First Plaintiff v First Defendant

1 Dr Longxiang Gao and Ms Xing Chen, the plaintiffs, claim the amount of $999,789.32 together with interest, arising out of loans they say were made by them in 2016 to Max Koshani, the first defendant. They also claim for the removal of a caveat lodged by Mr Koshani on the title to a residential property at 14 St John's Avenue, Mont Albert ('St John's Avenue property').

2 The plaintiffs and Mr Koshani engaged in a series of property development and loan transactions with each other. Effectively, the plaintiffs acted as the financiers and short term unsecured money lenders for Mr Koshani until December 2016 when they fell into dispute.

3 The main issues in this proceeding are whether the payments made by the plaintiffs were loans, whether the plaintiffs are entitled to the amounts they claim, and whether Mr Koshani repaid any of the loans.

4 Mr Koshani filed a counterclaim claiming breach of fiduciary duty and unconscionable conduct, contravention of the duties of an estate agent and the Australian Consumer Law and Fair Trading Act 2012 (Vic) ('Australian Consumer Law'), claims over chattels, and other matters against the plaintiffs.

5 The proceeding was issued in May 2017. Mr Koshani was legally represented by senior and junior counsel. In September 2018, leave was granted to allow the solicitor for Mr Koshani to cease acting. At the trial Mr Koshani was self-represented. As a result of an adjournment to assist Mr Koshani to be ready for the trial, the trial commenced one week later than had originally been listed.

6 At the trial, the affidavits and exhibits of each of the plaintiffs were tendered in evidence, as was that of Mr Grant Sutherland, a valuer. Ms Chen was not cross-examined by Mr Koshani. Dr Gao was cross-examined at length by Mr Koshani on some issues. Mr Sutherland's evidence was scarcely contested in cross-examination. Mr Koshani did not give evidence. He called Ms Hai Fei Wang, formerly a part-time waitress at a restaurant in Hawthorn where the parties had had dinners together when they were on good terms.

7 In June 2015, Mr Koshani signed a financial agreement with his former wife Ms Xiao Yan Wang.[1] In the agreement, he described their joint assets as consisting of:

$3,700,000.00 (subject to a Westpac mortgage of $2,700,000.00)

$800,000.00 (subject to a Westpac mortgage of $580,000.00)

Property at 4 Burch Street, Blackburn (owned by M & M Partners Pty Ltd)

$900,000.00 (subject to a Westpac mortgage of $664,000.00)

Property at 6 Meldreth Street, Surrey Hills ('Meldreth Street property')

$1,500,000.00 (subject to a Westpac mortgage of $1,200,000.00)

8 In all, their assets amounted to $7,025,000.00 and their liabilities to $5,464,000.00. The liabilities consisted of a debt owed to the Westpac Bank of $5,144,000.00 and a loan of $320,000.00 from Ms Wang's father. Their total net assets were estimated at $1,561,000.00. The loan to value ratio of the properties exceeded 77%.

(a) Ms Wang received the property at 4 Burch Street, Blackburn;

(b) the property at 3/227 Whitehorse Road, Blackburn was to be sold to pay off the loan from Ms Wang's father with the balance of sale proceeds to go to Ms Wang;

(c) Mr Koshani received the St John's Avenue and the Meldreth Street properties, as mortgaged to the Westpac Bank;

(d) Ms Wang was to receive $150,000.00 when the Meldreth Street property was developed; and

(e) Ms Wang retained the 2009 Mercedes Benz.

10 Performance of the financial agreement with Ms Wang would significantly reduce Mr Koshani's net asset position, and increase the pressures and risks associated with his highly geared financial position.

11 Between 2014 and 2016 Mr Koshani had very little income. The financial agreement made with Ms Wang in June 2015 recorded that he earned an income of approximately $40,000.00 per annum. His taxation return for the 2014 financial year shows a taxable income of $47,839.00. His taxation return for the 2015 financial year shows his total income to be $81.00. He had no income in the 2016 financial year.

12 By mid-2016, Mr Koshani was under extreme financial pressure. In May 2016, his accountants negotiated a payment arrangement for income tax of $111,669.90 payable by one of his companies. Mr Koshani agreed to make payments of $10,000.00 per month to the Australian Taxation Office to pay off the company's tax debt.

13 In short, in 2016 Mr Koshani was in a highly exposed position, with large outstanding liabilities to banks and lenders, and little or no income to meet his debts and those of his companies.

14 Dr Gao is a university lecturer in computer networks. His wife, Ms Chen, is an estate agent. Mr Koshani is a property developer. Ms Chen first met Mr Koshani in July 2015 in the course of her business. They formed a strong business relationship and close personal friendship, calling each other 'brother' and 'sister'.

15 In August 2015, Mr Koshani approached the plaintiffs and told them that he was short of cash and needed a loan. The plaintiffs agreed to lend him $100,000.00 provided by personal cheque on the basis of a signed agreement dated 18 August 2015. The agreement required Mr Koshani to repay the $100,000.00 by 12 September 2015.

16 Mr Koshani repaid the loan of $100,000.00 and made a voluntary payment of interest of $10,000.00 on 18 September 2015. The plaintiffs were impressed by the fact that Mr Koshani paid them an additional $10,000.00 even though he had no obligation under the agreement to do so.

17 In November 2015, the plaintiffs and Mr Koshani entered into an agreement for the development of the Meldreth Street property ('Meldreth Street development agreement'). The plaintiffs and Mr Koshani signed written agreements on 4 and 28 November 2015. The agreement of 4 November 2015 was dictated by Mr Koshani to Ms Chen, who typed it onto a computer during a meeting at the St John's Avenue property.

