Commonwealth Bank of Australia v Munro& anor [2011] NSWSC 128 (25 February 2011)

Last Updated: 27 May 2011

Supreme Court New South Wales

Case Title:	Commonwealth Bank of Australia v Munro & anor
Medium Neutral Citation:	[2011] NSWSC 128
Hearing Date(s):	1 - 3 November 2010
Decision Date:	25 February 2011
Jurisdiction:	Common Law
Before:	R A Hulme J
Decision:	Judgment for the plaintiff. Orders to be settled.
Catchwords:	CONTRACTS - general contractual principles - discharge, breach and defences to action for breach - non est factum - Contracts Review Act 1980 - unjust contracts - whether contract unjust - unconscionability under Trade Practices Act 1974 and Australian Securities and Investments Commission Act 2001 - relevant considerations - where borrower naive as to financial matters - whether lender had knowledge of borrower's vulnerability to coercion - whether lender failed to adhere to lending guidelines - MORTGAGES - mortgages and charges generally - remedies of the mortgagee - unconscionability - whether prior unjust mortgage relevant as part of relief that may granted in respect of later mortgage
Legislation Cited:	Australian Securities and Investments Commission Act 2001 (Cth) Competition and Consumer Act 2010 (Cth) Consumer Credit (New South Wales) Code Contracts Review Act 1980 Financial Transaction Reports Act 1988 (Cth) Real Property Act 1900 Trade Practices Act 1974 (Cth) Trade Practices Amendment (Australian Consumer Law) Act (No.2) 2010 (Cth) Uniform Civil Procedure Rules 2005
Cases Cited:	Agricultural & Rural Finance Pty Limited & Anor v John Edward Atkinson & Ors [2010] NSWSC 425 Aon Risk Services Australia Limited v Australian National University [2009] HCA; 239 CLR 175 Bakarich & Ors v Commonwealth Bank of Australia [2007] NSWCA 169; Aust Contract Reports 90-264 Bank of Western Australia Ltd v Tannous [2010] NSWSC 1319 Commonwealth Bank of Australia v Munro and Anor [2010] NSWSC 1066 Elkofairi v Permanent Trustee Co Ltd [2002] NSWCA 413; [2002] NSWCA 413; (2003) Aust Contract Reports 90-157 Ford by his Tutor Beatrice Ann Watkinson v Perpetual Trustees Victoria Limited [2009] NSWCA 186; 75 NSWLR 42 Jones v Dunkel & Anor [1959] HCA 8; 101 CLR 298 National Australia Bank v Satchithanantham [2009] NSWSC 21 No Fuss Finance Pty Ltd v Miller [2006] NSWSC 630 Pasternacki v Correy [2000] NSWCA 333; (2001) NSW ConvR 55-965 Perpetual Trustee Company Limited v Albert and Rose Khoshaba [2006] NSWCA 41 Petelin v Cullen [1975] HCA 24; [1975] HCA 24; 132 CLR 355 Spina v Permanent Custodians Ltd [2009] NSWCA 206 West v AGC (Advances) Ltd (1986) 5 NSWLR 610
Texts Cited:
Category:	Principal judgment
Parties:	Commonwealth Bank of Australia (Plaintiff) Terance Ronald Munro (First defendant) Loretta Laura Buccoliero (Second defendant)
Representation
- Counsel:	Counsel: Mr S Aspinall (Plaintiff) Ms S K Hill (Second defendant)
- Solicitors:	Solicitors: Henry Davis York (Plaintiff) Clamenz Corporate Lawyers (Second defendant)
File number(s):	2009/293782
Publication Restriction:

Judgment

1. HIS HONOUR: The Commonwealth Bank of Australia has brought a claim against Mr Terance Ronald Munro and Ms Loretta Laura Buccoliero for money owing under a credit contract and a claim for possession pursuant to a mortgage in respect of a property at Miranda.
   
2. Mr Munro has played no active part in the proceedings and the bank seeks default judgment against him.
   
3. Ms Buccoliero has filed a defence and a cross-claim against both the bank and Mr Munro. Against the bank she has sought relief pursuant to any or all of the Trade Practices Act 1974 (Cth), the Australian Securities and Investments Commission Act 2001 (Cth), and the Contracts Review Act 1980. She has also raised the defence of non est factum . Against Mr Munro she has sought relief, in effect, by way of the extinguishment of his half share in the Miranda property.
   
4. On 19 October 2010 Schmidt J ordered that a tutor be appointed to carry on the proceedings in respect of Ms Buccoliero. Her sister, Ms Sylvia Commins, consented to act in that capacity.
   
5. Mr Aspinall appeared as counsel for the bank and Ms Hill appeared as counsel for Ms Buccoliero.
   

The plaintiff's case

6. Mr Munro and Ms Buccoliero are the registered proprietors of the Miranda property. On 14 November 2007 they entered into a loan agreement with the bank. The agreement comprised a "Consumer Credit Contract Schedule" and "Usual Terms and Conditions for Consumer Mortgage Lending". The principal sum to be advanced was $440,000. It was to be secured by way of a mortgage on the Miranda property. The mortgage document incorporated terms of a memorandum which had been registered pursuant to s 80A of the Real Property Act 1900.
   
7. Settlement took place on 7 December 2007. Aside from the payment of incidental legal expenses, $383,773.47 was paid to RAMS to discharge Ms Buccoliero's existing mortgage on the Miranda property and $54,317.87 was paid to Mr Munro.
   
8. The discharge of the mortgage to RAMS, the mortgage to the bank and a transfer by Ms Buccoliero of a half interest in the property to Mr Munro were registered on 18 December 2007.
   
9. The first monthly repayment was made on 7 January 2008 but it was dishonoured. Most of the subsequent repayments were also dishonoured. No repayments were made after 8 August 2008.
   
10. Written demands pursuant to s 80 of the Consumer Credit (New South Wales) Code were sent to both defendants on 31 October 2008 requiring them to rectify the default . There was no compliance. Notices pursuant to s 57(2)(b) of the Real Property Act were sent on 3 November 2008. The default was not remedied. Further demands for the accelerated amount owing under the loan were sent on 12 January 2009 but there was still no compliance. The statement of claim was filed on 10 April 2009. The amount claimed to be outstanding at that time was in the vicinity of $470,000. By October 2010 it had risen to some $527,000.
    

The case concerning the first defendant

11. I have mentioned that Mr Munro has taken no active part in the proceedings. No appearance, let alone a defence, has been filed.
    
12. Mr Munro had been served with the bank's defence to Ms Buccoliero's cross-claim in October 2009 but it was realised fairly late in the piece that he had not been served personally with the statement of claim. It had been served upon occupiers at the Miranda property and at another property that was originally also part of the proceedings brought by the bank. A motion was brought before Schmidt J on 16 September 2010 seeking an order pursuant to r 10.14 of the Uniform Civil Procedure Rules 2005 . Her Honour made an order pursuant to that rule that the claim be taken to have been served upon Mr Munro on 25 April 2009: C ommonwealth Bank of Australia v Munro and Anor [2010] NSWSC 1066.
    
13. Communications between Mr Munro and the bank are strongly suggestive of the proposition that he does not dispute that the bank is entitled to judgment or possession. Indeed, a course of action he favoured of selling the property in order to obtain funds to discharge the mortgage was said to be prevented only by reason of the different stance taken by Ms Buccoliero.
    
14. Subject to resolution of issues raised by Ms Buccoliero's defence and cross-claim, it is otherwise appropriate that the orders sought in the bank's motion for default judgment concerning Mr Munro be made.
    

The case concerning the second defendant

15. The following facts were pleaded in Ms Buccoliero's defence:
    

The Second Defendant is and was at all material times, being between 1 December 2006 and present, on a disability pension, suffering from a mental illness, inexperienced in financial matters, of a lower than average intellect and unable to understand in any real way financial documents.

On or about 9 November 2007, the Plaintiff engaged the First Defendant and/or Tony Ottavio to act as their agents for the purposes of obtaining the Second Defendant's signature on the loan documentation and mortgage now known as AxxxxxxxW.

On or about 9 November 2007, the Second Defendant at the request of the First Defendant and Tony Ottavio and in circumstances where the Second Defendant did not bring informed consent, did not understand the purport or effect of the documents and acted as a result of the First Defendant's influence over her, signed a document, now known as the mortgage AxxxxxxxW.

The Second Defendant was a volunteer and did not benefit from the advancement of any funds by the Plaintiff or alternatively, in the event that the transfer of the property from the Second Defendant to the First Defendant referred to in paragraph 8 is set aside, the Second Defendant did not benefit from the advancement of any funds by the Plaintiff in excess of $200,000.00.

The Plaintiff either directly or through its agents or servants did not explain the documents to the Second Defendant and / or ensure that the Second Defendant obtained independent legal and / or financial advice in respect of the transaction.

On or about 4 December 2007, the Second Defendant was the victim of an attempted sexual assault.

On or about 7 December 2007, the First Defendant used his influence over the Second Defendant to have the Second Defendant sign a transfer document, without consideration, transferring half of her interest in the property to the First Defendant, without her informed consent.

16. It was then pleaded that on the basis of those facts the mortgage should be set aside pursuant to s 7 of the Contracts Review Act . Further, and/or in the alternative, it was pleaded that these facts create an unconscionable transaction for the purposes of s 51AA and/or s 51AB of the Trade Practices Act 1974 and/or s 12CA and/or 12CB of the Australian Securities and Investments Commission Act 2001. It was also pleaded that the mortgage should be set aside pursuant to s 87 of the Trade Practices Act and/or s 12GM of the Australia Securities and Investments Commission Act . Also, further, or in the alternative (which it really must be), it was pleaded that the mortgage should be set aside on the basis of non est factum .
    
17. The facts pleaded in the cross-claim against the bank and Mr Munro commenced with a repetition of paragraph 2 of the defence and then proceeded:
    

On or about November 2006 the Cross Claimant inherited a half share interest in the property known as xxxxxxxxx Miranda NSW ("the property").

On or about November 2006, the Cross claimant approached the Second Cross defendant for a loan in the amount of $250,000 to acquire the other half share in the property.

In or about January 2007, the Second Cross defendant advanced the sum of $250,000 to the Cross Claimant for the purposes (of) acquiring the other half share in the property.

Without the informed knowledge or informed consent of the Cross Claimant, the Second Cross Defendant obtained a third party mortgage on the property for the purposes of advancing the sum of $250,000 to the Cross Claimant.

In or about February 2007, and without the informed knowledge or informed consent of the Cross Claimant, the Second Cross defendant obtained a further $50,000 from the Cross Defendant's [sic - Cross Claimant's] entitlement under the estate, which reduced the amount owed by the Cross Claimant to the Second Cross Defendant to $200,000.

18. The cross-claim was then pleaded in largely the same terms as paragraphs 4 to 8 of the defence.
    
19. The relief claimed under the cross-claim is an order setting aside the mortgage pursuant to the Contracts Review Act ; a declaration that the bank engaged in unconscionable conduct for the purposes of the Trade Practices Act and/or the Australian Securities and Investments Commission Act; an order setting aside the mortgage against Ms Buccoliero pursuant to those two Acts; an order requiring the bank to provide Ms Buccoliero with a withdrawal of mortgage and the title deeds under those acts; a declaration that the mortgage was void and of no effect on the basis of non est factum ; a declaration that the transfer of the property from Ms Buccoliero to Mr Munro is void, unconscionable or obtained through undue influence; an order that Mr Munro transfer his interests in the property to Ms Buccoliero; and/or a declaration that Mr Munro holds his interest in the property on trust for Ms Buccoliero.
    
20. The bank filed a defence to the cross-claim which, in essence, resists all of the forms of relief sought. In relation to the relief concerning the Trade Practices Act , the bank relied upon s 51AAB of that Act. That section provides that s 51AA does not apply to conduct engaged in concerning "financial services", and that s 51AB does not apply to the supply, or possible supply, of services that are "financial services". It was common ground towards the end of closing submissions at the hearing that s 51AAB had application to the present case.
    
