Ellie Abraham Barikhan v Vincenzo Francesco Cagnoni

Background: the relationship between Vince, Ellie and George in 2011

1. In 2011, Ellie was an experienced mortgage broker who had been operating his own business for some years. Salim and George worked in Ellie's business. Vince operated a used car dealership through his company Scuderia Automotive Group Pty Ltd. Ellie and Salim had known Vince since the late 1990s or early 2000s. Ellie had acted as the mortgage broker for various refinancing transactions for Vince during those years. Ellie, Salim, and Vince were friends. Ellie and Vince also had an ongoing business relationship that involved Ellie sourcing cars and financing or arranging finance for cars to be sold through Vince's car dealership. The terms of that business relationship are unclear, but it appears that Vince was entitled to be paid a commission on the sale of the cars, and that Ellie was entitled to a commission for arranging the finance.

Discussions about the proposed acquisition of the Woodville Road properties

1. In his first affidavit sworn on 11 August 2021, Ellie gave evidence of a conversation that he says he had with Vince in about June or July 2011 in which Vince proposed that he would purchase the Woodville Road properties for approximately $570,000.00 by borrowing about 80 per cent of that purchase price from a bank, with Ellie putting in the balance, on the basis that they would have the property rezoned, obtain development approval for apartments, and then "sell with a DA and split the proceeds". According to Ellie, he asked Vince how much he thought that Ellie would need to contribute, and Vince said that "$160,000 will cover it." Ellie replied that he did not have $160,000.00 "lying around", but that he would speak with George to "see if I can get him to come in with me". Ellie told Vince that he thought that George "should be able to arrange a personal loan for me for $80,000.00 and one for himself for $80,000.00".
2. Ellie deposed that he then had a conversation with George about Vince's proposal. George informed Ellie that he was interested, but that he did not have any spare cash. Ellie told George that he was in the same position, and asked George to arrange loans for both of them for $80,000.00 each. George agreed to do so. George gave a similar account of his conversation with Ellie in his affidavit sworn on 6 August 2021. George gave evidence that he relied on Ellie, and that he did not discuss the arrangements for the purchase of the Woodville Road properties directly with Vince.
3. Ellie gave evidence in his first affidavit to the effect that he then had further conversations with Vince and George (separately), in which it was agreed that Ellie and George would take out personal loans for $80,000.00 each and pay the proceeds to Vince.
4. According to Ellie's first affidavit, George arranged the loans, and Vince instructed Ellie (who in turn instructed George) "in whose favour the funds for our two personal loans are to be drawn down". George "settled" his personal loan in July 2011 and "settled" Ellie's personal loan on or about 24 August 2011. Ellie could not recall how, or to whom, the proceeds of his personal loan were paid, and gave evidence that he was unable to obtain records that would establish this. George gave evidence to similar effect in his affidavit, adding that he took out the $80,000.00 personal loan for the sole purpose of going into "the venture" with Ellie and Vince, and that he "never touched a penny of the $80,000.00 loan".
5. In his first affidavit sworn on 6 August 2021, Salim gave evidence that he had a conversation with Ellie in about August or September 2011 in which Ellie told him that Vince had approached him with an offer of a "half share" in the Woodville Road properties if Ellie could come up with 20 per cent of the purchase price and the stamp duty and "incidents". Salim deposed that Ellie told him: "I have spoken to George and we are going to put in $160,000.00. We will each take out personal loans for $80,000.00." Salim asked Ellie how Vince was going to get a home loan for the 80 per cent of the purchase price and Ellie said that he would send Vince to Salim. Salim deposed that he recalled Vince approaching him shortly thereafter to arrange a loan for the Woodville Road properties that he had purchased for $570,000.00 and was needing to settle in October 2011. Salim referred Vince to a mobile lender with National Australia Bank (NAB).
6. Salim does not claim to have had any discussion with Vince about the arrangements between Vince, Ellie, and George concerning the payment of any component of the purchase price for the Woodville Road properties in excess of the amount that Vince would borrow from NAB.
7. Ellie, George, and Salim swore their first affidavits in August 2021, some ten years after the events and conversations in question. They did not give any further evidence prior to the commencement of the final hearing changing or qualifying their evidence about the terms on which they say that they agreed to pay money in connection with the purchase of the Woodville Road properties, or about the $80,000.00 personal loans.
8. At all times up until the commencement of the final hearing, the case pleaded by Ellie and George was that that they had each contributed the sum of $79,950.00 to the purchase price of the Woodville Road properties. On that basis, they sought a declaration that Vince held the properties on resulting trust for them (as to 14 per cent each) and for himself (as to 72 per cent).
9. In his first affidavit sworn on 9 December 2021, Vince gave evidence that he had first become aware that the Woodville Road properties were for sale in late August 2011, and that he had made an offer of $550,000.00 for the properties on 29 August 2011 before entering into the contracts to purchase them for a total price of $570,000.00 on 2 September 2011. The executors of the estate of the late Cedric Alfred Waters were the vendors under the contracts for sale. Vince also gave evidence that Salim had assisted him in arranging a loan from NAB for $456,000.00, which was secured by a mortgage against each of the Woodville Road properties.
10. Vince then deposed that: "30. On or about 3 November 2011, I drew down on the NAB Loan (Draw Down) and paid the remainder of the Purchase Price and stamp duty on the purchase. In total, including stamp duty, the Properties cost approximately $600,000."
11. Vince then referred to the bank statement for his NAB home loan account, which shows the loan funds of $456,000.00 being credited to that account on 3 November 2011 and debited on that same day as they were paid out to settle his purchase of the Woodville Road properties.
12. Vince then referred to the evidence given by Ellie and George to the effect that they had taken out personal loans of $80,000.00 each in order to fund part of the purchase price of the Woodville Road properties. Vince deposed: "31. …I do not accept or agree that any bank cheque or deposit by Ellie or George was used in the acquisition or purchase of the Properties by me. I did not receive or use any deposit or bank cheque in the amounts of $79,900 from Ellie or George. As I have set out above, the source of the funds used to fund my purchase of the Properties was the loan which I took out with the NAB. To my knowledge, the Properties were not for sale at the time that Ellie and George state that they provided their respective deposits."
13. Vince's affidavit was silent about how he had funded the shortfall between the $456,000.00 drawn down under his NAB home loan and the $570,000.00 purchase price of the Woodville Road properties.
14. The following matters are established by contemporaneous bank records and settlement sheets prepared by the solicitor who acted for Vince on the purchase of the Woodville Road properties: 1. George drew down on his personal loan from NAB in the sum of $79,900.00 on 7 July 2011, approximately two months before Vince entered into the contracts to purchase the Woodville Road properties and approximately four months before settlement; 2. Ellie drew down on his personal loan from NAB in the sum of $80,000.00 on 24 August 2011, approximately one week before Vince entered into the contracts to purchase the Woodville Road properties and more than two months before settlement; 3. a total sum of $570,068.08 was required for settlement of the purchase of the Woodville Road properties on 3 November 2011, including the balance of the purchase price payable to the vendor of $538,474.55 (after deducting the deposits totalling $28,500.00 and making adjustments for council and water rates), stamp duty, legal fees, and other incidental charges; 4. Vince drew down on his $456,000.00 home loan from NAB to pay $454,942.36 of that sum, and the remaining $115,125.72 was paid by a bank cheque drawn in favour of the estate of the late Cedric Alfred Waters on 2 November 2011 out of an account held with ANZ in the joint names of Ellie, George, and Salim (the ANZ joint account); and 5. the proceeds of the personal loans that Ellie and George obtained from NAB in July and August 2011 were not paid into the ANZ joint account.
15. It appears that the parties were not aware of all of those contemporaneous documents until shortly prior to the commencement of the final hearing of these proceedings. Some of the bank records were produced on subpoena approximately one month prior to the hearing.
16. The plaintiffs' written opening submissions stated that Ellie and George "now accept that they did not collectively contribute a total of $159,900 to the purchase price of the Land, but only $115,125.72, and hence they are collectively entitled only to a 20% interest (being 10% each). The Plaintiffs thus only press their resulting trust claim to the extent of 20% of the Land and abandon the claim to the remaining 8%."
17. The written opening submissions filed on behalf of Vince simply asserted that his evidence in his first affidavit, referred to at [22]-[26] above, refuted the plaintiffs' claim to have contributed to the purchase price of the Woodville Road properties.
18. In oral opening submissions, counsel appearing for Vince explained for the first time his client's contentions in relation to the sum of $115,125.72: "The first defendant's position is that there were transactions, borrowings and lendings payments between Mr Ellie Barikhan and Mr Vince Cagnoni, which cast light on to whether that $115,000 was a repayment of the loans that Mr Cagnoni has given, or he was part of the lending in the whole scheme of things at the time of the lending and the repaying of different amounts of money between the two. The first defendant's position is that the $115,000 is nothing more than a repayment, as was some kind of arrangement of borrowings between Mr Ellie Barikhan and Mr Vince Cagnoni at the time. Hence, the first defendant's position is that Mr Ellie Barikhan and Mr George Barikhan has no interest in the property at Woodville Road."
19. Salim is not a party to these proceedings. Salim has given evidence in support of the claims made by Ellie and George that they paid a contribution to Vince's purchase of the Woodville Road properties, and that Vince holds the title to those properties on resulting trust for himself, Ellie, and George. Salim's evidence referred to conversations that he says he had with Ellie and George concerning the contribution that Ellie and George say that they intended to make - and subsequently did make - to Vince's purchase of the Woodville Road properties. Salim did not claim to have participated in that contribution. Salim's affidavit evidence was prepared in circumstances where he (along with Ellie and George) claimed to recall that Ellie and George's payment made on settlement of the Woodville Road properties had been funded by two NAB personal loans in the sum of $80,000.00 each. However, Salim did not change the substance of his evidence after it emerged from the contemporaneous documents that the sum contributed to the purchase price of the Woodville Road properties was $115,125.72 (not $160,000.00), and that this sum had been paid out of the ANZ joint account. It therefore appears that, as between Ellie, George, and Salim, the payment of $115,125.72 out of that joint account is being treated as a payment made by Ellie and George only. Senior counsel for Ellie and George submitted that the determination of these proceedings on that basis would not preclude Salim from subsequently asserting any claim that he may have against Ellie and George in respect of any interest they may be found to have acquired in the Woodville Road properties by reason of the $115,125.72 payment.
20. In cross-examination, Ellie said that he and George had "lended in Vince Cagnoni's work account" the two personal loans that they had taken out, and that this had occurred before they paid the sum of $115,125.72 out of the ANZ joint account towards the purchase of the Woodville Road properties, and that Vince had then sent that money back to Ellie when he was living in Africa as and when Ellie needed it, including a transfer of $70,000.00 that Vince made to Ellie in September 2011.
21. In relation to the Woodville Road properties, Ellie said that he could not recall the dates when Vince had "come to us for the money". Ellie then gave the following evidence (emphasis added): "Q: Sir, in June or July 2011, you stated in your affidavit that Mr Cagnoni had a proposition for you, that he's going to buy the land at 177 to 179 Woodville Road for $570,000 and convert it. Would you agree with that? A. Vince came to us to borrow the money, yes, for the purchase of those two properties, yes. Q. That was in June or July 2011? A. I don't recall the dates, but Vince came to us, and that's is - hence why we lent him the money. Q. In your affidavit you said it was in June, July 2011? A. I don't recall the dates, I'm sorry. Q. Assuming that conversation did take place - A. The money we lent to Vince is there. … Q. Assuming that conversation occurred in June, July 2011, I put it to you that is an impossibility for that conversation to have occurred? A. No, because I don't recall. It was so long ago, like you know. Q. You don't recall because you saw the advertisement? [referring to a newspaper advertisement dated August 2011 that was tendered in the proceedings advertising the Woodville Road properties for sale] A. I don't need to see - I don't need to see - I don't recall the dates. I remember we lent him the money. Q. You lent him the money, you say, of $80,000. Is that correct? A. We lent him several times, money, and it was our money that we lent him."
22. Ellie was then cross-examined about the fact that, although he was an experienced mortgage broker in 2011, he had not documented or taken security for the loan that he had said he and George made to Vince to purchase the Woodville Road properties. Ellie's answers included (emphasis added): "A. … There's was trust there. We lent him the money." "A. … Vince had equity and collateral in other properties, and Vince was a friend that was stuck, and we lent him the money, okay." "A. … We lent him the money. We didn't sign because 179, the empty block of land, was supposed to be mine and my brothers… There was trust."
23. It was put to Ellie that he had not documented any loan agreement or security in respect of the $115,125.72 payment because it was in fact a repayment of money that Vince had previously advanced to Ellie. Ellie denied this.
24. Contrary to the plaintiffs' case, and inconsistently with his evidence referred to above in which he repeatedly described the $115,125.72 payment as a loan to Vince, Ellie asserted in cross-examination that he and George had a one-half share of the Woodville Road properties. Ellie's claims varied between the claim to which I have already referred above, that "179, the empty block of land, was supposed to be mine and my brothers", and the claim that "177-179 Woodville Road would be both joint owned together". Ellie also described the arrangements to purchase the properties as "a joint, 50/50 partnership".
25. Ellie elaborated on his claim to have a half share in the property during the following exchange with the cross-examiner: "Q. How much did you say were you going to own if the agreement you say was true? A. Two lots. There was two lots. One at 177. The house is his and the vacant block was ours. That's why we put a house on there. Q. So you say you were going to be a half owner of a property - A. Correct. Q. -- for an investment that was less than 20% of the purchase price? A. Half owner. Q. Half owner is 50%. A. Correct. Q. But you only put in 20%. A. But we didn't want to buy the properties. He was - it was his idea. We - he - he - he needed help and we helped him. That's why we are there. Q. But you said that you - you've been telling everyone that you are a half owner of the property? A. Well, there's two lots. One each. Q. But that's not correct. You're not the half owner is it? A. I lent him the first amount of 115 and a half. Second, the amount of 150 to pay out John Paul Bosley. Lastly, 20k, okay. So, that - that amount now exceeds the original amount that we were originally in for, and that's what happens when there's friends and there's trust."
26. The following different explanation of Ellie's claim to a half share in the Woodville Road properties emerged a short time later during his cross-examination: "Q. You were never the half owner of the property based on your contributions if you did so - if the contributions were accepted as your contributions? A. We were the half owners because that's what Vince said at the beginning. … Q. But if you were putting in 20% but getting 50%, would you not want that in writing? A. At the time, there was trust. Q. Well, I put it to you that there was never any discussion about you having any interest, or George having any interest, in the property, was there? A. We had interest. We were - we were meant to be partners, and we were on - this - this all happened on trust."
27. George maintained in cross-examination that he had taken out the $80,000.00 personal loan to finance the purchase of the Woodville Road properties "because that's what Ellie told me to do". It was put to George that the $80,000.00 was never given to Vince. George denied that. George was not cross-examined about the $115,125.72 payment.
28. Salim maintained in cross-examination that Ellie had told him in 2011 that he and George were going to borrow $160,000.00 for the purchase of the Woodville Road properties, and that they would have 50 per cent ownership of those properties. Salim gave evidence that he could not recall what Ellie and George did with the $80,000.00 that they each borrowed, yet he maintained that those loans were for the purpose of purchasing the Woodville Road properties. Salim said that he had spoken with Ellie "about the property going 50/50 halves, that's all I remember is the word, halves".
29. In cross-examination, Vince acknowledged that Ellie and George had provided a bank cheque for $115,125.72 for the purchase of the Woodville Road properties, contrary to Vince's evidence in paragraph 31 of his first affidavit in which he had denied that any bank cheque or deposit from Ellie or George was used for the purchase of the Woodville Road properties. [2] Vince said that, when he swore that affidavit, he believed that his denial in paragraph 31 was true. Vince acknowledged that he knew from his solicitors' settlement sheets exhibited to his first affidavit that, on settlement, an amount of approximately $115,000.00 had been paid in addition to the amount paid by NAB. Vince then gave the following evidence (emphasis added): "Q. So when you were preparing your affidavit of 9 December 2021, you would've thought very carefully, wouldn't you, I can see in these settlement sheets that I've attached to my affidavit that the money paid by National Australia Bank is about $115,000 short. I wonder where that money came from. That's what was going through your mind when you prepared that affidavit, wasn't it? A. Wasn't going through my mind, no. Q. Wasn't going through your mind, did you say? A. No, because I said to you, I - that was part of the settlement in there. Q. But wasn't it of great interest to you, sir, whether the plaintiffs had contributed to that property or not? A. Well, they've given me a loan to help me by [sic - buy] the property. They gave me a loan, or repaid the loans that I gave to them. Q. Wasn't it of great interest to you when you were swearing your affidavit to determine whether the plaintiffs had paid any part of the money that was so used in your purchase of the properties? Was it wasn't it? A. That was they loaned me some money to help me get a property. It's a loan. But they repaid me money that I'd given them, and money was going backwards and forwards most of the time with what we were doing. And they were getting the loan on the property and they do that sometimes, help you out to get it, and then you fix them up later, whatever you do. Q. When you said, sir, in paragraph 31 'I do not accept or agree that any bank cheque or deposit by Ellie or George was used in the acquisitional purchase of the properties by me' [sic], you surely checked, didn't you; you surely checked whether they had contributed any money to the acquisition of those properties, didn't you? A. No. Q. You just didn't bother checking? A. I didn't say didn't bother checking. Q. Did you check or didn't you before swearing that sentence? A. Well at the time that's what I thought it was. Q. You knew full well didn't you, sir, when you swore that affidavit that included that sentence that they Barikhan's had contributed $115,000 to the purchase of those properties, didn't you? A. No. No. No. … Q. … you weren't going to check where the missing $115,000 that wasn't supplied by the National Australia Bank came from. Is that what you're telling her Honour? A. But I said to you already that I borrowed some money off Ellie and his brothers, yeah, to help me purchase the property, but it wasn't to buy into the property. It was to help me get a loan, and they - I've loaned them money, they've loaned - and we were just doing it all the time, backwards and forwards. There was lots of loans in and out. And if need something, I'll help you and vice versa…."
30. Vince's description of "money going backwards and forwards most of the time with what we were doing" appears to be a reference to his evidence earlier in the cross-examination describing financial arrangements between himself and Ellie during the period from 2009 to 2012. Vince gave evidence that cars were purchased and sold through his dealership, and that Ellie was entitled to receive commissions which he sometimes rolled over to be applied to the purchase of more cars. Vince said that these arrangements became "very messy" after about two months, and that it had "turned into a bit of a - bit of a bun fight, actually". At one point during his cross-examination, Vince said that Ellie had "put in a couple of hundred thousand originally" as part of these arrangements. Vince later changed his evidence, saying that Ellie had that amount available "to play with" if it had been needed, but that he had not in fact paid that money in. According to Vince, none of these arrangements were properly documented.
31. Contrary to his evidence referred to at [42] above concerning paragraph 31 of his first affidavit and his state of mind when he swore that affidavit, Vince asserted on several occasions during his cross-examination that he had given evidence in his first affidavit to the effect that Ellie had lent money to him for his purchase of the Woodville Road properties. After several attempts to avoid answering the question, Vince ultimately conceded that he had said nothing in his first affidavit to suggest that either Ellie and George or Ellie alone had lent money to him in order to facilitate his purchase of the Woodville Road properties. It is very difficult to reconcile Vince's evidence referred to at [42] above, that he believed when he swore his first affidavit that no bank cheque or deposit from Ellie or George was used for the purchase of the Woodville Road properties, on the one hand, with Vince's evidence in his first affidavit that he proposed to Ellie on 9 December 2018 that he would pay him $270,000.00 in relation to the Woodville Road properties and his evidence in cross-examination that he had calculated that sum of $270,000.00 by doubling the approximate amount he recalled that Ellie had lent him when he settled his purchase of those properties, on the other hand. Vince's evidence concerning the 9 December 2018 conversation is referred to at [82]-[84] below.
32. Vince's second affidavit sworn on 4 October 2022 also makes no reference to Ellie, or Ellie and George, having provided part of the funds required to settle the purchase of the Woodville Road properties on 3 November 2011. Nor does Vince's second affidavit refer to any loans that Vince claims to have made to Ellie, or to Ellie and George, prior to 3 November 2011. Vince gave evidence that Ellie was frequently travelling to and from Africa during 2011, where Vince understood that Ellie was in the process of setting up a mining business and purchasing mining equipment. Vince deposed that Ellie asked him in about early September 2011 to wire him AUD$70,000.00.00 because he was looking to buy some mining equipment. Vince then caused that sum to be transferred from Sydney Auto Brokerage's account to Ellie in the Republic of Uganda on 2 September 2011. Vince's evidence does not describe that transfer as a loan to Ellie.
33. Vince also gave evidence in his second affidavit that Ellie "would also ask me for money to help him with his living expenses". According to Vince, he and Ellie "would have a telephone conversation" in which Ellie asked Vince to wire him some money because "I'm not making enough to live on" and specified the amount he thought he would need to "tide me over". According to Vince's own evidence, Ellie also said to him on these occasions that Vince could "deduct that amount from the money that you owe me". Vince gave evidence that he would then wire the money to Ellie on each occasion. Vince did not identify whether, or to what extent, these transfers occurred prior to 3 November 2011. Vince did not give any evidence disputing that he was indebted to Ellie at the time of each transfer, or that the amounts that Vince transferred to Ellie were to be deducted from that debt. Vince deposed that, after each transfer of funds, "I would enter the amount that I had wired to him into the ledger that I keep in relation to my dealings with Ellie". The evidence tendered in these proceedings did not include any ledger matching that description. Ledgers recording cash receipts and payments to and from Scuderia Automotive Pty Ltd's bank account ending in the numbers 3940 were tendered, and those ledgers included transactions booked to "Loan Account - E Barikhan". No transactions were recorded in that loan account during the period between November 2008 and December 2012.
34. Throughout his cross-examination, Vince prevaricated between characterising the $115,125.72 payment as a loan that Ellie and George made to him and characterising it as a repayment of money that Ellie owed to Vince. It suffices to refer to the following examples of Vince's evidence in cross-examination: "Q. Sir, you're not suggesting now, are you, that they [sic - the] amount of approximately 115,000 that the Barikhan's contributed to the purchase of these two properties was a loan that they made to you for that purpose, are you? A. It was a loan. Q. So now you say that they loaned you 115,000. Is that right? A. Well, again, they owed me, I owed them, backwards and forwards. Q. What was the terms of this loan that they made to you of 115,000? A. Ask them." "Q. Did you ask them for a loan of 115,000? A. Well, I asked to advance the 115,000 to settle on the property. Q. So, did you ask them for a loan for 115,000? A. No, because they owed me too. So, how do you know what the amount is exactly of a loan - not a loan or repayment? Q. You know that that 115-and-a-bit thousand was paid by a bank cheque to the estate of CA Waters, don't you? A. Yep. Q. And you know that the bank cheque, in a very precise amount, was drawn up by the Barikhan's bank and then provided, don't you? A. Well, I know this. I've sent money, 10,000, 50,000 to Ellie. I don't get - get an agreement for me. I give it to you, you give it back. Q. Yes, I'm not asking you about that, sir? A. I'm just saying to you. So no, we didn't. … Q. Now, how did the Barikhans know the precise amount of money to put in that cheque? A. They did - Q. Did you ask them for that precise amount? A. They did my loan for me. Q. Sorry? A. They did my loan, they did my settlement, the whole lot, they did that. Q. So, do you say that they provided this bank cheque for the 115-and-a-bit thousand, without you ever having asked them to put in that money at all, is that right? A. No. Q. So, you did ask them to put in that money? A. To settle the loan, yes. Q. When did you ask them? A. Would have been during the process. Q. Yes, well, what month? A. Near settlement. Q. I see. And who did you ask? Was it Ellie or George or Salim, or some combination of them together in the same room? A. It would have probably been - probably Ellie - probably Ellie and Salim. Q. And what did you say to them? A. I don't recall what I said. Q. Well, what was the gist of it? A. Well, a lot of times it would be 'We'll help sort that out. We'll sort that out and we'll fix it up later and we'll sort that out and we'll sort things out', like I used to sort things out for them. Q. Right, but what did you ask of them - A. Well, I don't know exactly what I said, no."