18 The parties agreed to form a new company to develop the property on a 50%, 25% and 25% shareholding basis for Mr Koshani, Dr Gao and Ms Chen respectively. They agreed on a target price of $4.5 million for the sale of the property, and for the distribution of profits following sale. The plaintiffs were to provide funding of $200,000.00 in advance of construction, to be deducted from Mr Koshani's entitlement after sale of the property. Mr Koshani's deposit of 20% on the purchase of the property, was also to be returned to him after the property had been sold.

19 The plaintiffs claim that they paid $100,000.00 by cheque to Mr Koshani on 4 November 2015, and a further $100,000.00 in cash on 27 November 2015 pursuant to the agreement.

20 In his Amended Defence and Counterclaim, Mr Koshani admits receiving the $100,000.00 cheque, but denies receiving $100,000.00 in cash.

22 The plaintiffs' evidence showed that $100,000.00 cash was withdrawn from Dr Gao's bank account, and given to Ms Chen. She handed the money to Mr Koshani, who signed for its receipt. The evidence shows that Mr Koshani returned his Westpac bank account to a surplus by depositing $5,000.00 on the 27 November 2015, and made deposits or paid credit card debt in amounts of $20,000.00, $10,000.00 and $30,000.00 on 10, 11 and 17 December 2015 respectively.

23 I find that the plaintiffs paid $200,000.00 to Mr Koshani on or before 27 November 2015.

24 Over the period from November 2015 to January 2016, the plaintiffs claim they made payments to contractors engaged in the Meldreth Street project.

(a) $4,395.80 to Permit Point Building Consultants;

26 The payments totalled $25,155.80. They are verified by the plaintiffs' evidence, and by invoices and bank statements provided by them.

27 In his Amended Defence and Counterclaim, Mr Koshani admits that the payments were made with the exception of the XAV Design payment. This payment was made for 3D marketing images, and Mr Koshani cannot recall the payment. He claims however, that Ms Chen made all four payments with cash provided by him. The plaintiffs deny this claim.

28 I accept the plaintiffs' evidence that they made each of the payments. The payments are supported by the invoices and bank statements that they have exhibited.

29 There is no evidence that Mr Koshani advanced cash to Ms Chen to make any of the payments to contractors. It would be surprising if he had. If he had the funds, he would have been perfectly capable of making the payments to contractors himself.

30 I find that by February 2016, the plaintiffs had made payments to Mr Koshani and contractors totalling $225,155.80 under the Meldreth Street development agreement.

31 In about February 2016, Mr Koshani proposed that the plaintiffs purchase the Meldreth Street property ('Meldreth Street purchase agreement'). The new agreement was to supersede the Meldreth Street development agreement.

32 Under the Meldreth Street purchase agreement, the Meldreth Street property was to be sold or transferred to the plaintiffs for $1.3 million, representing the value of the property. The loans for the development of the Meldreth Street property would be 'reapplied', as payments towards the purchase of the Meldreth Street property. Mr Koshani would oversee the Meldreth Street project, but costs would be paid by the plaintiffs directly or through Mr Koshani's company. Following sale of their property at 2/1 Renown Street, Burwood, the plaintiffs would pay Mr Koshani $500,000.00 for his remaining interest in the Meldreth Street property.

33 The Meldreth Street purchase agreement also outlined the development intentions of the parties in relation to two other properties. The plaintiffs had purchased land at 29 Essex Road, Mount Waverley ('the Essex Road property'). Mr Koshani would construct two townhouses on this land at his own expense at an approximate cost of $900,000.00. He would then be entitled to Unit 1, or the sale price of Unit 1. After completion of the Essex Road project, the plaintiffs and Mr Koshani intended another townhouse development. This was to be at 7 Langtree Court, Blackburn, and was to be a 50%-50% investment by the plaintiffs and Mr Koshani.

34 I accept that the Meldreth Street purchase agreement was made by the parties in the terms of the unsigned copy agreement tendered in evidence. Dr Gao was cross-examined at length about this agreement. I accept his evidence and that of Ms Chen. Their evidence is cogent and consistent with the documentation, and the subsequent actions of the parties.

Payments after the Meldreth Street purchase agreement

35 Ms Chen deposes that between March and May 2016 the plaintiffs made a series of payments totalling $532,000.00 to Mr Koshani, under their obligation to pay the contractors' costs for the construction. Those payments were:

(a) $200,000.00 between 10 and 18 March 2016 by telegraphic transfer, cheque and cash;

(b) $15,000.00 on 22 March 2016 by cash;

(c) $100,000.00 on 4 April 2016 in cash;

(d) $100,000.00 on 6 April 2016 in cash;

(e) the sums of $5,000.00, $15,000.00 and $47,000.00 on 20, 21 and 22 April 2016 in cash;

(f) $10,000.00 on 3 May 2016 in cash; and

(g) $40,000.00 on 7 May 2016 in cash.

36 In his Amended Defence and Counterclaim, Mr Koshani admits receiving the payments in (a), (c) (d) and (g) above totalling $440,000.00. He disputes that he received the payments in (b), (e) and (f) totalling $92,000.00.

37 Analysis of the bank statements of Ms Chen and Mr Koshani supports Ms Chen's account. Ms Chen's bank statements corroborate her evidence that she withdrew cash on the dates and in the amounts claimed by her. There is also a text message from Mr Koshani confirming receipt of $100,000.00 cash. Ms Chen was not cross-examined about any of these payments.

38 Mr Koshani's bank statements show that on 6 and 8 April 2016, he deposited into his Westpac account the sums of $100,000.00 and $90,000.00 respectively. On 21 and 29 April 2016, he made payments of $14,000.00 and $7,000.00 in reduction of his ANZ credit card debt. He made an additional payment of $20,000.00 on 20 May 2016 into the ANZ account. Again, on 20 May 2016, Mr Koshani deposited a further $30,000.00 into his Westpac bank account.

