JGM Nominees Pty Ltd & Ors v Tulip Investments Pty Ltd & Anor [2009] VSC 545

2 By 2005, Mr Calderone was overextended. The property market was not as buoyant as he would have liked, and he was having difficulties in generating sufficient cash flow to meet loan repayments and development expenses. Members of loan syndicates who had lent money against the security of various properties by way of second mortgages pressed Mr Calderone to make contact with Mr Michael Kyriackou, who Mr Calderone states was described by one of the syndicate members as a "business angel". At that time, Mr Kyriackou was the General Manager of Australvic Property Management Pty Ltd ("Australvic"), the second (and only active) defendant in this proceeding. Australvic is now in liquidation.

3 Mr Calderone met with Mr Kyriackou and Mr Walter Edwards, then a solicitor, in June 2005. Mr Kyriackou was also Mr Edwards' law clerk and practice manager. According to ASIC records, Mr Edwards was at that time the sole director of Australvic, having been appointed in place of Mr Kyriackou on 1 June 2005. Mr Calderone and Australvic agreed to enter a joint venture agreement for the development of the properties owned by him and his associated entities ("properties"), whereby the properties would be transferred to Australvic to enable it to refinance the existing loans and obtain further loan finance to complete the various development projects contemplated by Mr Calderone. Mr Calderone would be responsible for undertaking the work necessary to carry out the developments, and the parties would share equally any profits from any development of the properties.

4 The documents tendered in evidence suggest that the terms of the joint venture agreement were negotiated in August 2005, but it is likely that the Memorandum of Agreement which documented the joint venture agreement was not executed until sometime in late 2006. During the course of the negotiations, Mr Calderone was represented by his current solicitor, Mr Phillip Fox of John Matthies & Co. Mr Edwards acted as the solicitor for Australvic.

5 The Memorandum of Agreement that was finally executed provided, in clause 1(a), that:

The Company [Australvic] will sign with the Developer [Mr Calderone] a Declaration of Trust which will acknowledge that the Company holds the "funded properties" in trust for the Developer ...

6 Over the course of 2005 and 2006 Mr Calderone and his associated entities transferred ten properties to Australvic. None of the contracts of sale or transfer instruments tendered in the course of the trial indicated that Australvic was purchasing the properties in its capacity as trustee for the respective vendors. The property which is the subject of this proceeding (23 Oxford Street, Oakleigh) was transferred by Mr Calderone to Australvic on 29 September 2005. The transfer of land form executed by Mr Calderone refers to the consideration for the transfer being $530,000.

7 By the latter part of 2006 Mr Calderone was becoming disenchanted with Australvic. He complained to Mr Kyriackou regarding the lack of any progress with obtaining finance to enable the developments to progress. He instructed his solicitor to lodge various caveats on the properties in or about November 2006. However, he co-operated with Mr Kyriackou and Mr Edwards to enable Australvic to apply to the State Revenue Office for refunds of the stamp duty paid by Australvic upon the purchase of the properties. The refund application, which was made in December 2006, was based upon the assertion by Australvic that the transfers were to Australvic in its capacity as trustee, and that there had been no change in the beneficial ownership of the properties. This application was unsuccessful.

8 By early 2007, Mr Calderone, having learned more about the financial transactions Australvic had entered into with respect to the properties, had formed a view that Mr Kyriackou had "plundered the equity" in the properties for his own personal benefit. Further caveats were lodged over the properties.

9 On 5 February 2007 Mr Calderone's solicitors wrote to Australvic purporting to terminate the joint venture agreement. On the same day, a receiver and manager was appointed to Australvic by a Mr Tom Karas.

10 Over the course of 2007 and 2008, Mr Calderone, Australvic, and various financiers and other creditors of Australvic became involved in protracted litigation in this Court and the Federal Court. Australvic was wound up by the Federal Court on 23 May 2007, although the winding up orders were stayed until 5 October 2007.

11 On 5 May 2007, the first mortgagee of 23 Oxford Street, Perpetual Trustee Co Ltd, sold the property, exercising its powers of sale under its mortgage. The surplus proceeds of sale of $123,649.09 ("funds") were paid into Court on 29 August 2007. On 13 March 2009, the three plaintiffs, JGM Nominees Pty Ltd ("JGM"), Seventh Asteroid Pty Ltd ("Seventh Asteroid") and Mr Calderone issued a proceeding claiming an entitlement to the funds in various capacities. The first defendant, Tulip Investments Pty Ltd, makes no claim upon the funds. The second defendant, Australvic (through its liquidator) resists the claims by each of the plaintiffs. It has not filed its own claim for the funds, preferring to await the outcome of this proceeding. If each of the plaintiffs' claims fail, it will no doubt make a claim upon the funds as the registered proprietor of 23 Oxford Street.

12 JGM claims that it is owed (as at 13 October 2009) the sum of $397,281.80, which is secured over all of the properties owned by Australvic by reason of a deed executed on 25 September 2006 by JGM, M.K. River Pty Ltd (a company apparently controlled by Mr Kyriackou) and Australvic.

13 The 25 September Deed provides for JGM (a company associated with Mr Calderone's solicitors) to advance $46,000 to M.K. River Pty Ltd and Australvic, for a term of 30 days, following which $60,000 was repayable to JGM. The source of the funds advanced was funds held in John Matthies & Co's trust account on behalf of R.A.C. Investments Pty Ltd (a company controlled by Mr Calderone). The 25 September Deed provided that, in the event of default, interest would accrue at 65% per annum, compounding monthly.

14 Clause 6 of the 25 September Deed provides as follows:

In order to secure the monies owing pursuant to this agreement, the mortgagors hereby charge all land owned by each of them with the repayment of monies owing under this agreement and specifically charge the land situate at and known as 14 Loddon Court, Thomastown, 50 Koriella Drive, Sunbury and 570 Wallan Road, Whittlesea and agree to immediately execute such mortgages and other securities and guarantees as the mortgagee's solicitors shall require to secure the repayment of the monies owing under this agreement and to further appoint the Mortgagee as their attorney for such purposes.

15 The status and validity of the 25 September Deed is confused by the existence of other similar documents, being a further deed between JGM and M.K. River Pty Ltd dated 30 November 2006 and a Deed executed on 20 September 2006, which was in substantially (but not completely) similar terms to the 25 September Deed, and was not executed by Australvic. There is also evidence that payments apparently made pursuant to the 25 September Deed were actually made prior to that date and for purposes not identifiably related to the business of Australvic. Some statements made by Mr Calderone's solicitor in correspondence in the period after the 25 September 2006 Deed was executed and by Mr Calderone in affidavits sworn by him in support of JGM's application in this proceeding suggests that there is some confusion within Mr Calderone's own camp about the status of the various documents and the transactions to which they relate. Understandably, the liquidator is in no better position to make sense of what occurred in late 2006.

16 Australvic contends that any reliance by JGM upon the 25 September Deed is inconsistent with the claims of Mr Calderone that the properties were held on trust for him and his associated entities, and as such were not "owned" by Australvic.

17 In a document dated 19 May 2005, Mr Calderone and two associated entities charged their interest in certain land (including 23 Oxford Street) in favour of Seventh Asteroid to secure repayment of all monies owing by them to Seventh Asteroid. A caveat was lodged to support the charge on 18 December 2006 (some fifteen months after the transfer of 23 Oxford Street to Australvic). The accounts of Seventh Asteroid show a loan account in the name of "R.A. & A. Calderone" in the sum of $91,379.00 as at 30 June 2006.

18 Australvic submits that the charge is not effective, as the debt secured is a debt owing by Mr Calderone and his wife, not a debt of Mr Calderone alone. Furthermore, as the 19 May 2005 document provided for an equitable charge, Seventh Asteroid lost any rights if may have had when Mr Calderone sold 23 Oxford Street to Australvic. Furthermore, as the 2006 accounts of Seventh Asteroid (the most up to date available) show the existence of a liability of $115,354.00 in favour of Mr Calderone, the net debt owing to Seventh Asteroid secured by the charge is negligible.

19 Counsel on behalf of Seventh Asteroid submitted that the charge secured any debt owing by Mr Calderone to Seventh Asteroid, including any debt for which he was jointly liable with his wife, and there was no basis to assume that any debt owing to him by Seventh Asteroid could be set off against any debt owing by him (or by him and his wife).

20 Mr Calderone asserts that Australvic held 23 Oxford Street (and the remainder of the properties) on trust for him and his associated entities in accordance with the terms of the joint venture agreement referred to in paragraph 3 above. He relies upon the Memorandum of Agreement dated 3 August 2005 (which the evidence shows must have been executed at a later date), a Declaration of Trust dated 12 August 2005 (again, likely to have been executed on a later date), and a statutory declaration made by Mr Edwards on 19 December 2006 (presumably sworn in support of Australvic's application to the State Revenue Office in support of its application for a refund of stamp duty in respect of the transfer of the properties to Australvic).

21 Much of Mr Calderone's affidavit and oral evidence focused upon Australvic's alleged breaches of trust, and failure to fund the development of 23 Oxford Street, in circumstances when Mr Calderone had received encouraging signals from the City of Monash with respect to his proposed development of the property as student accommodation. However, it was conceded during the course of the trial that any such allegations could only give rise to a claim for equitable compensation or damages, and would not give rise to a proprietary interest in 23 Oxford Street.

22 The thrust of Australvic's submissions in relation to Mr Calderone's claim that 23 Oxford Street was held by Australvic on trust for him is that his entry into the joint venture agreement was part of an overall "sham" designed to deceive potential lenders and/or the State Revenue Office, and as such should not be given effect to by the Court. Further, Australvic provided real consideration for the transfers (being the extinguishment of liabilities previously incurred by Mr Calderone), and as such did not take the transfers as a bare trustee.

23 The plaintiffs relied upon three affidavits sworn by Mr Calderone and their exhibits, and a number of other documents discovered by Australvic in the proceeding.

24 Australvic relied upon the affidavit of the liquidator, Mr McCann. Mr McCann relies upon the books and records of Australvic as his source of knowledge of the relevant transactions.

25 None of the other relevant players in these transactions, in particular Michael Kyriackou, Walter Edwards, or Brian Fisher (a director of Australvic from 30 January 2007) were called to give evidence. Both counsel invited me to draw adverse inferences in respect of the other party's failure to call these witnesses. I decline to do so. It is apparent that neither party to this proceeding would place much store in any evidence given by these gentlemen. Mr Calderone is clearly upset and aggrieved by the conduct of Mr Kyriackou. Mr McCann in his evidence indicated that he is likely to be pursuing claims against Mr Kyriackou on behalf of Australvic for the benefit of its many creditors. In the case of Mr Edwards, as he has executed a Memorandum of Agreement and a statutory declaration which records Australvic as holding the properties, including 23 Oxford Street, on trust for Mr Calderone and his associated entities, I doubt that he could or would give evidence that would involve him resiling from that position, regardless of the true situation. Mr Fisher was not a director of Australvic during 2005 and 2006, and there was no evidence that he was involved in the discussions or negotiations which resulted in the execution of the documents relied upon by JGM or Mr Calderone.

26 Given the gaps in the evidence, it has been necessary for me to attempt to reconstruct the position from the evidence of Mr Calderone and the contemporaneous documents. I do have some reservations about the accuracy of some of Mr Calderone's evidence: while his recollection of relevant events was quite good, and his case did not collapse under cross examination, when one compares his versions of events in his various affidavits and his oral evidence with the contemporaneous documents, it seems to me that he is inclined to emphasise matters which support his case, and downplay matters which do not. For example, in paragraph 8 of his affidavit sworn 23 February 2009, he exhibits the Declaration of Trust executed by Australvic with respect to Australvic allegedly "in anticipation of the transfer being registered". However, examination of the document concerned (and in particular, the date reference on the footer of the document) shows that in all likelihood the declaration of trust was executed on or about 8 December 2006, prior to Mr Edwards lodging the application for the refund of stamp duty, and well after the transfer was registered on 6 October 2005.

27 Further, in paragraph 11 of his second affidavit sworn 6 October 2009, Mr Calderone states that he had received "indicative approval and support for development [from the City of Monash] for student accommodation of 35 units within a three storey construction". However, as became clear during the course of cross-examination, all that occurred is that he had shown a concept sketch to a senior planner who had indicated that any development application made by him would most likely to be looked upon favourably.

28 Further, in the course of giving evidence, Mr Calderone stated that the transfer form signed by him in respect of 23 Oxford Street did not show any amount in respect of consideration. However, examination of the transfer form tendered in evidence shows that the final document did refer to an amount of consideration (as did the transfer form for some of the other properties). It was not clear that Mr Calderone contended that the figures were inserted after he signed the transfer form.

29 Finally, Mr Calderone's claim that the Memorandum of Agreement dated 3 August 2005 (but, on his evidence, executed in late 2006) does not reflect the terms agreed between him and Messrs Kyriackou and Edwards does not enhance his credibility. It is apparent from the correspondence between Mr Edwards and Mr Fox that the terms of the agreement were negotiated between them.

30 No such concerns exist about Mr McCann's evidence. However, as the liquidator of Australvic, his direct knowledge of the relevant events is limited. Accordingly, I have based my findings as best I can upon the objective evidence available.

31 My conclusions in respect of the plaintiffs' claims, for reasons which are elaborated upon in the following sections, are as follows:

(a) Australvic held the property at 23 Oxford Street as trustee for Mr Calderone;

(b) Mr Calderone's equitable interest in 23 Oxford Street may be held subject to a charge in favour of Seventh Asteroid Pty Ltd (should it choose to enforce its security) as there was no change in the beneficial ownership of 23 Oxford Street by reason of the transfer from Mr Calderone to Australvic, but I cannot be satisfied as to the existence and amount of any debt said to be secured by the charge; and

(c) if I had held that the Memorandum of Agreement executed by the parties and the Declaration of Trust made by Australvic was either void or unenforceable by reason of illegality or breach of public policy, and therefore Australvic was the legal and beneficial owner of 23 Oxford Street, the 25 September Deed had charged Australvic's interest in 23 Oxford Street in favour of JGM Nominees (as agent for R.A.C. Investments Pty Ltd). If the Memorandum of Agreement and Declaration of Trust was found to be a sham, any charge in favour of Seventh Asteroid Pty Ltd would have been extinguished by the transfer to Australvic, as Australvic would have been both the legal and beneficial owner of 23 Oxford Street. However, in those circumstances, Mr Calderone would also presumably have a claim to the funds by reason of an unpaid vendor's lien, as the best evidence available is that Mr Calderone did not receive any payment from Australvic when the property was transferred to him. However, no such claim has been expressly made by him during the course of this proceeding.

32 Therefore, while Australvic was the registered proprietor of 23 Oxford Street, the beneficial ownership of the property lay with Mr Calderone. If JGM was an entity at arms length from Mr Calderone, I would need to make findings as to whether Mr Calderone or JGM had a better claim to the funds based upon their respective equitable interests. However, as for all practical purposes they are one and the same, it is not necessary for me to consider at any length whether Mr Calderone's equitable interest ought to be postponed in favour of JGM.

33 The thrust of the submissions made by Australvic with respect to Mr Calderone's claim is that the whole transaction (the transfer of the properties, the entry into the Memorandum of Agreement, and the execution of the Declarations of Trust) was a sham, in order to raise finance for the properties on fictional values, following which the parties "repositioned" the arrangement to enable Australvic and Mr Calderone to claw back the stamp duty paid upon the sales from the State Revenue Office.

34 The difficulty with this submission is that Australvic cannot have it both ways. Either the scheme was designed to lead potential financiers into believing that Australvic held the legal and beneficial ownership of the properties, or to defraud the State Revenue Office, but not both. In my view, the former is most likely to be the case given the circumstances Mr Calderone found himself in in 2005.

35 If one has regard to the evidence of Mr Calderone and the terms of the draft Memorandum of Agreement prepared by Mr Edwards in August 2005, it is apparent from the recitals that the primary purpose of the arrangement between Mr Calderone and Australvic was to enable Mr Calderone and his associated entities to refinance the existing loans and obtain further funding to develop the properties, which they were not at that time in a position to do because of their impaired credit history. The draft agreement, (and the final Memorandum of Agreement) provides in the recitals that -

and whereas [Australvic] is able to provide a service by providing a service by providing borrowing capacity and property management ... which will require [Australvic] to have the properties for which funding is being prepared transferred into its name.

36 This statement in the recitals, along with clause 1(a) and (b), which provide that -

In consideration for the Company [Australvic] obtaining funding for the Developer [Mr Calderone] -

(a) The Company will sign with the Developer a Declaration of Trust which will acknowledge that the Company holds the "funded properties" in trust for the Developer;

(b) The Developer acknowledges and authorises the Company to produce the Declaration of Trust to appropriate Government Authorities such as State Revenue Office, Land Titles Office, and Land Tax Office as and when required

suggests that it was always intended to seek to recover the stamp duty from the State Revenue Office. These clauses, originally drafted in mid 2005, are inconsistent with the application to the State Revenue Office being, as contended for on behalf of Australvic, an attempt to "reposition" the arrangement in order to recover the stamp duty. If that was the case, and the parties had always intended that beneficial ownership would pass to Australvic, why would Mr Calderone be so concerned about recovering the stamp duty? Furthermore, on 12 August 2005, John Matthies & Co suggested the inclusion of the following clause in the agreement, a modified version of which was included in the final executed version of the Memorandum of Agreement:

[Calderone and Associated Entities] may withdraw from the Funded Properties at any time the properties marked * in the schedule if and when the LVR of the remaining properties is sufficient to support the borrowings to first mortgagee then outstanding or upon payment to the first Mortgagee an amount sufficient to achieve such LVR.

37 A revised version of this clause, referable to 63 Euston Road Hughesdale (then Mr Calderone's family home), found its way into the executed Memorandum of Agreement. While the language of the clause lacks clarity, I assume the intention of the parties was that if the total value of the properties covered by the Memorandum of Agreement increased substantially, it would be open to Mr Calderone to seek to refinance the loans arranged by Australvic and secured by his family home using the equity available in the other properties. The existence of an arrangement of this nature is entirely inconsistent with beneficial ownership having passed to Australvic, as it could not have been intended that the beneficial ownership of any "withdrawn" property remain with Australvic.

38 There is other documentary evidence that the assertion by Mr Calderone and Mr Edwards on behalf of Australvic was not simply concocted to recover the stamp duty paid by Australvic on the transfers of the properties. A document tendered in evidence which appears to be an agenda for a meeting of the directors and officers of Australvic on 29 January 2007 includes the following agenda item:

2. To discuss the position of Trustee of the Australvic Trust Properties

The document also refers to the "Rocky Properties" and the "trust properties".

39 Therefore, Australvic's own records, created for its own internal purposes, rather than for submission to financiers or the State Revenue Office, support a finding that it considered itself to be trustee of the properties transferred to it by Mr Calderone and his associated entities.

40 Further, on 30 January 2007, John Matthies & Co lodged a caveat over 23 Oxford Street on behalf of Mr Calderone claiming an equitable interest in fee simple pursuant to the Declaration of Trust. On 5 February 2007, John Matthies & Co wrote to Mr Fisher stating that Australvic had breached the provisions of the Memorandum of Agreement and was no longer fit to act as trustee. While arguably this position could have been adopted to enable Mr Calderone and his associated entities to better secure their position in the light of the difficulties being experienced by Australvic, it is consistent with Mr Calderone's evidence and the contemporaneous documents.

41 Also, Mr Calderone tendered in evidence an affidavit sworn by Mr Brian Fisher in support of an (unsuccessful) application made by Australvic in April 2007 to remove the caveats lodged by Mr Calderone and his associated entities and other parties over the properties, a number of which were caveats lodged claiming an interest by Mr Calderone and his associated entities pursuant to the various declarations of trust in respect of the properties (including 23 Oxford Street).