Events after completion of the purchase of the Woodville Road properties

1. Ellie gave evidence in his first affidavit that he spent days together with Vince at 177 Woodville Road removing rubbish from the house and grounds and cleaning up the interior to make the house habitable for potential tenants.
2. Salim gave evidence in his first affidavit that he recalled going to 177 Woodville Road shortly after Vince purchased and helping Vince and Ellie undertake a major clean-up of the house. Vince deposed that he heard a conversation between Ellie and Vince while he was there. According to Salim, Vince referred to his plan to have the properties rezoned and then to obtain development approval for apartments, with Ellie saying to Vince: "We are halves in it, aren't we?" According to Salim, Vince replied: "Yes, Ellie. We are halves in it. One hundred percent."
3. Vince denies that Ellie or Salim helped him to clean up the 177 Woodville Road property after he purchased it. According to Vince's evidence, two other friends of his helped to remove all of the rubbish from the property in late 2011 and early 2012, and Ellie merely visited the property on one occasion during that process. Vince denies having a conversation with Ellie in the terms that Salim claims to have overheard.
4. There is a dispute between Ellie and Vince about who paid for a $5,000.00 demountable home, and the costs associated with transporting that home to 179 Woodville Road and installing it on that property, in about December 2012. The installation costs included fees payable to ES Engineering and Design (ESED) for structural design and documentation. Ellie gave evidence that he paid for the demountable and its relocation, and that he considered these payments to be "a contribution to the venture". In his first affidavit, Ellie deposed that he had a clear recollection that he paid $5,000.00 to purchase the demountable home, but that he had been unable to locate any record of the payment and that it was likely that he paid in cash. Vince gave evidence that he paid a $1,000.00 cash deposit to the vendor, and subsequently paid the balance by cheque. Vince's evidence is consistent with a receipt issued by the vendor at the time. Ellie gave evidence in his first affidavit that he and Vince had jointly engaged ESED. However, ESED addressed its fee proposal to Vince, and it was Vince who signed the proposal by way of acceptance. Ellie also gave evidence in his first affidavit that he had paid Vince $10,000.00 in cash to pay ESED's fees. Vince denies this. The $10,000.00 that Ellie claims to have paid to Vince is significantly greater than the $3,200.00 estimate of fees set out in ESED's fee proposal. Ellie gave evidence in his first affidavit that he had paid half the cost of transporting the demountable to 179 Woodville Road. Mr Lloyd Halcrow, who carried out the relocation, made an affidavit on 10 August 2021 in which he deposed that the relocation fee was $10,000.00, and that Ellie had paid him $5,000.00 in cash in two or three instalments, in addition to paying $10,000.00 for the relocation of another demountable to a property that Ellie owned in Luddenham. Mr Halcrow also deposed that Vince had paid him some of the remaining $5,000.00 fee for the 179 Woodville Road relocation, and that he had remembered "chasing" Vince for payment of the outstanding balance "a few times". Mr Halcrow could not recall the amount of that outstanding balance. Mr Halcrow was not available for cross-examination because he died prior to the final hearing. Vince gave evidence denying that Ellie had paid any amount towards the relocation of the demountable.
5. It is common ground that Ellie spent most of 2012, 2013, and 2014 in Africa, and that the Woodville Road properties were vacant during this period.
6. Vince gave evidence that he spent approximately $100,000.00 between about August 2012 and March 2013 on pier drilling, building brick walls, installing decking, building driveways, arranging plumbing, stormwater drainage, and sewerage for the Woodville Road properties, and making applications to the Council and to Sydney Water. According to Vince's evidence, he engaged Mr Nick Glezos, a builder, to carry out much of this work. Vince did not adduce any documentary evidence of this work, or of the cost of the work, and Mr Glezos was not called to give evidence.
7. Vince also gave evidence that, in 2013, he "put a fence around the Properties and closed the Properties down" because he needed to devote his time to relocating his car yard business to North Parramatta. According to Vince's evidence, the Woodville Road properties languished unused and in a state of disrepair from 2013 until February 2017 when Cumberland Council issued an order under s 124 of the Local Government Act 1993 (NSW) requiring him to remove all overgrown vegetation and waste from the properties. Vince described the state of the properties at that time as being overgrown with weeds and plants, and as having illegally dumped material (including asbestos) on the grounds. According to Vince, the house had been broken into, and floorboards, copper pipes, and wiring had been stolen, with walls having been smashed in order for the thieves to access the pipes that they stole.
8. Notwithstanding that he allowed the properties to fall into disrepair and neglect during the period from 2013 to 2017, Vince gave evidence that he made the mortgage payments, and also paid council rates, insurance, and land tax for the Woodville Road properties. There is some documentary evidence indicating that Vince, or his company, paid council rates, although they were frequently overdue for payment. There is no documentary evidence of any insurance being taken out for, or paid in regards to, the properties in this period. There is documentary evidence that land tax assessments were issued to Vince during this period. There is no documentary evidence of payments of land tax.
9. Neither Ellie nor George claim to have made any payments in respect of the mortgage secured against the Woodville Road properties, or to have paid insurance premiums, land tax, council rates, or other outgoings, during the 2013 to 2017 period, or indeed at any other time.
10. George gave evidence that he had a conversation with Ellie shortly after Ellie had returned from Africa in December 2014, in which Ellie told him that "I am going to have to get Vince to sell Woodville Road and pay us our money back. He's just sitting on it. I want my investment back." George gave evidence that he agreed with Ellie about this.
11. Salim gave evidence that he had a conversation with Ellie at about the same time, in which Ellie told him: "I must do something about Woodville Rd. It's been three years since Vince bought it. Both houses are vacant and in poor condition. Vince hasn't made any effort to rezone the land. I think he intends to sit on it. Both George and I want it sold. We need the money." According to Salim, he then had a conversation with Vince in which he urged him to sell the property because "My brothers want it sold. They need the money." Vince gave evidence denying that this conversation occurred.
12. Ellie gave evidence that he was pressing Vince to sell the Woodville Road properties from late 2014 because "this was the only way George and I could get our money back." Ellie introduced Vince to Mr Paul Kelly, a real estate agent. Mr Kelly gave evidence that he had a conversation with Ellie, Vince, and Salim at the Woodville Road properties in January 2015 during which Ellie said that Vince had been short of funds to settle his purchase of the properties, that Ellie and his brother had come up with the money, and that "our deal with Vince is that we are part owners". According to Mr Kelly, Vince did not say anything to contradict this at that meeting or in any of his subsequent dealings with Vince during January and February 2015. Mr Kelly did not adduce any evidence of any contemporaneous note of the conversation that he claimed to recall in January 2015, approximately six and a half years before he made his affidavit. However, Mr Kelly did adduce evidence of his mobile telephone contact listing for Vince, which includes the notation "Part Owner Salim & Ellie Barikhan". Mr Kelly gave evidence in cross-examination that he was aware that Ellie's brothers were Salim and George, and that it was his understanding that it was Ellie and Salim who were part-owners of the Woodville Road properties with Vince.
13. Neither Salim nor Ellie gave evidence of any conversation involving Mr Kelly and Vince, but Ellie claims to have made it clear to any real estate agent to whom he introduced Vince that "the property was the subject of a joint venture between me and Vince".
14. Vince gave evidence confirming that he met Mr Kelly together with Ellie at the Woodville Road properties in January 2015, but denying that Salim was present and denying that Ellie said to Mr Kelly in Vince's presence that he and his brother "came up with the money to settle and our deal with Vince is that we are part owners".
15. According to Ellie's evidence, Vince declined to engage Mr Kelly or any other real estate agent that Ellie proposed to sell the Woodville Road properties. Ellie deposed that Vince told him, on various occasions during 2015, that he would keep the Woodville Road properties and "pay you out" or that he would "pay you out" from the proceeds of sale of another property. Vince gave evidence denying that any of these conversations occurred, and denying that he ever agreed to put the Woodville Road properties on the market.
16. The Woodville Road properties were not sold.
17. In late 2016, Vince needed to borrow money to settle a dispute with his former business partner, Mr Paul Bosley. As I have already mentioned, it is common ground that Ellie lent the sum of $150,000.00 to Vince on or about 2 December 2016 on the terms of an undated, signed deed of loan between Ellie (as lender) and Vince (as borrower). Vince has not made any repayments or paid any interest in respect of that loan. It is also common ground that an undated, unregistered mortgage signed by Vince as mortgagor (albeit mistakenly naming Vince as the mortgagee rather than mortgagor and mistakenly naming Ellie as the mortgagor rather than the mortgagee) operates as an equitable mortgage securing against the Woodville Road properties all money owing by Vince to Ellie under that deed of loan. I have defined these transactions as the 2016 loan and the 2016 mortgage, respectively. [3]
18. As I have noted earlier in these reasons, there is a dispute between Ellie and Vince about the rate of interest payable under the deed of loan. [4]
19. Clause 2.3 of the deed of loan provided that: "The Principal Sum and all interest accrued thereon must be paid by the Borrower on or by the Repayment Date and in the meantime will immediately become due and payable upon the happening of any one or more of the following events …"
20. Clause 1.1 defined the "Repayment Date" as the earlier of the expiry of the Term, or the occurrence of an event of default under clause 5. The "Term" was defined as the term set out in the Schedule, being a period of three months after the "Commencement Date". The Commencement Date was not specified in the Schedule, but it is common ground that the loan was in fact made on or about 2 December 2016.
21. Clause 1.1 defined the "Interest Rate" as the rate specified in the Schedule, being the rate of 2 per cent per month, calculated on a daily basis on so much of the "Loan Amount" of $150,000.00 as is outstanding from time to time.
22. Clause 2.4 provided: "The Borrower must pay interest to the Lender at the rate of the Interest Rate calculated on a daily basis on the amount outstanding from day to day with such interest payable at the end of the term, subject to clause 2.3."
23. On the basis that Ellie advanced the $150,000.00 to Vince on or about 2 December 2016, the loan was due for repayment on or about 2 March 2017 and was approximately six years overdue as at the date of the final hearing.
24. As I have mentioned earlier in these reasons, [5] it is now common ground that Ellie made a loan of $20,000.00 to Vince in October 2017 on terms that Vince would repay the loan out of the proceeds of sale of the Woodville Road properties, which he would sell within a reasonable time. According to Ellie's evidence, Vince asked for the loan to "tide me over" so that he could pay the rent for his car yard and also the mortgage, rates, and land tax for the Woodville Road properties. It is common ground that Vince has not repaid that loan. Ellie contends - and Vince does not dispute - that interest is payable on that loan from July 2018 at the rates provided for in Practice Note SC Gen 16. Although the parties' submissions did not address the reason why interest is payable from July 2018, I infer from paragraphs 34 to 38 of the statement of claim that Ellie contends (and Vince now accepts) that July 2018 was the date by which Vince could reasonably have sold the Woodville Road properties.
25. In December 2017, Vince refinanced his NAB home loan secured against the Woodville Road properties with a new loan of $675,000.00 from MKM Capital. According to Vince's evidence, approximately $455,000.00 of this new loan was used to pay out the NAB home loan, and he used the remaining funds to finance some renovations to the house on the Woodville Road properties. Ellie was not aware of this refinancing and has given evidence that he would have objected to it if he had known about it because "that would erode our (George's and mine) equity it the property".
26. Vince has given evidence that he spent approximately $250,000.00 on renovations during 2017 and 2018, including cleaning, repairing fences, repairing the roof, replacing broken windows, installing new timber in the walls and floors, and "in effect, partly rebuilding the House". Vince did not call any evidence from any builder or other tradespersons involved in this work. Nor did Vince tender any documentary evidence of the work, or of the cost of the work.
27. According to Vince's evidence, the work on the house was "advanced but far from complete" after he had spent the $250,000.00 referred to above. The builder, Mr Glezos, advised him that the remaining work would cost about $400,000.00, or could be reduced to about $200,000.00 if Vince undertook the work himself. Vince has given evidence that he took a year off from work from about March 2018 in order to complete the renovations, including rebuilding bathrooms and kitchens, building brick walls, repairing and laminating floorboards, installing doors, building decks, landscaping, building driveways, and fitting out the houses with furniture. Vince has given evidence that he financed this work by borrowing a further $300,000.00 secured against another property in September 2018, and that the work was complete by about March 2019.
28. Vince has given evidence that neither Ellie nor George made any contribution or payment towards the maintenance or renovation of the Woodville Road properties. Ellie gave evidence in cross-examination that "the deal" did not require him or George to contribute to these expenses because "the deal was that we would cover our loan and he'd cover the rest". As I understood Ellie's evidence, his reference to "our loan" was a reference to the $80,000.00 personal loans that George and Ellie obtained from NAB in July and August 2011.
29. Ellie gave evidence that he had financed the 2016 loan by drawing on a loan facility that he had with RAB Finance, which was secured over a property in Riverstone owned by 88 Junction Road Pty Ltd. Ellie was the sole shareholder of that company. According to Ellie's evidence, his loan with RAB Finance was in default in December 2018, RAB Finance was threatening to repossess the Riverstone property, and "[t]he only way I could save that property was to get my money back from Vince".
30. In his affidavit sworn on 11 August 2021, Ellie gave evidence that he went to see Vince at his workplace on 10 December 2018, where he had a conversation with Vince to the following effect in the presence of Ms Julie Wright, who worked as a personal assistant for Vince: "Me [Ellie]: 'I need you to sell the Woodville Road property and pay us our share and I need you to repay the $150,000.00 loan and the $20,000.00 otherwise, I will lose Junction Rd.' Vince: 'I am sorry, Ellie. I don't have the money and I won't sell Woodville Rd. I am close to getting permission for my property at Fennell St to be used as a boarding house. Once I get that permission, I will sell that and pay you out. It won't be long now. Can we agree on a figure now? I am prepared to buy you out. I will also repay the $150,000.00 loan and the $20,000.000 loan.' Me [Ellie]: 'George and I have contributed at least $150,000.000 in cash and I have paid for the demountable home, the relocation expenses and the town planning fees.' Vince: 'You are wrong. Your cash contribution was only $133,500.00' Me [Ellie]: 'That is not correct. Even though our share in Woodville Rd is worth much more, I am desperate. George and I agree to surrender our share in Woodville Rd for $300,000.00 as long as you pay the $300,000.00 plus the two loans within two months so I can save Junction Rd. and I want you to pay both loans and I want that in writing.' Vince: 'Ok I agree.' Me [Ellie]: 'I need that in writing.'
31. George did not give any evidence of having discussed the Woodville Road properties with Ellie in or about December 2018, or about having agreed to "surrender our share" if Vince would pay $300,000.00 within two months. Indeed, George gave no evidence of any events or conversations concerning the Woodville Road properties at any time after his conversation with Ellie in December 2014. [6]
32. Ellie gave evidence in his first affidavit that, after he told Vince that "I need that in writing", he saw Ms Wright type up a letter which Vince then signed and handed to Ellie.
33. The letter was tendered in evidence. It stated: "To Ellie Barikhan, Ellie, I Vince intend to settle with you, all outstanding settlements and monies owed, upon the DA and subsequent sale of 61 Fennell Street, Parramatta. That being the case, the settlement on Woodville Road would be $300,000.000 as agreed. On top of that, there would also be a payment to you Ellie Barikhan of $20,000.00 that was forwarded to me earlier this year 2018. Also, the amount of $150,000.00, plus interest will be paid back to RAB Finances upon sale of the above mentioned property."
34. The letter was signed by Vince and bears what appears on the face of the document to be Ms Wright's signature as witness.
35. Vince gave a rather different account of the conversations that led to his signing the letter. According to Vince's evidence in his first affidavit, Ellie was waiting for him outside his home when Vince arrived there on the evening of 9 December 2018. Vince deposed that Ellie was agitated and spoke to him in an aggressive manner, and that they had a conversation to the following effect: "Ellie: 'When are you going to square up.' Vince: 'The most I can pay you now is $270,000.' Ellie: 'No. I want 3. I want 3.' Vince: 'Don't worry. I will pay you $300,000 when I sell Fennel Street."
36. However, Vince also agreed that their conversation outside his home on the evening of 9 December 2018 was along the lines of the first two paragraphs of Ellie's version of the 10 December 2018 conversation. As set out at [77] above, that included Ellie asking Vince to "sell the Woodville Road property and pay us our share and I need you to repay the $150,000.00 loan and the $20,000.00 otherwise, I will lose Junction Rd", and Vince saying to Ellie: "Can we agree on a figure now? I am prepared to buy you out. I will also repay the $150,000.00 loan and the $20,000.000 loan." Vince denied that their conversation on 9 or 10 December 2018 included Ellie saying anything about he and George surrendering their "share" of the Woodville Road properties in exchange for payment of $300,000.00 within two months.
37. In cross-examination, Vince accepted - after much prevarication - that the amounts of $270,000.00 and $300,000.00 referred to in his account of the 9 December 2018 conversation related to the Woodville Road properties, and not the 2016 loan of $150,000.00 or the 2017 loan of $20,000.00. Vince gave the following evidence: "Q. And when you said, 'The most I can pay you now is 270,000', you were saying to Ellie, 'The most I can pay you in relation to your contribution to the purchase price of the Woodville Road properties is 270,000'. Isn't that right? A. That's right. Q. So you considered on 9 December 2018 that you owed Ellie some money in relation to that contribution. Is that right? A. Right. Q. And you were prepared to pay him 270,000 for that. Is that right? A. That's right. Q. And how did you work out that figure? A. Because Ellie was screaming, 'I want double my money. Double my money, double my money'. Q. So on 9 December 2018, you were conscious that the amount of money was 115,000. Is that right? A. It was around about 100, 120-something, I thought it was at the time. Q. I see. But half of 270,000 is 135,000. A. Yep. Q. So did you think that it was 135,000? A. What I thought was, to shut him up and get him away and worry about it later - I'm trying to worry about it later - because he wasn't in a sense of talking properly. That's what I thought. It went through my head. Q. So yesterday, you told the Court that you'd forgotten, when preparing your first affidavit, about this contribution of 115,000 and you only remembered it later on. Do you remember - A. In my first affidavit, I thought it was like 130-odd or something. I said that I'd borrowed from them to help you purchase the house if you looked at the first one. Q. There's nothing in either of your two affidavits about the Barikhans having contributed 115,000 to the purchase of Woodville Road, is there? A. I think there is. Q. Instead, in your first affidavit, you deny that the Barikhans had contributed even $1 to their [sic - the] purchase. Is that not correct, sir? A. No, I never said that - 'not $1' - Q. Do you want me to take you back to the - A. 'Not $1', is that what I said? I said loans were going backwards and forwards all the time. Q. Now, sir, go to para 31 of your first affidavit … … Q. I went over this yesterday, sir. But since you've asked, I will take you back to it. 'I do not accept or agree that any bank cheque by Ellie or George was used in the acquisition or purchase of the properties by me.' Now, when I asked you questions about that yesterday - A. I wasn't sure. Q. -- you said that when you were preparing your affidavit, you hadn't realised that they had contributed 115,000. You only found that out more recently. A. That's right. Q. You knew on 9 December 2018 that they had contributed something in that order because you say that's how the amount of 270,000 was worked out by being approximately double the amount of money they had contributed. So are you saying,sir, that you remembered the contribution in December 2018 and you then forgot about it again between 2018 and 2021 when you swore your affidavit? Is that right? A. Probably so. Q. 'Probably so', you say. A. I don't know what to say to you. Like, yep, probably. Q. Even though this conversation on 9 December about the $270,000 actually features in your first affidavit. You didn't look at that conversation and say, 'Why did I offer him $270,000? There must have been some sort of contribution for me to offer $270,000'. You didn't think that? A. Well, I don't, I couldn't add to that either, so." Q. But you knew, didn't you sir, on 9 December 2018, that there had been a contribution by Ellie and George Barikhan to the purchase of the property and one that you were obliged to pay money for to settle with them in relation to that. Correct? A. First of all, it was Ellie, not George. Had never anything to do with it. And like I said to you, money went backwards and forwards all the time. So whether I used it for that or whatever, yes that might have been used to purchase that property that time. But then they had money to do other things too."
38. Vince deposed in his first affidavit that Ellie came to visit him at his workplace the following day, 10 December 2018, demanding money and saying repeatedly that "Salim wants something signed. We have no paperwork" and that "Salim wants paperwork". Vince gave inconsistent evidence within his first affidavit about how the letter that he signed on that day came to be prepared. Vince's first version of events was that Ellie wrote out by hand what he wanted Vince to sign. Vince's second version was that "Ellie and I hand wrote out what we had discussed". Vince arranged for Ms Wright to type up what had been written by hand in the terms that I have set out above, which Vince then signed and handed to Ellie. When asked about this evidence in his first affidavit during cross-examination, Vince initially said that he could not remember exactly how the handwritten document had been prepared, but ultimately committed to his first version that Ellie alone had written on the page, which Vince had then handed to Ms Wright to type.
39. However, Vince had given a third (and again differing) account of how the 10 December 2018 letter was created in his second affidavit, sworn on 4 October 2022. In that affidavit, Vince gave evidence that Ellie was very angry and very aggressive towards Vince when he came into his office on 10 December 2018. Vince deposed that Ellie told him that he had just had an argument with Salim, and that Salim wanted "something in writing about the money I lent you". According to Vince, Ellie said: "Salim wants it in writing and signed by you. If you don't sign it, something bad will happen to your business." Vince deposed that, in order to appease Ellie, "I got my secretary to come into my office and Ellie dictated the contents of the letter… My secretary typed the letter and handed the document to Ellie". Vince deposed that Ellie then handed the letter to him and yelled: "Sign it! Sign it! Sign it! I want you to sign it. If you don't sign it, I won't be responsible for whatever happens to you and your business." Vince described Ellie as being "very aggressive and in a rage" and deposed that he had signed the letter "[i]n the interest of looking after my staff" and "just to get rid of him".