21. It should be noted that the provisions of the Trade Practices Act were repealed and replaced on 1 January 2011 with corresponding provisions in Schedule 2 (" The Australian Consumer Law ") of the Competition and Consumer Act 2010 (Cth). However, pursuant to Schedule 7 Item 7 of the Trade Practices Amendment (Australian Consumer Law) Act (No.2) 2010 (Cth), the Trade Practices Act continues to apply to any proceedings brought prior to the commencement of the Australian Consumer Law , but which have not concluded before 1 January 2011.
    

Principles and issues

22. As to the claim of non est factum , Ms Hill relied upon Petelin v Cullen [1975] HCA 24; 132 CLR 355 and Ford by his Tutor Beatrice Ann Watkinson v Perpetual Trustees Victoria Limited [2009] NSWCA 186; 75 NSWLR 42. In the latter, Spigelman CJ stated:
    

[77] ... The principle is that the signer must know what he or she is signing. ... It is sufficient to state for present purposes that a signer who has no understanding at all about what he or she is signing, because of incapacity, does not know what he or she is signing such that the mind does not go with the pen.

23. That statement of principle is also sufficient for present purposes. In essence, Ms Buccoliero's claim is that when she signed the loan and mortgage documents she did not know that is what they were. She was unable to read them; she had been misled as to what they were; they were not explained to her; and she received no advice about them. I can state now that I do not find the claim established. The reasons for this view will emerge in my review of the evidence which follows and will be shortly summarised later.
    
24. The issues to be determined in relation to the claim for relief under the Contracts Review Act 1980, broadly speaking, cover the field of the other issues raised in the defence and cross-claim. The preferred course, generally speaking, is to consider a Contracts Review Act claim before considering claims of unconscionability: see Spina v Permanent Custodians Ltd [2009] NSWCA 206 where Young JA at [74] described jurisdiction under the Contracts Review Act as probably wider than when dealing with equitable principles of unconscionability. In Bakarich & Ors v Commonwealth Bank of Australia [2007] NSWCA 169; Aust Contract Reports 90-264, at [89] Hodgson JA referred to the threshold for relief under the Contracts Review Act as lower than in relation to a claim of unconscionability at general law.
    
25. It is well settled that the approach to a claim for relief under the Contracts Review Act is to first make primary findings of fact and then to make an evaluative judgment as to whether the contract was "unjust in the circumstances relating to (it) at the time it was made" (s 7(1)). If the answer to that question is in the affirmative, then it is necessary to consider the discretion as to the granting of relief: see, for example, Perpetual Trustee Company Limited v Albert and Rose Khoshaba [2006] NSWCA 41.
    
26. "Unjust" is defined in s 4(1) as including "unconscionable, harsh or oppressive".
    
27. McHugh JA in West v AGC (Advances) Ltd (1986) 5 NSWLR 610 at 620 described in general terms why a contract may be unjust:
    

"Under s 7(1) a contract may be unjust in the circumstances existing when it was made because of the way it operates in relation to the claimant or because of the way in which it was made or both. Thus a contractual provision may be unjust simply because it imposes an unreasonable burden on the claimant when it was not reasonably necessary for the protection of the legitimate interests of the party seeking to enforce the provision: cf s 9(2)(d). In other cases the contract may not be unjust per se but may be unjust because in the circumstances the claimant did not have the capacity or opportunity to make an informed or real choice as to whether he should enter into the contract: cf s 9(2)(a), 9(2)(e), 9(2)(f), 9(2)(g), 9(2)(i), 9(2)(j). More often, it will be a combination of the operation of the contract and the manner in which it was made that renders the contract or one of its provisions unjust in the circumstances. Thus a contract may be unjust under the Act because its terms, consequences or effects are unjust. This is substantive injustice. Or a contract may be unjust because of the unfairness of the methods used to make it. This is procedural injustice. Most unjust contracts will be the product of both procedural and substantive injustice."

28. In determining whether a contract is unjust the Court must have regard to the matters in s 9. The contentions for the second defendant in the pleadings may be summarised as follows:
    

The Miranda property which is at risk is Ms Buccoliero's home.

Ms Buccoliero played no role in negotiating the terms of the contract in the sense that she was not consulted, let alone did she agree, as to the sum to be advanced.

Ms Buccoliero was not reasonably able to protect her interests because of her intellectual capacity and mental illness.

Ms Buccoliero was inexperienced in financial matters.

Ms Buccoliero did not receive any independent legal or financial advice.

There was no explanation to Ms Buccoliero of the nature and purpose of the documents.

Ms Buccoliero was unduly influenced by Mr Munro to act in a way detrimental to her own interests and the bank was aware of this.

29. In relation to the third point, Ms Hill accepted in her written submissions that the case had not been pleaded on behalf of her client as a lack of capacity case but submitted that "it is the combination of circumstances of Loretta's lower than average intellectual capacity, her chronic psychosis, her irrational trust and faith in Terry, the manipulation and misrepresentations made by Terry and the fact that in her mind she was never able to borrow money, meant that a whole host of subjective factors were at work (at the time the relevant documents were executed)".
    
30. Other matters contended on behalf of the second defendant include:
    

Ms Buccoliero was on a disability pension meaning that she was incapable of meeting repayments of the loan. The bank should have been aware of this. The bank engaged in pure asset lending such as in Khoshaba (above). This was not a matter asserted in the pleadings.

Ms Buccoliero did not benefit from the advancement of any funds by the bank. Alternatively, if the transfer of an interest in the property to Mr Munro is set aside, she did not benefit from the advancement of any funds in excess of $200,000.

The bank, either knew, or should have been aware, that Ms Buccoliero was transferring half of her interest in the property to Mr Munro without consideration. This was also not a matter asserted in the pleadings.

31. Almost as much of the evidence, both documentary and oral, was concerned with the previous loan and mortgage with RAMS. It has not been part of the case for Ms Buccoliero that the contract with RAMS should be set aside, or that it was not enforceable.
    
32. The evidence concerning the RAMS loan and mortgage is relevant in at least two respects, aside from providing the background to the taking out of the loan and mortgage with the bank. It is relevant to the claim that Mr Munro exerted undue influence upon Ms Buccoliero. Further, her evidence about it is relevant to an assessment of her accuracy and reliability generally.
    
33. A letter was received from counsel for Ms Buccoliero after judgment had been reserved, with a copy sent to counsel for the bank, drawing attention to the recent decision of Davies J in Bank of Western Australia Ltd v Tannous [2010] NSWSC 1319. It was said by counsel to be relevant to "the principle that the unjustness of a prior mortgage can be taken into account as part of the relief granted in respect of the unjustness of a later contract". I accept that this provides an additional reason why the evidence concerning the RAMS transaction may be relevant. However, it was not the way the case for Ms Buccoliero was put at the hearing and I have not heard from counsel for the bank on the issue. This matter may be put to one side for the moment for the first task is to make findings of fact and consider whether they establish that the contract was unjust.
    

Background

34. Ms Buccoliero is a 49 year old woman who lives at the Miranda property. There was expert evidence that she is of below average intelligence (at the 12 th percentile). She left school at age 14. Her upbringing was attended by a number of difficulties, including physical abuse by her parents and the death of her mother when she was aged 12.
    
35. At the time of the transactions in question she lived independently. She had experienced employment in earlier years. She operated bank accounts. At least at a rudimentary level, she had the sense to protect her own interests, for example by switching from one bank to another which did not charge a monthly account access fee (see court book 7 page 20). (Hereafter, references will be to court book volume/page).
    
36. Ms Buccoliero is on a disability support pension and has been so since 2002. She receives that pension on account of a psychiatric illness. In September 2001 she was diagnosed with psychosis and schizophrenia. She has suffered from such mental illness since that time, although the severity of her symptoms has fluctuated.
    
37. A panel of experts provided reports and gave concurrent evidence at the hearing. Dr John McMahon, clinical psychologist, and Dr Stephen Allnutt, forensic psychiatrist, were engaged by the plaintiff. Dr Katie Seidler, clinical and forensic psychologist, was engaged by the second defendant. More will be said about their evidence later but for present purposes it is sufficient to note that there was agreement that Ms Buccoliero:
    

"(s)uffers from a chronic psychotic disorder, which would include the differential diagnosis of Schizophrenia (DSM-IV-TR 295.00, p.312) or Schizoaffective Disorder (DSM-IV-TR 295.70, p. 323) characterized by religious delusions, somatic delusions, hyper-religiosity, auditory hallucinations, referential ideas and thought disorder. It is also likely that she has suffered episodes of depressed mood. Further, there was a history of complex and unresolved traumatic experiences that has resulted in a disorganization of personality consistent with a diagnosis of Personality Disorder Not Otherwise Specified (Borderline and Histrionic Traits (DSM-IV-TR 301.9.00, p. 689 & 729))."

38. In her affidavit of 15 December 2009 Ms Buccoliero deposed that she "always had extreme difficulties in understanding numbers, documents or anything like that" . She also said that she had trouble recalling dates, places and times. She confirmed these things at the commencement of Mr Aspinall's cross-examination. She agreed that her memory "about what happened back in 2007 is poor" (T19.35).
    

Acquisition of the Miranda property

39. Ms Buccoliero inherited a half interest in the Miranda property from her late father in 2006. Her sister inherited the other half interest. Ms Buccoliero lived in the property and she decided that she wanted to buy her sister's half share. The property was valued at $500,000 and so she needed to raise $250,000. Mr Munro agreed to lend her the money. I will say more about how this came about later. The estate of her late father also included $100,000 in cash which was to be shared equally between the two sisters.
    
40. Ultimately Ms Buccoliero's goal was achieved but it was with finance provided by way of a loan to her from RAMS. Her claim, broadly speaking, is that she had no knowledge whatsoever that this was the source of the funds. She knew nothing of any loan from RAMS and thought that Mr Munro himself was the source of the funds.
    
41. Before reviewing her evidence on this topic it is appropriate to first consider what the documentary evidence reveals.
    

Document review in relation to the RAMS loan and mortgage

42. Mr Paul Pritchard of Pritchard Law Group was the solicitor who had responsibility for the administration of the estate of Ms Buccoliero's late father. Mr David Melville of Prompt Property Lawyers was a solicitor who had acted for Mr Munro in the past. He acted for Ms Buccoliero in relation to her acquisition of the Miranda property in January 2007 and settlement of the RAMS loan. He also acted for both Ms Buccoliero and Mr Munro in relation to the transfer of a half interest to Mr Munro and discharge of the RAMS mortgage and settlement of the bank's loan in December 2007.
    
43. Neither party called Mr Pritchard or Mr Melville to give evidence but their file notes were tendered (Mr Pritchard's are at 3/753 to 3/764 and 6/955 to 6/980 and Mr Melville's are at 3/642 to 3/704 and 6/676 - 6/707 respectively).
    
44. Submissions were made on behalf of both the bank and Ms Buccoliero that I should draw a Jones v Dunkel inference from the failure of the other party to call Mr Melville to give evidence (see Jones v Dunkel & Anor [1959] HCA 8; 101 CLR 298). There was no suggestion he was not available and no explanation provided by either party as to why he was not called. On the face of it, there were good reasons to expect both parties to have called him. He was not obviously "in the camp" of one party as opposed to the other. He may have been in a position to confirm matters relied upon by Ms Buccoliero. He also may have been in a position to give direct evidence of matters relied upon by the bank that are established by inference from documents. In the end, I do not feel that resolution of this issue would assist in determination of the proceedings.
    
45. The Pritchard Law Group file notes indicate that it was initially proposed that the Miranda property be sold at auction. This was with the agreement of Ms Buccoliero and her sister. The auction was scheduled for 28 October 2006.
    
46. In the days leading up to the auction, there were discussions concerning a proposal that Ms Buccoliero purchase her sister's share of the property with financial assistance from Mr Munro. Ms Buccoliero and Mr Munro attended Mr Pritchard's office on 25 October 2006 and there was discussion to this effect (6/960). It would seem from the file notes that both Mr Pritchard and Ms Commins had doubts about Mr Munro's bona fides. Nevertheless it would also seem that Ms Commins was open to the proposal but concerned that the transaction should take place without delay.
    