42 Counsel for the liquidator objected to the receipt in evidence of this affidavit, in which Mr Fisher deposed as to the existence of the Memorandum of Agreement and the Declarations of Trust, and sought the removal of the various caveats on the basis that they were frustrating the ability of Australvic to comply with its obligations under the Memorandum of Agreement. The receipt of this evidence was objected to on the basis that Mr Fisher had not been called to confirm the truth of the contents of his affidavit. I received the evidence, on the basis that I would not rely upon the affidavit as proof of the matters to which Mr Fisher deposed to, but rather simply evidence of what Australvic's director was prepared to say at a particular point of time. I note that in the affidavit Mr Fisher appears to rely upon the Memorandum of Agreement and the various Declarations of Trust, and does not depose to any of the underlying negotiations or discussions. In my view, the existence of the affidavit shows that as at April 2007 Australvic considered itself bound by the terms of the Memorandum of Agreement and the Declarations of Trust, (notwithstanding the purported termination of the joint venture agreement by Mr Calderone in February 2007) and was not asserting that the documents were merely a sham. Therefore, the affidavit has some corroborative value.

43 The timing and execution of the relevant documents and the delay in making the application for the stamp duty refund does arouse suspicions. In particular, the fact that the Declaration of Trust was dated 12 August 2005, but was clearly executed on or after 8 December 2006 does support the liquidator's submission that the transaction was in some way a sham. However, the Declaration of Trust states that -

[the property] is and has at all times material been held by the Trustee as trustee.

44 Further, the evidence is that the properties were transferred to Australvic over a twelve month period from August 2005 (the last property being transferred in August 2006), and the need to make an application for a stamp duty refund became more pressing once Australvic's financial position became increasingly insecure and Mr Calderone became more agitated about the turn of events. Finally, it is apparent that Mr Calderone was not only concerned about the bona fides of Mr Kyriackou (and perhaps Mr Edwards) in respect of their business relationship, but also their capabilities in managing the refinancing and development of the properties. In those circumstances, it is not surprising (or inconsistent with Mr Calderone's claim) that Mr Edwards and Mr Kyriackou did not promptly pursue the application for the refund of the stamp duty.

45 Finally, counsel for Australvic submitted that the entry by JGM (on behalf of R.A.C. Investments Pty Ltd, one of Mr Calderone's associated entities) into the 25 September Deed, by which Australvic and M.K. River Pty Ltd charged "all land owned by each of them" was inconsistent with Mr Calderone's assertion that he was the beneficial owner of the properties. If Mr Calderone knew the properties were truly owned by him or his associated entities, why would he instruct JGM and his solicitors to seek a charge over the properties? By entering into the 25 September Deed, he was in effect seeking to secure the equity in his own properties in favour of himself.

46 However, closer examination of the 25 September Deed, and in particular clause 6 leads to the conclusion that the parties intended that the advances made pursuant to the charge would be, in the first instance, recoverable from the equity in 14 Loddon Court, Thomastown, (owned by M.K. River Pty Ltd), 50 Koriella Drive Sunbury (owned by Australvic but not transferred to it by Mr Calderone or his associated entities), and 570 Wallan Road Whittlesea (ownership unknown) and not necessarily properties in the name of Australvic. Further, it is apparent from the evidence that Australvic was the registered proprietor of other properties in addition to those transferred to it by Mr Calderone and his associated entities. A document discovered by Australvic entitled "Australvic Property Management - Property Position Statement" and admitted into evidence includes references to three properties which Mr Calderone identified as never having been owned by him or his associated entities: 15 Koriella Drive Sunbury (referred to above), 9 Glyndon Avenue, St Albans, and 121 Hawdon Street, Heidelberg.

47 Therefore, JGM's entry into the 25 September Deed, in circumstances where Mr Calderone saw an opportunity to advance a short term loan with an excellent rate of return, would not of itself contradict Mr Calderone's claim to a beneficial ownership of 23 Oxford Street.

