Plaintiff v Defendants

2 The titles to the Property each record Sylina is registered as the 3rd mortgagee. Owenlaw Trust Ltd ("Owenlaw") is registered as the 1st mortgage. Double David Pty Ltd ("Double David") is registered as the 2nd mortgagee.

3 The 1st defendant, Josephine Shaesta Solanki ("Solanki"), lodged the Caveats on 31 October 2013, on the basis that she has a beneficial interest in the Property by means of a constructive trust. Sylina contends Solanki has no such interest.

4 Sylina is willing to provide further funding to the registered proprietor, Postcode Lygon Developments Pty Ltd ("Postcode Lygon") in relation to a development being carried out on the Property ("the Development"), but only on the basis that the Caveats are removed. The Development involves the construction of residential units. At the time of filing this application, Sylina's position was that it required the certainty that the Caveats would not affect the proposed subdivision, any existing and future sales, and the proposed refinancing, in relation to the Property and the Development.

5 Although some of these matters requiring certainty have now been addressed, Sylina persists with its application. For the reasons that follow, the application to remove the Caveats will be dismissed.

6 The originating motion and summons on originating motion, both filed by Sylina on 20 December 2013, were initially returnable before the court on 7 January 2014. At that time, Sylina had filed an affidavit sworn by its sole director, Pasquale Cufari ("P Cufari") on 17 December 2013. Solanki had filed 1 affidavit in response, sworn 19 December 2013.

7 At the time of filing these court documents, the plan of subdivision in relation to the Development ("the Plan of Subdivision") could not be registered because of the existence of the Caveats (and another caveat[1]); and neither of the caveators had given her or his consent to allow the registration to proceed. Further, the sale of 6 of the units in the Development, already the subject of executed contracts, were not able to proceed to settlement because of the Plan of Subdivision not being registered and the existence of the Caveats (and the other caveat).

8 On 7 January 2014, Bell J made the following orders by consent ("the Consent Orders"):

1. On or before 14 January 2014, [Sylina] is to file and serve an affidavit in reply, specifically providing copies of the following documents and information relied on to prepare the spreadsheet in exhibit PC1 to the affidavit of [P Cufari] sworn on 17 December 2013 in this proceeding:

(a) the priority agreements with Owenlaw as first mortgagee and Double David as second mortgagee;

(b) a statement showing the balance of the first mortgage loan and second mortgage loan;

(c) the loan agreement with [Sylina];

(d) a full statement of account for the third mortgage loan, including the current balance owing to [Sylina] and full details of how that sum has been calculated including but not limited to details of all advances made by [Sylina] pursuant to the third mortgage loan including the date and amount of each, and the date and amount of all repayments of principal and/or interest;

(e) the contracts of sale of the 6 units sold in [the Development]; and

(f) a letter from the selling agent confirming the current expected sale price of the remaining units in the [D]evelopment.

1. On or before 14 January 2014, [Solanki] is to file and serve a further affidavit, setting out:

(a) particulars of the interest claimed in the [Property], including particulars of whether [Solanki] claims an interest by way of constructive trust or as mortgagee; and

(b) evidence of the contributions made by [Solanki], including evidence of any notice given under clause 8.2, and any loan made under clause 8.3 of the joint venture agreement.

1. Subject to receipt of the affidavit set out in paragraph 1, [Solanki] will provide written consent to the registration of the Plan of Subdivision.
2. At settlement of the sale of the 6 units sold in the [D]evelopment, [Solanki] will provide a withdrawal of caveat in exchange for a settlement statement and cheque direction confirming that the sale proceeds from those 6 sales are being distributed to the first mortgagee [Owenlaw].
3. The further hearing of the proceeding is adjourned to 17 January 2014.
4. Costs are reserved.

9 Pursuant to these orders, Sylina filed a further affidavit sworn on 14 January 2014 by P Cufari. On the same day, Solanki also swore a further affidavit. Further, the registration of the Plan of Subdivision was consented to by Solanki and the other caveator. Finally, consent was provided by Solanki and the other caveator for the settlement of the sale of the 6 units.

10 No affidavit has been filed by any person on behalf of Postcode Lygon, the registered proprietor of the Property. Further, Postcode Lygon was not before the court and did not, itself, seek to have the Caveats removed.

11 In or about September 2012, P Cufari was approached by his brothers, Bruno Cufari ("B Cufari") and Frank Cufari ("F Cufari") for the purpose of seeking a loan from Sylina to companies associated with his brothers. B Cufari was the sole director of BGC Global Property Investments Pty Ltd ("BGC Global") and Postcode Lygon. F Cufari was the sole director of CCV Property Developments Pty Ltd ("CCV Property").

12 Pursuant to this approach, Sylina agreed to advance moneys to Postcode Lygon, BGC Global and CCV Property, initially in the sum of $154,657.37 ("the Loan").[2] The Loan was secured, in part, by a 3rd mortgage over the Property.[3]

13 In or about January 2013, Postcode Lygon requested additional funding to complete the Development of the Property. According to P Cufari, Postcode Lygon had been unable to obtain alternative funding for the completion of the Development. P Cufari said he was "advised" (though he does not say by whom or by what means) that at the time the additional funding was sought, Owenlaw and Double David had reduced their facilities by $400,000 as a result of a revaluation of the Property. The court was not provided with any details of any such revaluation.

14 Since January 2013, Sylina has increased its funding, allegedly to a total of $2.2 million, "in order to complete the [D]evelopment". According to P Cufari, the funds the subject of the Loan have been applied towards construction costs to complete the Development, as well as interest payments under the mortgages affecting the Property and other costs related to the completion of the Development.

15 According to P Cufari, Postcode Lygon has advised him that, on registration of the Plan of Subdivision, Postcode Lygon intends to obtain refinancing of the 1st and 2nd mortgages over the Property to minimise interest costs pending sale of the remaining units in the Development. As no details were provided, there is no basis for the court to assess properly the prospects of obtaining any such refinancing.

16 On or about 26 October 2009, Solanki entered into a joint venture agreement with B Cufari and Postcode Lygon ("the Joint Venture Agreement").[4] The Joint Venture Agreement recorded that Postcode Lygon was nominated as the purchaser of the Property and that it proposed to engage in the Development. The Joint Venture Agreement also recorded that Solanki wished to "invest in [Postcode Lygon] for the purposes of undertaking the Development".[5]

17 The Joint Venture Agreement set out the basis upon which B Cufari and Solanki were to enter into a joint venture and Solanki was to become a shareholder of Postcode Lygon. In this regard, the Joint Venture Agreement provided that:[6]

... the Joint Venturers shall

(a) participate as equal Shareholders in [Postcode Lygon] for the purposes of facilitating the Project upon the [Property] subject to the terms and conditions contained in this Agreement;

(b) share in their respective Participating Interest [in] the Joint Venture Expenditure and obtain proceeds of sale of the Units as specified in Schedule 2.

18 "Participating Interest" was defined to mean "the interest in the Development determined in accordance with this [A]greement, which interest and right carry with them the obligations of the Joint Venture expressed, referred to or implied herein".[7] The respective Participating Interests were said to be specified in Schedule 3 to the Joint Venture Agreement. It is common ground that the reference to Schedule 3 should have been a reference to Schedule 2.

19 Schedule 2 to the Joint Venture Agreement provided that Solanki would purchase half the issued shares in Postcode Lygon for the sum of $350,000. In consideration of this purchase, Solanki was to receive the first $700,000 of the net profit derived from the Development.

20 Upon signing the Joint Venture Agreement, Solanki also agreed to lend the sum of $150,000. In consideration of this loan, the Joint Venture Agreement provided that Solanki was to receive interest of $100,000 to be paid at a rate of $1,000 per week, commencing from a time specified and continuing until the completion of the Development "at which time [Postcode Lygon] will pay a lump sum of the balance of $250,000 then remaining outstanding".

