3 In turn, the first and second defendants have brought a summons in the proceeding seeking an order for the removal of the caveat lodged by the plaintiffs over the property pursuant to s.90(3) of the Transfer of Land Act.
4 The facts in the case are somewhat complicated, and a number of them are in dispute. However the facts which are essential for the purposes of the applications which are before me can be summarised briefly. In either late 2002, or January 2003, Beiser and Topoljski entered into a joint venture agreement, initially for the purposes of developing units at Jersey Parade, Carnegie. The plaintiffs' case is that the agreement was committed to writing and was constituted by a document, which is in evidence before me, entitled "Joint Venture Agreement Jersey Property" dated 13 January 2003, sealed by the second named plaintiff, P.C.C. (Imports) Pty Ltd and signed by Topoljski. On the other hand the first defendant submits that the agreement was verbal, and was constituted by conversations between Topoljski and Beiser in late 2002. It is contended that the written joint venture agreement was only signed for the purposes of enabling Beiser to obtain finance to progress the development of the Jersey Parade units.
5 On any view, it is common ground that by the terms of the agreement the profits of the joint venture were to be divided as to 70% for the second plaintiff, and 30% for the first defendant. Beiser was to contribute capital and know-how to the project, and Topoljski was to contribute labour, project management skills and some capital. The written agreement provided that the second plaintiff would be entitled to charge the joint venture interest at the rate of 8% in respect of all funds advanced to the joint venture. The first defendant denies that that was a term of the oral agreement made between the parties and which, it is contended, governs the relationship between the parties.
6 The Jersey Parade project was completed in about May 2003. At about that time it was agreed between the parties to roll over the profit from that project into further developments of residential properties to be undertaken by Beiser or by entities nominated by him, and by Topoljski. The plaintiffs claim it was agreed that those projects be conducted on the terms set out in the written joint venture agreement between the second plaintiff and Topoljski. It is common ground between the parties that the profits of each succeeding development was rolled over into the next development. The point at issue between the parties is whether the plaintiffs were entitled to charge the joint venture interest at the rate of 8% in relation to any advances made by them to the joint venture.
7 In any event, after the completion of the Jersey Parade project, companies associated with Beiser on the one hand, and Topoljski on the other hand, carried out four further development projects at Tattenham Street, Caulfield East; Royal Avenue, Glenhuntly; Marne Street, East St Kilda; and, finally, at Murray Street, East St Kilda. The penultimate project, at Marne Street, was concluded in July 2004. The Murray Street project (being the fifth and last project), concluded in June 2005.
8 The dispute between the parties arises in respect of two payments which were made in favour of Topoljski on the account of the third plaintiff, Sortelli, in May and June 2005. On 25 May 2005 Topoljski procured payment to himself of the sum of $300,000 from Sortelli's account. On 14 June 2005 Topoljski had a further sum of $200,000 paid to him out of the accounts of Sortelli. The first payment of $300,000 was applied by Topoljski to facilities which he had with the National Australia Bank which was secured over the Camperdown Street property. It is not altogether clear whether the $200,000 was also paid against that facility. The affidavit of Ms Flis, sworn in support of the plaintiffs' case, suggests that Topoljski sought payment of that cheque for that purpose.
9 The plaintiffs allege that the two payments were made in excess of any entitlements of Topoljski to the profits of the joint venture and that as a consequence Topoljski overdrew the sum of $240,096.94 from the joint venture. In response, Topoljski, in his affidavit, claims that the amounts paid to him were part-payment of his entitlement to the profits from the joint venture, from which he is still entitled to a further sum of $60,000.
10 As I understand it, the difference between the amount which the plaintiffs assert is owed to them by Topoljski, and, on the other hand, the amount which Topoljski claims he is still owed from the joint venture, arises from the different positions taken by the parties in relation to the issue whether the plaintiffs were entitled to charge the joint venture 8% interest on moneys advanced by them to the joint venture.
