Australian Securities & Investment Commission v GDK Financial Solutions Pty Ltd

IN THE MATTER OF THE CORPORATIONS ACT 2001 (CTH) IN THE MATTER OF GDK FINANCIAL SOLUTIONS PTY LTD (ACN 085 488 311) BETWEEN: AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION

AND: GDK FINANCIAL SOLUTIONS PTY LTD (ACN 085 488 311)

REASONS FOR JUDGMENT 1 Western Retirement Village Management Pty Ltd ("WRVM") was formerly the registered proprietor of "the Mews" situated at Lot 4, 285 Railway Parade, Upper Swan, Western Australia, being the whole of the land in Certificate of Title Vol 1950 Folio 469 ("the Land"). The Land was the subject of an unregistered investment scheme referred to as "the Mews Village" or "the Mews Retirement Village Scheme" ("the Scheme"), which is in the process of being wound up. Messrs Brian McMaster and Mark Mentha of KordaMentha were appointed receivers of the Scheme to oversee its winding up and were appointed as liquidators of WRVM upon the winding up of WRVM: Australian Securities and Investments Commission v GDK Financial Solutions Pty Ltd (2006) 236 ALR 699. 2 The Scheme and its participants were described by Finkelstein J in Australian Securities and Investments Commission v GDK Financial Solutions Pty Ltd (2006) 236 ALR 699 at [4] to [10] in the following terms: 4. By way of background, the promoters of the [Scheme] described their purpose as being to establish and operate a top-quality resort style retirement village with facilities for respite care. The idea was to develop and sell self-contained and fully serviced units and townhouses to people over the age of 55 years. The village was to be located on land purchased from another company associated with the promoters. Investors would put up the deposit with the balance to be raised by loans from the vendor. A management company controlled by the promoters would operate the village. After payment of a management fee, the profit would go to the investors. The key attraction to investors was the expectation that they would be entitled to deduct from their assessable income not only the amount of their investment but also their proportionate share of the loan taken to pay the balance of the purchase price. 5 The Mews Village was to be established on [the Land]. The [L]and was registered in the name of [WRVM]. By a contract dated 18 April 2000, WRVM agreed to sell the [L]and to the fourth defendant, The Mews Village Nominees Pty Limited, for $93,425,000. Other agreements to which Mews Village Nominees is a party show that it entered into the contract as "bare nominee" for a group of investors described as "Investor Partners". The contract of sale provided for the payment of a deposit of $18,048,000 with the balance to be paid by a loan from the vendor secured by a mortgage over the [L]and. The purchase price was not the exchange value of the [L]and. The price far exceeded that value. This came about because under the contract the vendor was required to construct the village. The building work was to take place in two stages over several years. Most of the deposit was raised from the investors who were grouped into several partnerships. The balance was provided by the vendor under a non-recourse loan agreement. The agreement required the loan to be repaid out of the fees payable by residents of the village. In the event of default the vendor could only look to the [L]and for payment. 6 I indicated that the investors were grouped into several partnerships. The principal partnership is styled The Mews Village Partnership and has 14 "Investor Partners". It was established by a partnership agreement dated 18 April 2000. The parties to this agreement appear to be the Investor Partners (although no provision is made for them to execute the agreement) and two companies associated with the promoters, Mews Retirement Nominees Pty Ltd and the first defendant, GDK Financial Solutions Pty Ltd. The partnership business is described as "the development and operation of retirement village facilities at [the Land]". GDK was appointed to manage the partnership's business. Mews Retirement Nominees was appointed to hold the partnership property as "bare trustee for the partnership". … 8 The Mews Retirement Village was to be managed by WRVM. To this end a Marketing Management and Profit Share Agreement was entered into between Mews Village Nominees (the purchaser of the [Land]) and WRVM. Only an unsigned copy of the agreement is in evidence. The copy does not indicate clearly the identity of the contracting parties. The front page suggests that the agreement is between WRVM and The Mews Retirement Nominees Pty Ltd which, it will be remembered, is the "bare nominee" of The Mews Village Partnership. A schedule records that the agreement is between WRVM and the Mews Retirement Village Nominees Pty Ltd. Notwithstanding those references, the body of the agreement shows that the agreement was between WRVM and Mews Village Nominees. The sealing clause is the latter company's name. A recital describes it as the purchaser of the [Land]. Moving on, the only substantive provision of the agreement to which reference should be made is the management fee which is set at 40 per cent of the profit derived by the village plus a commission of 1 per cent of the fees received from residents. This suggests that not much was to go to the investors, although one should not lose sight of the substantial tax advantage they derived from entering into the scheme. 9 Notwithstanding the complex series of agreements, and the subscription by investors of capital in the order of $8 million, The Mews Retirement Village did not get off the ground. All that has happened is that The Mews Retirement Nominees paid the purchase price for the [Land] using the investors' capital and loan funds obtained from the vendor. Despite receiving the purchase price, WRVM has not transferred the [L]and to the purchaser: [it] remains registered as the proprietor of the [L]and. Nor has WRVM carried out the building works which by the contract of sale it had promised to do. I assume it did not have the funds to undertake the work. There has been no accounting to investors for any of the money they contributed, despite many requests for information. The investors have simply been left in the dark. 10 There is no hope of the development going ahead, at least while it remains in the hands of its present controllers. GDK has been wound up. There is an unresolved dispute over the control of Mews Village Nominees. … To be blunt, things are in a mess and it will take a good deal of time and great expense to sort them out. 3 What Finkelstein J referred to as a "mess" is made more complicated by a series of transactions that is an immediate cause of the present proceedings. At the risk of undue abbreviation (with consequent inaccuracy) that series of transactions was made by interests associated with a principal of WRVM (Mr Michael Brereton) and interests associated with one Mr Salvo (an investor in the Scheme both as an individual and through a number of related entities). Whether because the Scheme was not being implemented, or for some other reason (and it may not matter which), the Brereton interests agreed that the Salvo interests would advance money to WRVM, it is said secured against the Land, for the purpose of developing the Land in a manner contrary to that intended under the Scheme. Again at the risk of undue abbreviation, these proceedings are intended to decide whether these transactions created debts of WRVM that are secured by the Land. 4 On 12 March 2008, WRVM filed an interlocutory process. AVS Property Pty Ltd (ACN 094 311 645) ("AVS") and Rental Fleets Australia Proprietary Limited ("RFA"), members of the First Delta Group of Companies and entities associated with Mr Salvo, are the respondents. AVS and RFA were formerly the holders of a second ranking registered mortgage over the Land ("the AVS mortgage") and are presently the holders of a registered charge over the assets of WRVM ("the AVS charge"). National Australia Bank Limited ("NAB") was the holder of the first registered mortgage over the Land. 5 Pursuant to a contract of sale dated 6 December 2007, the Land was sold. The sale proceeded pursuant to orders made by Finkelstein J on 28 November 2006 and 6 December 2007. In substance, the orders required the mortgagees (NAB, AVS and RFA) to produce discharges of their respective mortgages so that the sale of the Land could proceed. The discharges occurred on the basis that NAB was paid the amount that it claimed was secured by its mortgage and a sum of approximately $400,000 was set aside in a separate bank account to cover certain contingencies. AVS and RFA were not paid out. Their discharges were ordered to be produced on the basis that there would be proceedings for the taking of accounts of what is secured by the AVS mortgage and the AVS charge and that, to assist that taking of accounts, interlocutory proceedings of the kind now under consideration would be instituted. 6 It is common ground that RFA does not have any claim against WRVM which is secured by either the AVS mortgage or the AVS charge. Accordingly, there is no need for an account to be taken in relation to what amount, if any, WRVM owes RFA. 7 The position of AVS is quite different. It contends that it has a claim against WRVM and that the amount claimed is secured by both the AVS mortgage and the AVS charge. The total amount claimed, about $14 million, exceeds the balance of the proceeds of sale of the Land after payment to NAB and of GST. That balance is about $13 million. 8 The AVS claim is said to comprise the following five (5) amounts: 1. moneys allegedly advanced by AVS to WRVM under a facility agreement ("the AVS Facility Agreement"), together with interest on that money, in the order of $5.8 million. There are, in fact, three principal amounts claimed: · A "Tranche 1 Loan" of $1 million and a further advance of $100,000 allegedly advanced by AVS to WRVM under the AVS Facility Agreement. No issue arises in this proceeding in relation to these amounts. It was common ground that when an account is taken by a Registrar, the onus will be on AVS to prove each of these claims. No declaratory relief is sought in this proceeding in relation to either of these amounts. · A third amount, described as the "Tranche 2 Loan", in the order of $3 million. There is a dispute about this amount; 2. development costs incurred before 18 May 2005 of approximately $40,000 or $50,000; 3. development costs incurred after 18 May 2005 of $1.4 million; 4. a management fee of $660,000; 5. an entitlement to a profit share of a joint venture of some $6.2 million. The purpose of the interlocutory process is to obtain declarations in relation to AVS's entitlement to the 5 components identified (the Tranche 2 Loan and items 2, 3, 4, and 5) to assist with the taking of an account before a Registrar of the Court. 9 In general terms, the issues that are to be determined in this proceeding are (1) does WRVM owe AVS any of the 5 components identified and (2) if amounts are owed by WRVM to AVS, is payment of any or all of those amounts secured by the AVS mortgage or the AVS charge? WRVM contends that: 1. in relation to the Tranche 2 Loan, the amount was not in fact, at any time, advanced or lent by AVS to WRVM and, even if it was, it was not secured by the AVS mortgage or the AVS charge; 2. in relation to the other components (the development costs, the management fee and the profit share), the agreements under which each payment is said to arise are not enforceable as contracts for want of intention to give rise to contractual relations. Alternatively, if the parties did have the necessary intention, those agreements lacked certainty and are void for want of certainty. Finally, even if the agreements are enforceable, they are nonetheless subject to a condition precedent which was never satisfied. 10 As these reasons for decision will demonstrate: 1. Four of the components in dispute, namely, the Tranche 2 loan, the two lots of development costs and the management fee are owed by WRVM to AVS but the fifth component (profit share) is not; 2. only the Tranche 2 Loan was secured by the AVS mortgage; 3. none of the components was secured by the AVS charge. 11 It will be necessary to describe the successive "transactions" which are alleged to affect what is secured under the AVS mortgage and the AVS charge. Having regard, however, to the twists and turns that are said to be revealed by those transactions, it is desirable to attempt at the outset to describe generally the current positions adopted by the receivers of WRVM and the Salvo interests. 12 It must be emphasised that the accuracy of the statement of the general position that each adopted depends wholly upon the detailed analysis which must be undertaken later in these reasons for decision. But unless that detailed analysis is approached against a background provided by the general summary, there is a serious risk that the detail will obscure the proper assessment of the significance of particular events and circumstances. 13 Reduced to its essentials, WRVM acknowledged that the AVS Facility Agreement required AVS to advance three sums to WRVM - the Tranche 1 Loan ($1 million), the Tranche 2 Loan ($3 million) and $100,000. The receivers acknowledged that AVS advanced the whole of Tranche 1 and the $100,000 but denied that AVS advanced Tranche 2. WRVM's position was that $3 million was in fact advanced to WRVM by Salvern Pty Ltd ("Salvern"), another member of the First Delta Group of companies, which in turn obtained the necessary funds from NAB. In turn, the advance to WRVM by Salvern was subsequently replaced by an advance on the same terms from NAB to Salrest Pty Ltd ("Salrest"), another member of the First Delta Group of companies. 14 The receivers further submitted that to find that AVS had advanced the Tranche 2 to WRVM upon the security of the AVS mortgage or the AVS charge would lead to a commercially absurd result because it would mean that WRVM remained liable to pay AVS under the AVS Facility Agreement yet at the same time had satisfied NAB, the ultimate provider of the funds, by way of the NAB mortgage. Put another way, AVS (which requested Salvern to lend AVS the money which AVS lent to WRVM) says it should be entitled to recover from WRVM even though neither Salvern nor Salrest has indemnified WRVM for the amount WRVM paid in satisfaction of Salrest's debt to NAB.