21 Finally, Schedule 2 provided that, upon completion of the Development, Postcode Lygon would reimburse Solanki all interest incurred by reason of Postcode Lygon borrowing the moneys to a maximum of $80,000, together with interest calculated on half such amount at the rate of 30% per annum.

22 Extensive provisions were contained in the Joint Venture Agreement in relation to what was said to be the distribution policy to apply the "Net Proceeds at settlement".[8] Broadly speaking, "Net Proceeds" was defined to mean net proceeds derived from the sale, leasing or other disposal of each of the units in the Development. The Joint Venture Agreement provided for 6 different priorities in relation to the disbursement of the Net Proceeds. It is not necessary to go into this detail.

23 The Joint Venture Agreement then referred to "returns". This was not a defined term. In that regard, it was provided:

The Joint Venturers and [Postcode Lygon] agree that the net proceeds of the Project shall be allocated between the shareholders in accordance with their respective shareholdings.[9]

24 The Joint Venture Agreement contained an acknowledgement from Solanki and B Cufari that the Property had been purchased by Postcode Lygon on the basis that each of the joint venturers would contribute moneys payable by virtue of the Joint Venture Agreement. The Joint Venture Agreement then contemplated the possibility of 1 of the joint venturers not contributing in accordance with the Joint Venture Agreement. It is not necessary to set out all the detail, save that in the event that B Cufari was in default, the Agreement provided, amongst other things, that Solanki "may but is not obliged to advance by way of loan or equity the amount by which [B Cufari] is in default of paying".[10]

25 The Joint Venture Agreement then contained what was an obvious mistake. Clause 8.3 commenced with the words "a loan made by [Solanki] under clause 0 will ... (b) be secured ... by a registered mortgage over the [Property] together with such other security required by [Solanki] to adequately secure the loan including personal guarantees from [B Cufari]" (error in italics).[11] This subclause and the preceding subclause were the provisions referred to in order 2(b) of the Consent Orders.

26 To understand fully Solanki's involvement with the Property, it is necessary to refer to her involvement in relation to an investment in a different property. This property is located at 218 Lygon Street, Brunswick East ("218 Lygon Street").

27 Before the Joint Venture Agreement was entered into, Solanki, on 21 July 2009, together with her father,[12] acquired a unit in a unit trust as part of an arrangement to invest $600,000. (A trust deed of the same date was in evidence.[13]) The moneys were paid to a company appointed to act as the trustee of the unit trust ("the 218 Trustee") in exchange for 1 Class A Unit in the trust. Solanki also became a shareholder and director of the 218 Trustee. Solanki's investment was unsecured.

28 As will become apparent, it is not necessary to provide details of the extensive arrangements that were entered into in relation to this investment. However, there are some matters that must be referred to in order to understand the basis upon which Solanki now contends she has an interest in the Property.

29 The trust deed executed in relation to 218 Lygon Street expressly contemplated a joint venture between the unit holders.[14] The other unit holder was BGC Global, as already noted, another company controlled by B Cufari.

A Class A Unit shall entitle the Unit Holder to a fixed and defined distribution of the net income of the fund as more particularly described in the Joint Venture Agreement.

(Emphasis added.)

31 A joint venture agreement dated 21 October 2009 was entered into between Solanki, BGC Global and the 218 Trustee ("the Previous Joint Venture Agreement").[15] The Previous Joint Venture Agreement referred to "Participating Interests" held by the unit holders and provided for each unit holder to hold 50 per cent of the issued shares of the trustee.[16]

32 Similar to the Joint Venture Agreement, the Previous Joint Venture Agreement contained some complicated provisions in relation to the distribution of "Net Proceeds" upon completion of the development in relation to 218 Lygon Street. Although there were some detailed submissions in relation to how these provisions operated, it is not necessary to descend into any detail in relation to most of these clauses. More importantly, for the purposes of matters presently before the court, are the clauses relevant to moneys to be paid out to the unit holders at the conclusion of the development of 218 Lygon Street. The relevant clauses of the Previous Joint Venture Agreement included the following:[17]

At the conclusion of the Project, it is intended that:

(i) [Solanki] will have been repaid the initial investment of $600,000 plus Profit Share in the sum of $680,000 or shall have received or be entitled to receive Units commensurate with the aggregate value thereof; and

(ii) [BGC Global] will have received the balance of all net proceeds from the Project or have paid the whole of any shortfall.