39 These payments are consistent with the payments that Ms Chen says that she made to Mr Koshani. It is not apparent that Mr Koshani had any other source of funds that could account for the deposits and payments made by him at that time into his bank or credit card accounts. He did not give evidence.

40 I accept the plaintiffs' evidence, supported as it is by the banking records, and find that between March and May 2016 they paid Mr Koshani a total of $532,000.00. I find that each of these payments were made to Mr Koshani.

41 In April 2016, the plaintiffs claim they paid a total of $57,930.00 to Laguna Pools & Landscapes for work done on the Meldreth Street property.

42 They depose they made three payments to Laguna Pools & Landscapes. The first two payments were paid by electronic transfer from Ms Chen's ANZ bank account. These payments are corroborated by her bank statement. The third and final payment in the amount of $38,300.00 was made by bank cheque. Copies of the cheque and the tax invoices were produced.

43 In his Amended Defence and Counterclaim, Mr Koshani pleads that he does not recall the payments. He claims however, that he did from time to time give Ms Chen cash to make payments to contractors. His defence is vague and unspecific. It is not supported by Mr Koshani's banking records or those of the plaintiffs.

44 I find that the plaintiffs did make payments totalling $57,930.00 to Laguna Pools and Landscapes. It is highly unlikely that Mr Koshani provided them with funds to make any of these payments. Under the Meldreth Street purchase agreement, it was the plaintiffs' responsibility to pay the construction costs for the development of the Meldreth Street property. What the plaintiffs did was consistent with what they had undertaken to do.

45 I find that by 15 May 2016, the plaintiffs had paid amounts totalling $589,930.00 being the sum of $532,000.00 and the Laguna Pool and Landscapes payments of $57,930.00.

46 On 15 May 2016, Mr Koshani repaid $100,000.00 to the plaintiffs. The repayment was made by bank cheque drawn by Mr Koshani in favour of a business acquaintance of the plaintiffs from whom Ms Chen had borrowed $100,000.00. The payment of the $100,000.00 by Mr Koshani is not in dispute.

47 By mid-May 2016, the plaintiffs had expended the total amount of $815,085.80 consisting of the amounts of $225,155.80 and $589,930.00.[2] Mr Koshani had repaid an amount of $100,000.00, leaving $715,085.80 unpaid.

48 In his Amended Defence and Counterclaim, Mr Koshani claims that by mid-May 2016, the total amount paid by the plaintiffs was only $540,000.00 from which $100,000.00 had been repaid, and that the balance of $440,000.00 had been paid on or about 22 May 2016, by cash, in two or three brown paper bags.

49 In early May 2016, Mr Koshani put a new proposal to the plaintiffs. He proposed that they purchase the St John's Avenue property in lieu of the Meldreth Street property. He had been trying to sell the St John's Avenue property for some time but without success. The plaintiffs agreed to his proposal, and the parties prepared and signed two documents to record their agreement.

50 The first document was a contract of sale dated 18 May 2016 ('the contract of sale'). The contract price for the St John's Avenue property was shown as $4,000,000.00. At first, the deposit was shown as $400,000.00 and the balance of purchase money of $3,600,000.00 payable on 18 July 2016. These amounts were handwritten. The amount of the deposit was however, altered in handwriting to $920,000.00, and the balance payable reduced to $3,080,000.00. The parties, including Mr Koshani, signed or initialled their consent to these changes.

51 A second typewritten document dated 22 May 2016 was signed by the plaintiff's and Mr Koshani. It contained a new agreement ('the side agreement'). The side agreement contained five operative clauses:

(a) Clause 1 provided that the repayment of the construction loan obtained from the Westpac Bank for the Meldreth Street property was to be the full responsibility of Mr Koshani. The plaintiffs were to have no responsibility for the repayment of the construction loan.

(b) Clause 2 provided for Mr Koshani to take over and complete the Meldreth Street project as his own development.

(c) Clause 3 recorded that in exchange for the plaintiffs' withdrawal from the Meldreth Street project, Mr Koshani agreed to sell the St John's Avenue property to them for their new house for what was described in the side agreement as 'the less market value' of $3,000,000.00. Clause 3 recognised the plaintiffs' past financial contribution to the Meldreth Street project.

(d) Clause 4 provided that all of the money received by Mr Koshani from the plaintiffs for construction of the Meldreth Street project had been refunded to them in different forms of cash and bank cheque. There would not be any money outstanding or borrowing from the plaintiffs to Mr Koshani for the Meldreth Street property.

(e) Clause 5 provided that after the agreement, the plaintiffs and Mr Koshani would not have any claim against each other regarding the Meldreth Street property or the St John's Avenue property. This clause recognised that the plaintiffs' Meldreth Street project contributions were effectively the deposit on the St John's Avenue property.

52 The substance of the contract of sale and the side agreement are clear enough. Mr Koshani was to assume full responsibility for the Meldreth Street property and project. The plaintiffs were to purchase the St John's Avenue property. Their past contributions to the Meldreth Street project were recognised and credited to them through the revised deposit of $920,000.00.

53 A balance of $3,080,000.00 remained for payment by them to Mr Koshani to complete the purchase of the St John's Avenue property. Payment of the balance of purchase money would assist Mr Koshani to repay his Westpac loan secured on that property.

54 Mr Grant Sutherland, a valuer, gave expert evidence that the value of the St John's Avenue property was $4,000,000.00 in May 2016. That is the price that the plaintiffs agreed to pay Mr Koshani for the St John's Avenue property. Mr Sutherland's evidence is uncontested. I accept his expert evidence.

55 On Mr Sutherland's valuation, the purchase price of the St John's Avenue property as set out in the contract of sale reflects the market value of the property.