40. Vince was cross-examined about the fact that his evidence of Ellie threatening Vince's business, or of Ellie conveying threats made by Salim if Vince didn't sign the document, had not been mentioned in Vince's first affidavit and had emerged for the first time in his second affidavit. When it was put to Vince, after being shown his first affidavit, that he had not mentioned anything there about Ellie making threats to his business, Vince answered, "… how'd he threaten my business?" and "But why would he threaten my business?". Vince said that he could not recall Ellie threatening his business on 10 December 2018. The cross-examiner then took Vince to those parts of his second affidavit where he had deposed that Ellie had threatened his business during their exchanges on 10 December 2018. Vince was asked which evidence was true: his evidence in his second affidavit about the alleged threats, or his evidence given moments earlier in cross-examination, that he could not recall any such threats. Vince acknowledged that he could not recall the threats but denied that he had made up the evidence of the threats in his second affidavit to try to cast Ellie in a bad light. Vince said that he probably did recall the alleged threats at the time he swore his second affidavit.
41. In cross-examination, Vince accepted that he could not remember exactly how the terms of the letter were recorded or dictated before the letter was typed, but his point was that Ellie had determined the contents of the 10 December 2018 letter and Vince had simply signed it because Ellie needed to show Salim. This led to the following exchange: "Q. You weren't even trying in these affidavits to give a proper account of events of 10 December, were you sir? A. … Of course, I was trying, we're doing the best we can do. I can remember, like you said, we went through the whole lot and I've done two, and I think it's pretty close to what's right?"
42. Ms Wright was not called to give evidence.
43. In cross-examination, Ellie denied that he was angry with Vince at their meeting on 10 December 2018. Ellie said that he had been "disappointed" with Vince, and that "he borrowed the money and we wanted to know when he would pay us back". It became clear from the following exchange a short time later in Ellie's cross-examination that the money that he described Vince as having "borrowed" included the $115,125.72 (emphasis added): "Q. But you could've, as I stated earlier, you could've at got at least when the $115,000 was advanced, you could've gotten something in writing. Could you not? A. It was trust. And this is why we are here in this Court. Q. I put it to you that you had an argument with Salim who wanted proof that moneys were advanced to Vince. Would you agree with that? A. No, because Salim gave him the cheque for - at the ANZ Bank, so we already knew we had given him the money. We just wanted to know when he would pay us back."
44. Ellie then agreed with the cross-examiner that he had told Ms Wright what to type for Vince to sign. Ellie denied forcing Vince to sign the letter, refusing to leave Vince's office until it was signed, or making threats against Vince. Ellie said that he gave the signed letter to his lawyers.
45. Vince did not pay Ellie any money after signing the 10 December 2018 letter. In an apparent attempt to explain this, Vince gave evidence in his second affidavit to the effect that Ellie was indebted to him in respect of money that he had sent to Ellie in Africa. Vince deposed that he had sent Ellie amounts totalling about $160,000.00 to Ellie while he was in Africa, that those payments that he made to Ellie in the period up to about mid-2013 had eliminated amounts owing by Vince to Ellie, and that Vince's further payments made to Ellie in Africa during the period after mid-2013 had resulted in a debt owed by Ellie to Vince. Vince did not identify the debt that he had owed to Ellie prior to mid-2013, the amount of the payments he made to Ellie that he contends eliminated that debt in mid-2013, or the amount of the payments he made to Ellie after mid-2013 that he contends were a debt owed by Ellie to him. Vince deposed that Ellie owed him an amount greater than that which he owed to Ellie, and that Ellie had told him that he had not disclosed this to Salim. Vince deposed that Ellie refused to discuss this every time Vince sought to raise it with him, including during their conversation on 10 December 2018, at various times after Vince signed the 10 December 2018 letter, and during their heated argument in December 2019 referred to at [100] below.
46. When asked in cross-examination about money that Vince had sent to him while he was in Africa, Ellie repeatedly said that it was his own money that he had "left with" Vince "on trust". These answers culminated in the following exchange between Ellie and the cross-examiner (emphasis added): "Q. Is Vince your banker, Mr Barikhan? A. No. Again, it was my money that I had left with Vince. I and my brothers deposited that money back then, okay, it's for the house in - in 2011. I and my brothers lent Vince Cagnoni the money, so please, let's go, you know, like we've helped him, we - we got the mortgage, please, you know, so."
47. It was then put to Ellie that Vince had begun sending him money in Africa before Ellie had paid the $115,125.72 to facilitate the settlement of Vince's purchase of the Woodville Road properties: "Q. You received money from Mr Cagnoni in September 2011, didn't you? A. I don't recall. Q. The amount of $70,000 Australian. A. That was my money, please. Q. I put it to you that was not your money, but Mr Cagnoni's money? A. It was my money. The evidence is there. Q. When you say, 'your money', what money is it? The $115,000? A. No, previous to that. Previous to that. Q. Mr Barikhan, there's no evidence of you lending Mr Cagnoni any money before the $115,000 was advanced? A. The two personal loans that we received, I and my brother George lended in Vince Cagnoni's work account, okay, so we used - he used - sent me that money."
48. However, later during his cross-examination, Ellie said that the money that Vince had sent to him while he was living in Africa was Ellie's commission money that he was entitled to for loans that he had arranged to finance cars sold through Vince's dealership. Ellie said: "… I left my commission with Vince, and - and when I needed help, he'd - he'd help me with my own commission and my own money."
49. It was put to Vince in cross-examination that he had decided to manufacture evidence about Ellie asking Vince for money while he was in Africa, and to rely on records that he knew showed commission payments by Sydney Auto Brokers to Ellie and to pretend that those were loans made by Vince to Ellie. Vince denied this.
50. According to Vince's evidence, Ellie visited the Woodville Road properties in March 2019 when the work described above was essentially complete. A Mr Fitton, who was known both to Ellie and to Vince, and who was assisting Vince in tidying up, showed Ellie around the properties. According to Vince, Ellie said: "Wow. How beautiful these are. Look at how good they are now."
51. In his affidavit sworn on 31 January 2022 replying to Vince's affidavit, Ellie confirmed that he had inspected the completed renovations. Ellie did not dispute Vince's description of the nature of the renovation work that was done or claim to have made any contribution to the renovations. However, Ellie did give evidence disputing that the renovations would have cost $550,000.00. Ellie deposed that he had "extensive experience in renovating properties over many years" and that "for $550,000.00 one could have built a brand new home on 177 Woodville Rd that would have included demolition of the existing house."
52. On 20 May 2019, Vince took out a new loan from ING in the amount of $1,152,000.00. Vince gave evidence that he used the proceeds of this new loan to pay out the MKM Capital loan, and to repay $400,000.00 that he had borrowed from his company.
53. Vince gave evidence in his first affidavit that he had a heated argument with Ellie in December 2019 about money, and that he had not seen Ellie since that time.
54. Ellie gave evidence that he first learned about the refinancing during a conversation that he had with Salim and Vince in Salim's office in early 2020. According to Ellie, he was "pleading with Vince to place the property on the market for sale or refinance to pay George and me out", and the conversation included the following exchange: "Salim: 'How much do you owe on the properties?' Vince: 'About $1,000,000.00' Salim: 'But your mortgage is only for $460,000.00.' Vince: 'No it isn't, I was broke. I needed money. I couldn't keep my head above the water. I refinanced in 2017 and again in 2019 with ING. I am sorry. I needed the money.'"
55. In his first affidavit, Salim gave a similar account of that alleged conversation in his office in early 2020, adding that he and Ellie had a conversation between themselves after Vince had left Salim's office: "Ellie: 'I can't believe what this guy has done to George and me. He just kept taking out the equity in the property for himself. I have been reluctant to take legal action because of our friendship but now I have no alternative.' Me [Salim]: 'You've got to do something. This guy is using you."
56. Vince gave evidence in his first affidavit denying that any such conversation occurred in early 2020, adding that he had not spoken to Ellie or any member of his family since December 2019 when he had the heated argument with Ellie to which I have referred above at [100]. Vince added that Ellie knew that he had refinanced with ING in about May 2019 because Ellie had introduced him to the broker who had arranged that refinancing.
57. Ellie did not respond to this aspect of Vince's evidence in his second affidavit sworn on 31 January 2022. Salim responded by deposing that, on reflection and after considering Vince's evidence, the conversation had taken place earlier than early 2020 and "probably shortly before the argument that Cagnoni had with Ellie in December 2019". Salim also revised his evidence about the location of the alleged conversation, deposing that he and Ellie had been together in either Salim's car or Ellie's car and had the conversation with Vince by mobile phone on speaker mode.
58. Ellie gave evidence that, by early 2020, he realised that "Vince had no intention of selling Woodville Rd and accounting to George and me for our share", and that Vince did not intend to repay either the 2016 loan or the 2017 loan.
59. On about 4 June 2020, Ellie caused a caveat to be registered on the titles to the Woodville Road properties claiming an equitable interest in the land as mortgagee pursuant to the 2016 mortgage and the underlying deed of loan.
60. On 23 June 2020, solicitors then acting for Vince wrote to Ellie's solicitors requesting that the caveat be withdrawn on the bases that Ellie did not have a mortgage over the Woodville Road properties and that the caveat did not contain the particulars required by s 74F of the Real Property Act 1900 (NSW). Ellie gave evidence that he caused his solicitors to reply to that letter by email on 27 July 2020. The email attached a copy of the 2016 loan and the 2016 mortgage and stated: "In view of the above documentation, it is abundantly clear that our client has an equitable interest in the property." I note that that email, which Ellie caused to be sent, made no mention of any claim by Ellie to have an interest in the Woodville Road properties other than the interest created by the 2016 mortgage. The solicitors who sent the email are the solicitors who are acting for Ellie and George in these proceedings.
61. Although the caveat was not withdrawn, Ellie's solicitors appear to have acknowledged that it was deficient because they lodged a fresh caveat on Ellie's behalf on 28 July 2020 claiming an interest under a mortgage and loan agreement dated 22 December 2016. The details supporting the claim were recorded in the following terms: "An equitable interest as equitable mortgagee pursuant to a deed of loan and mortgage executed by the registered proprietor on or about 22 December 2016 securing an advance of $150,000.00 from the caveator to the registered proprietor."
62. On 28 September 2020, Ellie and George caused their solicitors to lodge a further caveat on the title to the Woodville Road properties claiming an estate in fee simple by virtue of a beneficial interest in a trust dated 21 November 2011. The details supporting the claim recorded: "Registered Proprietor ('RP') holds the Land on constructive trust for RP and the Caveators as beneficial owners, the Caveators having provided $160,000.00 in July and August 2011 to RP to enable RP to acquire the Land from Laraine Gray and Danielle Agnew on 22 November 2011."
63. Ellie and George commenced these proceedings on 8 June 2021.