33 As may be seen from this provision, it was intended that Solanki would receive $1,280,000 from the initial investment of $600,000. The reference in the clause immediately above to "Profit Share" is dealt with in other provisions of the Previous Joint Venture Agreement. Without referring expressly to the detail of those provisions, in substance, Solanki was to receive $2000 per week from "the date of the first drawdown of the Project Funding" up to a total of $680,000.[18]

34 BGC Global duly purchased 218 Lygon Street. The development of 218 Lygon Street was completed in December 2012. Between 10 August 2009 and October 2013, Solanki was only paid $241,500. Solanki complains that she has received no proper accounting in relation to her investment or the income and expenses referrable to 218 Lygon Street.

35 At the apparent conclusion of the development of 218 Lygon Street, Solanki alleges that B Cufari told her that the proceeds of sale of the residential units in that development at 218 Lygon Street were insufficient to pay out the registered mortgages. B Cufari is also alleged to have said that if Solanki wished to recover the amount of her investment she would have to "roll" her investment into a new development, being the Development of the Property.

36 In relation to the "rolling" of Solanki's investment, Solanki gave the following evidence (which was not contested):

On several occasions, [B Cufari] provided me with handwritten documents which purported to "inform" me about the [development at 218 Lygon Street] and [the Development]. Although none of them were particularly satisfactory in terms of their content, it is clear from some of them that my investment in [218 Lygon Street] had been "rolled" into [the Property]. For example, [B Cufari] provided me with the document headed "What happens once 218 is fully completed and sold". That document stated, amongst other things:

The $600,000 you put into 218 at the start I would like you to re-invest it with [Postcode Lygon] until [Postcode Lygon is] all built and sold ... The $600,000 will be used mostly for interest and investor's (sic) payments for [Postcode Lygon] ... [Postcode Lygon] need (sic) this injection of $600,000 so we can push it more + finish quicker ... This $600,000 will come back to you end September 2013 along with what you have put into [the Property] from start.

(Emphasis added.)

37 Another document was provided by B Cufari to Solanki, which purported to be a forecast in relation to the Property. Some of the language used is almost indecipherable, but it is clear the substance of the note was to the effect that the investment of Solanki referable to 218 Lygon Street was to be "put ... towards" the Property. The note concluded with the following:

The aim is to get [the Property] completed + settled by end of July + hopefully get your money + other's paid back.

(Emphasis added.)

38 Solanki also swore that, although there had been no formal documentation to support her investment in the Property, B Cufari has acknowledged that "the money I have loaned" has been used in the Development.

C.3 Basis of Solanki's claim of an interest in the Property

39 Solanki makes a claim in relation to the Property based on a constructive trust and also as a mortgagee. For the purpose of disposing of this application, it is only necessary to consider the claim made based on a constructive trust. As noted above, this is the basis upon which it is recorded that the Caveats were lodged.[19]

C.4 Further promises alleged to have been made by B Cufari

40 Consistent with what Solanki says B Cufari told her in relation to 218 Lygon Street, further representations have been made in relation to when and how Solanki might receive a return of her investments.

41 According to Solanki, more recently B Cufari has told her that there will be no funds available to pay Solanki, either by way of repaying loan funds or equity, from the sale of all of the units at the Property. B Cufari also said that in order to recover her "investments" in 218 Lygon Street and the Property, Solanki would need to "roll" her investments into a new project in Northcote.

42 During the course of the discussion referred to in the previous paragraph, B Cufari is also alleged to have said that he is now "out of" the Development and that it had been taken over by P Cufari. Not surprisingly, Solanki deposes that this has caused her significant alarm. She also deposes that despite further requests, she has not been provided with any meaningful documentation in respect of these matters.

43 The principles to be applied on an application to remove a caveat are well settled. There are numerous cases enunciating the approach the court must take. Relevantly, the authorities[20] establish as follows:

(1) The court's power under s 90(3) of the Act is discretionary.

(2) A caveator bears the onus of establishing that there is a serious question to be tried that it does have the "estate or interest in land"[21] as claimed.

(3) If the caveator establishes a serious question to be tried in relation to the estate or interest claimed, the caveator must further establish that the balance of convenience favours the maintenance of the caveat until trial.

(4) There is a relationship between the strength of the case in establishing a serious question to be tried and the extent to which the caveator must establish the balance of convenience favours the caveator; the stronger the case in establishing a serious question, the more readily the balance of convenience might be satisfied. It is sufficient that the caveator show a sufficient likelihood of success that, in the circumstances, justifies the practical effect which the caveat will have on the ability of the registered proprietor to deal with the property in question in accordance with its normal proprietary rights.

44 There is clearly a serious question to be tried in relation to whether or not there is a caveatable interest. The evidence of Solanki discloses that it was positively represented to her by B Cufari, on behalf of Postcode Lyon, that the $600,000 that had been previously invested in 218 Lygon Street would be used to invest in the Property and the Development.[22] Although the moneys invested by Solanki were initially moneys paid by her for an interest in a trust and a "Participating Interest" in a development at 218 Lygon Street, the Previous Joint Venture Agreement provided that the moneys to be paid out from the Previous Joint Venture Agreement at the completion of the development of 218 Lygon Street would be the moneys of Solanki.

45 In these circumstances, there must be at least an arguable case that the moneys referred to by B Cufari as being placed or invested in the Property and the Development were moneys owned by her, beneficially in her own right. It follows that there must also be a serious question as to whether the use of Solanki's moneys to develop the Property gives rise to a beneficial interest in the ownership of the Property.[23]

46 It is not apparent that there is an appropriate equitable remedy falling short of the imposition of a trust, which might provide a reason for the court determining that a constructive trust has arisen.[24] In seeking to suggest otherwise, Sylina submitted that monetary compensation would be sufficient. But based on the facts Sylina has invited the court to accept, any monetary remedy that might be pursued by Solanki against Postcode Lygon would be worthless.[25]

47 Any suggestion made on behalf of Sylina that Solanki could not have any interest in the Property as constructive trustee by reason that there were no moneys available from the Development at 218 Lygon Street can be given little weight. There is a dearth of material before the court on such matters. In short, on an interlocutory basis, the court cannot be satisfied that Solanki did not have a real and substantial entitlement to proceeds from 218 Lygon Street, the fruits of which were transferred to the Property and the Development, thereby giving her an interest in the Property capable of supporting the Caveats.

48 Obviously, in light of the Consent Orders made 7 January 2014,[26] some factors which previously weighed in favour of Sylina on the question of the balance of convenience are no longer matters to be taken into account. It follows that, relatively, there are now less substantial matters Sylina can rely upon relevant to the practical effect of the Caveats remaining.

49 In my view, the balance of convenience favours the Caveats remaining in place. My reasons for this include the following.

50 First, in considering the balance of convenience, without expressing any final view, I have serious reservations about some of the evidence put forward by Sylina. Much of what was put before the court as being relevant to the issue of the balance of convenience amounts to little more than assertions and conclusions, without the necessary underlying evidence. In these circumstances, it is not possible for the court to reach a conclusion on some of the matters raised with any substantial degree of satisfaction.[27]

51 Secondly, a key submission put by Sylina was that, after the interests of the registered mortgagees are taken into account, there would be no equity left in the Property in any event. The submission was put that, accordingly, there would be nothing left for Solanki to realise by reason of any interest that Solanki might have. In these circumstances, it was contended that maintaining the Caveats would provide no real benefit to Solanki. Further, it was submitted that, contrastingly, the prejudice caused by the Caveats to the completion of the Development, including the obtaining of further moneys from Sylina as 3rd mortgagee, meant that the balance of convenience strongly favoured the removal of the Caveats.

52 In my view, the evidence does not establish that no equity will remain in the Property after all residential units are sold (assuming that ultimately occurs) and the registered mortgagees have been duly paid.

53 The evidence relied upon by Sylina to attempt to establish there was no equity left in the business includes extremely unsatisfactory valuation evidence. This evidence was not objected to,[28] but I have considerable reservations in relying on this evidence on an interlocutory hearing given its serious deficiencies.[29]

54 For examples of the deficiencies, I refer to a valuation that was said to rely upon "factors" being carefully considered that had been provided to the valuer. None of those factors were identified. In these circumstances, it is not possible for the court to be satisfied that opinions expressed are wholly or substantially based on the specialised knowledge of the expert. Further, it was said that comparative material was taken into account in relation to another valuation, but equally none of that material was identified. In short, the evidence does not satisfy the requirements of s 79(1) of the Evidence Act 2008 (Vic).[30]

55 Another difficulty with the valuation evidence is that it is opinion evidence in relation to future sale prices of residential units. When the units are actually sold, the prices realised might be substantially different from the opinions (such as they are) expressed to date.

56 In addition, the probative value of the evidence concerning the financial position of Postcode Lygon is minimal. The court is faced with the circumstances where there is no direct evidence on many of the matters relevant to the financial position of the Property and the Development, together with the fact that many of the units remain unsold. It follows that it is problematic for the court to reach any level of satisfaction as to how profitable the Development might ultimately be.

57 Another substantial factor in establishing there was no equity left in the Property was the interest charged by Sylina as 3rd mortgagee. As already noted,[31] P Cufari (the sole director of Sylina) is the brother of the sole director of the registered proprietor, Postcode Lygon. Without expressing any view in relation to the matter, there must be some issue as to whether or not the Loan Agreement was an arm's length transaction. Without in any way being exhaustive, some of the terms suggest there must be some doubt about this.[32]

58 Although this factor in itself would probably not have been a determinative factor, I have sufficient disquiet about the arrangements previously entered into, and now sought to be relied upon, that it has confirmed the view I would have otherwise formed.

59 Furthermore, whether or not there is a question about the suitability of the terms entered into between Sylina and Postcode Lygon, the interest component of the claim made by Sylina as 3rd mortgagee already paid is $346,502.70.[33] This means that in less than 12 months Sylina has already received a very substantial return on its investment (together with still having the secured right to the return of the principal and other claims for further interest in due course).

60 Thirdly, Sylina relied upon evidence that it was unwilling to advance any further funds unless and until the Caveats were removed. This was said to have the result of stifling the progress of the Development because the Plan of Subdivision could not be registered without a further amount of approximately $50,000 being advanced to Postcode Lygon for this purpose.[34] Sylina's position was that it was only willing to advance these moneys if and when the Caveats were removed. It was submitted that if the Plan of Subdivision could be registered (once the Caveats are removed), and the Development could proceed, at least the registered mortgagees would be able to derive the benefits that would flow from these events.

61 A difficulty with this submission is that there was no evidence from the registered proprietor Postcode Lygon. In particular, there was no evidence that the $50,000 could not be raised from some source other than Sylina. Although the evidence available does suggest that Postcode Lygon is under some financial difficulty, in circumstances where so much money has already been invested and the consequences of the absence of a registration of the Plan of Subdivision are so severe, I could not be satisfied that an amount in the order of $50,000 would not be raised in order to conclude the Development. This is particularly so in light of the fact that once the Plan of Subdivision is registered, Postcode Lygon will be able to proceed with the sale of 6 units for a total sum of $2.324 million.

62 Further, I have some reservations about the evidence of Sylina not being willing to advance a further sum of approximately $50,000, when to do so would put at grave risk more than $2 million alleged to be owing to Sylina. Although this may be Sylina's position, it seems to make little commercial sense.[35]

63 Fourthly, the Caveats are now not preventing the Plan of Subdivision from being registered; nor are the Caveats preventing the settlement of the existing sales. There appears to be no sensible reason why, if further units are sold, Solanki would not consent to those further sales proceeding to settlement.

64 It was contended on behalf of Sylina that the existence of the Caveats would be potential obstacles to further sales. It was submitted that potential purchasers would be less likely to enter into a contract for sale of a unit if the Caveats remain.

65 There was no evidence of any such effect having occurred to date. On the contrary, the evidence before the court indicated that some of the contracts of sale already entered into were executed after the Caveats had been lodged. Furthermore, it is common in developments, such as the Development, for contracts of sale to be entered into when there are still many contingencies in place which mean that the development may or may not go ahead or be completed. A good example of this is a sale occurring prior to the registration of a plan of subdivision.

66 In the absence of any evidence to support the submission, I am not willing to accept that the Caveats will provide any meaningful obstacle to further sales if they remain in place.

67 Sylina sought to rely on observations made in Goldstraw v Goldstraw[36] in inviting the court to conclude that the Caveats would continue to act as a potential deterrence to prospective purchasers. However, the facts of that case, concerning a single, established residence, are clearly distinguishable. In any event, as I have said, the only evidence before me suggests the Caveats have not acted as a deterrent.

68 Further, there was nothing in the evidence to suggest that, if further sales occur, in the usual course of business, before any trial and determination of this proceeding,[37] that it is likely Solanki would not allow those sales to proceed to settlement. It is plainly in her interests for any such settlements to occur.

69 However, in order to ensure the Caveats do not impose some unwarranted impediment to the Development proceeding as satisfactorily as is reasonably practicable, the orders the court will make will include liberty to the parties to apply. If the ongoing existence of the Caveats prevents, or is likely to prevent, the settlement of a sale of other units in the usual course of business, a further application may be made to the court to deal with this circumstance.

70 Fifthly, I repeat the fact that Postcode Lygon has not appeared before the court either to seek to have the Caveats removed, or to support the application being made by Sylina.

71 Sylina submitted that the "significant practical effect" of the Caveats remaining was that the "potential damages to [Postcode Lygon] could be substantial" (emphasis added). If the position is as Sylina contends, one would expect Postcode Lygon to be before the court. Moreover, the fact that Postcode Lygon is not before the court has meant that there has been no verification by its sole director, B Cufari, of the matters advanced by Sylina in relation to the position of Postcode Lygon, the Property and the Development.

72 For the reasons stated, the application made pursuant to s 90(3) of the Act for the Caveats to be removed will be dismissed.

Summary of interest charged 28 December 2012 - 8 December 2013

[1] A proposed purchaser has lodged a caveat, number AK707928P, which appears on both titles of the Property.

[2] It is unclear precisely for what purposes the Loan was advanced in its entirely. The Loan was sought by B Cufari and F Cufari "for the purpose of completion of property developments being undertaken by the companies", ie BGC Global, Postcode Lygon and CCV Property. In the loan agreement entered into with all the companies ("the Loan Agreement"), "Authorised Purpose" is described simply as "Business cash flow".

[3] There may be some doubt as to this issue. Although Sylina is registered as a mortgagee in relation to both titles regarding the Property, the Loan Agreement records an entitlement for Sylina to take a mortgage only in relation to 34 Lygon Street.

[4] I was referred to various definitions in the Joint Venture Agreement, together with cll 2.1, 2.6, 3.1, 5.4, 6.1, 8.2, 8.3, 8.4 and Schedule 2.

[9] Clause 6.1. I also note that "net proceeds" in this clause is not capitalised so as to refer to the defined term. Any issue concerning whether this was deliberate or inadvertent is a matter for trial.