47. On 31 October 2006 Mr Munro spoke with Mr Pritchard and in the course of that discussion he mentioned the possibility of him purchasing a one third share of the Miranda property (6/964). Why it was thought that providing only one third of $500,000 would be sufficient for Ms Buccoliero to buy out her sister is not apparent.
    
48. On 2 November 2006 Mr Prichard wrote to Ms Buccoliero and raised concerns about what Mr Munro was proposing (6/966). In part, this was because Mr Munro had initially said that he would lend Ms Buccoliero the funds from his own money and then said he would arrange finance for her through a bank. Mr Prichard was concerned that those proposals seemed to have now fallen by the wayside with the suggestion that Mr Munro would purchase a one third share of the property. Mr Prichard suggested that there were a number of issues that she should consider and implored her to obtain independent legal advice. One issue was how Mr Munro proposed to fund the purchase. It was suggested that if he proposed to take out a mortgage over the house to secure a loan to assist with the purchase, the lender would insist that the loan be secured over the share Mr Munro proposed to purchase as well as Ms Buccoliero's share and that she may be asked to provide a guarantee in respect of the loan. Another issue was that Mr Munro would acquire a right to occupy the property and/or authorise others to occupy the property.
    
49. Seemingly in response to that letter, there was a telephone conversation on 8 November 2006 in which Ms Buccoliero told Mr Peter Hortis (a solicitor in Mr Pritchard's office) that she was entering into a contract with Mr Munro which would set out terms upon which he would purchase a share of the property, including issues relating to occupation and potential sale of the property (6/967). In another conversation on 8 November 2006, Ms Buccoliero mentioned that she was sick and tired of everyone being critical of Mr Munro's character. She claimed that she had known him for 15 years and that he was a "good man". She indicated that she was happy to proceed with the proposal for Mr Munro to purchase a one third share of the property. She was reminded of the suggestion that she obtain independent legal advice. In response she said that "she had sat with the lawyers of Terrance and they had gone over things" (6/968).
    
50. Through the course of November 2006, there arose some concern about a lack of progress. On 28 November 2006 a letter was sent from Pritchard Law Group to both sisters expressing concern that deadlines that had been set had passed; that the property had been withdrawn from auction in late October; and that interest in the property from potential purchasers had waned (6/974). The executor expressed a view that there seemed little prospect of Mr Munro providing the funds to assist Ms Buccoliero with the buy-out proposal. A deadline of 2 December 2006 was set. It was asserted that if the funds were not forthcoming by then, the house would be put back on the market.
    
51. On 1 December 2006 there was a conversation between Mr Pritchard and Mr Munro in which Mr Munro was still speaking about Ms Buccoliero purchasing her sister's share of the property (6/975). He mentioned that he was trying to help her; no loan to her had been approved; she was on a pension; nobody would lend her money; and that funding "would be from a private person".
    
52. On 4 December 2006 an application was made in the name of Ms Buccoliero to RAMS for a home loan (3/768). The application form included information that she was self-employed as a "consultant", although no income details were stated. A loan of $350,000 was sought. A birth certificate, Medicare card and a bank card were provided to satisfy Financial Transaction Reports Act 1988 (Cth) identification requirements. The application was signed in three places, "L Buccoliero", above a date 1 December 2006 (3/780-782). Ms Buccoliero has a rather distinctive signature and the signatures on this form look nothing like it.
    
53. A letter from the mortgage broker, apparently to RAMS, explained that Ms Buccoliero was purchasing her sister's half share in the property and asked for the matter to be dealt with urgently (3/778).
    
54. On 6 December 2006 Mr Munro wrote to Mr Melville. The letter included discussion of a (the) proposed mortgage to RAMS which seems to have been at least provisionally approved (6/698-9). Mr Melville wrote that day to Mr Pritchard advising that he acted for Ms Buccoliero in her quest to purchase her sister's half share of the property (Exhibit F). It was said that enclosed with the letter was a copy of an approval for finance in the sum of $250,000. The enclosure was not part of the exhibit.
    
55. In a letter of 11 December 2006 addressed to Ms Buccoliero (3/646), RAMS advised that it had approved her application for a home loan in the sum of $350,000. There was further confirmation of this in a letter of 14 December to her from Mortgage Settlements Australia, the solicitors for RAMS (3/647). Both of these letters were sent to Ms Buccoliero's home address.
    
56. Mr Pritchard wrote by express post to Mr Melville on 12 December 2006 confirming the proposed sale of a half share in the property to Ms Buccoliero. A counterpart contract was enclosed and advice given that Ms Commins required exchange by 15 December 2006 (6/697). There is a handwritten note at the foot of the copy of the letter: " 13/12/06. O.P. with Terry (Hunter?). He will get hold of Buccoliero and get her to come in today or tomorrow " . (Hunter seems to have been an alternative name used by Mr Munro).
    
57. The following day Mr Pritchard sent a fax to Mr Melville. It advised that another party had signed a contract for the purchase of the property for $530,000 and confirmed that the proposed sale to Ms Buccoliero would not proceed unless contracts were exchanged by 15 December 2006.
    
58. Ms Buccoliero signed instructions to Mr Melville on 14 December 2006 to the effect that she did not wish to obtain a pest and building report and that she was prepared to accept the property despite there being some features that had not been approved by the local council (3/650). Another document dated 14 December 2006 from Mr Melville's files, which has the appearance of having been written by Mr Munro but signed by Ms Buccoliero, authorised Mr Melville to pay to Mr Munro $5,000 from the settlement (3/649).
    
59. Contracts were exchanged on 15 December 2006 for the purchase of the Miranda property for $500,000 by Ms Buccoliero.
    
60. Mr Melville wrote two letters to Ms Buccoliero on 23 December 2006. One appears to be a pro forma letter to a new client/purchaser in a conveyancing transaction (Exhibit G). The other enclosed various documents in relation to the loan and mortgage with RAMS, asked her to peruse the loan agreement carefully, and to sign all of the documents where indicated in the presence of a witness and return (Exhibit D).
    
61. Pro forma conveyancing instructions to Prompt Property Lawyers, purportedly signed by Ms Buccoliero, were within Mr Melville's files (6/694). They are dated 1 January 2007 and bear a signature that has no likeness to Ms Buccoliero's signature. Against the typed contact details there is in handwriting, "Terry", and a mobile phone number, which was Mr Munro's number.
    
62. A letter from Mr Munro to Mr Melville dated 9 January 2007 advised him that there was no need for unnecessary searches as Ms Buccoliero had lived at the property all of her life. He asked to be advised when proof of insurance of the property was required and enclosed a certified copy of Ms Buccoliero's birth certificate for the purpose of Mr Melville processing a first home buyer's claim. In a postscript he advised that the mortgage documents would be forwarded when they arrived (6/693).
    
63. A certificate of currency in respect of insurance on the Miranda property was sent by fax on 15 January 2007. It was addressed to Ms Buccoliero but sent to Mr Munro's fax number (3/651). (The number is the same as appears on Mr Munro's stationery).
    
64. Ms Buccoliero signed the various documents in relation to the RAMS loan and mortgage on 17 January 2007. They comprised a RAMS Low Doc Home Loan Agreement Details, a Home Loan Agreement General Terms, a Direct Debit request and authority, an acknowledgment that she had been advised to seek independent legal and financial advice but had declined to do so, a disbursement authority, and a warranty in relation to the property (3/652 - 3/686). I am satisfied that the signatures are authentic.
    
65. The mortgage itself was probably also signed on the same date, but it bears the date 1 February 2007. Ms Buccoliero's signature on this document was witnessed by "Terry Hunter" and the address given for the witness was Mr Munro's.
    
66. Ms Buccoliero signed a handwritten "Irrevocable Authority", dated "24.1.2006" in which she directed Mr Melville to credit Mr Munro's Westpac bank account with $20,000 from the settlement proceeds (3/642). The date should obviously be 2007. There is a file note on the foot of the page in Mr Melville's handwriting: " 25/1/07. O.P. with Loretta. Confirmed she had signed above. She will call + collect her cheque on Tuesday next " .
    
67. Mr Melville faxed directions to pay to Mortgage Settlements Australia on 25 January 2007. It included payment of $250,055 to Pritchard Law Group, $77,066.54 to Ms Buccoliero and $20,000 to Mr Munro (3/687).
    
68. Settlement occurred on 30 January 2007. RAMS drew cheques as directed by Mr Melville (3/688). A photocopy of a bank cheque made out to Ms Buccoliero for $77,066.54 from Mr Melville's files has the handwritten endorsement, " Received 31/1/07 " and there is an illegible signature above the printed name, " T. Hunter " (6/688).
    
69. Within Mr Melville's files is a typed document headed "Irrevocable authority" dated 30 January 2007 and signed by Ms Buccoliero. It has the appearance of having been prepared by Mr Munro. It contains an instruction to Mr Melville to "hand over cheque payable to myself less all costs as authorised to Terry Hunter" (6/689). There is also a photocopy of the cheque drawn in favour of Mr Munro for $20,000 with the handwritten endorsement, " Your instructions to deposit monies into Westpac are withdrawn ". It also has a signature, seemingly Mr Munro's, appearing underneath, " Received 31/1/07 " (6/690).
    
70. Statements in respect of the RAMS home loan indicate that repayments were made by a weekly direct debit from Ms Buccoliero's account with the ANZ Bank. 23 such payments between 19 February and 16 July 2007 were made but 19 of them were dishonoured. 4 payments totalling $3,000 between 19 and 22 March 2007 were made by way of direct credit from "Mr Terrance Hunt". It is of some note that the statements are addressed to Ms Buccoliero at a post office box at Oyster Bay. This was a postal address used by Mr Munro but not, apparently, by Ms Buccoliero.
    

Conclusions thus far

71. I am satisfied that Mr Munro initiated the application to RAMS for the loan and that he did so, in part, to assist Ms Buccoliero to purchase her sister's half share of the Miranda property. I am also satisfied that Mr Munro liaised with Mr Melville on behalf of Ms Buccoliero and that he was involved in obtaining her signatures on the loan and mortgage documentation.
    
72. At face value the documents indicate that Ms Buccoliero had some knowledge of, and involvement with, the application for the loan. I am satisfied she signed the documents on 17 January 2007 in the presence of Mr Munro but otherwise the documents themselves do not permit a conclusion as to where or in what circumstances she signed them.
    
73. Of the proceeds of the loan, some $250,000 was used for Ms Buccoliero's benefit in purchasing her sister's share of the property. $20,000 went to Mr Munro by way of a cheque payable to him. Mr Munro also received the cheque for $77,000 made out to Ms Buccoliero. What he did with it is not known. There was evidence that Ms Buccoliero had two bank accounts at the time and there is no deposit of such a sum to either of them.
    
74. I am satisfied that Ms Buccoliero authorised the disbursement of $20,000 to Mr Munro. No conclusion is available from the documents as to why she did this, or in what circumstances she signed the "Irrevocable Authority" of 24 January 2007 (see above at [66]).
    
75. Ms Buccoliero was incapable of making the repayments on the RAMS loan. At the time the loan was drawn down she was receiving a fortnightly Centrelink pension of $517.90 and the repayments were $590.50 per week.
    

Ms Buccoliero's evidence concerning the RAMS loan and mortgage

76. As indicated earlier, Ms Buccoliero claimed to have no knowledge of any loan and mortgage with RAMS. Her evidence was that "Fred" suggested that "Terry" was a wealthy man and may be able to assist her financing the purchase of her sister's half share of the property. Fred arranged for her to meet Mr Munro one day at Fred's house. Ms Buccoliero told Mr Munro of her plan and that she needed $250,000. She told him that she could not get money from a bank and did not want a loan. She offered to repay him by taking in boarders and he would receive the rent. He agreed.
    
77. Ms Buccoliero remembered Mr Munro and herself speaking to Mr Pritchard about " Terry getting me the money ". She did not recall much of the conversation " except that Terry was just sorting it out ".
    
78. After that meeting there were occasions when Mr Munro had her write faxes to Mr Pritchard and Mr Pritchard was putting pressure on her to have Mr Munro come up with the money. She left it all to him because she felt he knew what he was doing. He kept assuring her that it would be done soon and that he just needed to get some paperwork done.
    
