Plaintiff v First Defendant

Supreme Court of Victoria|2010-11-24|Before: MACAULAY J

REAL PROPERTY - Caveat - Application to remove caveat - Whether caveat should be amended - Application to amend caveat to substitute interest claimed - Application refused - Midwarren Estates Pty Ltd v Retek & Stivic [1975] VicRp 56; [1975] VR 575 followed - Whether prima facie case of sufficient probability to justify maintenance of caveat - Piroshenko v Grojsman & Ors [2010] VSC 240 followed - Transfer of Land Act 1958 (Vic) s 90(3).

1 Since the breakdown of their business relationship in about May 2003 Mr Pasquale Lanciana, a director of the plaintiff, and the first defendant, Mr Gangemi, have been engaged in a form of legal warfare. Their long and litigious history has been detailed in several judgments of this Court.[1] At least 16 different legal proceedings have been issued between the parties or their associated corporate entities in the Supreme Court of Victoria, County Court of Victoria and Federal Court of Australia.

2 In this latest manifestation of their dispute, the plaintiff ("Percy & Michele"), a company controlled by Mr Lanciana[2], applies under s 90(3) of the Transfer of Land Act 1958 (Vic) for the removal of a caveat dated 11 October 2010 lodged on the title of land which it owns.

3 The caveat, AH548361C, claims an interest in "estate in fee simple" on land particularised in certificate of title vol 10464 folio 006. That land is situated at 86 Mitchell Street, Maidstone ("the Maidstone land").

4 The caveator is Mr Gangemi. The Registrar of Titles (the second defendant) has taken no part in the proceeding but has indicated he will abide the result.

5 The grounds of the claim are described as follows:

Equitable interest to (sic) an agreement dated 4 May 2001 between Antonio Gangemi and Clapana Pty Ltd as original registered proprietor. Subsequent transfer of trustee pursuant to a vesting order dated 7 June 2010 to Percy & Michele Pty Ltd effecting of registered proprietor (sic) from Clapana Pty Ltd to Percy & Michele Pty Ltd. [ACN details omitted].

6 The extent of the prohibition claimed in the caveat is said to be absolute "save for a transfer to the caveator or at his direction".

7 The Maidstone land was originally purchased by interests associated with Mr Lanciana and Mr Gangemi in 2001, intended for redevelopment. It is approximately six acres in area. Mr Lanciana claims it is presently valued at approximately $4,500,000. He claims that the local council has indicated it would approve development for a high density residential dwelling and mixed use on which basis he estimates the development would yield a profit of between $9,000,000 and $12,000,000.

8 The proceeding was commenced by originating motion filed 22 October 2010. A summons on originating motion was filed the same day seeking the relief claimed in the originating motion.

9 The matter first came before me in the Practice Court on 4 November 2010.

10 The material before me showed that the mortgagee of the Maidstone property, Cobville Pty Ltd ("Cobville"), had purported to take possession of the property on or about 5 September 2010. Percy & Michele had secured consent orders from this Court on 24 September 2010 whereby Cobville was restrained until 31 October 2010 from taking any steps to exercise its rights to sell the property. I was informed by counsel for the plaintiff that a mortgagee's auction of the property had been set for 8 December 2010.[3]

11 Mr Lanciana has deposed that he has secured an alternative lender to refinance the Cobville mortgage but that the caveat lodged by Mr Gangemi is frustrating his ability to implement that refinancing proposal. Unless the caveat is lifted, he says, Percy & Michele face the risk of losing the opportunity to retain the property by refinancing the mortgage loan and avoiding the mortgagee sale. More will be said on this issue later but it is these circumstances which have given rise to the claimed urgency.

12 Accordingly, on 4 November I gave directions for further affidavits and written submissions and listed the matter for hearing on 12 November 2010

13 In addition to the filing of further affidavits, Mr Gangemi has sought to implement a number of other court procedures. First, he sought and obtained leave from me on 4 November (without opposition from the plaintiff's counsel) to issue and serve upon a Mr Christopher Bunnett, solicitor, a subpoena to produce documents and give evidence at the hearing fixed for 12 November. Whilst I gave leave for the subpoena to be issued I made no determination on 4 November as to whether or not Mr Bunnett would be permitted to be examined.