FACTS 15 Against that statement of general position, it is necessary to set out the principal facts. Much of what is set out constitutes facts as found by Finkelstein J. No party in the present proceeding disputed those findings. Nor did any party in the present proceeding dispute the other facts set out below, though there was a lively dispute about the legal consequences that follow from those findings. 16 On 16 March 2000, WRVM contracted to purchase the Land for $2.85 million. It became the registered proprietor of the Land on 11 July 2000. Mr Michael Brereton was the sole director of WRVM. 17 Approximately one month later, on 18 April 2000, WRVM entered into a contract to sell the Land to The Mews Village Nominees Pty Ltd ("Mews") for $93,425,000 ("the Mews Sale Contract"). On 2 November 2006, Finkelstein J concluded, as a finding of fact, that although WRVM remained the registered proprietor of the Land, it held the Land as bare trustee for Mews: see also Australian Securities and Investments Commission v GDK Financial Solutions Pty Ltd (2006) 236 ALR 699 at [4] to [9]. In fact, it was not until 6 December 2007, when the Land was sold pursuant to the orders of Finkelstein J, that WRVM ceased to be the registered proprietor of the Land. 18 The Mews Sale Contract contained Special Conditions. By cl 6.1 of the Special Conditions, WRVM agreed that "Stage 1" would be constructed by WRVM in an expeditious manner. In general terms, WRVM was obliged to construct a number of three bedroom duplex and freestanding units, four bedroom duplex and freestanding units, and serviced apartments, including the necessary infrastructure. 19 Nothing of significance transpired between 2000 and September 2003. That was the problem. Significantly, the Land was not developed in accordance with the terms of the Mews Sale Contract. 20 On 19 September 2003, prior to the NAB and AVS becoming mortgagees and any suggestion of a joint venture between WRVM and Mr Salvo or his interests, Westpac Banking Corporation ("Westpac") advanced money to Wolten Finance Pty Ltd ("Wolten"), a company associated with Mr Michael Brereton. Brereton is the sole director of both WRVM and Wolten. Another Brereton entity, ZMB Australia Pty Ltd, is the sole shareholder of Wolten and the 100% legal shareholder (50% beneficial shareholder) of WRVM. The Wolten advance was secured by a guarantee and indemnity from a number of corporations and individuals including WRVM. As security for the WRVM guarantee and indemnity, WRVM granted Westpac a mortgage over the Land ("the Westpac mortgage"). The effective date of registration of the Westpac mortgage was 30 March 2004.

Heads of Agreement 21 In May 2005, events took a distinct change of course. The Westpac facility was in default. A series of meetings were held between WRVM and the First Delta Group to seek Mr Salvo's assistance to refinance WRVM and, secondly, to discuss the possibility of a joint venture for the development of the Land between WRVM and the First Delta Group. On 18 May 2005, a document entitled "Heads of Agreement" was executed ("the Heads of Agreement"). The preamble stated that Mario Salvo or his nominee (defined as "MS") and WRVM and or its nominee "wish[ed] to establish a joint venture for the development of [the Land]." The recitals provided that: A. [WRVM] owns the Land … which is currently encumbered by a mortgage to Westpac … for approximately $2.2m. B. [WRVM] and or its related parties have third party obligations, not exceeding $3.0m, that are not related to the development of the Land. MS will cooperate with [WRVM] in settling the third party obligations in the best and most cost effective manner. The settlement process will be transparent between the parties. C. By an earlier agreement, [WRVM], or its related party, have agreed to purchase the Mews Partnership Interest held by [RFA] for $2.0m plus accumulated interest of $896,296 for the total of $2,698,296.00 ("the RFA Debt"); D. MS and his businesses are property developers with experience in managing large property developments and securing project finance for developments from banks and other institutions. E. [WRVM] advises that the fair market value of the property is $14.0m upon receipt of the new Overall Development Plan ("ODP") as detailed in the July 2004 "The Planning Group Report" prepared for [WRVM]. 22 Under the heading "Agreement", the document included clauses that: (1) WRVM and MS would form a joint venture for the development of the Land, with each party entitled to 50% of the profits: cl 1; (2) AVS, described as a "Salvo entity", would discharge the Westpac mortgage and take a first mortgage over WRVM and the Land on terms identical to the Westpac mortgage: cl 2. The clause went on to provide that "AVS [would] advance on a first mortgage basis, an amount sufficient to discharge the Westpac mortgage (currently estimated at $2.2 million) and any other encumbrance on the land, including land tax etc and a further amount of up to a total of 4 million dollars to [WRVM] nominees ("[WRVM] loan") ...". No other amounts were said to be secured by the AVS mortgage; (3) the WRVM loan would bear interest on a monthly basis at the current Westpac mortgage rate and would be due and repayable six months after the loan was made: cl 3; (4) Statewide Developments Pty Ltd ("Statewide") would be the Joint Venture Manager of the project and "entitled to a management fee equal to 5% of the before tax profits of the Joint Venture", with a minimum management fee of $500,000. A retainer of $10,000 per month was to be paid, offset against the management fee, and a nominee of WRVM would act as WRVM's representative and work on the development of the project for a monthly fee to be agreed between the parties: cl 4; (5) WRVM was obliged to discharge certain liabilities including the amounts advanced by AVS as contemplated by cl 2 and the development costs incurred prior to receipt of planning approval for the proposed ODP: cl 9; (6) The Heads of Agreement would be documented by a formal joint venture agreement and other documents as soon as possible: cl 12. 23 The Heads of Agreement was purportedly signed as an agreement by Mario Salvo on behalf of AVS, Statewide and himself and by Michael Brereton on behalf of WRVM. It is apparent that Mr Wunsch, and not Mr Salvo, signed the Heads of Agreement. I was informed that Mr Wunsch, at the relevant time, was an employee of a company associated with AVS. Nothing was said to turn on Mr Wunsch having signed Mr Salvo's name. At the time of execution of the Heads of Agreement, AVS and RFA did not hold a mortgage over the Land or a debenture charge over the assets of WRVM. 24 WRVM contends that the Heads of Agreement is not enforceable as a contract for want of intention to create legal relations. WRVM contends that it is a document by which the parties have done no more than record a stage in their negotiations with no intention to be bound by it: Masters v Cameron (1954) 91 CLR 353 at 360-361. Alternatively, WRVM contends that if the document is not wanting for intention, it is insufficiently certain in its terms to be enforceable as a contract. In support of the latter submission, WRVM identified a number of respects in which it submitted the document was insufficiently certain in its terms. WRVM's primary complaint was that there was no indication as to who were the parties to the joint venture. 25 For the sake of completeness, it is appropriate to record at this stage that WRVM contends that even if the Heads of Agreement is enforceable as a contract: (1) it was replaced by two later agreements - a Development Agreement (see [43] below) and a Second Development Agreement (see [47] below); and (2) even if the amounts identified in [8] are payable under the Heads of Agreement or Development Agreements, none of the amounts is secured by the AVS mortgage or the AVS charge.

AVS Facility Agreement 26 Notwithstanding WRVM's contentions in this litigation that it was not contractually bound by the Heads of Agreement, WRVM took steps to satisfy the obligations stipulated in the Heads of Agreement. On 24 or 25 May 2005 (after execution of the Heads of Agreement), WRVM entered into the AVS Facility Agreement. Under the AVS Facility Agreement, AVS agreed to provide to WRVM what was described as the "Tranche 1 Loan" ($1 million) and the "Tranche 2 Loan" ($3 million): cl 2.1. The Facility Limit was $4 million: sched 1. Clause 3 of the AVS Facility Agreement provided that: (1) [WRVM] must use part of the Tranche 1 Advance to repay [the] principal owing to Westpac under the Westpac Facility … (2) [WRVM] must use all of the Tranche 2 Advance to repay the then remaining proportion of moneys owing to Westpac under the Westpac Facility and / or to fully discharge any existing encumbrances over the Land. 27 To secure the advances under the AVS Facility Agreement, WRVM granted the AVS mortgage over the Land and the AVS charge, a fixed and floating charge over all of the assets of WRVM.

AVS Mortgage 28 The AVS mortgage was registered against the Land on 3 June 2005. Clause 2.4(8) of the AVS mortgage provided that references to the mortgagee are "to either or both AVS ... and [RFA]". (There is no equivalent provision in the AVS charge.) The obligation to pay is in cl 3.1. The mortgage secured the "Secured Money", which was defined to mean "all amounts now or at any time in the future" falling within identified categories: see cl 1.1(27). The categories included: (a) all money now or in future owing or payable to the Mortgagee … by [WRVM], either alone or on joint or partnership account and whether as principal debtor, guarantor or indemnifier on any account; … (i) all costs and expenses that the Mortgagee incurs or becomes liable for in connection with this Mortgage or any Security Document. 29 "Security Document" was defined to mean the mortgage and every other agreement between WRVM and the mortgagee: cl 1.1(1) and (28). Clause 42, dealing with Certificates, Receipts and Notices, provided that a certificate purporting to be signed by an Authorised Officer is prima facie evidence of the matters set out in the certificate, including the fact of occurrence, payment, date and amount.

AVS Charge 30 The terms of the AVS charge were different. AVS and RFA were defined as the Lender. As noted earlier, there was no equivalent provision to cl 2.4(8) of the AVS mortgage. This is of significance because of the argument about certificates dealt with later. WRVM was defined as the Chargor. "Secured Money" was defined in cl 1.1(18) as: [A]ll money that each Transaction Party (whether alone or with another person) is or at any time may become actually or contingently liable to pay to or for the account of the Lender (whether alone or with another person) for any reason. It includes money by way of principal, interest, fees, costs, indemnities, guarantees, charges, duties or expenses or payment of liquidated or unliquidated damages for which a Transaction Party is or at any time may become liable under or in connection with a Transaction Document, or as a result of a breach of or default under or in connection with a Transaction Document. 31 The Certificate provision was also different. Clause 20.1 provided that "a certificate by the Lender relating to any Transaction Document [was], in the absence of manifest error, conclusive evidence against the Chargor of the matters certified". AVS relies on such a certificate in these proceedings. However, WRVM contended that the certificate relied upon by AVS was not a certificate under the charge because it purported to be given by AVS, on behalf of RFA and AVS, and, unlike the mortgage, the charge defined the lender as AVS and RFA together, not as either or both. In any event, WRVM submitted that even if the certificate was a certificate under cl 20 of the charge, the certificate was not conclusive evidence of the secured indebtedness because there was manifest error. The manifest error was said to be the inclusion of amounts not owing, namely, the Tranche 2 Loan and development costs. At this point it is worth noting that the certificate does not refer to any claim for a management fee or a share of profit on the sale of the Land, arguably because those amounts were not yet quantifiable. It will be necessary to return to consider the AVS mortgage and the AVS charge in further detail later in these reasons for decision.

Tranche 1 Loan 32 Under the AVS Facility Agreement, AVS paid the "Tranche 1 Loan" of $1 million to WRVM by the provision of 7 bank cheques. AVS obtained the necessary funds from Distinctive FX 2 Pty Ltd ("DFX2"), also a member of the First Delta Group. The advance is recorded in the books and records of DFX2. On 25 May 2005, the sum of $1 million was drawn by DFX2 on its account with NAB and applied in payment of the bank cheques. The transaction was recorded as a debit entry in the bank statement for DFX2's NAB business cheque account and in its general ledger for that cheque account. DFX2's general ledger for AVS records the transaction as a debit entry of $1 million with the notation "Western Retiire" (sic). In the general ledger and journals of AVS, the seven bank cheques totalling $1 million were recorded on 25 May 2008 as credits in the DFX2 general ledger and as debits in the WRVM general ledger account. In other words, the "Tranche 1 Loan" was accounted for as a loan by DFX2 to AVS and a loan by AVS to WRVM of $1,000,056 comprising the advance of $1 million and the bank cheque fees of $56.00.

Tranche 2 Loan and the Salvern Facility 33 Under the AVS Facility Agreement, AVS was also obliged to advance the $3 million Tranche 2 Loan to WRVM: see [26] above. WRVM contends that AVS did not advance the Tranche 2 Loan under the AVS Facility Agreement. AVS contends that it did. The manner in which the sum of $3 million was advanced is complicated. AVS sought to borrow the funds from NAB. That did not occur. The reason why it did not occur is irrelevant. What instead happened was that in June 2005, NAB offered to provide Salvern with a bill facility of up to $4 million ("the NAB Letter of Offer"). As noted earlier, Salvern was also a member of the First Delta Group of Companies and an entity associated with Mr Salvo. 34 Security for that facility ("the Salvern Facility") was a guarantee and indemnity to be given by WRVM (dated 9 August 2005), a registered mortgage over the Land in favour of NAB (registered on 15 July 2005) ("the NAB mortgage"), a Deed of Priority giving NAB's mortgage priority over the registered interests of AVS and RFA and a term deposit letter of set off for $300,000 over a term deposit in the name of Salvern. The NAB Letter of Offer was accepted by Salvern on 21 and 22 June 2005. Consistent with the terms of the Salvern Facility, on 21 June 2005 WRVM provided a guarantee and indemnity in favour of NAB to secure the indebtedness of Salvern and a Deed of Priority was executed between NAB, AVS and RFA by which NAB's mortgage took priority over the AVS mortgage. 35 The Salvern Facility was drawn down on 22 June 2005 in three components: NAB paid out the Westpac mortgage ($2,953,067.22), NAB placed $282,659.77 on term deposit in Salvern's name consistent with the terms of the Salvern Facility and the balance ($746,273.01) was paid by NAB into an account of another related Salvo entity, Distinctive FX Pty Ltd ("DFX"). On 3 July 2005, the Westpac mortgage registered against the Land was discharged. 36 The Salvern Facility and the Tranche 2 Loan under the AVS Facility Agreement were accounted for as follows: (a) Salvern General Ledger: (i) Loan by NAB to Salvern of $4 million. The notation reads "NAB-Comm Bill-WA"; (ii) Loan by Salvern to AVS of $2,953,067.22 to AVS loan account. The notation reads "AVS Loan to [WRVM]"; (iii) Loan by Salvern to DFX of $764,273.01; (iv) $282,659.77 to Salvern Term Deposit; (b) DFX General Ledger: (i) Loan by Salvern to DFX of $764,273.01; (ii) Loan by DFX to Salvern of $17,082.35. This payment was made on 28 June 2005 to top up the term deposit to $300,000 as required by the Salvern Facility; (c) DFX2 General Ledger - the payment of the Deacons bill of $36,881.50 was recorded as well as the $33,528.64 on-charged to AVS; (d) AVS General Ledger - Loan by AVS to WRVM of $2,953,067.22 with the notation "Re Salvern Loan", a loan by AVS to WRVM of $33,528.64, a loan by AVS to WRVM of $16,959.35 and a credit by AVS to WRVM of $3,328.57 with the notation "Tranche-2-La". The advances were recorded in the general ledger and journals under the heading "Re Salvern Loan / [WRVM]". A corresponding credit entry in the sum of $2,953,067.22 was listed in the AVS general ledger for Salvern. Although Salvern was the borrower of funds from NAB, it had no agreement with WRVM. 37 Accordingly, under the AVS Facility Agreement, the Tranche 2 Loan of $3 million was drawn down by: 1) the NAB payment of $2,953,067.22 to Westpac on 22 June 2005 in accordance with the AVS Facility Agreement; 2) a payment of $36,881.50 by DFX to Deacons on 24 June 2005 in payment of their bill of costs in respect of the AVS Facility Agreement and the securities for that agreement of which $33,528.64 was charged by DFX to AVS and then on-charged by AVS to WRVM; 3) a payment of $16,959.35 on 22 June 2005 by AVS to Mr Brereton at his request on behalf of WRVM; 4) a loan credit of $3,328.57 was accorded to WRVM by AVS on 22 June 2005 as a land tax adjustment. As the sums reveal, the amount in (1) plus the on-charged amount in (2) plus the amount in (3) less the amount in (4) yields the Tranche 2 amount of $3 million (plus $226-odd in change). 38 By offer dated 5 August 2005, NAB increased the Salvern Facility by $650,000 to $4,650,000. Additional securities and a deed of priority were granted to secure the advance. The terms of those securities may be put to one side. Salvern drew down the extra $650,000. From the $650,000 proceeds of the drawdown, AVS paid a further amount of $100,000 to WRVM on 11 August 2005. These funds were advanced to WRVM at the request of Mr Brereton who acknowledged that the advance was pursuant to the terms of the AVS Facility Agreement and secured by the AVS mortgage. The advance of $650,000 was accounted for as a loan of $650,000 from NAB to Salvern, a loan of $650,000 from Salvern to AVS and then a loan of $100,000 from AVS to WRVM. 39 The positions adopted by WRVM and AVS in relation to these events are fundamentally at odds. AVS contends that, consistent with the provision of the Tranche 1 Loan by way of the third party source DFX2, the Salvern Facility was the source of funds for the provision of the Tranche 2 Loan under the AVS Facility Agreement. That is to say, the interposition of Salvern was no more than AVS complying with its obligations under the Heads of Agreement by way of third party finance. AVS contends that there is no distinction of principle between Tranche 1 and Tranche 2. In support of these contentions, AVS relied upon the manner in which the advance was recorded in the books and records of Salvern and AVS (see [36] and [37] above). 40 WRVM, on the other hand, contends that although the AVS Facility Agreement contemplated that AVS would advance the Tranche 2 Loan (of $3 million) to WRVM that is not what occurred. WRVM contends that AVS simply had no role to play in this transaction. WRVM contends that the guarantee given by WRVM to NAB and the mortgage given by WRVM to NAB which became the first ranking mortgage over the Land are the reasons for treating Tranche 1 as an advance under the AVS Facility Agreement but not Tranche 2. 41 In further support of its contention, WRVM pointed to the fact that when in 2006 Salrest stepped into the shoes of Salvern, WRVM paid out the indebtedness of Salvern to NAB and the advance of $2.9 million was effectively repaid and extinguished. In fact, the Salvern facility and therefore WRVM's liability as guarantor of it was discharged when the last Salvern bill was retired on 1 August 2006. But the facts do not stop there. In its place, WRVM assumed liability as surety under a guarantee dated 13 July 2006 in respect of a facility from NAB to Salrest which was secured by the continuing NAB mortgage. It was the Salrest facility which was repaid when the NAB mortgage was paid out by WRVM under the guarantee. The significance attached to this was not clearly articulated, but the argument appeared to be that the transaction, by which WRVM paid out Salvern's indebtedness, satisfied any obligation that WRVM otherwise might have had to the Salvo interests and in particular to AVS and RFA. This argument is dealt with later in these reasons. 42 However, that was not the limit of WRVM's contentions. It also submitted that if WRVM was indebted to AVS in respect of the Tranche 2 Loan, the result would be that WRVM would be liable to NAB under the NAB Facility (initially $4 million which had grown to in excess of $8 million) but having only received the benefit of $2.9 million (the discharge of the Westpac mortgage). At the same time, it would be liable to AVS for the AVS Facility Agreement of $4.1 million having only received the benefit of $1.1 million (the first tranche and the $100,000 identified in [8] above). Put another way, WRVM submitted that if it was liable to AVS, it would be paying the same "debt" twice. I consider the legal consequences of these arrangements in further detail below (see [81]).