79. Mr Munro told her in about early December 2006 that he was ready, that he had the money. He spoke of the need to see a solicitor, David, to sign some papers. They went to see Mr Melville. She said that she did not understand the conversation with Mr Melville. He pointed to places in documents where he wanted her to sign. She claimed that she did not understand the documents - "I do not understand these legal things and did not have my glasses and David never explained them to me" . She said to Mr Munro, in front of Mr Munro, "I can't read this" . She asked, "Why do I need to sign anything?" and he replied, "That is just to say that you can have the home from your sister" . It would seem that this was the occasion when she went to Mr Melville's office and signed a number of papers including, I infer, the contract to purchase her sister's share of the property.
    
80. The above is the extent of the account provided by Ms Buccoliero in her affidavits in relation to her acquisition of the Miranda property. The following evidence was given in cross-examination.
    
81. Ms Buccoliero said that she did not receive the letter from RAMS of 11 December 2006 advising of approval of her home loan application (3/646). The letter is in her name and has her home address. She explained that Mr Munro was getting all of the mail (T28). She similarly denied receiving the letter of 14 December 2006 from Mortgage Settlements Australia (3/647). She was asked whether it was likely that she did receive it, given that it was addressed to her, and she replied:
    

A. I just don't know how to - if I saw loan I know it would have freaked me out. I would have inquired - I wouldn't have opened it. Because I can't have a loan, I'm on a disability (T30.40)

82. Counsel asked Ms Buccoliero about the letter from Mr Melville of 23 December 2006 which enclosed the various loan and mortgage documents (Exhibit D). She said she would have " freaked out with the word 'loan '". She claimed that she did not receive this letter, even though it was addressed to her (T32). She also denied looking at the enclosed documents and then signing them. She explained, "Well, I got my glasses not that long ago so I wouldn't have, because I couldn't read without the glasses" (T37).
    
83. Ms Buccoliero was shown the RAMS documents. In relation to the signature appearing on a page headed "Acceptance by customer" she said she was not sure but did not think it was hers (T33.15). The signature, in my view, looks very much like hers. She gave a similar answer in respect of a signature appearing on the RAMS "Home Loan Agreement General Terms" document, but it too looks very much like hers.
    
84. Ms Buccoliero was then taken to the mortgage document (3/822) and, in relation to the signature upon it, she said, "Whatever I signed I didn't have glasses at the time" . She was pressed as to whether it was her signature and she agreed that it looked like it was (T34.30). The signature, in my view, is virtually identical to those in the previous documents that she said she did not think were hers.
    
85. She agreed that the signature on the RAMS Direct Debit Request form (3/682 and 3/784) also looked like hers. But when it was put to her that she knew that she was borrowing money from RAMS she replied, "Nope" (T34).
    
86. The report of Dr Seidler includes a history provided by Ms Buccoliero concerning her purchase of her sister's share of the property (2/443-444). Dr Seidler reported that Ms Buccoliero said that at first she had hoped to get finance from Mr Munro but at some point he told her that they would have to go through a bank. Ms Buccoliero explained that what appeared in Dr Seidler's report was "written a little different from how I said it" . She agreed, however, that matters got to a point when she asked Mr Munro why it was taking so long and he explained to her that it had been necessary for him to borrow the money from a bank (T38-39). There is nothing to this effect in any of her affidavits.
    
87. Counsel then directed Ms Buccoliero's attention to the handwritten "Irrevocable Authority" dated 24 January 2006 (sic - 2007) in which Mr Melville was directed to credit Mr Munro with $20,000 from the settlement finance. At first she said, "It looks like my handwriting" , but she could not recall writing it (T39). This was an answer given before her attention was directed to the content of the document. After some questions about the content, counsel then put to her that "if Terry was borrowing the money himself ... there would have been no need for you to write this authority, would there?" She replied, "He said - well, as I said I don't recall writing that. I don't even think I wrote that" . She denied that she knew that she was borrowing the money in her own name (T40). I got the distinct impression that the ramification of her earlier answer emerged to her whilst she was being taken through the document.
    
88. Ms Buccoliero then made some concessions: she knew that money from RAMS was being used to pay her sister; and, although she claimed that Mr Munro would be required to make the repayments to RAMS, she knew that if he missed repayments, RAMS could take the house away (T40.33 - 43). However, she maintained a denial that she knew that she was borrowing money to pay Ms Commins (T41.9).
    
89. The direct debit repayments to RAMS were made from Ms Buccoliero's account with the ANZ Bank. Statements were sent by the ANZ to Ms Buccoliero at her home address. They clearly indicated the repayments being persistently dishonoured. However, she explained, "As I said just recently I got my glasses so I don't think I would have even read - I don't read my statements" (T43.29).
    
90. Statements from RAMS were also sent to Ms Buccoliero at her home address. Her attention was directed to one of them (3/828). She did not recall having received it. She was asked, " Do you tell me you have never seen a statement like this RAMS home loan statement before? " She replied, "No, I only got my glasses recently for all this and I couldn't even read back then" (T50.5).
    
91. To this point Ms Buccoliero had explained that her lack of awareness of what appeared in various documents she had signed was because of her inability to read them because of poor eyesight and a lack of glasses. She had only acquired glasses recently. However, there was then the following on the subject:
    

HIS HONOUR

Q. When did you first get glasses?

A. Um, when my lawyer said to get the glasses for the bank's psychiatrist, they put me this test.

ASPINALL

Q. But that was in - let me have a look.

A. Because I am not employed, I just cook, I don't really need to read, you know, until this happened.

HIS HONOUR

Q. Is this the first time in your life you ever had glasses?

A. My eyes went pretty bad in the last two, three years, just "boom" as I would be 50, it was just "boom". I had very good eyesight two years ago or three, four.

ASPINALL

Q. You had very good eyesight two years ago?

A. No, no.

Q. I thought that's what you just said?

A. Several years ago.

Q. Aren't you just saying that now because you knew your first answer wouldn't help you in this case?

A. No.

Q. You could read two years ago, couldn't you?

A. Well, I said to my sister my father died two years ago and apparently he died four or five years ago. I know several years my eyesight has been blurred - and that's on the Bible. (T50)

92. This evidence is of some significance. Ms Buccoliero claimed in her affidavit of 15 December 2009 that when Mr Munro took her to sign documents with Mr Melville in December 2006 that she told Mr Melville that she could not read them because she did not have her glasses. That is not consistent with somebody who did not even own glasses at the time. That same applies to the claim in that affidavit that when she signed the plaintiff's loan and mortgage documents in November 2007 she said to the bank representative (Mr Tony Ottavio) and Mr Munro, "I don't have my glasses, what am I signing" . Her first answer in the above extract would have it that she first got glasses when she saw either Dr McMahon or Dr Allnutt which was in May 2010. As to her claim that her eyesight was poor and she was unable to read in 2006-2007, her handwritten "Irrevocable Authority" dated 24 January 2006 (sic - 2007) would indicate that her eyesight was not so bad at that point.
    
93. A statement of claim was filed by RAMS on 24 July 2007. It was personally served upon Ms Buccoliero on 9 September 2007. When shown the statement of claim she first said she had not seen it before (T51.27). She was taken through the affidavit of service which indicated personal service at her home address and she then gave these responses:
    

Q. You received this statement of claim, didn't you?

A. I don't recall, I just remember a warning of the policeman and the bills, something had to be paid. Possession, or taking possession of the property.

Q. Assuming Mr Hunt [the process server] is right, you must have known, from the time you were served with this statement of claim--

A. Yeah.

Q. --that you hadn't paid the RAMS loan and that RAMS wanted to take Miranda from you. Right?

A. I didn't think it was in my name.

Q. How could you think anything else when, on this statement of claim, it says "Loretta Buccoliero"?

A. Well, I didn't read it. I just listened to him. (T53.25)

94. A Notice to Vacate was issued by the Sheriff's Office on 19 November 2007 (3/695). It required that the property be vacated by 12 December 2007. When shown this document Ms Buccoliero said she had not seen it before (T54.20). She then said she did not recall receiving it (T54.26). Then:
    

Q. Well, isn't this the document that the Sheriff gave you when he came around?

A. I remember just running to the post office, the phone books and I said, "A policeman has come to the house, you have to pay your money". (T54.30)

Conclusions as to whether Ms Buccoliero was aware of the RAMS loan

95. I do not accept Ms Buccoliero's evidence in relation to the RAMS loan and mortgage as being accurate and reliable for a number of reasons. Her concession that she does not have a good memory for events in 2007 was candid but means her evidence should be approached with caution.
    
96. I do not believe her explanation that she did not read certain documents because of eyesight problems and a lack of glasses. Her denial that she received letters and statements sent to her at her home address is difficult to accept. She was not prepared to acknowledge that her signature appeared on certain RAMS documents relating to the loan where, to my mind, there was no significant difference when compared to her admitted signatures. The change in her evidence as to whether it was her handwriting on the "Irrevocable Authority" document of 24 January 2006 (sic - 2007) is another matter that does not sit well with her being a credible witness, as also is her hesitation in accepting that she was served with a statement of claim following default on the RAMS loan.
    
97. On Ms Buccoliero's evidence alone, I am not prepared to accept that she signed documents in the presence of the solicitor, Mr Melville, with no explanation of their nature and purpose, with Mr Melville simply pointing to where he wanted her to sign.
    
98. I am not satisfied that Ms Buccoliero was not aware of the loan and mortgage with RAMS. The fact that the application was not signed by her does not compel the conclusion that she was not aware of it. Documents confirming the making of the application, and its approval, were posted to her at her home address.
    
99. Ms Buccoliero signed all of the associated documents on 17 January 2007. I cannot determine whether or not at the time she appreciated their nature and purpose because there is an absence of evidence as to the circumstances in which she signed them.
    

The application to the Commonwealth Bank

100. Mr Antonio (Tony) Ottavio represented the bank in its dealings with Mr Munro and Ms Buccoliero. Mr Ottavio described himself as a self-employed "Mortgage Innovation Manager" at the bank's "Mortgage Innovation Centre" at Bexley. He described this as a " commission-based sales force that sell the Bank's branded home and investment home loans ". References herein to "the bank" should be understood as including Mr Ottavio and his staff.
     
101. Ms Buccoliero said in her affidavit of 15 December 2009 that there came a point during 2007 when she became worried about what would happen with " everything " if Mr Munro was to die. She said this was because of her belief that " he looked after all the money side of things ". What she meant by this is not at all clear. She raised this concern with him and he told her not to worry as he would nominate her as the sole beneficiary in his will. He said he would " arrange for us to go to the lawyer and get it sorted out ".
     
102. It is appropriate to set out what immediately follows in the affidavit:
     

35 Sometime after this, I had a conversation with Terry along the following lines:

Terry: "I have sorted out the will and the money if I die, someone is coming over here then we will go to the lawyers"

Me: "Ok".

36 Shortly after that, a man arrived who I now believe to be from the Commonwealth Bank. I don't recall his name or any details but from looking at the documents .... It must have been around November 2007 and the person's name must have been Tony Ottavio.

37 The meeting took place with Terry and Tony at Terry's house at Oyster Bay. I wasn't living there at the time. When Tony arrived, I said "Hello" and Tony and Terry sat down at the kitchen table.

38 Terry then said to me "Go and fetch some tea and coffee and some food for me".

39 I then left the two men to talk. When I returned with the tea and coffee I heard Terry say to Tony "She is hard to live with". I interrupted and said "I don't live with you". Terry then said to me "Don't worry, we just need to say that for the paperwork". I said "I'm not going to say that, it is not true". I had a boyfriend at the time and I have never been Terry's defacto partner, rather I use to see him as more of a father figure.

40 To the best of my recollection, that was the only substance to the conversation I had with Tony. Apart from that, he simply pointed to some pages on the paper and said "Sign Here". I said "I don't have my glasses, what am I signing", Terry said "It is just to say that you live at Miranda on the property". I then signed as he requested, thinking that these documents were to protect me if Terry died and I thought this was to correct the impression that he gave Tony that I was living with Terry.