Mr Koshani's claimed repayments after the Meldreth Street purchase agreement

56 In his Amended Defence and Counterclaim, Mr Koshani claims that he repaid the sum of $540,000.00 to the plaintiffs on 15 May 2016 of $100,000.00 by cheque, and on 22 May 2016 of $440,000.00 in cash, representing the entire sum advanced after the Meldreth Street purchase agreement. Mr Koshani relies on text messages to support his claim. The plaintiffs deny the repayments occurred.

57 In the particulars of the Amended Defence and Counterclaim, Mr Koshani refers to a text message sent by him to Ms Chen on 15 May 2016 which stated 'that's money return to you from Meldreth st which you paid for your deposit [sic]'.

58 The text message was sent at the same time as a photograph of the bank cheque dated 13 May 2016 for $100,000.00, drawn in favour of the business acquaintance of Ms Chen from whom she had previously obtained the money. The meaning of Mr Koshani's text message is unclear. Nonetheless, it is the undisputed fact that Mr Koshani repaid $100,000.00 to Ms Chen's business associate by bank cheque dated 13 May 2016.[3]

59 Mr Koshani claims that Ms Chen acknowledged by text that the loans had been repaid. Most likely on 22 May 2016, the amount of deposit money as set out in the contract of sale was amended from $400,000.00 to $920,000.00. On the same day Mr Koshani sent a text message that stated: 'Okay, so as agreed today! [sic] All the money has been returned back to you. Thank you'.

60 The text message recognised that under the contract of sale the payments previously made by the plaintiffs after the Meldreth Street purchase agreement had been recognised and credited to them. It did not imply that Mr Koshani had given them $440,000.00 in cash.

61 Ms Chen responded 'Hahaha, okay is correct [sic]. I received all money back already. Thanks'. The opening of Ms Chen's text message is understandable as the plaintiffs had received their money back through the increase in deposit to $920,000.00. They had not physically received any money back.

62 I reject Mr Koshani's claim that he repaid the amount of $540,000.00 to the plaintiffs, in cash or otherwise in May 2016 for the following reasons:

(a) the plaintiffs gave evidence, which I accept, that no such repayment occurred;

(b) Mr Koshani did not give evidence;

(c) having regard to his indebtedness and low level of income, I find that Mr Koshani was not in a financial position to make a repayment of the magnitude claimed by him to have taken place;

(d) review of the bank statements of the plaintiffs over the relevant period shows that they did not receive the amount of $540,000.00 from Mr Koshani;

(e) review of the bank statements of Mr Koshani and his companies shows that they had insufficient balances to make a repayment of this magnitude; and

(f) there is no logical reason why Mr Koshani would pay the plaintiffs $540,000.00 at that time. The parties had agreed that the plaintiffs were responsible to pay Mr Koshani the balance and purchase money on the St John's Avenue property of around $3 million. They agreed that Mr Koshani was solely responsible for the construction loan for the Meldreth Street property. If Mr Koshani had a spare $440,000.00 in cash, it would be logical and rational for him to reduce his indebtedness to the Westpac Bank or pay other creditors.

63 I accept the plaintiffs' submission that their money had been 'returned' to them and credited in the deposit recognised as being paid for the purchase of the St John's Avenue property. Dr Gao was cross-examined on this point. I accept his evidence about this issue. I accept that this was the basis on which the contract of sale and side agreement proceeded, and was fair to both parties.

Mr Koshani's acknowledgement that the deposit of $920,000.00 was paid

64 In his Amended Defence and Counterclaim, Mr Koshani claims the deposit of $920,000.00 was due and payable by the plaintiffs under the contract of sale for the St John's Avenue property.

65 On 3 November 2016, Mr Koshani brought a proceeding in the Supreme Court of Victoria to remove a caveat lodged by Ms Wang, his former wife, from the title of the St John's Avenue property.

66 He deposed in an affidavit sworn on 2 November 2016 in support of his application, that the purchasers had paid the deposit of $920,000.00, and that the funds had been used for the development of the Meldreth Street property. This is entirely consistent with the plaintiffs position.

67 In the same affidavit, Mr Koshani deposed that he believed that the sale price of $4,000,000.00 represented fair market value for the St John's Avenue property. He said that virtually all of the purchase price at settlement was required to be applied to discharge the mortgage to the Westpac Bank on the St John's Avenue property. The outstanding balance of the mortgage was then approximately $3,090,000.00.

68 The evidence in Mr Koshani's affidavit of 2 November 2016 confirms the plaintiffs' evidence in this proceeding. I reject Mr Koshani's claim that the deposit of $920,000.00 was not paid.

69 Subsequent to the contract of sale and the side agreement, the plaintiffs continued to make loans to Mr Koshani.

70 On 7 June 2016, Ms Chen borrowed $100,000.00 from a business partner to lend to Mr Koshani. He confirmed receipt of the loan by text message on 10 June 2016, noting that he would return the money after the Meldreth Street property was refinanced or earlier if he could.

71 In mid-July 2016, Ms Chen lent Mr Koshani another $100,000.00, again borrowed from a friend. On 13 July 2016, Mr Koshani sent a text message to Ms Chen thanking her for the $100,000.00 that she had transferred to him. He undertook to repay the money early next week.

72 Settlement of the St John's Avenue property was scheduled to occur on 18 July 2016. At that time, the plaintiffs were short of funds to pay for the stamp duty following settlement. On 20 July 2016, Mr Koshani transferred $320,000.00 to their account. He explained that $200,000.00 was for his borrowing from them and $120,000.00 for the stamp duty payable following the settlement of the St John's Avenue property. In turn, the plaintiff used the $200,000.00 to repay the loans that they had obtained from their friends.

73 On 28 July 2016, Ms Chen returned the $120,000.00 to Mr Koshani's account. He confirmed receipt of the $120,000.00, thanking Ms Chen for the transfer of funds.