A resulting trust?

1. The contemporaneous documentary evidence, [7] understood in the context of Salim's attitude to these proceedings, [8] establishes that Ellie and George paid an amount equivalent to approximately 20.2 per cent of the purchase price of the Woodville Road properties by drawing the sum of $115,125.72 from the ANZ joint account to be paid by bank cheque to the vendor.
2. In opening submissions, senior counsel for Ellie and George submitted that the plaintiffs' evidence establishes that it was expressly agreed between Vince, Ellie, and George in 2011 that Ellie and George were to have "a share" in the Woodville Road properties in return for the payment of $115,125.72. That submission strayed beyond the pleaded case, which was limited to a claim that a resulting trust arose from the fact of the payment. Counsel for Vince did not raise any objection to this departure from the pleadings.
3. For the following reasons, I reject the submission that the evidence establishes any such express agreement.
4. Ellie gave evidence of conversations that he claims to recall having had with Vince, and with each of George and Salim, about the Woodville Road properties in about June or July 2011. [9] Each of George and Salim gave evidence about conversations that they claim to recall having with Ellie about those properties at about the same time. Each witness's memory of any such conversations is fallible due to the passing of ten years before they first swore affidavits in these proceedings setting out their account of the conversations in August 2021. [10]
5. Each witness's account of the conversations in his affidavit sworn in August 2021 was plainly reconstructed on the foundation of an assumption that the $80,000.00 personal loans that George and Ellie obtained from NAB in July 2011 and August 2011 (respectively) had funded a payment that they made to facilitate Vince's settlement of the purchase of the Woodville Road properties. That assumption has been falsified by the contemporaneous documents referred to at [27] above. Those contemporaneous documents show that the amount of the payment was $115,125.72 (not $160,000.00), that the payment was made out of the ANZ joint account (not directly out of the proceeds of the two NAB personal loans), and that the proceeds of the personal loans were not paid into the ANZ joint account. I reject the submission made by senior counsel for the plaintiffs that the documents do not shed any light one way or the other on whether the proceeds of the personal loans were paid into the ANZ joint account. The statements for the ANZ joint account were tendered. The credit entries recorded in those statements in the period after July and August 2011 do not include any credits that may be referable to the two $80,000.00 personal loans. Indeed, Ellie gave evidence in cross-examination that the proceeds of the two personal loans had been paid into Vince's "work account" and that Vince had used those funds to transfer money to Ellie as and when he required funds when he was in Africa. [11] That evidence is wholly inconsistent with the notion that there was any connection between the personal loans and the $115,125.72 payment.
6. The evidence of Ellie, George, and Salim about conversations concerning the Woodville Road properties in 2011 is unreliable for those reasons, and I reject it. George and Salim's evidence in cross-examination, in which they adhered to their reconstructed account of Ellie and George taking out the NAB personal loans in order to contribute to the purchase price of the Woodville Road properties, is unreliable for all of the same reasons. [12] I reject that evidence.
7. Ellie's evidence in cross-examination to the effect that it was agreed with Vince that Ellie and George would have a "share" in the Woodville Road properties [13] was internally inconsistent, inconsistent with Ellie's repeated description of the $115,125.72 as a "loan" to Vince during his evidence in cross-examination, inherently improbable in the context of the evidence of the conduct of Ellie and George after Vince acquired Woodville Road properties in November 2011, and inconsistent with the case that was pleaded and that was run at trial on behalf of Ellie and George.
8. Ellie's evidence in cross-examination varied between claiming that Vince had agreed that Ellie and George would have a "half share" in each of the Woodville Road properties, and his claim that one of the two properties - the vacant land at 179 Woodville Road - was to belong to Ellie and George. [14] That is the internal inconsistency to which I have referred above.
9. Ellie's claim to have agreed with Vince that he and George would have a "half share" in the Woodville Road properties (or would own one of those properties) in return for the $115,125.72 payment is irreconcilable with Ellie's own evidence in cross-examination, in which he consistently described the payment as a loan to Vince. [15] Ellie has at least 10 years' experience as a mortgage broker. [16] I reject the submission made by senior counsel for the plaintiffs that Ellie was using the term "loan" in cross-examination because he was not used to differentiating between loans and trusts. Ellie used the term "loan" in the same context as he referred to Vince as having "borrowed" the $115,125.72 sum, and at the same time as giving evidence of wanting to sell the property in 2015 to "get our money back" and wanting to know in December 2018 "when he would pay us back". Ellie's words plainly describe a loan, and efforts to cause that loan to be repaid. Ellie had caused separate caveats to be lodged against the title to the Woodville Road properties in 2020 - one claiming that Ellie had an interest in the land as mortgagee under the 2016 loan, and a later caveat claiming that Ellie and George had a beneficial interest in the land under what was described as a constructive trust. [17] The claims made by Ellie and George in these proceedings have included from the outset a claim that they acquired an interest in the land under a trust by reason of the payment that they made which enabled Vince to settle the purchase of the Woodville Road properties. I infer that, at the time of his cross-examination, Ellie was well aware of the distinction between making a loan that the borrower was required to repay and making a payment that entitled one to an interest in the land as a beneficiary under a trust. I consider that Ellie's evidence in cross-examination describing the $115,125.72 payment as a loan reflected his assessment of the true character and substance of the transaction.
10. There was no hint of uncertainty or hesitation in Ellie's language or tone when he repeatedly described the transaction as a loan during cross-examination. On the contrary, as senior counsel for the plaintiffs submitted, Ellie was "essentially combative from the moment he stepped inside the witness box".
11. One of Ellie's answers during cross examination revealed that his contention that he and George are "half owners" of the Woodville Road properties is nothing more than a notion that Ellie has constructed relatively recently to reflect what he considers to be a fair outcome to "settle" [18] the payment of $115,125.72 in 2011 (which Ellie consistently described in cross-examination as a loan), together with the 2016 loan of $150,000.00 and the 2017 loan of $20,000.00. I have extracted the transcript of that part of Ellie's cross-examination at [38] above. That outcome, for which Ellie advocated in cross-examination, is very different from the relief claimed by the plaintiffs in their statement of claim and from the outcome for which the plaintiffs advocated in the submissions made by senior counsel on their behalf.
12. In circumstances where Ellie's evidence about the terms of his discussion and agreement with Vince has been rejected as unreliable, and where Vince gave no evidence about the terms of his discussions with Ellie at the time, it is relevant to have regard to the parties' conduct after the payment of $115,125.72 was made. [19] As I have stated above, Ellie's evidence that the substance or effect of his agreement with Vince was that Ellie and George would have a "share" in the Woodville Road properties is inherently improbable having regard to the way in which Ellie and George conducted themselves after Vince acquired the Woodville Road properties in November 2011. On their own evidence, neither Ellie nor George paid any attention to what Vince was doing (or not doing) with the properties in the period from 2012 to 2014, except in relation to the demountable home installed on one of the properties. The Woodville Road properties were left vacant during that period, and were allowed to fall into an increasingly worse state of disrepair and neglect. [20] Ellie must have become aware of the state of the properties when he met Vince and Mr Kelly there in January 2015, [21] yet there is no evidence to suggest that he sought to do anything, or that he asked Vince to do anything, to improve them or to prevent their further deterioration. The neglect continued throughout 2015 and 2016 until sometime in 2017. [22] It is inherently improbable that Ellie and George would have allowed this state of affairs to unfold without protest, if they had agreed with Vince in November 2011 that they were entitled to a "share" in the properties.
13. Ellie's evidence to the effect that he paid for half the costs of transporting the demountable home to 179 Woodville Road, and that he gave Vince $10,000.00 in cash to pay ESED's fees, is unsupported by any contemporaneous documentary evidence. [23] Given the demonstrated unreliability of Ellie's evidence about the $115,125.72 payment in November 2011, I do not regard Ellie's evidence about these events in December 2012 as reliable.
14. Mr Halcrow's evidence about who paid for the transport of the demountable home to 179 Woodville Road was also unsupported by any documents created at the time. His affidavit, which was sworn in August 2021, did not disclose any particular reason why he would recall the details of a cash transaction some nine years earlier in December 2012. [24] Mr Halcrow's recollection of that transaction is fallible due to the passage of time, and he passed away before his evidence was able to be tested in cross-examination. For those reasons, I attribute no weight to Mr Halcrow's evidence.
15. Although he disputes Vince's evidence about the cost of the work that he carried out to the Woodville Road properties in the period between 2017 and about March 2019, Ellie does not cavil with Vince's evidence about the nature and extent of the work done, and does not claim that he or George had had any involvement in, or exercised any oversight or control over, the work, or made any contribution to the cost of the work. It is inherently improbable that Ellie and George had a "share" in the Woodville Road properties yet took no interest in that work or the manner in which it was being carried out during that two year period. [25] In circumstances where Ellie had lent Vince $20,000.00 in October 2017 to tide him over so that he could afford to pay the mortgage, rates, and land tax for the Woodville Road properties, it is equally improbable that Ellie and George would have taken no interest in how that work was being financed and whether Vince was borrowing against the security of the Woodville Properties to pay for the work, if they had agreed with Vince in November 2011 that they were entitled to a "share" in the properties. [26] I note that Ellie's own evidence is that he made no complaint directly to Vince when he learned in early 2020 that Vince had refinanced the Woodville Road properties, increasing the amount of the loan secured against them to about $1,000,000.00. [27] Approximately six months passed after Ellie says that he learned about the refinancing before he lodged any caveat, and a further 18 months passed before Ellie and George commenced these proceedings. It is not necessary to resolve the dispute between the parties about the actual cost of the work undertaken by Vince, but it is inherently improbable that he would have done that work without calling on Ellie and George to contribute to the cost if he had agreed that they had a "share" in the Woodville Road properties.
16. It is also inherently improbable that Ellie and George would have made no contribution to the outgoings payable in respect of the Woodville Road properties, including land tax and council rates, if Vince had agreed in November 2011 that they would have a "share" in the properties, as Ellie and George now claim. Ellie and George do not claim to have made any contribution to those outgoings. Their only explanation - that their "deal" with Vince was that "we could cover our loan and he'd cover the rest" - is not credible because their personal loans were not connected with their $115,125.72 payment, for the reasons already explained above. [28]
17. The terms of the 10 December 2018 letter recording Vince's agreement that "settlement on Woodville Road would be $300,000.00" are equivocal and provide no support for the plaintiffs' contention that Vince expressly agreed in November 2011 that they would have a "share" in the Woodville Road properties. Those words in the letter are equally capable of referring to repayment of a loan or to the settlement of some other claim in respect of the Woodville Road properties. George did not corroborate Ellie's affidavit evidence that he and Ellie agreed to "surrender our share" in the Woodville Road properties for $300,000.00. [29] Inconsistently with that affidavit evidence, but consistently with his evidence in cross-examination describing the $115,125.72 payment as a loan to Vince, Ellie gave evidence in cross-examination that he asked Vince to sign the letter on 10 December 2018 because "we had given him the money. We just wanted to know when he would pay us back". [30] Ellie's affidavit evidence lacks credibility in light of that inconsistency, and I prefer his evidence given in cross-examination.
18. If Vince had agreed in November 2011 that Ellie and George would have a "share" in the Woodville Road properties in consideration for the $115,125.72 payment, it is inherently improbable in my opinion that Ellie would not have caused a caveat to be lodged in respect of that "share" in June 2020, when he first caused his solicitors to lodge a caveat after claiming to have realised in early 2020 that "Vince had no intention of selling Woodville Road and account to George and me for our share". The only interest claimed in the caveat that Ellie caused to be lodged in June 2020 was as equitable mortgagee under the 2016 mortgage. It was not until the end of September 2020 that Ellie and George caused those same solicitors to lodge a caveat claiming an interest in the Woodville Road properties under a trust. It is clear from the details of the claim set out in that caveat that the claim was founded on the assumption that the personal loans that George and Ellie had obtained from NAB in July 2011 and August 2011 (respectively) had funded the payment that they made in connection with Vince's settlement of his purchase of the Woodville Road properties. [31] As I have already explained, that assumption is falsified by contemporaneous documents. [32]
19. I have not overlooked the evidence of Ellie and Salim to the effect that they assisted Vince with a major clean-up of the house on 177 Woodville Road soon after Vince purchased the properties, and Salim's evidence that he overheard Vince saying to Ellie that "[w]e are halves in it". [33] I do not consider that evidence to be reliable, having regard to the passage of time and the demonstrated unreliability of Ellie and Salim's evidence of other events and conversations in 2011.
20. Nor have I overlooked Mr Kelly's evidence. Mr Kelly's account in his affidavit sworn in August 2021 of a conversation that he claimed to recall from January 2015 is unreliable due to the passage of time. Considering Mr Kelly's evidence as a whole, I consider that he is likely to have subconsciously reconstructed the conversations that occurred six years earlier on the basis of the erroneous description of Vince in Mr Kelly's contacts list as a part-owner of property with Salim and Ellie. No party to these proceedings suggests that any property was in fact co-owned by Salim, Ellie, and Vince. [34]
21. For all of the reasons explained at [113]-[130] above, I reject as inherently improbable and unreliable Ellie's evidence that Vince agreed that he and George would have a "share" in the properties. The evidence adduced by the plaintiffs, considered as a whole, does not establish any such agreement. It is not necessary to consider issues that would have arisen under s 23C of the Conveyancing Act if such an agreement had been established.
22. Vince gave no evidence at all about any conversations with Ellie, George, or Salim about the Woodville Road properties in 2011, and simply asserted in paragraph 31 of his first affidavit that no bank cheque or deposit from Ellie or George had been used for his purchase of the Woodville Road properties. [35] That assertion was wrong, as Vince had to acknowledge in cross-examination. [36] Vince did not suggest that the $115,125.72 payment was a gift to him. Vince's evidence suggesting that the payment was made to him as a repayment of money that he had previously lent to Ellie lacks credibility due to the vague nature of that evidence, the lack of any contemporaneous record of Vince having made a loan to Ellie prior to November 2011, and Vince's own evidence that he was indebted to Ellie at that time. [37] I reject Vince's evidence that the $115,125.72 sum was a repayment to him of moneys that he had lent to Ellie prior to November 2011. The only other explanation proffered by Vince for the $115,125.72 payment - that it was a loan from Ellie and George to Vince - is consistent with Ellie's evidence in cross-examination to which I have referred above.
23. It is convenient at this point to record that Vince was a most unsatisfactory witness. There were inconsistencies within his affidavit evidence, [38] his answers in cross-examination were frequently evasive and unresponsive to the question that been asked of him, and much of his evidence was marred by prevarication and obfuscation. [39] He had a tendency to embellish his account of events and conversations in ways that he thought would assist his defence when he had no memory of the details that he had added by way of embellishment. [40] However, those fundamental difficulties with Vince's evidence do not assist Ellie and George. To the extent that they relied on an unpleaded express agreement with Vince in 2011 that Ellie and George would have a "share" in the Woodville Road properties, Ellie and George bore the onus of proving that agreement on the balance of probabilities. For the reasons I have explained above, Ellie and George have failed to discharge that onus. [41]
24. Senior counsel for the plaintiffs made the alternative submission that the amount of the $115,125.72 payment was "quite a neat figure mathematically in terms of a contribution that suggests in and of itself" that the parties intended the payment to be "an equity contribution". I do not consider that the amount of the contribution - being the precise amount of the shortfall between the amount required to be paid to the vendor to settle Vince's purchase of the Woodville Road properties and the proceeds of the home loan that Vince had obtained from NAB to finance the purchase - rationally supports an inference that Vince, Ellie, and George intended the payment to be a contribution by Ellie and George to the purchase price of the properties rather than a loan to Vince to facilitate his purchase of the properties. In my opinion, the amount of the payment "in and of itself' is equally consistent with each of those possibilities.
25. That leaves the plaintiffs' pleaded case that the $115,125.72 payment gave rise to a resulting trust. That case relies on a presumption of fact which arises where property is purchased using funds contributed in whole or in part by others. The presumption is that the purchaser taking the title to the property and the contributors intended the property to be held for the benefit of all contributors as tenants in common in proportion to their respective contributions. The presumption will yield to any inference of an actual intention to the contrary drawn on the balance of probabilities from the totality of the evidence. [42]
26. The evidence to which I have referred at [119], [120], [122], [125], [126], and [127] above, considered as a whole, supports an inference on the balance of probabilities that Vince, Ellie, and George intended on 2 November 2011 that Ellie and George's payment of $115,125.72 was a loan made to Vince to facilitate his purchase of the Woodville Road properties for himself, and I so find. I acknowledge that there is no evidence of any discussions between Vince, Ellie, and George at the time about whether the loan would be interest bearing, or when it would be repayable. I regard this as symptomatic of the informality that appears to have attended all of their financial dealings with one another at that time, rather than as displacing or outweighing the other evidence that points the intention that the payment was a loan. For example, I refer to Ellie's evidence that he was content to leave "my own money" (being commission owing to him for financing cars in connection with Vince's car sales business) with Vince "on trust" on the basis that Vince would pay it to him as and when Ellie required it, [43] and to Vince's evidence that there was "money going backwards and forwards most of the time with what we were doing" under "very messy" arrangements. [44] In the absence of an agreement about the date for repayment, the loan is repayable on demand. Counsel for Vince accepted in closing submissions that, if the $115,125.72 payment was found to be a loan to Vince, then interest would be payable at court rates.
27. The consequence of my finding that Vince, Ellie, and George intended the $115,125.72 payment to be a loan is that the presumption referred to at [135] above does not arise. Accordingly, Vince does not hold the Woodville Road properties on resulting trust for himself, Ellie, and George. The plaintiffs' claim for a declaration of resulting trust in prayer 1 of the statement of claim must be dismissed.