103. One obvious curiosity about that evidence is her claim that the men sat down at the kitchen table and that she then left them in order to make tea and coffee. Another problematic matter is her claim that she protested that she did not have her glasses and, by inference, could not read the documents (I have earlier commented upon her evidence concerning glasses). It is implicit in this evidence that she owned glasses at the time, contrary to her claim set out earlier that she did not have glasses until after the legal proceedings had commenced.
     
104. Ms Buccoliero's affidavit of 15 December 2009 says nothing more about the loan and mortgage with the bank except to claim that she could not recall having ever seen the bank statements in relation to it. Those statements refer to the borrowers as being both of the defendants but they are addressed to Mr Munro at his post office box at Oyster Bay. Ms Buccoliero said that she had never had access to that post office box. She accepted that she did receive some letters like the Consumer Credit Code Default Notice dated 31 October 2008 but claimed that she did " not really understand what they mean ".
     
105. The affidavit concludes with a concession that signatures on documents relating to the loan and mortgage appear to be hers, however:
     

"49. As outlined above, I never was explained the documents and did not understand that I could lose my property by signing the documents. If I knew there was any chance of me losing my house and inheritance, I would never have signed the documents."

106. In relation to that assertion, it is to be remembered that Ms Buccoliero signed the documents some two months after being served with a statement of claim filed by RAMS and shortly before a notice to vacate was served by the Sheriff. The practical reality was that she was going to lose her home if she did not obtain finance elsewhere.
     

Evidence of Mr Tony Ottavio

107. Mr Ottavio's evidence was that an application was made by Mr Munro on or about 29 August 2007 for a loan to purchase an investment property, and that on 3 October 2007 an amendment was made to the application to add Ms Buccoliero as a co-borrower. (This was shortly after service of the RAMS statement of claim).
     
108. Mr Ottavio sent a letter addressed jointly to Mr Munro and Ms Buccoliero on 25 October 2007 to advise that the application had met the bank's requirements for approval (2/303). The letter was posted to Mr Munro's post office box. Mr Ottavio then telephoned Mr Munro to arrange to meet with him and Ms Buccoliero in order to review the loan contract and mortgage documentation. That meeting occurred on 14 November 2007 at Mr Munro's home in Oyster Bay. The documents signed at this meeting are dated 14 October 2007 but it was accepted by the parties that the meeting occurred on 14 November 2007.
     
109. Mr Ottavio recalled that he was greeted at the front door by Mr Munro and Ms Buccoliero and he introduced himself to her. They led him into the house where he sat at the head of the dining table with Ms Buccoliero seated to his right and Mr Munro seated to his left. He observed that Ms Buccoliero was " a neatly dressed, attractive, middle aged woman " and that at all times during the meeting she " was attentive and coherent in her responses to me ". Mr Ottavio's evidence was that the meeting lasted about thirty minutes and that Ms Buccoliero was present in the room for its entirety. Mr Ottavio also claimed that it was his general practice not to accept offers of refreshments during business meetings at customer's homes but that in any event no refreshments were served.
     
110. Mr Ottavio said that the purpose of the meeting was to explain the loan and mortgage documentation and to have them sign the documents if they were happy to do so at that time. He brought to the meeting a package of documents including the Consumer Credit Contract Schedule, the Mortgage, a Consumer Loan Authority (Borrowers), letters of request to RAMS for a payout figure and to discharge the mortgage, and an Acknowledgement and Consent Proof of Identify Details (Borrowers) form (2/305 - 2/323).
     
111. Mr Ottavio did not purport to recall the exact conversation that ensued but claimed to have followed his "invariable practice". He then set out in his affidavit a conversation in which he explained the content of the Consumer Credit Contract Schedule that conformed with his "invariable practice". At the conclusion of that explanation he said that he enquired whether his explanation had been understood and he received affirmative responses from both Ms Buccoliero and Mr Munro. He enquired whether they were happy to sign the contract then and there or whether they wished him to leave the documents with them so that they could seek legal advice. He claimed that both indicated they were happy to sign immediately. He indicated where they should sign and they complied. He witnessed their signatures.
     
112. Then, in accordance with his "invariable practice" he explained the mortgage document to the borrowers. He said that he particularly recalled saying, "this is the mortgage, you would be familiar with this document because you both had mortgages in the past" . He claimed that both nodded in agreement. Nevertheless, whilst unable to recall the exact words, he said that in accordance with his "invariable practice" he then went on to give a short explanation of the nature of the mortgage. That explanation included that if they defaulted on the loan the bank would have the right to take possession of the property, but that would be a last resort.
     
113. Mr Ottavio claimed that he then said words to the effect, "if you are happy with the mortgage, you can sign it now or if you want to obtain legal advice I can leave it here with you" . Both indicated that they were happy to sign immediately. Mr Ottavio then indicated to them where they should sign and when they had done so he witnessed their signatures.
     
114. Mr Ottavio then explained the Consumer Loan Authority (Borrowers) document. It was a brief summary explanation similar to that which he had given in relation to the above documents. It included an explanation that the document included an authority for the bank to put the surplus proceeds on settlement into a nominated account. He asked to which account they wished to deposit the surplus proceeds and Mr Munro replied that it should be a Commonwealth Bank account in his name. Mr Munro nominated the account details. At the conclusion of the explanation, that document was also executed by Mr Munro and Ms Buccoliero.
     
115. Mr Ottavio then came to explain the discharge documentation. He said that he showed the documents to them and in the course of the conversation relating to them he said, "Loretta, in order for us to payout your existing loan with RAMS you will need to sign a request for payout figure and requests to discharge to [sic] the loan. Are you happy to sign these documents?" She replied in the affirmative. Those documents were then signed by Ms Buccoliero.
     
116. Even though Mr Ottavio conceded that he could not recall the precise words spoken, if his account is to be accepted at all, it may be inferred that in relation to the payout of the RAMS loan and discharge of that mortgage, he would necessarily have had to have addressed Ms Buccoliero specifically about it. In those circumstances, it seems highly likely that he would have referred to her existing loan and her mortgage.
     
117. The final document that Mr Ottavio said that he explained to Mr Munro and Ms Buccoliero was the Acknowledgement and Consent Proof of Identity Details (Borrowers). He showed the document to them and said, "For us to process your loan, we need to verify Loretta's verification (sic) " . He claimed that Ms Buccoliero replied, "Yes, I have identification" . Verification of identification was only required for Ms Buccoliero, according to Mr Ottavio, because Mr Munro was an existing customer of the bank. Mr Ottavio recalled that Ms Buccoliero had ready four original identification items in order for him to verify her identity, they being a rate notice in her name, a Medicare card, a photocard, and a birth certificate. Mr Ottavio's evidence is silent as to whether photocopies of those documents were also provided to him, were made somehow during the course of the meeting, or whether he took the items away and made copies of them. Nevertheless, copies of those items made their way into the bank's file.
     
118. Mr Ottavio disputed that Ms Buccoliero mentioned not having her glasses and enquired what she was signing; that he said, or gave Ms Buccoliero reason to believe, that the documents she was signing were to protect her in the event that Mr Munro died; and that Ms Buccoliero indicated that she did not understand the documents. He also claimed that at no time during the meeting did Ms Buccoliero's conduct, either by speech or mannerism, cause him concern as to her level of understanding.
     
119. The bank approved the loan and, upon being made aware of this, Mr Ottavio prepared and sent a letter to Ms Buccoliero on 15 December 2007, addressed to her Miranda home, advising, "Congratulations - the settlement paperwork for your new home loan has been finalised" . Mr Ottavio had no further contact with Ms Buccoliero after that time.
     

Evidence of Predraj Kelava

120. Mr Predraj Kelava was employed at the Mortgage Innovation Centre at Bexley. He assisted Mr Ottavio with "loan processor" tasks. He could not recall this particular loan application but accepted that documents indicated that he assisted Mr Ottavio in relation to it. It would seem that the tasks he performed were carried out under the supervision of Mr Ottavio. His evidence did not advance the case of either party in any significant respect. That is particularly so because of his lack of recollection. For example, when he was shown certain documents he was only able to speak of general practices and procedures and when asked to comment about any perceived deficiencies he was left to speculation.
     

Ms Buccoliero's reply

121. Ms Buccoliero's affidavit of 27 April 2010 is a reply to that of Mr Ottavio. Generally, she disputes his version and maintains that which she set out in her earlier affidavit. One specific matter should be noted. In responding to Mr Ottavio's version as to the purpose of the meeting, Ms Buccoliero claimed that she " was only informed by Terry that the meeting was in relation to my inheritance following the death of my father ". This may be contrasted with the claim in her earlier affidavit (at [35] - [40]) that I have set out above (at [102]).
     

Cross examination of Ms Buccoliero

122. There were some matters raised in the cross-examination of Ms Buccoliero that are relevant to an assessment of her reliability.
     
123. There is a handwritten note in Mr Melville's files (3/701). It is what appears to be a draft list of disbursements in respect of the $440,000 to be advanced by the bank. "T. Munro" is in the list but no amount appears against it. Underneath is a note:
     

"O.P. with Terry. About $54,000 left over. Make cheque out to him for balance. He will get Loretta to ring".

124. Beneath that is another note:
     

O.P. with Loretta. Ok for $54,000 to go to Terry. Draw cheques as he requires. Can't get in to authorise this or fax".

125. When this was drawn to her attention, Ms Buccoliero was adamant that she had never spoken with Mr Melville on the telephone. Implicitly, she denied authorising the disbursement of $54,000 to Mr Munro. Why Mr Melville would have made such a file note was not otherwise explained.
     
126. It was pleaded in Ms Buccoliero's defence and cross-claim that Mr Munro "used his influence" to have her transfer half of her interest in the property to him. However, nothing was mentioned in any of her affidavits about this claim. There is some evidence that Mr Munro "used his influence" in a general sense, and I will say more about this later, but there was no evidence from her at all as to how the transfer to Mr Munro came about. One of Mr Melville's file notes (3/697), signed by Ms Buccoliero, relates to the issue:
     

"21/11/07

To David Melville

I note that:-

TERRANCE MUNRO can force me to sell the property

If TERRANCE MUNRO goes Bankrupt the Bankruptcy Office may order a sale

If the property is to be sold Terrance Munro could get one half

I am prepared to transfer a one half share to Terrance knowing the above"

127. Ms Buccoliero denied having had a conversation with Mr Melville in which the matters set out in the note were discussed (T59.23). She was not prepared to agree that it was her signature at the foot of Mr Melville's note - when asked she responded, "not necessarily" (T58.25). Later, she said that Mr Munro had practised writing her signature, I assume to suggest that he might have forged her signature (T60.15).
     
128. I have earlier mentioned Ms Buccoliero's primary affidavit in which she said, " Shortly after that, a man arrived who I now believe to be from the Commonwealth Bank ". I take her to mean that she did not know at the time that he was from the Commonwealth Bank. This may be contrasted with the following towards the end of her cross-examination:
     

Q. I suggest to you you knew when Mr Ottavio came to see you that he was from the bank, didn't you?

A. Terry rang me up and said -

Q. Can you answer the question? You knew when Mr Ottavio came to see you he was from the Commonwealth Bank, didn't you?

A. Yes. (T60.45)

129. The cross-examination continued:
     

Q. And you knew what Mr Ottavio was giving you to sign was a loan and a mortgage?

A. No.

Q. You knew if you did not make loan repayments that the Commonwealth Bank would be able to take your home?

A. No.

Q. Because you had already been through that with RAMS?

A. I believed the loan was for Terry.

Q. And that was why you were re-financing?

A. Terry said he was not happy with RAMS.

Q. And your evidence that you did not know what you were signing was false?

A. I signed nothing. I owned (the Miranda property) that he was getting ready to put a granny flat on. (T60.48 - 61.13)

Conclusions as to Ms Buccoliero's evidence concerning the bank

130. There are matters in the evidence I have just reviewed which may be added to the matters I have earlier referred to which raise a serious question as to Ms Buccoliero's accuracy and reliability.
     
131. There is no credible explanation for Mr Melville making the file note concerning the disbursement of $54,000 to Mr Munro other than that, contrary to her denial, she did in fact speak to him on the telephone and authorise it.
     
