Capital Access Australia v Hraiki [2011] NSWSC 109

The nephew and the lender alleged that the borrowers had consented to the loan to the nephew.

The mortgage was an all monies mortgage. Therefore, if the borrowers were not bound by the loan agreement no money would be secured by the mortgage.

Justice Schmidt had difficulty accepting the borrowers’ evidence where it conflicted with the lender’s because the lender had supporting documents, such as file notes, in evidence. Further, His Honour noted:

The borrower’s confusion appeared finally to stem from a difficulty in keeping his story straight, given that the evidence which he was giving was not entirely truthful.

Accordingly, it was held that even though (on expert evidence) the loan agreement was forged, the borrowers were bound by it. This is because the nephew was authorised by them to obtain the loan. Further, the actions of the borrowers after the loan indicated they accepted they were bound by it.

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