[12] It was not clear on the evidence as to the extent to which Solanki's father took an interest. The evidence of the parties proceeded on the assumption that Solanki was the investor. I will also proceed on this basis.

[13] I was referred to the definitions section, together with cll 8.1, 8.2, 8.5, 8.6, 20, and Schedule items 1 and 2.

[15] I was referred to cll 2.1, 2.6, 5.4, 7, 9.3, 9.4, 9.5 and Schedule 2.

[19] See par 3 above. The claim as a mortgagee concerns cll 8.2 and 8.3 of the Joint Venture Agreement. It will obviously also involve issues relating to rectification.

[20] See, for example: Percy & Michele Pty Ltd v Gangemi [2010] VSC 530, [38]-[48] (Macaulay J); Piroshenko v Grojsman (2010) 27 VR 489, 491-492 [7]-[11], 492-494 [13]-[20] (Warren CJ); Schmidt v 28 Myola Street [2006] VSC 343; (2006) 14 VR 447, 457 [32] (Warren CJ); Goldstraw v Goldstraw [2002] VSC 491, [30] (Dodds-Streeton).

[22] Although 1 of the notes (see par 36 above) refers to investing in Postcode Lygon rather than the Property and the Development directly, the preponderance of the evidence suggests that it was an investment directly into the Property and the Development that was represented. Further, there is no evidence that Postcode Lygon ever issued any further shares to Solanki, or gave any other recognition on an investment in the company itself.

[23] Cf, for example, Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137, 149.5 (Mason CJ, Wilson and Deane JJ, with whom Toohey and Gaudron JJ agreed); Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583, 614.3, 616.10-617.2, 620.6-621.3 (Deane J, with whom Mason J agreed).

[24] Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101, 113 [10], 125 [49]-[50] (Gleeson CJ, McHugh, Gummow and Callinan JJ, with whom Kirby J generally agreed). See also Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89, 172 [200] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ).

[25] Cf Windemac Pte Ltd v Jada Ex Beverages Pty Ltd [2013] VSC 1, [21] (Sifris J).

[26] See par 8 above, in particular orders 3 and 4.

[27] For example, affidavit of P Cufari sworn 17 December 2013, pars 5, 6, 7, 8, 12; affidavit of P Cufari sworn 14 January 2014, pars 3, 7, 8.

[28] Perhaps because of order 1(f) of the Consent Orders.

[29] Cf Lym International Pty Ltd v Marcolongo [2011] NSWCA 303, [103] (Campbell JA, with whom Sackar J agreed; Basten JA expressly declined to address this issue: [2].) See also Odgers, Uniform Evidence Law in Victoria (2nd ed, 2013), 236-239 [1.3.290].

[30] See Dasreef Pty Ltd v Hawchar [2011] HCA 21; (2011) 243 CLR 588, 604 [37] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ), (referring with approval to Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705, 743-744 [85] (Heydon JA)), 622 [90], 631 [108], 632 [110] (Heydon J).

[32] The schedule to the loan agreement provides a standard rate of interest of 11% per month or, if the borrower is not in default a "concessional" rate of 5.5% per month. A further provision allows the lender to impose a further 5.5% per month "higher than interest rate which would otherwise prevail" if the borrower failed within 3 days to take action requested by the lender to facilitate registration of the lender's interest.

[34] A letter dated 5 December 2013 from consultants acting for Postcode Lygon itemises 4 matters that total slightly in excess of $50,000 that will need to be attended to as part of the registration process.

[35] For completeness, I note that P Cufari gave evidence that interest is accruing on the 1st and 2nd mortgages at a rate of $56,000 per month. There was no suggestion in any of the evidence or any submission put that these interest obligations were not being met.

[36] [2002] VSC 491, [38]-[39] (Dodds-Streeton J).

[37] Presently, the originating motion only seeks relief in relation to the Caveats. The parties may make submissions as to the further conduct of the proceeding.