132. Similarly, there is no credible explanation for her signature appearing on the document from Mr Melville's file dated 21 November 2007 other than that, contrary to her denial, she did receive advice on the topic of her transferring a half interest in the property to Mr Munro and signed the note to acknowledge receipt of such advice.
     
133. The evidence Ms Buccoliero gave at the end of the cross-examination that I have set out above is contrary to her claim that she knew nothing of a loan and mortgage with RAMS. That evidence is also contrary to her implicit claim that she did not know that the other man at the meeting with Mr Munro, when the documents were signed, was from the Commonwealth Bank. Indeed, she seemed to be saying in the second and third last questions and answers I have quoted that there was a loan with RAMS that was being refinanced with the bank.
     
134. For these reasons, in conjunction with what I have earlier said on the subject of credibility, I am not prepared to accept Ms Buccoliero's evidence.
     
135. In relation to what occurred when the documents were signed on 14 November 2007, this leaves the evidence of Mr Ottavio without credible contradiction. It does not necessarily follow that I should accept his evidence for that reason alone. His recollection was incomplete and he spoke in large part in terms of what his "invariable practice" was, rather than purporting to have an actual memory of everything that was said.
     
136. There was only the mildest attack made upon Mr Ottavio's credibility. There was a suggestion that he was biased towards Mr Munro because he was a "good customer". There was also an implicit suggestion that he might have been motivated to cut corners or overlook matters because he was paid only by way of commission. Mr Ottavio gave acceptable responses in respect of these matters. On balance, I am prepared to accept that what occurred on 14 November 2007 was broadly as he described.
     
137. It follows that I accept that when Ms Buccoliero signed the loan and mortgage documents she had been made sufficiently aware of their nature and purpose. It was essential that she understood the amount of the loan, the interest rate, the fees that were payable, the requirement to make repayments, the consequences of falling into default and the proposed disbursement of the surplus. These were all matters I accept Mr Ottavio included in his explanation, and that Ms Buccoliero indicated that she understood.
     
138. Finding against Ms Buccoliero thus far does not necessarily mean that her claim must fail. Her case also depended upon matters disclosed in the documents and other evidence independent of her own.
     

Failure to adhere to lending guidelines

139. At the commencement of the hearing Mr Aspinall objected to some documents tendered by Ms Hill (6/810 - 6/954). On the final day he objected to the tender of a further folder of documents (court book 8). The basis of both objections was that the documents related to the bank's lending guidelines and that there had been no pleading that it had failed to adhere to them. Mr Aspinall only became aware of the possibility of the point being taken on the morning of the first day and it was only confirmed by Ms Hill at the end of the evidence and immediately prior to closing submissions (T155.35). Consequently, the bank had not prepared to meet such a case.
     
140. Ms Hill relied upon Spina v Permanent Custodians Ltd (above) as authority for the proposition that "all of the circumstances of the case" (s 9(1) Contract Review Act ) that the Court is required to consider may include the lender's operational guidelines.
     
141. Mr Aspinall, on the other hand, submitted that I should accept and adopt the reasoning of Einstein J in Agricultural & Rural Finance Pty Limited & Anor v John Edward Atkinson & Ors [2010] NSWSC 425. His Honour there held (at [29]) that "'all the circumstances of the case' must be a reference to the circumstances of the case that have been pleaded".
     
142. Einstein J was concerned in that case with litigation far more complex than the present, and he was clearly mindful of the issues considered by the High Court of Australia in Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; 239 CLR 175. There seems to be, however, and with respect, good sense in what his Honour said, at least as a general proposition. I accept that there is the statutory mandate for the Court to consider "all of the circumstances of the case". But it does not seem to me to be at all procedurally fair for a party seeking relief under the Contracts Review Act to withhold particularisation of the claim for that reason.
     
143. It is appropriate to first examine whether there is any merit in the points Ms Hill sought to make on behalf of Ms Buccoliero. In the end, the only manner in which it was contended that there a failure to adhere to the lending guidelines was an asserted failure to interview Ms Buccoliero and assess "her needs". I will consider that point in the course of considering submissions that were made generally in relation to all of the evidence independent of Ms Buccoliero's evidence.
     

Other evidence in relation to the Commonwealth Bank loan and mortgage

144. Ms Hill submitted that the "circumstances of the loan and mortgage application and execution demonstrate a wilful blindness or, alternatively, a reckless disregard to prudential lending and the interests of Loretta". A number of submissions were made in support of that proposition.
     

A conflict between the evidence of Mr Ottavio and Mr Kelava

145. It was submitted that Mr Ottavio's and Mr Kelava's accounts of the loan application were "conflicting and obtuse". It was asserted that "both alleged the other to have been responsible for the loan application". That is not the way I understood their evidence. Ms Hill was invited to provide transcript references to the evidence that supported her submission but did not do so. The evidence was to the effect that Mr Ottavio dealt directly with Mr Munro in relation to the loan application and Mr Kelava performed data entry and follow-up tasks. There was no significant conflict in their evidence.
     

No involvement or participation by Ms Buccoliero in negotiating the loan

146. The documents, together with the evidence of Mr Ottavio, indicate that the loan was negotiated by Mr Munro without any involvement of Ms Buccoliero. I find nothing significant in this. There is nothing wrong with a lender to multiple borrowers having most of its contact with one of the borrowers.
     
147. Ms Hill acknowledged that the ability of a borrower to negotiate the terms of a loan and mortgage with a major bank is limited, but she pointed to the lack of participation of her client, for example as to the amount of the loan that was sought. I accept, however, that Mr Ottavio's explanation of the mortgage and loan documentation included reference to the amount of the loan, and so I am not prepared to conclude that Ms Buccoliero signed the documents without awareness of that detail. Further, I am satisfied that she spoke with Mr Melville about the surplus amount of $54,000 being disbursed to Mr Munro.
     
148. It was also submitted that "it was not reasonably practicable for Loretta to negotiate for alterations or to reject the documents". Ms Hill could not, however, suggest any alterations that Ms Buccoliero might reasonably have sought. This point is of no additional significance.
     

The loan application itself has "numerous examples" of failure to verify the most basic information.

149. In this respect, attention was invited to the lack of addresses for the properties that the borrowers (specifically, Mr Munro) owned, and the lack of account numbers for two savings accounts Mr Munro held with other banks. It was submitted that this indicated a failure to inquire as to the capacity for the borrowers to be able to repay the loan.
     
150. I fail to see the significance of this. Mr Ottavio had previous experience with Mr Munro, although not with Ms Buccoliero. Information in the loan application included that Mr Munro owned a number of investment properties from which he derived substantial rental income. There was a surplus of assets over liabilities in excess of $2 million. In the context of a loan for $440,000 on a property valued 12 months earlier at $500,000, the precise details of other investments could not have been a matter of great significance. Moreover, it was not suggested to Mr Ottavio that, with his previous dealings with Mr Munro, he should have been doubtful of information indicating that he had net assets in the order of $2 million.
     
151. Knowledge the bank had, or ought to have had, in relation to Ms Buccoliero's ability to service the loan in the event that Mr Munro was unable to do so is another matter which I will discuss shortly.
     

Conflict between information given to Mr Ottavio or Mr Kelava and that appearing in the loan application

152. When the loan application was varied from one made solely by Mr Munro to a joint application with Ms Buccoliero, the bank's internal electronic file system (the "CommSee notes") included an entry to the effect that they were "defacto partners" (2/294). The note is signed off, "Pedj Kelava, per Tony Ottavio". However, in the application itself, separate home addresses are indicated for the two (2/298). The significance of this is not at all clear. Mr Aspinall submitted that it was not for the bank to inquire into the personal lives of borrowers, and that in any event there could be a number of potential explanations.
     
153. At its highest, this may be indicative of a lack of concern by the bank as to the accuracy of information provided in support of the loan application. However, more than a relatively minor inconsistency such as this would be needed to support, or contribute to, a finding of "wilful blindness" or "a reckless disregard to prudential lending and the interests of Loretta".
     
154. The loan application form includes that the security for the loan was to be the Miranda property and that the owners were both Ms Buccoliero and Mr Munro (2/301). Of course, at the time of the application, Ms Buccoliero was the sole registered proprietor. I do not see any significance in this. The CommSee notes include that "F/A is currently on title solely, but M/A will now be joining". That is entirely consistent with what occurred when Ms Buccoliero transferred to Mr Munro a half interest in the property.
     
155. The application form posed a question as to whether the applicant(s) would be living in the house and it was answered, "No - Investment". This was said to be inconsistent with the fact that Ms Buccoliero proposed to continue living in the house. Immediately above that question, however, there is an indication that the purpose of the loan was for refinancing and personal investment (2/296). It is also indicated in the form that one of the applicant's, Mr Munro, did not live at the security property, so, at least in respect of him, the description "investment" was accurate. It is also indicated in the form that $370,000 was required for repayment of an existing loan and there would be a surplus of about $41,000. There is nothing of significance in this.
     

No interview was conducted with Ms Buccoliero

156. It is correct to say that there was no "interview" with Ms Buccoliero and so, as was put in oral submissions, there was no "needs analysis". This was said to be contrary to the policy in the bank's lending guidelines.
     
157. On the face of it, this was a relatively straightforward loan transaction. As far as the bank was concerned, Ms Buccoliero lived at a property which was the subject of a loan with another financial institution. A loan was sought to payout the existing loan and for a comparatively modest additional sum. I fail to see why, in such circumstances, the bank should have seen it as necessary to interview Ms Buccoliero and assess her "needs". Her needs were obvious.
     

The documents which Mr Ottavio and Mr Kelava relied on as "verification" of employment and income were extremely inconsistent and specious, yet no further explanation was sought.

158. Ms Hill's submissions referred to a letter dated 21 November 2006 purportedly from Mr Munro's employer confirming his employment and salary (6/755). There are a number of curious features about it that indicate that it is unlikely to be authentic. For example, the mobile phone number on the letterhead is Mr Munro's own number. It is indicated in a number of loan applications by Mr Munro that he was employed by "Matin Elrick Advertising" but the letter indicates his employer was "Martin Elric Marketing". In an application of November 2006 it was indicated that Mr Munro had been employed for 12 years. In the joint loan application 12 months later it was indicated that he had been employed for 9 years 1 month. The letter, however, indicates that he had been employed since 2001, so, only for 5 or 6 years. The overall appearance of the letter (for example, different fonts and font sizes, the author's signature, and the layout of the contact details for the author) should have also prompted suspicion.
     
159. Mr Ottavio recalled that Mr Munro either brought or sent this letter to Mr Ottavio's office. He said that he (Mr Ottavio) " would have at some stage browsed through it " (T70.23). As to the discrepancy in the description of the employer, he said he " wouldn't have really thought twice about it " (T70.41). He acknowledged that there was a discrepancy in relation to the length of service (T71.3). He did not notice that the mobile phone number was Mr Munro's (T71.19).
     
160. Mr Kelava's signature and stamp appears on the letter. He said that this meant that he was the person who had been responsible for calling the employer and verifying Mr Munro's employment and income (T113.43). He could not, however, recall having done so (T113.48; 114.5; 115.34). Mr Kelava did not find it odd that there was a discrepancy as to the name of the employer (T114.28). He then said that he did not " pick up on that " (T114.34). Nor did he " pick up on " the discrepancy as to the length of service. He said, " possibly I didn't " notice that Mr Munro's mobile phone number was on the letter (T115.16).
     
161. Mr Kelava described the procedure for verifying an applicant's employment. His explanation is consistent with the lending guidelines. Where an applicant put forward a letter from an employer, it was necessary for a call to be made to verify the information. The telephone number in the letter was not used; rather it was the required procedure to look up the number, presumably in the white pages. Mr Kelava claimed that this is what he did, or would have done, notwithstanding he had no actual recollection.
     
162. Although I am satisfied that this letter is not authentic, I am not satisfied that Mr Kelava did not make the call that he claimed. Moreover, there is no evidence to establish that the information in the letter was not correct, that is that Mr Munro was employed by Martin Elric Marketing and was paid a salary of $168,000 per annum. With a lack of evidence on the subject, I cannot conclude that the bank was on notice that Mr Munro was not employed as he claimed.
     