11 The circumstances in which the two payments were made to Topoljski are in dispute. Beiser left for overseas on 11 May 2005. He appointed Topoljski, Ms Jacobson and Ms Flis as alternative directors of the third plaintiff during his absence. The third plaintiff was the vehicle used for the last development by the joint venture. It is common ground that the two payments were made to Topoljski on request by him made to Ms Flis. Ms Flis is employed by the plaintiffs as their administration manager. In her affidavit she states that Topoljski told her that he was entitled to the moneys from the third plaintiff. Topoljski in his affidavit states that before Beiser departed for overseas, he told Beiser that the NAB bank bill of $300,000, secured over the Camperdown Street property, was expiring on 31 May 2005. Topoljski says that he also told Beiser that his personal overdraft with the NAB was nearing its limit of $200,000 and would also need to be repaid. At that time Topoljski had not received any sum on account of his 30% interest in the profits of the five projects undertaken by the joint venture. Mr Topoljski maintains that Beiser told him that he would provide funds so that Topoljski could pay the $300,000 bank bill and the $200,000 overdraft while Beiser was away, and that Topoljski should contact Ms Flis to arrange payment.
12 In response Beiser, in his affidavit, states that he did not authorise the payment of $300,000 made by the third plaintiff to Topoljski. He states that while he was overseas Topoljski telephoned him and asked him if he could have $200,000 of his money. Beiser states that he authorised the payment of $200,000, but did so in ignorance of the earlier payment of $300,000 made in May. Beiser says that he spoke to Ms Flis while he was away and authorised her to draw up and sign the cheque of $200,000 to Topoljski.
13 Beiser returned from overseas on 20 June 2005. In the meantime Mr and Mrs Topoljski had departed for overseas and they returned in early October. Shortly thereafter the joint venture relationship between Beiser and Topoljski came to an end.
14 On 6 April 2006 Beiser's solicitors sent a letter to Topoljski seeking payment of the sum of $240,096.94 claimed to have been overdrawn by Topoljski on his entitlements and drawings from the joint venture. On 27 July 2006 there was lodged at the Titles Office a transfer by the first and second defendants to the second defendant of their interest in the Camperdown Street property. There was also sought to be registered a discharge of the mortgage by the first and second defendants to the National Australia Bank, and in its place a new mortgage by the second defendant to the bank.
15 In short compass, the plaintiffs claim that Topoljski acted in breach of his fiduciary duties to the plaintiffs in procuring the two payments to himself in May and June of 2005. It is claimed that as a consequence the first and second defendants hold the East Brighton property on a constructive or resulting trust on behalf of the third plaintiff or all of the plaintiffs to the extent of the moneys said to be misappropriated. It is that trust which is claimed to be the basis of the caveat lodged by the third plaintiff over the title to the Camperdown Street property. Alternatively the plaintiffs' claim is based on the alleged overpayment to Topoljski from the joint venture from the sum of approximately $240,000. It is submitted that there is a real risk of dissipation of assets by the first defendant, evidenced principally by the transfer by him to his wife of his interest in the Camperdown Street property. Accordingly the plaintiffs seek a Mareva order against the first and second defendants.
16 The first defendant having brought a summons in this case to remove the caveat, the onus now lies on the plaintiffs to establish that there is a serious question to be tried that the third plaintiff has the estate or interest in the land claimed in the caveat. Further, it must be shown that the balance of convenience favours the maintenance of the caveat until the trial of this action.[1]
17 The principles relating to the plaintiffs' claim for a Mareva injunction are well established. The plaintiffs are required to show that they have a good arguable case in the proceeding. Further they must show that there is a substantial risk there will be a dissipation of assets by the defendant before judgment which might deprive the plaintiffs of the fruits of their judgment. It is well established that the jurisdiction to grant a Mareva injunction must be exercised with care, and that the purpose of such an order is not to provide a plaintiff with security in advance for a judgment which he might obtain in the proceeding.[2]
The Caveat
18 I shall first consider the application by the first defendant to remove the caveat. That caveat was lodged by Sortelli Pty Ltd. The caveat claims an equitable interest in fee simple in the interests of the first defendant as one of the registered proprietors in the property. The grounds of claim stated are: