Jack and Jill have built up a profitable company called Pale Of Water Pty Ltd. They are both shareholders and both directors of the company. Pale Of Water Pty Ltd owns their family house property.

Jack is the sole shareholder of Jax Pty Ltd which is involved in manufacturing leather and woodwork products for a profit.

Getting the business up and running has been capital intensive.

Jack has borrowed money from Helpful Bank Ltd. Helpful Bank Ltd was happy to lend the money to Jax Pty Ltd but required some security for the loan. Jack did not have enough assets to put up as security for the loan. Jack offered to mortgage the family home as security for the loan which the bank accepted. Jack signed the mortgage contract himself and forged his wife's signature.

Jack has now defaulted on the loan.

1. Please discuss whether Pale Of Water Pty Ltd will be liable under the mortgage contract that Jax signed? Would your answer be any different Helpful Bank Ltd knew that Jack had forged the signature?