74 In his Amended Defence and Counterclaim, Mr Koshani claims that the $120,000.00 was a part payment for the purchase of the St John's Avenue property. This was plainly not the case.

75 Settlement of the sale of the St John's Avenue property took place on 21 November 2016. It was delayed due to a caveat lodged by Mr Koshani's former wife Ms Wang. At settlement, the plaintiffs paid Mr Koshani the sum of $3,079,774.80 including a further $80,000.00 loan which he had requested. Mr Koshani transferred title to the St John's Avenue property to the plaintiffs. It is clear that the settlement proceeded on the basis that the deposit of $920,000.00 had previously been paid. It did so without demur from Mr Koshani. It was not suggested at the time that Mr Koshani had a continuing interest in the property not discharged at settlement.

76 The principal dispute between the parties arises from payments made by the plaintiffs over the period from August to November 2016. There are 24 payments to Mr Koshani and third party contractors, which the plaintiffs seek to recover from Mr Koshani. They are set out in the table below.

Table 1 - Loans and payments claimed by the plaintiffs from Mr Koshani

Bank transfer $94,000.00 to Mr Koshani and his nominated recipient

Bank transfer of $8,000.00 to Roda Rendering Pty Ltd

Bank transfers to AllStairs Pty Ltd of $9,184.00 and $8,240.00.

Bank transfers to Northern Plumbing Group Pty Ltd of $5,777.64 and $930.00.

Bank transfer of $4,000.00 to Aceland Development Pty Ltd

Bank transfers of $2,000.00 and $650.00 to Lauri Bond Pty Ltd

Cash payments of $40,000.00, $50,000.00 and $60,000.00 to Mr Koshani

Bank transfer of $825.00 to Northwind Quantity Surveyors

Payment of $80,000.00 to Westpac Bank to repay mortgage debt owing by Mr Koshani in respect of the St John's Avenue property

Electronic funds transfer of $18,000.00 to Mr Koshani

77 The plaintiffs say that the loans and payments were made on the basis that when the Meldreth Street property was refinanced by Mr Koshani, they would be repaid by him. Repayment did not occur, and Mr Koshani disputed the plaintiffs' entitlement to repayment in December 2016.

Claims 1, 2, 7-11, 14-17, 19, 20, 22, 23 - claims admitted by Mr Koshani

79 In his Amended Defence and Counterclaim, Mr Koshani admits receipt of the funds sought to be recovered in 15 claims.

80 In relation to nine claims, including claim 1 ($100,000.00), 2 ($75,000.00), 14 ($275,000.00), 15 ($30,000.00), 16 ($30,000.00), 17 ($40,000.00), 19 ($150,000.00), 20 ($16,000.00), and 23 ($50,000.00), Mr Koshani admits he received the amounts provided by the plaintiffs, but says that they were received on account of the plaintiffs' obligation under the contract of sale to pay the deposit on the St John's Avenue property.

81 I reject Mr Koshani's claim for the following reasons:

(a) I accept the evidence of Dr Gao and Ms Chen.

(b) Mr Koshani did not give evidence. There is no evidence which supports his characterisation of the payments.

(c) The contract of sale was amended with Mr Koshani's signed consent to provide for a deposit of $920,000.00 for the purchase of the St John's Avenue property. This change recognises the contributions previously made by the plaintiffs after the Meldreth Street purchase agreement.

(d) Clause 3 of the side agreement recognises that the plaintiffs will purchase the St John's Avenue property for the reduced price of $3 million, having regard to their previous contributions. Clauses 4 and 5 also recognise the plaintiffs' contributions after the Meldreth Street purchase agreement.

(e) A deposit is ordinarily payable at or before the time when a contract for the sale of land is made. Mr Koshani's position requires numerous payments of widely varying amounts to be treated as deposit payments made months after the contract of sale was executed. The need for future deposit payments is not referred to in the contract of sale.

(f) The contract of sale was completed by the plaintiffs in November 2016 by payment of the balance of purchase monies. This was in accordance with the contract of sale. Neither party suggested on settlement that the deposit was unpaid and outstanding, in whole or in part. It would be remarkable if they had.

82 I find that the nine amounts admittedly received by or on behalf of Mr Koshani, were loans made by the plaintiffs to Mr Koshani, to be repaid when the Meldreth Street property development was refinanced. They were not monies paid or received on account of the plaintiffs' obligations under the contract of sale. They were never repaid.

84 Mr Koshani admits receipt of the payments the subject of claims 9 (15,000.00) and 11 ($15,000.00) in the Amended Defence and Counterclaim. Otherwise, these claims are 'not admitted'. No reason for the non-admissions is advanced in the Amended Defence and Counterclaim, or was given during the trial. Both payments were made by bank transfers from Ms Chen's bank account to that of Mr Koshani, and are verified by bank documents. The plaintiffs depose to the making of these loans. There is no evidence to the contrary.

85 I uphold claims 9 and 11 as made by the plaintiffs.

86 Mr Koshani admits receipt of the payments the subject of claims 7 ($4,000.00) and 8 ($2,650.00) in the Amended Defence and Counterclaim.

87 The payments were received by Aceland Development Pty Ltd (Claim 7), and by Lauri Bond Pty Ltd (Claim 8). Mr Koshani asked Ms Chen to make the payments in this manner. The payments were made by bank transfer from the plaintiffs' joint bank account. I accept the plaintiffs' evidence as to these payments. There is no contrary evidence.

89 Claim 22 concerns the payment of $80,000.00 by the plaintiffs to Mr Koshani at settlement of the purchase of the St John's Avenue property.

90 In the Amended Defence and Counterclaim, Mr Koshani contends that payment of this sum was part of the payment of the $3,080,000.00 paid by the plaintiffs at settlement. The plaintiffs claim that the $80,000.00 was paid to assist Mr Koshani to clear the amount outstanding on his bank mortgage.