The rate of interest payable in respect of the 2016 loan

1. The relevant terms of the 2016 loan are referred to at [66]-[69] above. The terms of clauses 2.3 and 2.4, and the defined terms within those clauses, bear repeating.
2. Clause 2.3 of the deed of loan provided that: "The Principal Sum and all interest accrued thereon must be paid by the Borrower on or by the Repayment Date and in the meantime will immediately become due and payable upon the happening of any one or more of the following events …"
3. Clause 1.1 defined the "Repayment Date" as the earlier of the expiry of the Term or the occurrence of an event of default under clause 5. The "Term" was defined as the term set out in the Schedule, being a period of three months after the "Commencement Date". The Commencement Date was not specified in the Schedule, but it is common ground that the loan was in fact made on or about 2 December 2016.
4. Clause 1.1 defined the "Interest Rate" as the rate specified in the Schedule, being the rate of 2 per cent per month, calculated on a daily basis on so much of the "Loan Amount" of $150,000.00 as is outstanding from time to time.
5. Clause 2.4 provided: "The Borrower must pay interest to the Lender at the rate of the Interest Rate calculated on a daily basis on the amount outstanding from day to day with such interest payable at the end of the term, subject to clause 2.3."
6. Counsel for Vince submitted that the effect of clause 2.4, properly construed, is that the "Interest Rate" (as defined in the deed of loan) ceases to apply once the "Repayment Date" passes on expiry of the three-month "Term", even if the whole of the principal sum remains outstanding. Counsel for Vince acknowledged that this construction was "ridiculous" but submitted that it is what the parties agreed to by the words of clause 2.3, which requires the principal sum and all interest accrued thereon to be paid "on or by the Repayment Date", and by the words of clause 2.4, which refer to interest calculated at the "Interest Rate" to be "payable at the end of the term". It was submitted that the deed of loan is silent about the rate at which interest accrues on any amount outstanding after the end of the three-month term, and that the "Interest Rate" as defined therefore does not apply after the expiry of the term.
7. I reject those submissions. A reasonable businessperson would have understood the words in clause 2.4 of the deed of loan as requiring the borrower to pay interest at the defined "Interest Rate" on the amount outstanding from day to day. A reasonable businessperson would have understood the words "with such interest payable at the end of the term, subject to clause 2.3" as deferring the time at which such interest was payable to the end of the term, notwithstanding that the interest was to be calculated on a daily basis, unless the principal sum and accrued interest became payable earlier by reason of one of the events of default specified in clause 2.3. A reasonable businessperson would not have understood those words as absolving the borrower of any obligation to pay interest at the contractual rate for any period of time after the end of the term during which the moneys remained owing. That conclusion flows from the literal meaning of the words of clauses 2.3 and 2.4 and is entirely consistent with the obvious commercial purpose of the deed of loan, which was to facilitate the loan of the lender's funds to the borrower at an agreed rate of interest that was payable by the borrower as the price for the use of the lender's funds. A construction that permitted the borrower to continue having the use of those funds at a significantly reduced price if the borrower breached his obligation to repay the loan on expiry of the term would be commercial nonsense. [45]

The application for possession and an order for judicial sale

1. In circumstances where it is common ground that Ellie made the 2016 loan, that the loan is secured by the unregistered 2016 mortgage, and that Vince has not repaid any part of the principal sum or made any interest payments in respect of that loan, Vince does not oppose the Court exercising its discretion to make an order for judicial sale. [46]
2. I have summarised the terms of the orders sought by Ellie for judicial sale at [6] above.
3. The first mortgagee, ING, is the second defendant to these proceedings. On 1 July 2021, the Court made an order by consent noting the terms of an agreement between the plaintiffs and ING, and excusing ING from further appearance in the proceedings unless and until the Court should intend to make orders contrary to or inconsistent the terms of that agreement, in which case the Court would hear ING before making such final order. The terms of the agreement noted by the Court are as follows: "1. the second defendant [ING] neither consent to nor opposes the orders sought in the statement of claim, subject to the first and second plaintiffs [Ellie and George] seeking order 21 as against the first defendant only and not as against the second defendant; 2. if the first plaintiff obtains possession of the property the subject of the proceedings, the first defendant is to immediately hand over that possession to the second defendant to enable the second defendant to conduct a mortgagee sale of the property pursuant to the second defendant's first ranking registered mortgage AP264242, unless the second defendant gives written notice that it does not require such possession; and 3. the first and second plaintiffs will not take any steps in reliance on orders 5 - 14 sought in the statement of claim for so long as the second defendant, having been handed or otherwise taken possession, is progressing a mortgagee sale of the property; and 4. the second defendant consents to an order being made directing the second defendant as to how any net proceeds of any sale by the second defendant of the property the subject of the proceedings, after the payment of selling costs and all other amounts secured by the second defendant's mortgage, are to be paid."
4. The orders for judicial sale set out in prayers 5 to 14 of the statement of claim include an order that Ellie be appointed to effect the sale on behalf of the Court. Counsel for Vince submitted that the Court should appoint Vince or, alternatively, a third party, to effect the sale. It was submitted that Vince had concerns about whether Ellie would conduct the sale "at arm's length". The precise nature of, and basis for those concerns, was not articulated in counsel's submissions. Nor were any such concerns put to Ellie during cross-examination.
5. Evidence adduced by Vince, which was not contested by the plaintiffs, suggests that the value of the Woodville Road properties is in the vicinity of $1,850,000.00. In his first affidavit sworn on 9 December 2021, Vince deposed that an amount of $1,100,000.00 was owing to ING and secured by its registered mortgage. There was no evidence before the Court of the amount owing to ING at the time of the final hearing in March 2023 and I proceed on the assumption that the amount owing remains in the vicinity of $1,100,000.00. Vince accepted the plaintiffs' calculation that, if interest is payable in respect of the 2016 loan at the rate of 2 per cent per month calculated on a daily basis for the whole of the period during which moneys have been owing since 2 December 2016 (as I have held above), then the amount secured by the 2016 mortgage as at the conclusion of the final hearing was $376,257.55. Vince did not oppose the order sought by the plaintiffs that the amount owing under the 2017 loan be paid out of the proceeds of sale, and accepted the plaintiffs' calculation of the amount of principal plus interest as $24,532.55 as at the conclusion of the final hearing. On that basis, the total amount to be paid to ING and Ellie out of the sale proceeds of the Woodville Road properties would be likely to be in the order of $1,500,000.00.
6. Senior counsel for Ellie and George submitted that, if the $115,125.72 payment was a loan (as I have held), then the principal sum of $115,125.72 plus interest at the court rates should be ordered to be paid to Ellie and George out of the proceeds of sale of the Woodville Road properties before any surplus is distributed to Vince. It was submitted that, because the loan was made for the purpose of Vince purchasing the Woodville Road properties, "one would infer an intention that it be paid out of the property". I reject that submission. As I have said above, the loan was repayable on demand. The inferred or implied term for which Ellie and George contended would be akin to treating the unsecured loan as being secured against the Woodville Road properties. I do not accept that such an intention is to be inferred, or that such a term is to be implied, merely because the loan was made for the purpose of enabling Vince to settle his purchase of the Woodville Road properties. Ellie was an experienced mortgage broker. If he and George had intended to have security over those properties for their advance, they would have required Vince to execute a charge or mortgage, as Ellie did in respect of the 2016 loan.
7. As senior counsel for the plaintiffs submitted, it is relevant to the exercise of the Court's discretion to make an order for judicial sale to take into account whether the sale proceeds will likely exceed the amount secured by the first mortgage and, if so, whether they will likely exceed the amount secured by the second mortgage. [47] On the basis of the evidence referred to above, it seems likely that the sale proceeds will exceed the total amount secured by ING's mortgage and by the 2016 mortgage, plus the amount owing to Ellie under the 2017 loan. It follows that Vince has an interest in achieving a good price for the Woodville Road properties so as to maximise the amount payable to him.
8. Senior counsel for the plaintiffs submitted that, if Ellie is appointed to effect the sale, he will be required to so in accordance with the duties owed by a mortgagee exercising a power of sale, as expressly provided in the terms of the order proposed in prayer 9 of the statement of claim. Ellie will be obliged to act bona fide and to take reasonable precautions to obtain a proper price under an independent bargain with the purchaser. [48] As I have already mentioned, counsel for Vince did not articulate the basis for the asserted concern that Ellie would not comply with those obligations.
9. Senior counsel for the plaintiffs further submitted that the purpose of the order for judicial sale is to facilitate a second mortgagee's enforcement of its security, [49] and that an order appointing Vince to effect the sale would not be an effective means of doing so because Vince "presumably wants to hang on to the property and will show no sense of urgency in selling it". I respectfully consider that there is force to that submission. Vince has taken no steps to pay any amount owing under the 2016 loan, despite having represented that he would do so in the 10 December 2018 letter. There has been more than sufficient time for Vince to sell the Woodville Road properties in order to repay the 2016 loan if he were inclined to do so. It was clear from the submissions made on his behalf at the conclusion of the hearing that it remains Vince's preference not to sell the properties.
10. For all of those reasons, but subject to hearing from ING, I have determined that the Court should exercise its discretion to make the order for judicial sale on the terms proposed in prayers 5 to 10 of the statement of claim. The plaintiffs' proposed orders concerning the distribution of the sale proceeds in prayer 13 of the statement of claim are inappropriate because their claim to an interest in the land under a resulting trust has failed. There will be an order that the sale proceeds be applied: 1. first, to pay the costs of the sale; 2. second, to discharge ING's mortgage of the Woodville Road properties; 3. third, to discharge the 2016 mortgage; 4. fourth, to pay the amount owing to Ellie in respect of the 2017 loan; and 5. fifth, to pay the remainder to Vince.
11. It is appropriate to make orders for possession in the terms sought in prayers 2 to 4 of the Woodville Road properties. Those orders are sought by way of specific performance of the 2016 mortgage, the terms of which included an entitlement for the mortgagee to take possession of the land in the event of default.
12. Finally, it is appropriate that there should be an order for liberty to apply in the terms of prayer 14 of the statement of claim.
13. The consent orders made by the Court on 1 July 2021 require that ING have an opportunity to be heard before making a final determination to make orders to the effect summarised above. Those orders would be contrary to the agreement noted by the Court on 1 July 2021. That is because the orders would require Ellie to effect the sale of the Woodville Road properties on behalf of the Court, unless he exercises the liberty to apply to seek an order discharging him from complying with those orders. Contrary to the agreement between the plaintiffs and ING, Ellie will not be at liberty to refrain from conducting the sale merely because ING requires Ellie to hand over vacant possession and decides to exercise its own power of sale.

Conclusion and orders

1. In summary: 1. in relation to the 2016 loan, judgment will be entered in favour of Ellie against Vince in the sum of $150,000.00, plus interest calculated at the rate and in the manner specified in the deed of loan for the whole of the period for which moneys have been owing, and there will be an order for interest payable after judgment pursuant to s 101 of the Civil Procedure Act 2005 (NSW) to calculated at that same rate (cf statement of claim, prayers 15-17); 2. in relation to the 2017 loan, judgment will be entered in favour of Ellie against Vince in the terms of prayer 18 of the statement of claim and there will be an order for interest up to judgment in terms of prayer 19 of the statement of claim, noting that interest will be payable after judgment pursuant to s 101 of the Civil Procedure Act 2005 (NSW); 3. subject to hearing from ING, there will be orders to the effect summarised at [154]-[156] above; 4. there will be an order that the proceedings are otherwise dismissed; and 5. there will be an order in relation to the costs of the proceedings, about which I will hear from the parties.
2. I make the following directions: 1. By 5:00pm on 5 July 2023, the legal representatives for the plaintiffs and the first defendant are to prepare and send to my Associate the terms of proposed orders giving effect to these reasons for judgment, and to provide a copy of those proposed orders to the solicitors for the second defendant. 2. The proposed orders referred to in order 1 above are to include the terms of the orders for which the plaintiffs and the first defendant contend in relation to costs. 3. By 5:00pm on 5 July 2023, the plaintiffs and the first defendant are to file and serve, and send to my Associate, any evidence on which they intend to rely in relation to the costs of the proceedings. 4. List the proceedings at 4:00pm on 6 July 2023 for the purpose of: 1. hearing from the second defendant in relation to the proposed orders referred to at [154]-[156] above; and 2. hearing from the parties in relation to the costs of the proceedings.

Endnotes

1. Folio identifiers 11/562212 and 12/562212.
2. See [25] above.
3. See above at [4].
4. See above at [6]-[8].
5. See above at [5].
6. See [57] above.
7. See [27]-[28] above.
8. See [29]-[32] above.
9. See [14]-[20] above.
10. Watson v Foxman (1995) 49 NSWLR 315 at 319 (McLelland CJ in Eq).
11. See [33] above.
12. See [40]-[41] above.
13. See [35] and [37]-[39] above.
14. See [35] and [37]-[38] above.
15. See [34]-[38], [90], and [93] above.
16. See [13] above.
17. See [106]-[109] above.
18. To use Ellie's term in the 10 December 2018 letter.
19. County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 at [7]-[27] (Spigelman CJ, Beazley JA agreeing).
20. See [52]-[55] above.
21. See [58]-[59] above.
22. See [55] and [72]-[75] above.
23. See [51] above.
24. See [51] above.
25. See [72]-[75] and [97]-[98] above.
26. See [71] and [97]-[104] above.
27. See [101]-[102] above.
28. See [75] above.
29. See [77]-[81] and [91] above.
30. See [90] above.
31. See [105]-[109] above.
32. See [115]-[116] above.
33. See [48]-[50] above.
34. See [59]-[63] above.
35. See [25]-[26] above.
36. See [42] above.
37. See [42]-[46] above.
38. See [84] above.
39. See, for example, [42] and [47] above.
40. See, for example, [86]-[88] above.
41. See [117]-[132] above.
42. Bosanac v Commissioner of Taxation (2022) 96 ALJR 976; (2022) 405 ALR 424; (2022) 115 ATR 35; (2022) 18 ABC(NS) 521; (2022) 65 Fam LR 508; [2022] HCA 34 at [8], [12]-[13], [21] and [32]-[33] (Kiefel CJ and Gleeson J), [50]-[51] and [63]-[67] (Gageler J), and [99]-[106] (Gordon and Edelman JJ).
43. See [95] above.
44. See [43] above.
45. Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; (2014) 88 ALJR 447; (2014) 306 ALR 25; (2014) 7 ARLR 361; [2014] HCA 7 at [35] (French CJ, Hayne, Crennan, and Kiefel JJ); Simic v New South Wales Land and Housing Corp (2016) 260 CLR 85; (2016) 91 ALJR 108; (2016) 339 200; [2016] HCA 47 at [78] (Gageler, Nettle, and Gordon JJ).
46. King Investment Solutions Pty Ltd v Hussain (2005) 64 NSWLR 441; (2005) 1 BFRA 577; [2005] NSWSC 1076 (Campbell J).
47. King Investment Solutions Pty Ltd v Hussain, supra, at [120]-[123].
48. See Almona Pty Ltd v Parklea Corporation Pty Ltd (2021) 392 ALR 457; [2021] NSWCA 171 at [56]-[64] (Bathurst CJ), [105]-[115] (Basten JA), [318]-[325] (White JA), and the authorities there cited.
49. Mango Media Pty Ltd v Mertes (2006) 14 BPR 26,971 [2006] NSWSC 1460 at [31] (Brereton J).

Amendments 30 June 2023 - Coversheet amended - catchword spacing DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 30 June 2023