163. In the course of considering the application made by Mr Munro in June 2007, the bank required proof of his claim that he was provided with accommodation rent free. Mr Ottavio said that Mr Munro provided a letter (6/756). It appears to be on the same stationery as the employment verification letter but there are some notable differences. It has the appearance of letterhead stationery but there are no contact details, no address and no telephone number. The letter has a printed name but there is no signature by the "author".
     
164. Mr Ottavio was not concerned about these apparent anomalies (T75). Mr Kelava's signature and his stamp have been placed on the letter. There is another stamp beneath which purports to certify that the document is a true copy of the original. Mr Kelava could not recall whether he noticed the letter was unsigned (T125.38). The fact that Mr Munro was living rent free was a relatively minor issue and I suspect it was regarded as something akin to a formality to obtain a letter to place on the file. I would think it rather unlikely that anyone would have paid close attention to it.
     
165. Another document from Mr Ottavio's files has an anomaly that might have prompted inquiry (6/800). There was a letter purporting to be from a real estate agency, addressed to "To Whom It May Concern", indicating that the market rental of the Miranda property was "in the vicinity of $550 to $565pw as of the date of this letter". The letter is signed "G. Morrison" but no title is indicated. The letter is dated "November 16, 2007" (coinciding with the format Mr Munro adopts in dating his correspondence). However, at the top of the letter there is a facsimile imprint indicating it had been faxed from the agency on 13 April 2007. Mr Ottavio said that he " perhaps ... would have " inquired about this if it had been noticed (T136.40). Mr Kelava did not recall looking at the document (T126.40).
     
166. This document disclosed information that, in the scheme of things, was not controversial and, in the context of all that was important in the assessment of the application, was relatively trivial. I am not satisfied that the bank should have been expected to examine it so closely that the anomaly disclosed by the facsimile imprint should have been detected.
     
167. The loan application includes the information that Ms Buccoliero had been employed by "The Angels Gallery" for one year and had an income of $43,001 p.a. Two payslips dated 14 and 21 September 2007 were received at Mr Ottavio's office purporting to confirm her employment and her income (3/521 - 3/523). The employer's name is shown as "Angel's Gallery Pty Ltd". A business name search was within Mr Ottavio's files. It showed that two named people traded as "The Angel's Gallery" as at 26 September 2007.
     
168. Mr Ottavio said that if he had looked at these documents and noticed the discrepancy between a business name and a company name it " wouldn't have rang huge alarm bells " (T138.10).
     
169. Ms Buccoliero's evidence was that she had never been employed by such a business or company and that she had never said she had been. She was not challenged on that evidence and so, notwithstanding some problems with her evidence generally, I accept it. Given that it is common ground that the information in the loan application came from Mr Munro it must follow that it was he who asserted that Ms Buccoliero was employed.
     
170. Mr Ottavio and/or Mr Kelava, and hence the bank, were entitled to proceed upon an acceptance of the payslips as sufficient verification of income. They looked genuine. I do not regard the business name search result as being something that would necessarily provoke suspicion. It is not unheard of for a commercial entity to have a common trading and corporate name. Acceptance of the payslips was in accordance with the bank's lending guidelines (8/112). It follows that the bank was not on notice that Ms Buccoliero was unemployed and on a pension.
     
171. An "Individual Consumer Report" from Veda Advantage Information Services and Solutions Ltd was within Mr Ottavio's file (6/809). The report, in the nature of a consumer credit report, relates to Ms Buccoliero and is dated 21 August 2007. In a numerical summary of information it has a zero in the category, "Employers". Mr Ottavio did not notice this, and did not know if he even looked at the report (T137). Mr Kelava did not recall looking at it (T127.33).
     
172. The significance of this report was whether Ms Buccoliero had been in default in relation to any past credit facility. It disclosed that she had been in default in a payment due to Telstra in the sum of $195 in July 2007. An explanation about that matter was provided to the bank that was regarded as satisfactory. In my view it is unrealistic to have expected any bank official or agent to have seen anything significant in the abovementioned entry. It would be reasonable to assume that a credit reference agency is not notified of a consumer's employer details as a matter of course.
     
173. The bank required production of statements showing transactions in the previous six months in respect of the RAMS home loan. Within Mr Ottavio's files was a letter from RAMS to Ms Buccoliero dated 28 September 2007 which thanked her for contacting RAMS Customer Service and enclosed the "requested transaction listing" (3/525). RAMS file notes (3/821) include a note that on 28 September 2007,
     

"Miss called waiting on statement ordered last week?? Offered miss TL instead. Miss reqst last six months to be posted. Email sent to CCA".

174. The next note, also dated 28 September, reads, "CCA mailed trans listing".
     
175. What appears to be a transaction listing was with the letter in Mr Ottavio's files (3/526). I am satisfied that it is not authentic. Genuine statements from RAMS are elsewhere in the documentary evidence (3/828 - 3/831). The "transaction listing" (3/526) does not correlate with the statements at all. It purports to show regular payments being made and no reversals for dishonoured payments. Even the postal address (P.O. Box xxx Miranda 2225) is incorrect. The post code for Miranda is 2228. The RAMS statements were sent to a post office box with the same number but at Oyster Bay (which was Mr Munro's), as was the letter of 28 September 2007.
     
176. Mr Ottavio said the focus would have been on whether the loan repayments were being made and he would not have noticed the error in the address (T141). Aside from the address, however, Ms Hill conceded that the transaction listing met the bank's requirements in accordance with its lending policy at the time. I do not believe any fault can be found in the bank on this issue.
     

Conduct checks were undertaken in relation to Mr Munro's accounts but not Ms Buccoliero's

177. It was submitted that if a three month check on Ms Buccoliero's savings account with the bank had been carried out it would have revealed that her only source of income was a Centrelink pension. The statements for that account with the bank (court book 8) indicate that the pension was being received into the account by way of fortnightly credits between 4 April and 5 September 2007. There is no indication of the nature of the pension. The account was closed on 11 September 2007.
     
178. It was Ms Buccoliero who raised the question of whether the bank had adhered to its lending guidelines. In relation to this topic, the fact of the matter appears to be that the lending guidelines do not require a conduct check of savings accounts, including closed accounts, but only certain credit or loan accounts. This is another reason for not holding that the bank was constructively on notice that Ms Buccoliero was on a pension.
     
179. A submission was also made that previous personal loan applications by Ms Buccoliero, for relatively modest sums, should also have alerted the bank to her true financial situation. Those applications were made in July 2005 and July 2006. There was insufficient evidence as to how readily accessible the information was relating to those applications and there was no submission that a failure to locate and peruse them was contrary to lending guidelines.
     

The explanation of the documents by Mr Ottavio at the meeting on 14 November 2007 was inadequate

180. The essential elements for Mr Ottavio to explain was the amount of the loan, the interest rate, any fees payable, the requirement to make repayments, the consequences of falling into default, and what was to happen to the surplus after the RAMS loan was paid out. On his version, those matters were adequately discussed and explained. Mr Ottavio claimed that he also offered to leave the documents with Mr Munro and Ms Buccoliero to allow them the opportunity to obtain legal advice but they declined and agreed to sign immediately.
     
181. It was submitted that Mr Ottavio failed to explain the "Usual Terms and Conditions" which, together with the "Consumer Credit Contract Schedule", comprised the contract. Ms Hill did not indicate what, of significance, in the Usual Terms and Conditions should have been explained. She did submit, however, that even if Mr Ottavio's evidence was accepted, it was not inconsistent with Ms Buccoliero being under the misapprehension that the loan was for Mr Munro alone. The problem with that submission is that this was not what Ms Buccoliero claimed in her affidavit. Her version there was to the effect that she had no knowledge that the documents she signed had anything to do with a loan and mortgage and thought they concerned something else. In any event, Mr Ottavio's evidence included that Ms Buccoliero acknowledged that she understood his explanation of each of the documents before she signed them.
     

It was only after the loan and mortgage were signed that Mr Ottavio verified Ms Buccoliero's identity

182. When I sought to clarify with Ms Hill what the significance of this contention was, she submitted that obtaining a borrower's signature on the form entitled "Acknowledgement and Consent Proof of Identity Details (Borrowers)" empowered the bank to obtain personal information. It was said to follow that if 14 November 2007 was the first time Ms Buccoliero had signed such a document, the bank "hadn't even obtained this necessary consent to conduct any checks prior to the mortgage and the loan actually being signed" (T184.15). However, she then submitted that the bank did not conduct any such checks.
     
183. Precisely what personal information the bank should have gathered, or checked, was not disclosed. In any event, the submission does not accurately reflect the evidence. Mr Ottavio's evidence was that this form was one of the documents signed at the 14 November 2007 meeting but he had earlier received a faxed copy, signed by both borrowers. He simply took another form along to the meeting so that he would have a signed original for the file (T148.35).
     

The bank engaged in "pure asset lending"

184. It was not contended in the defence or cross-claim, but it was in submissions, that the bank "engaged in pure asset lending such as in Khoshaba and treated Loretta's home as nothing more than 'security' for the borrowings of Terry".
     
185. This is not a case in which the lender was content to lend on the value of the security alone, indifferent to the purposes for which the loan was sought. The bank was informed, correctly, that the vast majority (87 per cent) of the loan was required to refinance an existing loan that Ms Buccoliero had with RAMS. To that extent, it was not "the borrowings of Terry". The bank must be taken to have understood that the Miranda property was her only real asset. It was, however, unwittingly misled into believing that she had an income, albeit relatively modest by comparison to the size of the loan.
     
186. Each case must, of course, be determined upon its own individual facts and circumstances, but to put the present case in context it is useful to refer to some of the cases that were referred to in submissions. Contracts were held to be unjust in Pasternacki v Correy [2000] NSWCA 333; (2001) NSW ConvR 55-965; Elkofairi v Permanent Trustee Co Ltd [2002] NSWCA 413; (2003) Aust Contract Reports 90-157; Perpetual Trustee Company Limited v Albert and Rose Khoshaba , above; No Fuss Finance Pty Ltd v Miller [2006] NSWSC 630; and National Australia Bank v Satchithanantham [2009] NSWSC 21. In these cases, loans were made to borrowers which were secured by what was their only, or substantially only, real asset. They had little or no capacity to make repayments. So much is in common with the present case. But those cases had the additional feature that either a substantial proportion, or the sole, benefit of the loan was for someone else. The lender was either aware of this or was on notice of it. The lender was indifferent to the improvidence of the loan insofar as the claimant borrower was concerned. A further distinguishing feature is that in those cases the claimant borrower did not have an adequate, or any, understanding of the nature of the documents that he or she signed, something that I am not satisfied was the situation in the present case.
     

The bank did not send statements to Ms Buccoliero alerting her to the existence of the loan, and that it was in arrears

187. There was an issue about whether this was a matter that had been pleaded and whether there was evidence to support the submission (T193-197). I do not regard it as significant to the primary questions of unjustness or unconscionability. It is more relevant to whether to grant relief, if findings are made in favour of Ms Buccoliero on either of those issues.
     

Ms Buccoliero was a partial volunteer or in the same position as a surety in respect of some of the funds advanced by RAMS and by the bank

188. This submission was made in respect of the $20,000 of the RAMS advance paid to Mr Munro, the $77,000 cheque made out to Ms Buccoliero that he received, as well as in respect of the $54,000 of the loan from the bank.
     
189. I have earlier set out the relevance of the RAMS transaction. I reiterate that it set the background for why refinancing became necessary and it was part of the case sought to be made by Ms Buccoliero that she was under the influence of Mr Munro and taken advantage of by him. Beyond those matters, however, it is not relevant to the question of whether the contract with the bank was unjust, or was a result of unconscionable conduct. Consideration of the submission should be confined to the $54,000 of the loan that was paid to Mr Munro.
     
190. Confining the submission in that way, there is the problem that there is evidence that Ms Buccoliero was aware that the amount of the loan over and above that needed to discharge her obligations with RAMS was to go to Mr Munro. During the meeting with Mr Ottavio, there was a discussion as to which account the surplus should be deposited into. Mr Munro indicated an account he held and Ms Buccoliero did not demur. Then there was the conversation she had with Mr Melville, as recorded in his file note, in which she authorised the disbursement of the $54,000 to Mr Munro.
     