91 I accept the plaintiffs' evidence. Payment of the amount was made by bank transfer from the plaintiffs' joint account. The $80,000.00 was additional to the funds which the plaintiffs had to pay under the contract of sale. There is no evidence that supports Mr Koshani's defence as to claim 22.

93 Claim 10 of $11,000.00 relates to a licence agreement made between the parties.

94 The contract of sale was executed on 18 May 2016, and the side agreement on 22 May 2016. The contract of sale provided for settlement to occur on 18 July 2016. Settlement was postponed until 21 November 2016 because of the need to remove the caveat lodged by Ms Wang. The plaintiffs depose that a licence agreement was made between them and Mr Koshani in September 2016. They were permitted to occupy the St John's Avenue property for a monthly licence fee of $11,000.00 from an occupation date of 24 September 2016.

95 Ms Chen deposed to an oral agreement with Mr Koshani to the effect that, the plaintiffs did not have to pay the $11,000.00 per month licence fee, and that if they did make any payments, the payments would be treated as loans from the plaintiffs to Mr Koshani to be repaid when he refinanced the Meldreth Street property. Ms Chen said that she trusted Mr Koshani and agreed to sign the licence agreement on that basis.

96 Ms Chen was not cross-examined, and Mr Koshani did not give evidence. I have no reason to doubt Ms Chen's sworn evidence.

Claims 6, 12 , 13 , 18 and 24 - claims denied or not admitted

98 Each of these claims is either denied, not admitted, or in one case not pleaded to at all in Mr Koshani's Amended Defence and Counterclaim.

99 Claim 6 is a claim in relation to a loan of $8,350.00 said by the plaintiffs to have been made by bank transfer on or about 6 September 2016.

100 It is denied with a bare denial in Mr Koshani's Amended Defence and Counterclaim. Ms Chen deposes in an affidavit that she transferred the funds electronically to Mr Koshani at his request. The plaintiffs' joint bank account shows the bank transfer. Ms Chen's affidavit exhibits a bank transfer receipt for the bank transfer to Mr Koshani's account. Mr Koshani's bank account shows his receipt of the payment.

101 I accept Ms Chen's evidence. She was not cross-examined. Mr Koshani did not give evidence. The bank records confirm Ms Chen's evidence.

103 Claims 12 ($2,500.00), 13 ($7,666.00) and 18 ($20,000.00) are not admitted in Mr Koshani's Amended Defence and Counterclaim. Nothing more is said about these claims.

104 The plaintiffs added claim 24 ($18,000.00) by an amendment to their statement of claim. The Amended Defence and Counterclaim was not subsequently amended by Mr Koshani to plead to claim 24. There is nothing in the Amended Defence and Counterclaim that responds to claim 24.

105 In claims 12, 13, 18 and 24, Ms Chen deposes that she transferred the funds electronically to Mr Koshani at his request. In each case, the plaintiffs produced bank documents that showed the funds leaving the plaintiffs' joint account, or Ms Chen's account, and arriving in Mr Koshani's account. Mr Koshani received the money in each case.

106 I accept Ms Chen's evidence. Her evidence is corroborated by the bank records relating to the accounts of the plaintiffs and that of Mr Koshani. Ms Chen was not cross-examined. Mr Koshani did not give evidence.

Claims 3, 4, 5 and 21 - payments made to contractors

108 Claims 3 ($8,000.00), 4 ($17,424.00), 5 ($6,707.64) and 21 ($825.00) are payments made to contractors.

109 The plaintiffs depose that they made six payments to four contractors. All of the payments relate to work done, goods supplied or services provided to assist Mr Koshani to complete the Meldreth Street project. Their evidence is corroborated by the contractors' tax invoices, banking records and receipts.

110 In his Amended Defence and Counterclaim, Mr Koshani says that he cannot recall whether the payments to third parties were made. He alleges however, that from time to time he provided cash to Ms Chen to make payments to subcontractors and suppliers on his behalf.

111 The particulars in the Amended Defence and Counterclaim lack detail. They do not refer to the date or amount of such cash payment made to Ms Chen by Mr Koshani in relation to any of the six payments made by the plaintiffs to contractors. There is no evidence that supports Mr Koshani's assertions.

112 I accept the plaintiffs' evidence that they made the payments to contractors that they claim. Mr Koshani did not give evidence, and has not provided any evidence or reason why the plaintiffs' evidence should not be accepted.

113 I find that the plaintiffs made the payments to contractors as set out in claims 3, 4, 5 and 21 on or about the dates, in the manner and amounts that they claim. These claims succeed.

114 The 2016 loans made by the plaintiffs were to be repaid by Mr Koshani when the Meldreth Street property was refinanced. Mr Koshani refinanced the Meldreth Street property in December 2016. The loans became due and payable at this time. The loans made by the plaintiffs to Mr Koshani were not repaid. The Meldreth Street property was sold in June 2017.

115 The plaintiffs have succeeded in proving their claims against Mr Koshani for the loans they made to him over the period from August to November 2016. These loans total $983,122.64.

116 The plaintiffs claim for $16,666.68 interest incurred by them on a $400,000.00 loan obtained by them for Mr Koshani.

117 Ms Chen deposed that in mid-November 2016, Mr Koshani asked to borrow $500,000.00 from her. He said that he was under a lot of pressure. Ms Chen was able to obtain a loan of $400,000.00 through a business partner at 25% annual interest. Mr Koshani told her to proceed with the loan and said that he would pay the interest. He told Ms Chen that he would repay the loan within two months, because he would soon refinance the Meldreth Street property.

118 Ms Chen deposed that on this basis, she was able to borrow the funds from acquaintances of her business partner. She obtained a cheque for $400,000.00 on 17 November 2016 to fund further loans to Mr Koshani. She produced a copy of the cheque.