Development Agreements 43 On 23 December 2005, a document entitled "Development Agreement" between AVS (or its nominee) and WRVM (and / or its nominee) was executed ("the Development Agreement"). Clause 1 provided that the Heads of Agreement was terminated and replaced by this agreement. As with the Heads of Agreement, the preamble recorded that the "parties" wished to establish a joint venture. However, cl 2 of the Development Agreement provided that WRVM and AVS had already formed a joint venture for the development of the Land with each party entitled to 50% of the profits. 44 Clause 3 provided for the appointment of AVS or its nominee or related entity as the manager of the joint venture and that the manager was entitled to a fee of 5% of the profits with a minimum of $500,000. A retainer fee of $10,000 per month was again payable and offset against the total management fee. By Clause 7 of the Development Agreement, WRVM was obliged to discharge certain obligations: a) the amounts advanced pursuant to the AVS Facility Agreement, the balance owing being $4,279,595.21 as at 31 December 2005; b) the development costs incurred prior to receipt of planning approval for the proposed ODP, together with interest thereon, the balance as at 31 December 2005 being $42,609.92; c) WRVM's liability to investors in the Mews Scheme. 45 Clause 7(b) referred to WRVM also being obliged to discharge the "RFA debt as per the Agreement for Sale of Partnership Entitlements dated 20th May 2005" by which WRVM agreed to acquire RFA's partnership interest as an investor. It is common ground that that offer was never accepted and there was no RFA debt. WRVM relies upon this fact to support its contention that the Development Agreement was not intended to give rise to binding obligations between the parties. In general terms, WRVM contends that AVS seeks to take the benefit of some of the terms as binding and enforceable (i.e. its entitlement to the management fee, development costs and profit share) while, at the same time, asserting that the sale of the RFA partnership interests was not binding and enforceable. 46 Other clauses of the Development Agreement are important. The Development Agreement had three appendices which contained ledgers which set out, respectively, the expenses as at 19 December 2005 of $205,685.02 which AVS had incurred on behalf of the joint venture (Appendix A), WRVM's loan statement with AVS as at 28 November 2005 (Appendix B) and what were described as "pre joint venture expenses not deducted from [the] initial loan amounts" - amounts to be recovered by WRVM under cl 9 of the Heads of Agreement (Appendix C). 47 On 16 January 2006, a second document entitled "Development Agreement" between AVS (or its nominee) and WRVM (and / or its nominee) was executed ("the Second Development Agreement"). It differed substantially from the Development Agreement. First, cl 9 was new. It provided that: [WRVM] agrees that AVS shall be entitled to take a charge or mortgage over the assets of [WRVM] including the Land to secure AVS for payments made or expenses incurred by AVS or its associated entities in relation to the development including the entitlements of AVS under this Agreement. WRVM contends that this clause provides further evidence that the components earlier identified were not secured and were not intended to be secured by the AVS mortgage or the AVS charge. 48 Six months later, on 12 July 2006, NAB provided a further Letter of Offer addressed to Salrest. This letter related to a bill facility with a limit of $7,819,000 ("the Salrest Facility"). The purpose of the Salrest Facility was recorded in the letter as being to retire the Salvern Facility (see [41] above) and to provide a further $3,169,000 to assist with the funding of the residential development of the Land. The Salrest Facility, like the Salvern Facility, was secured by a mortgage over the Land given by WRVM, a guarantee and indemnity from Mario Salvo and WRVM and a mortgage debenture over all the assets of Salrest: cl 4. Again, there was a deed of priority in favour of NAB. On 1 August 2006, DFX paid $4.65 million to NAB to retire the Salvern bill and, on 2 August 2006, AVS paid $4.65 million to DFX. No further details of these transactions were provided.

