Take it to the bank: knowledge of fraud is required!

In Spiliotopoulos v National Australia Bank Limited [2017] NSWSC 971, the Supreme Court of NSW dismissed a plaintiff’s claim for relief following allegations of a fraudulently procured signature leading to the registration of a mortgage over his property.


The Plaintiff, Mr Spiliotopoulos, was the registered proprietor of 52 Russell Street, Greenacre. Mr Spiliotopoulos was also the joint-proprietor of 47 Russell Street, Greenacre, with his wife, the subsequent fourth defendant.

In 2005, Mrs Spiliotopoulos sought the assistance of Ms Jackson to attest to her signature on a document. Ms Jackson did not recognise the document at the time, which ultimately turned out to be a mortgage in favor of the National Australia Bank (Bank) over 52 Russell Street. Subsequent evidence suggested that the signature was in fact that of Mr Spiliotopoulos who was not present when Mrs Spiliotopoulos sought Ms Jackson’s assistance.

Ultimately, two separate advances were made to the Spiliotopoulos’ joint bank account for a total line of credit of $420,000. The funds were used to construct duplexes on 47 Russell Street. In July 2011, one duplex was sold for $600,000. Mr and Mrs Spiliotopoulos remained the joint owners of the remaining duplex.

In 2015, Mr Spiliotopoulos commenced proceedings against his wife, Ms Jackson, the Bank and the Registrar General seeking damages and equitable compensation, as well as an order that the mortgage be set aside. The basis of Mr Spiliotopoulos’ application being that the mortgage was obtained fraudulently.


From the outset, his Honour Justice Harrison  made light of Mr Spiliotopoulos’ poorly drafted pleadings and the difficulty in interpreting the precise claim alleged. The allegation, as understood by his Honour, was that Ms Jackson had acted fraudulently by attesting to Mr Spiliotopoulos’ signature in the absence of his presence and without being satisfied of his identity, thereby procuring the mortgage on his property

Significantly, Mr Spiliotopoulos did not allege fraud on behalf of the Bank. Rather Mr Spiliotopoulos alleged that the Bank:

  1. obtained the mortgage with notice of the fraud by failing to meet with Mr Spiliotopoulos to discuss the mortgage as required “in the course of banking practice”; or alternatively
  2. obtained the mortgage by reason of the fraud though failing to comply with its own internal procedures and policies, despite certification to the contrary.

Mr Spiliotopoulos argued that as a result, the mortgage was defeasible and should be set aside.

Both the Bank and Ms Jackson sought summary dismissal of Mr Spiliotopoulos’ claim.

Relevant law

Pursuant to rule 15.3 Uniform Civil Procedure Rules 2005 (NSW) (UCPR) a pleading must give particulars of any fraud, misrepresentation, breach of trust, wilful default or undue influence on which the party relies.

Pursuant to rule 13.4(1) UCPR:

If in any proceedings it appears to the court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings:

(a) the proceedings are frivolous or vexatious, or

(b) no reasonable cause of action is disclosed, or

(c) the proceedings are an abuse of the process of the court,

the court may order that the proceedings be dismissed generally or in relation to that claim.


The Court highlighted that the essential premise of rule 15.3 UCPR is the requirement that a person seeks to make out a claim for fraud, it must be made clear from the pleadings which distinctly plead the nature of the fraud and the facts supporting this claim. It is not sufficient to plead a series of facts and at a later stage of the proceedings assert that some of those facts support such an allegation. Harrison J went on to outline that the failure to properly plead matters of fraud could amount to grounds for summary dismissal by reason of a failure to plead a reasonable cause of action.

Harrison J found that Mr Spiliotopoulos could not demonstrate Ms Jackson perpetrated any fraud. However, he indicated the facts could give rise to a ‘viable claim in negligence’, though this was not pleaded.

In order for Mr Spiliotopoulos’ claim to succeed against the Bank, Harrison J outlined that he needed to demonstrate that the fraud could be ‘brought home to the bank’ in the sense that Mr Spiliotopoulos could demonstrate the Bank committed or had knowledge of a consciously dishonest act committed against Mr Spiliotopoulos or had acted in a way so as to amount to a reckless disregard to the information available to the Bank.  Only then would title to property be defeasible.

Harrison J summarised this as follows:

“The plaintiff does not allege that … the Bank did not believe that the mortgage was not a genuine document that could be properly acted upon, or that [their] suspicions were aroused, or that [they] abstained from making further enquiries lest [they] discovered that the plaintiff had not signed it. It is not alleged that the Bank engaged in a level of recklessness amounting to fraud.”

The Bank’s mere failure to comply with internal polices was not enough to meet this high threshold.

In any event, Harrison J was not able identify any actual loss suffered by Mr Spiliotopoulos following the allegedly fraudulent or negligent actions of Ms Jackson. Rather, Mr Spiliotopoulos enjoyed the benefit of the loan the subject of the mortgage in being able to re-develop the land jointly owned with Mrs Spiliotopoulos.

As such, the Court made orders for summary dismissal of the claims against Ms Jackson and the Bank, with costs.

Takeaway points

This case is timely reminder of the high threshold a plaintiff is required to meet (at the drafting stage) where an allegation of fraud is made in a claim. Pleadings alleging fraud must give all necessary facts and particulars that will enable the party who is alleged to have committed the fraud to be aware of the case they must meet. Whilst this is true for any claim, a pleading that contains an allegation of fraud (albeit contained in some larger claim) can be exposed to being struck out. Where a claim is entirely based on fraudulent conduct (as Mr Spiliotopoulos’ misconceived case eventually appeared to be) it may be dismissed for failing to disclose a reasonable cause of action.

For more information, please contact ERA Legal.


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