119 Ms Chen deposes that she repaid the principal loan of $400,000.00 to the lenders on or around 16 January 2017, and produced the repayment cheque. She paid $16,666.88 interest on the $400,000.00 loan. She produced copies of two cheques, each for $8,333.34, that she paid to the lenders in December 2016 and January 2017.

120 Ms Chen was not cross-examined. There is no reason to doubt her evidence. Her evidence is supported by production of the cheques drawn to repay the interest that she incurred. Mr Koshani did not give evidence, and there is no evidence inconsistent with Ms Chen's account.

121 I accept the claim for the interest of $16,666.68 incurred by the plaintiffs in relation to the bridging loan, and not paid by Mr Koshani.

122 Ms Hai Fei Wang,[4] who was formerly a part-time waitress at a restaurant in Hawthorn, was called by Mr Koshani to give evidence. Ms Wang was the only witness called by Mr Koshani.

123 She gave evidence that she saw the plaintiffs and Mr Koshani at the restaurant on some occasions. She heard Ms Chen and Mr Koshani refer to each other as sister and brother. She observed that Mr Koshani was very easy with money, and provided cash to Ms Chen.

124 Ms Wang's evidence is in general terms, and does not ultimately assist the Court in resolving the issues in dispute. Her evidence does not extend to details of the transactions between the plaintiffs and Mr Koshani. She does not refer to any specific loan, repayment or transaction.

125 For the reasons that I have set out above, the plaintiffs are entitled to judgment of $983,122.64, being amounts lent by them to Mr Koshani. They are entitled to judgment in the amount of $16,666.68 for borrowing expenses incurred by them which Mr Koshani agreed to pay, and for which he is responsible.

126 The counterclaim made by Mr Koshani was not supported by any evidence at the trial, and inevitably must be dismissed. Nonetheless, I will make some observations about the various claims made in it against the plaintiffs.

Breach of fiduciary duties and estate agents' duties

127 Mr Koshani alleges that Dr Gao and Ms Chen owed fiduciary duties to him in respect of their ventures, and also that Ms Chen had duties to him arising from her position as a real estate agent.

128 Even if Dr Gao and Ms Chen did owe fiduciary duties to Mr Koshani concerning their ventures, which is far from established, I find that Dr Gao and Ms Chen did not breach those duties. The Meldreth Street purchase agreement was terminated by agreement between the parties in May 2016. Thereafter, the plaintiffs purchased the St John's Avenue property from Mr Koshani at fair market value. The plaintiffs' contributions after the Meldreth Street purchase agreement were credited to them by agreement that there had been a deposit of $920,000.00 under the contract of sale. There is nothing in these transactions which indicates a breach of fiduciary duty.

129 Ms Chen was never formally appointed as Mr Koshani's estate agent. There is no evidence that she was in breach of her duties as an estate agent. It was Mr Koshani who first suggested the transactions which subsequently occurred. The plaintiffs were induced by Mr Koshani to lend large sums of money to him arising out of the trust and confidence that had developed.

130 In relation to the sale of the St John's Avenue property, Ms Chen was not appointed as Mr Koshani's estate agent to sell the property. He executed no sale authority. She received no commission. It was the suggestion of Mr Koshani that the plaintiffs purchase the St John's Avenue property. It was Mr Koshani who introduced the St John's Avenue property to the plaintiffs. There is nothing in the sale of the property which indicates Ms Chen acted as a real estate agent.

131 I accept the plaintiffs' evidence as to what took place concerning the Meldreth Street purchase agreement and the St John's Avenue property. Mr Koshani did not give evidence.

132 I reject the claims made in the Amended Defence and Counterclaim that there was a breach of fiduciary duties by the plaintiffs, or breach of the duties of an estate agent by Ms Chen. These claims are without foundation.

133 In the Amended Defence and Counterclaim, Mr Koshani alleges that shortly prior to settlement of the St John's Avenue property, Ms Chen represented and warranted to him that the balance of deposit would be paid shortly after settlement.

(a) Ms Chen denied the supposed representation, and was not cross-examined;

(b) Mr Koshani did not give evidence, or seek to prove that the alleged representation took place;

(c) the deposit on the St John's Avenue property had already been paid through the plaintiffs' Meldreth Street project contributions which the parties accepted in payment of the St John's Avenue deposit; and

(d) the plaintiffs were buying a home from Mr Koshani in which they intended to live. It has not been established by Mr Koshani that they were acting in trade or commerce.

135 This claim has no substance and must be dismissed.

136 In the Amended Defence and Counterclaim, Mr Koshani alleges that he left various chattels at the St John's Avenue property when he vacated, and is entitled to them. They included two Persian rugs, curtains and chandeliers.

137 The contract of sale contained a term that all fixtures, floor coverings, electric light fittings, and window furnishings were sold with the St John's Avenue property. Title in these goods passed to the plaintiffs on settlement.

138 The plaintiffs also depose that shortly after the contract of sale and side agreement were executed, Mr Koshani told them, in substance, that anything in the St John's Avenue property was theirs. Their evidence is not contradicted. Mr Koshani did not give evidence, and has not produced any evidence inconsistent with the plaintiffs' account.

140 In the Amended Defence and Counterclaim, Mr Koshani claims the plaintiffs owe him $9,570.00 under the licence fee agreement.

141 The plaintiffs moved into the St John's Avenue property in September 2016. Settlement of this property did not take place until November 2016, because of the need for Mr Koshani to make application to the Court to remove the caveat lodged by Ms Wang. It was not the plaintiffs who were responsible for the delay in settlement from 18 July 2016 until 21 November 2016. Mr Koshani is responsible for the delay in settlement due to his inability to make good title.

142 I accept the plaintiffs' evidence as to the reasons for the delay in obtaining possession of the St John's Avenue property. Mr Koshani did not give evidence, and there is no evidence before the Court which supports his claim.