Subsequent Events 49 On 28 November 2006, for the reasons dated 2 November 2006, Finkelstein J ordered the Scheme to be wound up: Australian Securities and Investments Commission v GDK Financial Solutions Pty Ltd (2006) 236 ALR 699. By paragraph 16 of those orders, his Honour directed the receivers of the Scheme to call for any person claiming any right, title or interest in Land to prove his or her claim by affidavit to be served by 22 December 2006. AVS responded to that direction. The substance of its response was relied upon by WRVM as providing a factual foundation for an estoppel claim in the event that I found each of the components as owing by WRVM to AVS and secured by the AVS mortgage or the AVS charge. In general terms, WRVM submitted that even if the debts were secured, the liquidators and receivers of WRVM had priority because of their reliance on representations made by, or attributable to, AVS. 50 AVS's response to the call for proofs was provided by way of affidavit sworn by Mario Salvo on 22 December 2006. Paragraph 2 confirmed that it was an "affidavit in support of the claims made by RFA, AVS and Statewide … of their interests in the Land". Mr Salvo described himself as the director of RFA and the general manager of AVS. He went on to say that the sole director and secretary of AVS was a Mr Andrew Vito Salvo, but that nonetheless he was authorised to make the affidavit on behalf of RFA, Statewide and AVS. Significantly, the affidavit explained the background to and circumstances surrounding the events in and after early 2005. Mr Salvo deposed to the fact that in or about early 2005, he became concerned for "his investment". In the context, "his investment" could only refer to RFA's investment in the Scheme. (Strictly speaking, however, the documents record investment in the Scheme by Mario Salvo as an individual and by some of his related entities including DFX and CLA Holdings.) As a result of these concerns, Mr Salvo held discussions with Mr Brereton regarding whether RFA might assign its rights in the Scheme to WRVM for $2,696,296. A draft agreement was prepared, signed by WRVM but not signed by RFA. Salvo said that he chose not to sign the agreement for the sale of RFA's interests because he was not entirely sure he wanted RFA to assign its rights as an investor. In substance, he decided to hold the signed sale agreement and see how things in relation to the Land developed. 51 As at May 2005, the Land was subject to the Westpac mortgage. The Westpac facility had in fact expired on 29 October 2004 and penalty interest was being charged on an outstanding loan of $3.1 million. At this time two events crystallised. Mr Salvo spoke to Mr Brereton and was told by him that he was going to pay out the investors and intended winding up the Scheme. At the same time, Mr Salvo said he believed the Land had development potential with his property development expertise and capital base which provided him with an opportunity to recoup RFA's investment and make a profit from the development of the Land. 52 WRVM relies upon these events as evidence that the Heads of Agreement and the later Development Agreements were unenforceable. The unenforceability is said to arise from the fact that the agreements proceed on the basis of an intention to bring to an end the Scheme and the Mews Sale Contract. Put another way, WRVM contends these events give rise to a condition precedent (i.e. that the Scheme and contract be wound up) which must be implied into the Heads of Agreement and each of the Development Agreements if, contrary to WRVM's earlier submissions, those agreements are enforceable as contracts. 53 I reject WRVM's characterisation of these events. It is true that the Heads of Agreement and the two Development Agreements contemplate that the earlier arrangements will be brought to an end, with the intention being that the Land can then be developed other than in accordance with those existing obligations - that is to say, the agreements describe development of the Land in a way which does not include the investors and which can then proceed as a joint venture between WRVM or its nominee on the one hand and AVS or its nominee or a related entity, on the other hand. In fact, Mr Salvo states that his understanding on entering the Heads of Agreement was that the sale of the Land pursuant to the Mews Sale Contract had not been completed and would not be completed. As a result, Mr Salvo's affidavit concluded that: Having secured a binding agreement to develop the land, [he] then decided to advance money to [WRVM] to pay out the Westpac loan facility and discharge the Westpac Mortgage. 54 Mr Salvo then went on to say that it was his understanding that the Scheme was at an end and that the future of the Land would involve its development and ultimate sale. The source of that understanding is not disclosed. Moreover, it is inconsistent with his later conduct. On 20 February 2007, Mr Wunsch (an employee of Mr Salvo) sent an email to Leanne Chesser, an employee of KordaMentha, the firm associated with the receivers and liquidators. In that email, Mr Wunsch indicated a potential offer to buy the Land. A component of that offer was that the sale would generate a return to the investors in the Scheme. Attached to that email was an analysis of a proposal by AVS to buy the investors out rather than sell the Land on the open market. Significantly, the analysis records that as at 31 January 2007, AVS was owed an amount of principal, interest and costs of $4.7 million. 55 Finally, Mr Salvo in his 22 December 2006 affidavit summarised the claims he believes RFA, AVS and Statewide have in the following terms: a) RFA as an investor in the … Scheme; b) AVS as a mortgagee. AVS lent $4,100,000 to [WRVM] and that this amount (plus interest and costs) and AVS's development costs of $41,353.33 are secured by the AVS Mortgage; c) AVS and Statewide for work performed by them in developing and improving the Land pursuant to the Development Agreements and the development profit which is 50% of the net proceeds of sale in accordance with the Third Development Agreement. 56 On or about 16 January 2006, AVS and WRVM prepared but did not execute a development agreement. (which is not to be confused with the separate Second Development Agreement executed on 16 January 2006) It is a comprehensive document. WRVM relied upon the form and contents of this draft agreement as evidence of the sort of complexity that would have been required if there was going to be an enforceable agreement. In particular, WRVM referred to the certainty of the identity of the contracting parties and the precision in the definition of the Project by reference to annexed plans. 57 On 8 August 2007, Mr Salvo sent a letter offering to acquire the interests of other investors in the Scheme. The letter included a table listing the expected net proceeds of sale and the amounts owing against the land. Mr Salvo described the AVS mortgage in the following terms: AVS …, a company related to Mario Salvo, holds a second ranking secured mortgage over the Land based on monies advanced to [WRVM] against the Land in mid 2005. I have attached a summary of the primary debt amount of $5,014,925.29 owing assuming the debt is repaid in full on 30 September 2007. 58 The attached summary contained the Tranche 1 Loan, the Tranche 2 Loan and the further advance of $100,000, together with interest. There was no reference to the management fee, the profit share or the monthly advances of $10,000. 59 On 6 December 2007, Finkelstein J made orders that the court appointed receivers do all things necessary to progress and complete the sale of the Land in accordance with the Sale Agreement between WRVM and Clarendon Residential Group Pty Ltd. The sale of the Land was at arm's length. On 20 February 2008, Goldberg J made orders authorising the receivers to commence proceedings to prevent payment out of the proceeds of sale of the Land to AVS and RFA. On 13 March 2008, Finkelstein J noted the undertaking of WRVM to commence this interlocutory process and, on that undertaking, ordered the joinder of NAB to those proceedings, and effectively the discharge of the relevant mortgages so that completion of the sale of the Land could proceed. Completion of the sale took place on 17 March 2008. On completion, the NAB mortgage was discharged. The entitlement of AVS to the balance of the sale proceeds is the issue to be resolved in these proceedings. 60 Finally, on 3 March 2008, AVS's solicitors wrote to WRVM's solicitors. AVS asserted that the amount then due by WRVM to AVS under the AVS Facility Agreement was $5,857,286.36. WRVM submitted this was the first time that the AVS claim had included the five components identified earlier (see [8]). Although the profit share and management fee were said to be secured by the AVS mortgage or the AVS charge, the precise amounts owing were said to be incalculable. 61 On 17 March 2008, WRVM as guarantor paid to NAB the sum of $9,410,063.13 thereby discharging Salrest's liability to NAB.

ANALYSIS 62 Before turning to consider the five components identified earlier (see [8]), it is necessary to restate some important principles about Torrens land and the securities registered against it. The Torrens system implemented in Western Australia by the Transfer of Land Act 1893 (WA) ("the TLA") is a system of "title by registration" (Breskvar v Wall (1971) 126 CLR 376, 385) and not a system of "registration of title". Registration has two consequences: it not only confers title but it also determines priority. Priority is governed by order of registration and not by date of execution. 63 Indefeasibility is the foundation of the Torrens system: Bahr v Nicolay (No 2) (1988) 164 CLR 604, 613. In Western Australia, the principle of indefeasibility of title is "give[n] expression to, and at the same time, qualif[ied] by" ss 68 and 134 of the TLA (Bahr at 613). Each section refers to the concept in the context of the registered "proprietor". "Proprietor" is defined in s 4 of the TLA to include "in relation to freehold land, the owner, whether in possession, remainder, reversion or otherwise, of land or of a lease, mortgage or charge over land". As a result ss 68 and 134 of the TLA confer indefeasibility of title not only on the holder of the fee simple but also on the registered holder of an interest in the land including a mortgagee. The qualifications to or limits of indefeasibility for present purposes may be put to one side. It was not submitted that any exception arose for consideration. 64 In the circumstances that then existed: 1. WRVM was and remained the registered proprietor of the Land; 2. NAB was a registered mortgagee with priority over the other mortgagees, AVS and RFA; 3. NAB's mortgage and liability has been discharged; 4. The AVS/RFA mortgage had also been discharged but with the issue of WRVM's liability to AVS remaining unresolved together with the issue of whether any such liability was secured by the AVS mortgage. 65 In ascertaining whether WRVM is indebted to AVS and, if so, whether the whole or part of that debt is secured by the AVS mortgage necessarily involves questions of fact, and no less significantly, the proper construction of the terms of the AVS mortgage itself. It is therefore necessary to turn to consider the five components of the "debt".