191. Ms Buccoliero does not concede any conversation with Mr Munro on this topic. I have the evidence of Ms Buccoliero generally being vulnerable to Mr Munro's influence, which I will say more about shortly, but otherwise there is nothing. There could be all manner of reasons why this amount went to Mr Munro.
     
192. It was suggested in Mr Aspinall's submissions that Ms Buccoliero achieved a considerable benefit from entering into the contract with the bank. She owed RAMS $370,000 and was about to be evicted. Through Mr Munro's actions, she obtained refinance and was able to remain in her home. Accordingly, it was not improvident for Ms Buccoliero if Mr Munro were to benefit by way of receiving a half share of the property and $54,000 in exchange for his taking on liability with her to the bank for $440,000. He owned other property which, while not secured by mortgage in respect of this loan, could be put at risk. There is some logic in that proposition. There is also logic in the alternative proposition that Mr Munro took unfair advantage of Ms Buccoliero in a similar manner to the way in which he profited through the RAMS transaction. The dearth of evidence on the subject, however, means choosing between the competing submissions is an exercise in speculation.
     

Conclusion as to the other evidence

193. The documentary evidence, and the evidence of Mr Ottavio and Mr Kelava about it, indicates that, in the various respects I have outlined, the bank was deceived by Mr Munro. Whilst in hindsight it would have been preferable if there had been more attention to detail, I am not satisfied that the evidence indicates "a reckless disregard to prudential lending and the interests of Loretta".
     

The expert evidence

194. The expert evidence of Drs Seidler, McMahon and Allnutt is relevant to the pleaded case that Ms Buccoliero suffered from a mental illness, was of lower than average intellect and was unable to understand financial documents. It also bears some relevance to the pleadings that, in signing the loan and mortgage documents on 14 November 2007 and the transfer of a half of her interest in the property to Mr Munro, Ms Buccoliero acted as a result of his influence over her.
     
195. I have already referred to the opinion that Ms Buccoliero suffered from mental illness, principally chronic schizophrenia and personality disorder.
     
196. Dr Allnutt reported that schizophrenia is a long term disorder from which the sufferer does not recover " but experiences exacerbations, remissions and fluctuations in severity of symptoms over time " (2/429). Dr McMahon confirmed that the symptoms of schizophrenia can vary considerably over time. I accept that in late 2007 Ms Buccoliero was suffering from schizophrenia. However, there is no evidence that she was exhibiting symptoms of any great severity.
     
197. There was also the diagnosis of "Personality Disorder Not Otherwise Specified (Borderline and Histrionic Traits)". Dr Seidler explained in her evidence that ' histrionic traits or histrionic personality disorder refers to, in essence, a very dramatic and overly expressive presentation of people who are very attention seeking who can also be quite manipulative and deceitful in their interactions with others " (T98.10).
     
198. There is a particular matter that tends to confirm the possibility that Ms Buccoliero may be manipulative. Dr McMahon administered a variety of tests, including some to test for the genuineness of effort being exerted in the testing exercise. Scores were returned in three of the tests that indicated that Ms Buccoliero was not responding genuinely and was making an opportunistic effort to embellish psychopathological symptomatology. She was also reported to have said that she could "handle you", interpreted by Dr McMahon as " an unintentional expression that she was able to manipulate the examination ".
     
199. I find it difficult to determine the extent to which Ms Buccoliero was deliberately endeavouring to manipulate the test results in order to assist her case. Disordered thought processes as a result of her mental illness may well have played a part. The least that can be said, however, is that the results of all of the testing must be regarded with caution.
     
200. The doctors were in agreement that Ms Buccoliero's intelligence was "lower than average". Dr McMahon's testing indicated that her intellect was at the 12 th percentile, placing her "at worst" in the below average range of general intelligence. He assessed her capacity to understand the information provided by Mr Ottavio on 14 November 2007 (on his version), and to understand the documents she executed on that occasion, as being between the 14 th and 37 th percentile, or " in all likelihood ... in the upper end of the below average range or lower end of the average range ".
     
201. Having regard to her intellectual capacity, there was agreement among the doctors that, without any information as to the purpose of the meeting with Mr Ottavio and without any explanation of the nature and purpose of the documents, Ms Buccoliero likely would not have adequately understood them. However, on the premise that there had been an adequate explanation, the doctors expressed the following opinions:
     

Dr Seidler:

"On the proviso that Ms Buccoliero was provided adequate information pertaining to the purpose, nature and information contained in the loan documents, her capacity to understand would be in the "below average range" commensurate with her below average intelligence, and this would likely have been to an adequate degree."

Dr Allnutt:

"With adequate orientation to the information, nature and purpose of the documents it is likely that she would have understood to an adequate degree; that is, had there been a process whereby the basic nature, purpose and information contained in the report been explained she would have likely understood."

Dr McMahon:

"In my opinion if oriented appropriately to the documents Ms Buccoliero would have understood the documents to an adequate degree commensurate with her below average range intellectual functioning."

202. The doctors were asked to comment similarly in relation to Ms Buccoliero's mental illness. They were agreed that it was " reasonable to conclude that, on balance, Ms Buccoliero was experiencing symptoms of a psychosis ... at the time she executed the loan on 14 th November 2007 ". As with the question of intellectual capacity, they agreed that because of the presence of this mental illness it was unlikely that she would have understood the nature and purpose of the documents if there had been no adequate explanation of them. Dr Seidler was of the view that even if there had been an explanation " page by page, line by line, section by section " there was " concern " that Ms Buccoliero still might not have understood the documents. In her oral evidence (T100.46) she explained that she had in mind matters such as the effect of the mental illness and of other mental health concerns including trauma, personality disorders, the influence of her relationship with Mr Munro, and the psychosocial stressors upon her. On the other hand, Drs McMahon and Allnutt were of the view that Ms Buccoliero would likely have understood if there had been an adequate explanation.
     
203. The doctors were also asked whether Ms Buccoliero's below average intellectual capacity and mental illness would have been apparent to a lay person. They agreed that she could present as being eccentric, odd or naive but thought it unlikely a lay person would detect that her intelligence was below average. They noted that distinguishing between average and below average intellectual capacity is not something that a lay person can reliably determine.
     
204. The doctors agreed that a lay person " might reasonably not have detected a mental illness ". This was a general opinion in that they noted there were a number of variables, such as the person's experience with people with mental illness.
     
205. Mr Ottavio described Ms Buccoliero as being " a neatly dressed, attractive, middle aged woman ". It was his belief that at all times during the meeting on 14 November 2007 she was attentive and coherent in her responses to him. This evidence was not disputed.
     
206. The final issue to which the evidence of the experts was relevant was whether Ms Buccoliero was vulnerable to the influence of Mr Munro. Dr Allnutt carried out a thorough review of the history of her mental illness, such as was disclosed in the documents which were provided to him. He noted that other clinicians prior to 2006 had regarded her as vulnerable to be taken advantage of materially and unable to make realistic and rational decisions. Further, at some stage in the past she had been provided with a guardian in relation to financial matters. This suggested to Dr Allnutt that she was vulnerable to the influence of others, at least when experiencing active symptoms of her mental illness.
     
207. Dr Allnutt explained in oral evidence that Ms Buccoliero's mental illness and, to a lesser degree, her intellectual capacity rendered her a person who placed greater reliance upon the opinions of others than was necessary (T94.35). Drs McMahon and Seidler agreed. Dr McMahon added that Ms Buccoliero impressed him as a person capable of responding with self-preservation if she detected that she was being manipulated (T94.41).
     

Conclusions on the Contract Review Act claim

208. I accept that Ms Buccoliero trusted Mr Munro and was vulnerable to his influence. In addition to the expert evidence, the notes in Mr Pritchard's file support that proposition. Just how, and to what extent, she might have been influenced is difficult to determine. It is difficult to draw conclusions from her own evidence in her favour for the reasons I have earlier given. The evidence that she had a mental condition that rendered her prone to being manipulative is not insignificant.
     
209. I am not satisfied that the bank was aware of any undue influence exerted by Mr Munro over Ms Buccoliero. The fact that all of the arrangements for the loan and mortgage, aside from the signing of the documents, were with him and not her was not such as to put the bank on notice.
     
210. It would seem that Mr Munro obtained a significant sum of money through the transactions with RAMS and the bank. He obtained $20,000 from the RAMS advance and $54,000 from the bank's advance. He also received the bank cheque made out to Ms Buccoliero in the sum of $77,000 from the RAMS advance. The evidence is silent as to what became of it, except that it does not appear to have gone to Ms Buccoliero. It was also claimed that he, in effect, duped Ms Buccoliero into signing over to him a cheque for $50,000 which was her half share of the cash proceeds of her late father's estate. Potentially, Mr Munro profited from his dealings with Ms Buccoliero to the extent of about $200,000. The fact that he benefited in such ways supports the proposition that he exerted influence over Ms Buccoliero in persuading her to enter into the contract.
     
211. Confining consideration to the transaction concerning the bank, Mr Munro obtained $54,000 and, at the same time, a half interest in the property. He also, however, acquired a liability together with Ms Buccoliero, in terms of indebtedness to the bank in the amount of $440,000.
     
212. The loans served Ms Buccoliero's purposes as well. She owned half of the property through the inheritance from her late father. She acquired the other half from her sister with the assistance of the advance from RAMS. Then, when recovery action was instituted by RAMS, and the Sheriff was about to execute a writ of possession, she was able to obtain refinancing from the bank. This is a significant matter. The transaction with the bank did not put Ms Buccoliero's home at risk. It was already at risk. If she had not obtained the refinancing from the bank, she would have been evicted and RAMS would have recovered, through sale of the property or otherwise from her, some $383,000 plus accruing interest and expenses.
     
213. Ms Buccoliero was never in a position to make repayments under either of the loans. That started, however, with the RAMS loan. If there was any injustice to Ms Buccoliero, it had its genesis there. The loan and mortgage with the bank was not the cause.
     
214. I am satisfied Ms Buccoliero had a sufficient understanding of the loan and mortgage documents at the time she signed them. I accept that they were explained to her and that she had the intellectual capacity to understand that explanation. There is no evidence that her capacity in this respect was impaired by her mental illness.
     
215. I am also satisfied that apart from refinancing in relation to the RAMS loan, Ms Buccoliero understood that additional funds were going to Mr Munro. I am satisfied that she was both aware of, and authorised, this.
     
216. McHugh JA referred in West v AGC (Advances) Ltd (above) to substantive and procedural injustice. In the present case, I am not satisfied that there was injustice in either form. It was not suggested that the terms of the contract were unjust. The case for Ms Buccoliero was based upon the methods used to make it. Regrettably, the case was confused by arguments based upon alleged unfairness to Ms Buccoliero in relation to the antecedent contract with RAMS, yet there was no overt, let alone pleaded, attempt to claim that it was unenforceable. I am not satisfied that the contract was unjust.
     

Conclusions as to other relief sought

217. I have earlier indicated that the claim of non est factum must fail. It depended upon an acceptance of Ms Buccoliero's evidence as to her understanding of the events of 14 November 2007. I have indicated that I do not accept her evidence. Acceptance of Mr Ottavio's evidence involves acceptance that Ms Buccoliero was aware of the nature of the documents she was signing.
     
218. I am not satisfied that relief should be afforded upon the claims that rely upon unconscionability for the same reasons discussed in relation to the Contracts Review Act claim. Some further consideration to those claims might be warranted if there was evidence that the bank was aware of matters that were claimed to have put Ms Buccoliero in a position of special disadvantage, such as her below average intelligence and mental illness. I am not satisfied that the bank was aware of such matters. Further, I am not satisfied that the bank was aware that she had a misplaced trust in, and was under undue influence by, Mr Munro.
     

Orders

219. There will be judgment for the plaintiff. I propose making the orders sought in the amended statement of claim and dismissing the cross-claim. I also propose granting the application for default judgment against the first defendant. Counsel for the bank sought to update the money sum owing before final orders are made.
     
220. I direct the plaintiff to bring in short minutes of orders to reflect these conclusions after consultation with the second defendant as to the current sum due.
     
221. I will hear the parties as to costs.
     

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