hall v Hall (495) (Warrington J). And in Parsons v McBain (128) [23], the Full Federal Court referred to the succinct question of the Lord Chancellor of Ireland, 'Who got the money?': Re Kiely (1857) 6 Ir Ch R 394, 405.
As I explain below, in relation to the ground of appeal concerning the findings of fact, there was also significant further evidence which supported the intention of the parties that Ms Gutta would be entitled to be exonerated as to the $90,000 debt.
Although it is a semantic matter, the preferable approach today may be simply to consider whether in the circumstances of the case the relevant intention of the parties is manifest. In relation to the circumstances in which the language of presumption was historically invoked, it is now anachronistic to describe as common experience a wife's intention to be treated as a surety in mortgaging property, including jointly owned property, for the benefit of her husband. In Paget v Paget [1898] 1 Ch 470, 474 ‑ 475, Lindley MR, delivering the judgment of the Court of Appeal, explained that the equity of exoneration is based upon an inference to be drawn from the circumstances of each particular case and that '[t]o say that in all such cases [of husband and wife] there is a presumption in favour of the wife, and that it is for the husband to rebut it, is, in our opinion, to go too far and to use language calculated to mislead'. Almost a century later, in Re Pittortou (a bankrupt) [1985] 1 All ER 285, 288, Scott J (as his Lordship was then) emphasised this point in stronger terms: '[t]he guide that Victorian cases can provide to the inferences which should be drawn from the dealings with one another of husbands and wives today is often not very valuable'.
This particular of the appeal ground must also be rejected.

The evidence concerning the use of, and security for, the borrowed funds

Mr Ierino's grounds of appeal also asserted that the primary judge erred in fact in two respects:
(i)there was no support in the evidence for the inference of the primary judge that the loan facility was intended to be used for two distinct purposes: (a) to buy the Dalyellup property and (b) to provide a benefit solely to Mr Ierino;
(ii)the primary judge should have found that the $90,000 borrowed was secured against Mr Ierino's Lalor Road property rather than secured against the Dalyellup property.
As to (i), there was significant evidence to support the primary judge's conclusion that the loan facility was intended to be used for two distinct purposes.
First, there was the evidence relied upon by the primary judge of the actual use of the money by Mr Ierino for his own purposes, which use Ms Gutta was aware of and in which she acquiesced.
Secondly, there was the evidence from Ms Gutta that the reason for borrowing the money was for both the cost of the Dalyellup property and because Mr Ierino needed extra money to 'buy other things' which Ms Gutta said that she thought was for Mr Ierino's business and for his property in Lalor Road, Kenwick. In the course of his Honour's findings about the forgery, the primary judge said that he found Ms Gutta's evidence to be both honest and reliable.
In contrast with Ms Gutta's evidence, Mr Ierino's evidence was that the reason for borrowing the additional amount was to construct a house on the Dalyellup property. But in discussing the evidence of Mr Ierino generally, the primary judge said that he was unable to accept Mr Ierino's evidence except where it was undisputed or confirmed by Ms Gutta. In any event, for the reasons explained above, the relevant time for assessing the intention of the parties is the date at which the money was drawn down, and the debt incurred. Counsel for Mr Ierino properly conceded on this appeal that at this date Mr Ierino's intention was to use the $90,000 for his own purposes.
As to (ii), there is no basis for the submission that the primary judge should have found that the $90,000 borrowed was secured against Mr Ierino's Lalor Road property rather than secured against the Dalyellup property. The 24 February 2004 HBS agreement concerning the line of credit was part of an exhibit at trial. It provided that HBS had taken, or would take, security in the form of a first registered mortgage over the Lalor Road property and the Dalyellup property. Another exhibit was the stamped mortgage over the Dalyellup property, with HBS as mortgagee. Unsurprisingly, this submission was not made at trial. It must be rejected.

Conclusion

The appeal was filed several days out of time because of an incorrectly addressed cheque. Leave to appeal, supported by affidavit evidence, was sought. Leave should be granted but the appeal should be dismissed. It is not necessary to address the matters raised in Ms Gutta's notice of contention.