144 Mr Koshani claims the sum of $16,448.00 on account of work and labour done at the Essex Road property. The sum of $16,448.00 is made up of three payments:

(a) $9,500.00 to ACR Fencing Services;

(b) $1,848.00 to Online Demolition Pty Ltd; and

(c) $5,100.00 to Planning and Design Pty Ltd.

145 As to the payment to ACR Fencing Services, Ms Chen deposed that she spoke with Mr Koshani about the need to remove a gate in a side fence, and to move the fence to the actual boundary of the property. She deposed that Mr Koshani stated, in substance, that he would get this done as a gift for his 'darling sister'.

146 As to the payment to Online Demolition Pty Ltd, Ms Chen deposed that in early December 2015, she submitted an application for an amended planning permit to build two townhouses at the Essex Road property to the Monash City Council. Ms Chen further deposed that in March 2016, she liaised with Online Demolition Pty Ltd for the demolition of the existing structure located at the Essex Road property. Following receipt of a demolition permit from Online Demolition Pty Ltd on 11 April 2016, she asked that company to delay commencing demolition works at the Essex Road property until the plaintiffs were ready to proceed.

147 Ms Chen deposed that on 22 July 2016, a planning permit was issued for the construction of two townhouses on the Essex Road property, and that Mr Koshani did not assist in the process of obtaining planning permission. She said that in September 2016, Mr Koshani told her that Online Demolition Pty Ltd had telephoned him to ask if they could start demolition of the existing structure. On 13 September 2016, Ms Chen emailed Online Demolition Pty Ltd to confirm her instructions that the demolition job was 'on hold'. On 30 November 2016, Ms Chen visited the Essex Road property, and discovered that Online Demolition Pty Ltd had commenced demolition work without the plaintiffs' consent.

148 As to payment to Planning and Design Pty Ltd, Ms Chen deposed that she was not aware that Mr Koshani did any work or had any involvement with the plans done for Essex Road. She deposed that from the time of the side agreement on 22 May 2016, she understood that Mr Koshani had given up any interest in Essex Road.

149 Ms Chen's evidence was not challenged, and she was not cross-examined. Mr Koshani did not give evidence or call any evidence that might establish liability on the part of the plaintiffs to pay him for any of the work carried out at the Essex Road property. Proof of the claims made concerning the Essex Road property was not attempted by Mr Koshani. He has not proven that he expended any monies to the contractors, still less that he is entitled to reimbursement from the plaintiffs.

150 The Essex Road property work claims must be dismissed.

151 In the Amended Defence and Counterclaim, Mr Koshani alleges that he was induced to sign the side agreement to sell the St John's Avenue property for $3 million due to undue influence of the plaintiffs. He asserts that he was under a special disability or a disadvantage, and that the plaintiffs ought to have known of this when the side agreement was made. He asserts that it would be unconscionable or unjust for the plaintiffs to now rely on the side agreement.

152 Mr Koshani did not produce evidence to support this claim, which fails for want of proof. There is no evidence that he was under a special disability or disadvantage.

153 On 27 September 2018, Derham AsJ ordered Mr Koshani to submit to a psychiatric examination by a medical expert. Mr Koshani failed to do so. The unconscionable conduct claim was struck out, and fails for this reason also.

154 None of the claims made by Mr Koshani in the counterclaim have been substantiated. The counterclaim must be dismissed.

155 Mr Koshani lodged a caveat on the title to the St John's Avenue property on 7 April 2017. His stated ground of claim was that he was an unpaid vendor under a contract of sale with the plaintiffs. Inconsistently, he claimed an estate or interest as chargee.

156 The plaintiffs apply in this proceeding for removal of the caveat under s 90(1) of the Transfer of Land Act 1958 (Vic). Mr Koshani, as caveator, bears the onus of proof of the claim made in the caveat.[5]

157 Mr Koshani did not give evidence, and did not call or tender any evidence that might support the ground or claim made in the caveat. The caveat is not supported by the evidence, and the ground asserted and the interest claimed by Mr Koshani are not substantiated.

158 The plaintiffs did give evidence, which I accept. The deposit was paid or credited in the circumstances that I have previously set out. The contract of sale was settled on 21 November 2016, and the balance of purchase money paid to Mr Koshani together with an additional amount necessary to discharge his bank mortgage.

159 An order will be made for the Registrar of Titles to remove the caveat.

160 Under s 58 of the Supreme Court Act 1986 (Vic), statutory interest occurs from the date when demand for payment of a claim in a liquidated sum is made. On 23 January 2017, Interise Legal acting on behalf of the plaintiffs, sent a letter to Mr Koshani demanding repayment of $1,578,338.00, and advising that failure to do so within 14 days would result in the immediate issue of legal proceedings. The plaintiffs are entitled to statutory interest from this date.

161 For the reasons given above, the plaintiffs are entitled to judgment in the amount of $999,789.32 against Mr Koshani for the monies owed to them by Mr Koshani and not repaid. They are entitled to statutory interest, and to an order directing the Registrar of Titles to remove the caveat lodged by Mr Koshani on the St John's Avenue property. The counterclaim will be dismissed.

[1] The financial agreement was made under Family Law Act 1975 (Cth) s 90C.

[4] Ms Hai Fei Wang is unrelated to Ms Xiao Yong Wang, the former wife of Mr Koshani.

[5] Lewenberg v Direct Acceptance Corp Ltd [1981] VicRp 36; [1981] VR 344, 347 (O'Bryan J); Piroshenko v Grojsman (2010) 27 VR 489, [7] (Warren CJ); Re Jorss' Caveat [1982] Qd R 458 (Douglas, Andrews and Demack JJ); Bernstein v Georgakakis [2010] VSC 52 (Beach J).