AVS Facility Agreement - Second Tranche: Paragraph 9 of the Interlocutory Process 66 As noted at the outset, there are two issues to be determined: 1. is WRVM indebted to AVS in relation to the Tranche 2 Loan; and 2. if so, is that debt secured by the AVS mortgage? 67 The transaction or series of transactions comprising the Tranche 2 Loan, the manner in which they are recorded in the books and records of AVS and the parties respective position have been described earlier (see [33] - [42]). 68 Section 1305 of the Corporations Act 2001 (Cth) ("the Corporations Act") provides that a book kept by a body corporate under a requirement of the Corporations Act is admissible in evidence in any proceeding and is prima facie evidence of any matter stated or recorded in the book: s 1305(1). "Books" is defined (in s 9) to include any register, record of information, and financial reports and financial records however compiled, recorded or stored. "Financial records" are defined in s 9 to include invoices, receipts, cheques, vouchers and documents of prime entry. Under ss 285 and 286 of the Corporations Act, a company must keep written financial records that not only correctly record and explain its transactions, financial position and performance, but also would enable true and fair financial statements to be prepared and audited. A document purporting to be a book kept by a company is, unless the contrary is proved, taken to be a book kept in accordance with s 1305(1): s 1305(2). 69 The first issue is whether each of the general ledgers and journal entries identified earlier (see [36] above) is a book kept by a body corporate under a requirement of the Corporations Act. They clearly are: see Australian Securities and Investments Commission v Rich (2005) 216 ALR 320 at [223] - [321]. The documents, on their face, purport to be documents kept by a body corporate. They are printouts of electronic records which identify the relevant body corporate by name, the nature of the document by name and, in many cases, the time and date on which the printout was printed. It was not submitted by WRVM, and there are no bases for contending, that the presumption arising under s 1305(2) has been rebutted. On the contrary. The evidence of the contents of the documents together with the unchallenged evidence of Mr Wunsch that the documents were sourced from the relevant body corporate reinforces the conclusion that each document is a book kept by a body corporate under a requirement of the Corporations Act. 70 The second issue is what facts those documents record. As noted earlier (see [33]-[37]), so far as is presently relevant, the documents record: 1. a loan by NAB to Salvern of $4 million; 2. a loan by Salvern to AVS of $2,953,067.22 with the notation "AVS Loan to [WRVM]"; 3. that $33,528.64 of the Deacons bill of $36,881.50 was on-charged to AVS; 4. a loan by AVS to WRVM of three amounts - $2,953,067.22 (with the notation "Re Salvern Loan"), $33,528.64 (being payment of legal fees) and $16,959.35; 5. a credit by AVS to WRVM of $3,328.57 with the notation "Tranche-2-La". 71 WRVM did not challenge the admissibility of these records or the facts recorded in them. Moreover, WRVM did not seek to cross-examine Mr Wunsch who identified the documents and the source of them. In the circumstances, the only conclusion to be drawn from those financial records is that AVS did advance the Tranche 2 Loan to WRVM under the AVS Facility Agreement. In this context, AVS also referred to cl 24 of the AVS Facility Agreement. It provided that AVS (described as the Financier) was entitled to maintain records specifying the payments made by AVS for the account of WRVM, any payments made by WRVM for the account of AVS under, inter alia, the AVS Facility Agreement and the interest, fees, charges, costs and expenses payable and that those records would, as against AVS, constitute conclusive evidence (in the absence of manifest error) of the matters set out in them. The documentation described earlier records the advance of the Tranche 2 Loan by AVS to WRVM. Whether other amounts were paid or incurred in relation to the Tranche 2 Loan was not disclosed. Those issues, if relevant, would be considered at the time of the taking of any account. 72 In light of those conclusions, it is then necessary to turn to consider the parties' submissions that the Court should have regard to the conduct of the parties both before and after execution of the AVS Facility Agreement in deciding whether or not AVS advanced the Tranche 2 Loan to WRVM. 73 It is well established that what was said and done by parties to an agreement is part of the relevant context in which an agreement is construed: Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337, 348-53 (per Mason J) and Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 76 ALJR 436; see also Chacmol Holdings Pty Ltd v Handberg (2005) 215 ALR 748 at [32] (per Tamberlin J) and [68]-[77]; Chitty on Contracts, 27th ed, Sweet & Maxwell, London, 1994 at [12057]; and McVeigh, In the Matter of Piccolo v National Bank of Australia [2000] FCA 187 at [30] (per Finkelstein J) and at [68] (per Kenny J) and Manks v Whiteley [1912] 1 Ch 735, 754 (per Fletcher-Moulton LJ). 74 However, in the present case, that conduct does not assist either party. The longstanding rule is that parties are bound by the unambiguous terms of their written agreement unless it is affected by fraud, mistake or misrepresentation: Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471, 483-84 [33] and [35]. The terms of the AVS Facility Agreement are not ambiguous. In the absence of such ambiguity, the written document stands on its own as a record of the agreement between the parties to it. 75 The question which then arises is whether the Tranche 2 Loan is secured by the AVS mortgage. That requires consideration of the proper construction of the terms of the AVS mortgage itself. 76 As noted earlier (see [28]), the AVS mortgage secured the "Secured Money", which was defined to mean "all amounts now or at any time in the future" falling within identified categories: see cl 1.1(27). The categories included: (a) all money now or in future owing or payable to the Mortgagee [(AVS)] … by [WRVM], either alone or on joint or partnership account and whether as principal debtor, guarantor or indemnifier on any account; … (i) all costs and expenses that the Mortgagee incurs or becomes liable for in connection with this Mortgage or any Security Document. "Security Document" was defined to mean the mortgage and every other agreement between WRVM and the mortgagee: cl 1.1(1) and (28). 77 These provisions, read together, are commonly described as an "all-moneys" clause. Provisions such as these are not at large: Fountain v Bank of America Trust & Savings Association (1992) 5 BPR 11,817 at 11,819. The clause is confined in its operation "by reference to the context in which [it] appear[s] and by reference to the commercial purpose for which [it was] intended to serve": Fountain at 11,819-11,820. Those matters are ascertained by having regard to the language of the clause construed in the context of the security instrument as a whole, the apparent purpose and object of the transaction and any admissible evidence as to the surrounding circumstances: Olympic Holdings Pty Ltd v Windslow Corporation Pty Ltd (in liq) [2008] WASCA 80 at [43]. Consistent with that approach, an all-moneys clause will not secure a debt of a fundamentally different character from the debt specifically contemplated by the parties at the time they entered into the contract: McVeigh, in the matter of Piccolo v National Australia Bank Limited [2000] FCA 187 at [84]. As Gleeson CJ said in Fountain (at 11,820), "The critical question ... is whether, on the true construction of the document and in the events that have occurred, the transaction [the Tranche 2 Loan was] within the purview of [cll 1.1(27) and (28) of the AVS mortgage]." 78 In the present case, the Tranche 2 Loan was clearly within the purview of cll 1.1(27) and (28) of the AVS mortgage. The AVS mortgage was granted as security for the moneys advanced under the AVS Facility Agreement, a component of which was the Tranche 2 Loan. 79 Before turning to consider the Development Agreements and the amounts said to be owed by WRVM to AVS under those agreements, it is necessary to say something about the Tranche 2 Loan transaction or series of transactions. The way in which it occurred is not altogether surprising. It was not dissimilar to that which had occurred in relation to the Tranche 1 Loan. Funds for Tranche 1 were borrowed by AVS from DFX2. That loan was unsecured. Tranche 1 was then advanced by AVS to WRVM secured by the AVS mortgage. In relation to the transaction or transactions comprising the Tranche 2 Loan, AVS sourced the funds from NAB (via Salvern and Salrest). The loan was secured by the NAB mortgage against the Land. WRVM consented to that arrangement. AVS on-lent the funds to WRVM. The AVS loan was secured against the Land by the AVS mortgage. Salvern (and then Salrest) had no security for its loan to AVS. 80 Once it is understood that the NAB mortgage was secured against the Land and was a registered interest which took priority over the AVS mortgage, the fact that WRVM was obliged to pay out the NAB mortgage and then pay out the AVS mortgage is apparent. The real difficulty (from WRVM's perspective now) arose when WRVM consented to the Land being subject to the NAB mortgage and in priority to the registered interests of AVS and RFA. 81 At first blush, the fact that WRVM appears to be "paying" twice for the Tranche 2 Loan is unpalatable. The appearance of paying twice arises because the Land was realised to meet the NAB debt and yet AVS recovers the same amount on its mortgage registered against the same Land. But realisation of the Land in satisfaction of the NAB debt results in a claim by WRVM against Salrest and if all parties are solvent and meet their obligations, the result would be that (1) WRVM will pay AVS (2) AVS will pay Salrest and (3) Salrest will use the funds it receives from AVS to indemnify WRVM for the payment WRVM made to NAB in satisfaction of the money loaned by NAB to Salrest (originally Salvern). The net result is that the external financier (NAB) is repaid, and after the inter-company transactions are completed, each party will have effectively paid only once. It is true that a problem in the chain may occur if the solvency of any of the companies whose debt is unsecured is in doubt, but no evidence about the solvency of the parties (other than WRVM) was tendered. Moreover, no argument was advanced that the chain of transactions just described can be or should be treated as providing WRVM with an answer to AVS's claim to enforce the debt secured by its mortgage. In particular, WRVM expressly disclaimed any argument that it was able to set off its rights against Salrest against its obligations to AVS. In any event, all of that is irrelevant because any set-off or indemnification claims are not the subject of this proceeding. Accordingly, whether the reordering of priorities in NAB's favour and the failure of the other entities to secure each link of the inter-company loans results in one company (i.e. WRVM) getting stuck with a double payment does not require further consideration. 82 Before turning to consider the other agreements executed by WRVM and the Salvo interests, it is appropriate to deal with other aspects of WRVM's contention that the Tranche 2 Loan was not advanced under the AVS Facility Agreement. WRVM contended that on the proper construction of the AVS Facility Agreement, the sole purpose of the Tranche 2 Loan was to discharge all encumbrances over the Land and that any payment by AVS to or for the benefit of WRVM did not form part of the Tranche 2 Loan unless it was made for that purpose. In particular, WRVM submitted that: 1. the payment of $2,953,067.22 was not an advance by AVS but a payment by NAB to Westpac; 2. the payment of $33,528.64 to Deacons and the payment of $16,959.35 to Mr Brereton, whether or not made by AVS, were each not a payment for the purpose of discharging any encumbrance over the Land. 83 WRVM's contentions are rejected. They are contrary to the express terms of the AVS Facility Agreement. As noted earlier (at [26]), cl 3(1) of the AVS Facility Agreement under the heading "Purpose" provided that WRVM "must use all of the Tranche 2 Advance to repay the then remaining proportion of moneys owing to Westpac under the Westpac Facility and / or to fully discharge any existing encumbrances over the Land." The Tranche 2 Loan Amount was $3 million: cl 1.1. However, cl 4.5 entitled "Tranche 2 Loan Conditions Precedent" provided that: [AVS] is not obliged to make the Tranche 2 Loan available to [WRVM] unless it is satisfied in its absolute discretion that: (1) [WRVM] will use all moneys advanced under a Tranche 2 Advance to repay all its debt under the Westpac Facility and / or to full discharge any existing encumbrances over the Land; (2) Westpac has agreed to discharge its mortgage; and (3) once the funds are advanced [AVS] will receive a first ranking mortgage over the Land. 84 Of course, as the facts set out earlier record, the events described in cl 4.5 did not all occur. But that does not matter. And it does not matter because cl 4.6 of the AVS Facility Agreement provided that: the conditions precedent in … clause [4] are for the benefit of [AVS] only and may be waived by [AVS]. … 85 In light of the events that transpired (see [36] and [37]), AVS must be taken to have waived the requirements of cl 4.5. It did not contend otherwise. And nor could it. The Westpac mortgage was in fact discharged. AVS did receive a first ranking mortgage but executed a Deed of Priority in favour of NAB. Moreover, the AVS General Ledger recorded (see [36] and [37]) that AVS not only knew of but accounted for the way in which the Tranche 2 Loan was in fact used. To the extent that was in a manner contrary to cl 3 of the AVS Facility Agreement (an issue I do not need to decide), AVS must by its conduct be taken to have satisfied itself for the purposes of cl 4.5 and, if necessary, waived the condition precedent in cl 4.6. 86 Accordingly, the whole of the Tranche 2 Loan was advanced by AVS to WRVM and was secured against the Land by the AVS mortgage, notwithstanding the way in which it was ultimately disbursed or applied.

Heads of Agreement and Development Agreements 87 As noted previously, WRVM contends that the Heads of Agreement is not enforceable as a contract for want of intention to create legal relations. WRVM contends that it is a document by which the parties did no more than record a stage in their negotiations with no intention to be bound by it: Masters v Cameron (1954) 91 CLR 353 at 360-361. Alternatively, WRVM contends that if the document is not wanting for intention, it is insufficiently certain in its terms to be enforceable as a contract. 88 The simplest answer to any questions about the validity or enforceability of the Heads of Agreement is that those questions need not be answered because cl 1 of the Development Agreement terminated that agreement. Accordingly, the parties agree that no money can be owing under the Heads of Agreement. However, because the same arguments are put by WRVM against each of the three agreements, it is convenient to address them together. 89 WRVM identified a number of respects in which it submitted that the agreements were insufficiently certain in their terms including: 1) the identity of the contracting parties was not known but a matter for further negotiation; 2) although the agreement was in relation to the development of land, there was no agreement as to what the proposed development would be; 3) the identity of the party on whom obligations were imposed was not certain; 4) although each agreement provided for the appointment of a manager who was entitled to substantial benefits, no corresponding obligations were imposed on the manager. WRVM identified a number of matters which it will be necessary to consider in further detail below. 90 Both WRVM's contention that the agreements are not enforceable as contracts for want of intention to create legal relations and its contention that they are insufficiently certain in their terms to be enforceable as contracts are rejected. 91 WRVM's primary complaint was as to the identity of the contracting parties. As noted earlier (see [21]), the preamble referred to the fact that "Mario Salvo or his nominee (defined as "MS") and WRVM and or its nominee "wish[ed] to establish a joint venture for the development of [the Land]". The meaning of that provision is unambiguous and certain. Mr Salvo and WRVM were the parties to establish "a joint venture for the development of the Land." However, each was given a power to nominate an alternative. If no alternative party was nominated, Mr Salvo and WRVM alone were bound to establish a joint venture. The clause unambiguously records that the parties intended to create a binding agreement which created a joint venture and then governed the relationship between them. WRVM's contention that the parties were insufficiently defined or uncertain to constitute a binding agreement is without foundation. Moreover, contrary to the submissions of WRVM, the decision of the Full Court of the Supreme Court of Western Australia in Hadley v Hazian Proprietary Limited (Unreported, 13 July 1995) does not support its contention. As the unanimous Full Court in Hadley made clear, a clause in the form of that found in the preamble to the Heads of Agreement is unambiguous and certain. What was unambiguous but uncertain was a clause which required a sale to be implemented by any one of A, B or C or some or all of them or their respective nominees. The uncertainty arose because the clause did not identify who was bound to purchase. That criticism cannot apply to the preamble. The preamble provides with certainty that Mario Salvo and WRVM wish to establish a joint venture and that each of them is entitled to nominate an alternative. Moreover, cl 1 of Heads of Agreement provides that each of the WRVM and "MS" is to be entitled to 50% of the profits of the joint venture subject to certain variations. If in the future WRVM wished to nominate an alternative or sell down part of its 50% interest in the joint venture then it was entitled to do so. That might never occur. And until it did, the parties and their obligations were unambiguous and certain. 92 Furthermore, even if the preamble's identification of the parties was uncertain or ambiguous, cl 1 of the Heads of Agreement clearly states that "WRVM and MS" will form the joint venture, and cl 2 identifies AVS as the Salvo entity that will discharge the Westpac debt, loan money to WRVM, etc. To the extent that there is any inconsistency between the recitals and the operative portion of the contract, the operative portion controls: Harpur v Levy (2007) 16 VR 587 at [63] and Chacmol Holdings Pty Ltd v Handberg (as administrator of Australian Risk Analysis Pty Ltd) (2005) 215 ALR 748 at [39]-[50], [105] and [106]. The same analysis applies equally to the Development Agreements. Clause 2 of the Development Agreement states that "WRVM and MS have formed a joint venture" and the same is true of cl 2 of the Second Development Agreement. 93 For the sake of completeness, I should mention that WRVM's written submissions raised a further ten or so grounds (depending on how one counts them) in support of its uncertainty contention. Those grounds, of which the ones most closely pressed in oral submissions are considered above, are rejected generally on the basis that they go to non-essential terms, terms that are not at issue here, and terms that could be severed if necessary. Only one merits further discussion, and that is the contention that the agreements fail because, while they purport to be agreements for development of the Land, they fail to specify just what the proposed development will be. 94 As the Western Australian Court of Appeal recently noted, it is trite to say that a contract can fail for uncertainty if it is missing an essential term (a typical example being price): Uranium Equities Ltd v Fewster [2008] WASCA 33 at [257]. More useful is what the Court in Uranium Equities went on to say about essential terms in the uncertainty context (at [257]): We have said what is meant by the word "essential" in this context. When dealing with the question of contractual intention, we have expressed opinions on the question whether or not terms left over for future negotiation were essential. We have concluded that, although some of the matters left over were indicative of a lack of intention to be bound, they were not such as to lead to a finding that, if the requisite intention was present, the contract failed for lack of certainty. As Lloyd LJ said in Pagnan SpA v Feed Products Ltd [1987] 2 Lloyd's Rep 601, 619 there is no legal obstacle which stands in the way of the parties agreeing to be bound now while deferring important matters to be agreed later. He went on to say that it "happens every day where parties enter into so-called 'heads of agreement'". While many of the matters left over in this case were important, none seems to us to have been essential to the efficacy of the alleged agreement, in the sense that the agreement could not be enforced without it. 95 I consider this case to be of the kind referred to by Lloyd LJ. Here we have a heads of agreement in which many matters of import, including the precise nature of the development, were left to be agreed later. In my view, however, the lack of a project definition is not essential to the efficacy of the agreement in the sense of its enforceability. Regardless of the precise nature of the development project, it is clear that the agreements contemplate at least some effort or work toward development however defined. That is to say, the development work contemplated in the agreements, at least initially, is the work required to put together a proper development proposal, including financing, whether for the building of a golf course, a residential development, or otherwise. That AVS or its nominee was to undertake such work (with the aid of WRVM's representative) is evident from the project management and project representative provisions in cl 3, including the retainer provision requiring a payment of $10,000 per month to AVS or its nominee. 96 Another way of putting it is that there was an implied obligation on both parties to nominate the relevant related entities or representatives and an implied obligation on the part of AVS to generate a development proposal in return for its management and retainer fees. I consider such terms to be reasonable, equitable, obvious, and necessary within the meaning of the test for the implication of contractual terms set out in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 226, 283 and the subsequent cases that have adopted that test. In the absence of any development efforts by AVS, WRVM could have asserted breach of contract based on complete failure to perform; similarly, AVS could have asserted breach of contract if WRVM had failed to allocate the $10,000 per month. Accordingly, I consider that the lack of a specified development proposal did not render the agreements unenforceable. 97 WRVM's further contention was that even if the agreements were enforceable contracts, then properly construed they were subject to a condition precedent that the Scheme would be wound up and, in particular, WRVM would be discharged from its obligations under the Mews Sale Contract (see [50]-[56] above), but that condition precedent had not been satisfied. That contention proceeded on an assumption that it was not possible for WRVM to enter into the Mews Sale Contract and yet at the same time contract with Mario Salvo under the Heads of Agreement. That assumption is incorrect. It may be reasonable to conclude that WRVM was not going to be in a position to complete both agreements but that does not mean that one or both of the agreements is subject to a condition precedent. 98 There is no general rule that parties having knowledge of a prior contract between different parties may not subsequently enter into a contract with fundamentally inconsistent terms (which is really the result of the "implied condition precedent" argument put by WRVM). The lack of any such rule is the inevitable consequence of the efficient breach theory of contract, which, although it has occasionally been criticised, remains the controlling theory of contract damages under Australian law: Hospitality Group Pty Ltd v Australian Rugby Union Ltd (2001) 110 FCR 157 at [159]. 99 To understand both the theory and its rationale, a simple hypothetical may assist. Suppose A agrees on Day 1 to sell his bicycle to B for $25 (which happens to be fair market value at the time of contract but $5 more than A himself paid) with delivery to take place on Day 10. Now suppose that on Day 5, C approaches A and offers to buy the bicycle for the above-market price of $50 on the spot (maybe he happens to have an urgent need for a bicycle for which he is willing to pay a premium). It is perfectly rational in those circumstances, and completely open under the law of contract, for A to sell the bicycle to C, breach his contract with B, pay damages, and pocket the difference, if any. Assuming there is nothing special about A's bicycle and equivalent bicycles are readily available in the market, the damages for breach are likely to be only the replacement costs (i.e. fair market value) of a like bicycle on Day 10, the date of delivery. There is of course a risk to A that the market price of bicycles will rise. Provided that the price does not rise above $45 by Day 10, however, A will make more money by breaching his contract with B and selling to C even after he pays B damages. The law encourages (or at least allows) this eventuality on the basis that everyone is better off (or at least no worse off). A makes a bigger profit, B gets a substantially identical replacement bicycle (or strictly speaking, the cost of cover), and C gets the bicycle he wanted. 100 In short, which of the contractual arrangements WRVM decided to complete (if any) was ultimately a matter for it to decide in the future in light of its own enlightened self-interest. And even if WRVM entered into the Heads of Agreement or Development Agreements on the basis of an ill-informed judgment on its part either that ultimately it could or would extricate itself from the Mews Sale Contract or that it could make a greater profit by simply breaching that contract and paying damages, it does not assist WRVM. The consequence or consequences that flowed as a result of WRVM failing to complete one or more of those arrangements was ultimately to be determined depending on the way in which the facts resolved themselves and the remedial step or steps (if any) the disappointed contracting party took against WRVM. As in the bicycle hypothetical where A runs the risk that the cost of bicycles on Day 10 may exceed $45 (i.e. he will incur a loss rather than a profit by breaching the first contract), WRVM ran the risk that it would not be able to get out of the Mews Sale Contract and Scheme at a cost that would justify breach of that agreement. That, however, is a commercial rather than a legal consideration. As such, WRVM's contention that the Heads of Agreement or the later agreements never came into effect due to the non-fulfilment of a condition precedent is rejected. 101 Finally, WRVM contends that even if the Heads of Agreement is enforceable as a contract, it was replaced by the two later agreements. However, as noted earlier, there is a complete answer to the submission that any or all of the Heads of Agreement or Development Agreements was terminated by its successor agreement. The answer is that money was payable not under the Heads of Agreement or Development Agreements but under the AVS Facility Agreement. The AVS Facility Agreement was independent of the Heads of Agreement: see definition of "Security Documents" in cl 1.1 and Sched 4 (described as the AVS mortgage, the AVS charge, a guarantee and indemnity limited to $1.7 million granted by Mr Brereton and a Mr McLeod and any other security or document) and the definition of "Transaction Document" in cl 1.1. In those circumstances, it is unnecessary to discuss the consequences of cl 1.1 of the Development Agreement or any other possible termination by novation that may have occurred with respect to the three agreements.

Other amounts claimed by AVS 102 It is appropriate at this point to consider AVS's claim that it is owed development costs incurred before 18 May 2005 of approximately $40,000 or $50,000, development costs incurred after 18 May 2005 of $1.4 million, a management fee of $660,000 and an entitlement to a profit share of a joint venture of some $6.2 million. 103 It is convenient to deal with the profit share entitlement first. AVS contended that the profit share was payable pursuant to cll 7 and 8 of the Development Agreement. Clause 2 of the agreement also states that AVS, as a joint venturer, is entitled to 50% of the profits. Taking as the starting point the proposition that the Development Agreement and these clauses in particular were and are effective, I nevertheless conclude that no profit is payable or owing. 104 Clause 8 provides: It is the inten[t]ion of the parties to use all reasonable efforts to obtain the Forecast Profit before tax of at least 30% of (Development Costs plus Land value) to be considered a viable development. The Land value is deemed to be $8 million and there is no provision to increase this deemed value due to increased profit or any other factors…. 105 There is no definition of "profit" in cl 8 or anywhere else in the agreement. Although the earlier Heads of Agreement did contain what appears to be a definition of profit in accordance with general accepted accounting principles, AVS accepts that that earlier agreement was terminated by the Development Agreement. While there are portions of the Development Agreement providing for the continued operation of certain parts of the Heads of Agreement, there is no provision for the carrying forward of the profit formula. Accordingly, the Heads of Agreement does not assist. 106 Returning to the Development Agreement, cl 8 speaks only of a Forecast Profit, which is defined as 30% of the $8 million land value plus development costs which are said to be in the order of $2 million. However, even this amount is said only to be a forecast and not a guaranteed one at that (i.e. the parties are required only to use reasonable best efforts to achieve it). Nevertheless, in an annexure to its submissions, AVS calculates its claimed $6,225,706.00 profit share by subtracting the deemed value of the Land ($8 million), the development costs (a little less than $2 million), and the project management fee ($665,000) from the approximately $23 million sale price of the Land. Taking 50% of the resulting $12.5 million yields the alleged profit figure of approximately $6.2 million. In effect, AVS's profit theory appears to be that it is entitled to a half share of the appreciation in value of the Land from 2000 (at the deemed value of $8 million) until its sale in 2008 for $23 million, less costs, despite the fact that no party did anything to develop the Land. 107 Finkelstein J considered and rejected the AVS profit share claim in his reasons for judgment in ASIC v GDK Financial Solutions Pty Ltd (in liq) (No 3) [2008] FCA 448 at [27]-[31]. Although the claim at that time was merely foreshadowed rather than actual, it turns out the actual claim is on precisely the same basis and in precisely the same terms as the foreshadowed claim rejected by Finkelstein J. While it is true that his Honour's comments on the profit share issue are non-binding dicta, I nevertheless consider them to be clearly correct and adopt them. Although I do not propose to repeat all of his Honour's reasons here, a simple restatement of the fundamental premise is that, in the absence of any definition of "profit" in the agreement, there is no reasonable, or even rational, implied definition or formula for profit under which it could be said that a profit was made. 108 Again, any implied definition must be reasonable and equitable. The definition must be in keeping with the purpose and other provisions of the agreement. Here, the purpose of the Development Agreement was the development of the Land. Again, cl 2 states that AVS is entitled to 50% of the profits from the "development of the land." On that basis, I consider that a reasonable and equitable definition of profit could only be one involving profit resulting from improvements made to the land (whether by construction of a housing development or otherwise). Because no development was undertaken, there can be no profit. 109 I should emphasise one other point made by Finkelstein J, which goes to answer a claim that profit that should be defined more broadly (a claim which I reject) to include profit derived from appreciation of the Land's value over the years due to a general rise in the real estate market. As noted by his Honour, the problem with this argument is that because WRVM was only the bare legal owner of the Land, and not the beneficial owner, it is not entitled to any proceeds from the sale. It goes without saying that AVS, apart from its mortgage interest (which as a secured legal interest superseded the equitable interests of the Mews investors), was neither a beneficial nor a legal owner of the Land. Neither WRVM nor AVS is entitled to the sale proceeds as an item of profit to which the joint venture agreement could attach. 110 With respect to the remaining items claimed by AVS (development costs incurred before 18 May 2005 of approximately $40,000 or $50,000, development costs incurred after 18 May 2005 of $1.4 million, and a management fee of $660,000), the fact that some amounts may be owing follows from the conclusion that the Development Agreements are valid and enforceable. Whether the particular amounts claimed are supportable is another story. For example, although a project management fee of approximately $660,000 is claimed, it cannot stand. Clause 3 of the Development Agreement states that AVS is entitled to a project management fee "equal to 5% of the before tax profits of the Joint Venture, with a minimum of $500,000 plus GST." Given that I have already concluded that there was no profit, it follows that the maximum amount that could be claimed is only $500,000 ex GST. Clause 3 further provides that any $10,000 monthly retainer fee charged is to be offset against the management fee, which might further diminish the amount allowable as a management fee. 111 I need not consider the accuracy of the fees and costs claims any further, however, because I conclude that those amounts are not secured by the AVS mortgage or charge. As noted earlier (at [77]-[78]) the all-moneys clause in the mortgage will not be held to secure debts of a fundamentally different character from those contemplated at the time at which the contract was entered into. Here, I consider that while the mortgage explicitly considered the two tranches of loans (the $1 million and $3 million advances) at the time of contracting in May 2005, the mortgage did not consider the development costs and management fees. As noted earlier, cl 3 of the AVS Facility Agreement states that the purpose of the mortgage loan agreement was to discharge encumbrances on the Land. In effect, it was a refinancing agreement of the distressed Westpac loan. I consider that the amounts now claimed to be secured as development costs and management fees are costs related to development, not costs relating to encumbrances, and are thus of a fundamentally different character from the debts contemplated at the time of the mortgage's execution. Further, I consider that this analysis applies equally to the all-moneys clause in the AVS charge. 112 Based on this analysis (i.e. that the debts are not secured), I need not resolve WRVM's contentions regarding the alleged deficiencies of the certificates given under the AVS mortgage and charge purporting to be conclusive evidence of the amounts stated as due and payable. In essence, AVS may be able to prove as an unsecured creditor for amounts owing under the Development Agreements in the winding-up of WRVM (assuming that WRVM has any assets to distribute to unsecured creditors), but the evidence AVS will have to submit and the amounts that evidence might support are matters to be addressed in that proceeding. 113 Accordingly, for the foregoing reasons: (1) subject to proper proof in a taking of accounts, the amounts described in [8(1)] above are amounts owing and secured by the AVS mortgage; (2) the amounts described in [8(2)-(4)] may, at least in part, be amounts owing but are unsecured by either the AVS mortgage or AVS charge; and (3) the amount described in [8(5)] is not owing. I will allow the parties to confer and jointly submit a minute of order giving effect to these reasons. Further, I will hear the parties on the question of costs. I certify that the preceding one hundred and thirteen (113) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.

Counsel for the Third Defendant: P Van Hattem SC

Solicitor for the Third Defendant and AVS Property Pty Ltd: Blake Dawson Waldron

Counsel for the Eighth Defendant: I Martindale SC

Solicitor for the Eighth Defendant and AVS Property Pty Ltd: Deacons

Counsel for the Thirteenth Defendant: L Kinda

Solicitor for the Thirteenth Defendant: Michael Brereton & Co

SCHEDULE OF PARTIES AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Plaintiff GDK FINANCIAL SOLUTIONS PTY LTD (IN LIQUIDATION) First Defendant WINDSOR VILLAGE MANGEMENT PTY LTD (IN LIQUIDATION) Second Defendant WESTERN RETIREMENT VILLAGE MANAGEMENT PTY LTD (IN LIQUIDATION) Third Defendant THE MEWS VILLAGE NOMINEES PTY LIMITED (IN LIQUIDATION) Fourth Defendant PERIDON MANGEMENT PTY LTD (IN LIQUIDATION) Fifth Defendant ROSEDALE VILLAGE NOMINEES PTY LTD (IN LIQUIDATION) Sixth Defendant PETER HASTINGS WARNE Seventh Defendant RENTAL FLEETS AUSTRALIA PTY LTD Eighth Defendant JOHN MONTGOMERIE Ninth Defendant ANDREW REGINALD YEO Tenth Defendant GUISEPPE DE SIMONE Eleventh Defendant SEACHANGE MANAGEMENT PTY LTD Twelfth Defendant ZMB AUSTRALIA PTY LTD Thirteenth Defendant