48 Of course, the trust relationship between Mr Calderone and Australvic would not be effective to pre-empt any proprietary claims by registered mortgagees or possibly even subsequent equitable interest holders without notice of the trust relationship. Further, any financier who had lent and lost money on the strength of the sale amounts referred to in the transfers of land forms might well have claims against both Australvic and the relevant vendors. They would almost certainly have the right to rescind or terminate the relevant loan agreements. However, it seems to me that as between Mr Calderone and Australvic, the Memorandum of Agreement and the Declaration of Trust, (along with the absence of evidence of any consideration passing from Australvic to Mr Calderone which would evidence an intention to transfer the beneficial ownership of the properties), Australvic is estopped from denying that it holds the properties on trust for Mr Calderone.

49 The fact that the State Revenue Office reached a preliminary conclusion that the transfers of the properties were sales and was not prepared to refund the stamp duty does not of itself change the fundamental character of the relationship between Mr Calderone and Australvic upon a review of all of the available evidence. I note that at the time that the State Revenue Office notified Australvic's solicitors that the application for the stamp duty was refused (11 May 2007) Australvic was engaged in a great deal of litigation, and was facing a winding up order. I can reasonably conclude that making submissions to the State Revenue Office or challenging its determination would not have been among Australvic's highest priorities.

50 Any beneficial interest of Mr Calderone may be subject to the charge in favour of Seventh Asteroid Pty Ltd, should it take action to enforce the charge. The transfer of 23 Oxford Street to Australvic did not extinguish any entitlement of Seventh Asteroid, as Australvic was not a bona fide purchaser for value. However, on the evidence before me, I am not satisfied that the charge in favour of Seventh Asteroid secures any monies owed to it by Mr Calderone.

51 If I am incorrect, and the Memorandum of Agreement and Declarations of Trust are either void or unenforceable for illegality or public policy reasons (or some other reason), in my view, JGM is entitled to be paid the funds in Court by reason of the 25 September Deed. As the charge is made pursuant to a deed, which acknowledges that the advances have been made to M.K. River Pty Ltd and Australvic, means that it is not relevant that the advances made pursuant to the 25 September Deed were made prior to its execution or were not on their face made to Australvic. The 25 September Deed is not a counterpart to the document dated 20 September 2006, as originally contended for by Mr Calderone, but appears to have superseded it. Further, it is apparent from the correspondence between the parties and the documents themselves that there were two separate advances: one made pursuant to the 25 September Deed of $46,000, and another of $60,000 made by JGM for the purposes of satisfying the creditors of R & A Cab Co Pty Ltd. It was the latter advance that was secured by the Deed between JGM and M.K. River Pty Ltd (and not Australvic) dated 30 November 2006, and this document was not a variation of the 25 September Deed (as erroneously described by Mr Calderone and relied upon by Australvic), but related to an entirely separate transaction.

52 If JGM was a party unrelated to Mr Calderone, I would need to carefully consider whether, in circumstances where Mr Calderone was the beneficial but not the legal owner of 23 Oxford Street, and JGM had a valid equitable interest in 23 Oxford Street as chargee, Mr Calderone's conduct was such that his prior equitable interest ought to have been postponed to that of JGM as chargee. By reason of the terms of the Memorandum of Agreement, Mr Calderone had (in clause 1(c)) agreed to Australvic -

having full control and management over the properties.

53 This clause, along with the express and implied authority given by Mr Calderone to Australvic to deal with the properties to enable it to refinance the properties and raise funds for their development, would have probably amounted to postponing conduct if JGM had been an arms length third party acquiring a beneficial interest in 23 Oxford Street by way of the charge created by the 25 September 2006 Deed. However, as there are no practically different consequences in doing so (given that R.A.C. Investments is controlled by Mr Calderone and is not in liquidation), I do not need to determine that issue finally.

54 Accordingly, I will order that the funds be paid to Mr Rocco Calderone, subject to considering any application that might be made by the liquidator with respect to his costs and expenses.

55 I will hear the parties on the appropriate form of orders, and the question of costs.