Capital Access Australia v Hraiki [2011] NSWSC 109

The funds were advanced to the nephew and used for his business. The borrowers claimed their signatures were forged by the nephew. However 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 (due to a forgery) no money would be secured by the mortgage.

Justice Schmidt disbelieved the borrowers’ evidence where it conflicted with the lender’s because the lender had supporting documents, such as file notes. 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 nevertheless bound by it. This is because the nephew was authorised by the borrowers to obtain the loan (including forging their signatures). Further, the actions of the borrowers after the loan indicated they accepted they were bound by it.

Click here to read the full judgment

Scroll to Top