14 Additionally, on 3 November 2010 Mr Gangemi served on Percy & Michele a notice to produce documents. That notice, filed just after 2.00 pm on 3 November, called upon Percy & Michele to produce at 10.30 the next morning documents listed under three categories but with each category having five or more subcategories. That particular notice was not answered when the parties appeared before me on 4 November.

15 I gave directions on 4 November 2010 for steps to be taken within a tight timeframe, without objection from either party, in order to facilitate the hearing taking place on 12 November 2010.

16 During the days preceding 12 November 2010 Mr Gangemi took further steps. First, through his solicitors he indicated that he no longer wished to examine Mr Christopher Bunnett and therefore would only be issuing a subpoena to him to produce documents. Secondly, late on Wednesday, 10 November a request was made to me through my Associate to urgently list a hearing to enable Mr Gangemi to obtain leave to issue and serve a subpoena upon a Mr Sam Chirico to attend and give evidence on Friday 12 November. I declined to list such a hearing unless counsel for Percy & Michele was able to attend. He was not able to do so and I indicated that any such leave would have to be sought at the hearing on Friday 12 November.

17 Thirdly, Mr Gangemi notified Percy & Michele by letter that, at the hearing of the matter on 12 November, he intended to cross-examine witnesses of the plaintiff, namely: Mr Lanciana, Mr Brendon Blott, and Mr Richard Osborne. Each of those witnesses had sworn affidavits on behalf of Percy & Michele in the proceeding.

18 Finally, it appears that the notice to produce dated 3 November 2010 was abandoned. In the afternoon of 10 November 2010 Mr Gangemi filed a second notice to produce calling upon Percy & Michele to produce documents at 10.30 am on Friday 12 November 2010. That notice to produce sought the following documents:

1. All documents, letters, notes and records concerning any proposal to obtain loan finance to be secured over the property known as 86 Mitchell Street Maidstone, Victoria being the land more described in Certificate of Title Volume 10464 Folio 006 made by or on behalf of any of the following persons:

(a) Percy & Michele Pty Ltd (A.C.N. 142 732 796) or any legal entity on its behalf;

(b) Pasquale Lanciana (also known as Percy Lanciana) or any legal entity on his behalf;

(d) Daniel Leigh Lanciana or any legal entity on his behalf;

2. Original or copies of all documents, letters, notes and records concerning any proposal made, or agreement made, by any of the persons or entities since 1 January 2010 for the sale of the said property at 86 Mitchell Street, Maidstone.

3. Originals and copies of all documents, notes, letters and records concerning;

(1) any application for loan;

(2) any proposal for loan finance;

for finance made to any bank or financier for a loan to re-finance the existing mortgage loan over the said property at 86 Mitchell Street Maidstone.

4. Originals and copies of all documents, letters, notes or records concerning any approval of any loan application made by the persons or entities concerning the said property, including (without limiting this request) documents recording the proposal, and acceptance of the proposal for finance from Principled Mortgage Investments Limited, referred to in paragraph 4 of the affidavit sworn by Pasquale Lanciana on 4 November 2010 in this proceeding.

5. All documents letters, notes or records concerning:

(1) Caveat No. AD083720Y lodged by Richard Osborne over the title to the said property including requests made by any entity or person for the removal of the same;

6. A Deed of Settlement dated 5 March 2010 made between Pasquale Lanciana and 87 Stevedore Street Pty Ltd and Michie Investments Pty Ltd and Daniel Leigh Lanciana and Beyo Group Pty Ltd and Michele Lorraine Riddiford and Bloomingdale Holdings Pty Ltd and Antonio Gangemi and Rala Nominees Pty Ltd.

19 At the hearing on 12 November counsel for Mr Gangemi called upon the notice to produce. It became apparent that counsel for Percy & Michele was unaware of the existence of the second notice but later conceded, after obtaining instructions, that it had been sent to his instructing solicitor by email some time in the afternoon of Wednesday 10 November 2010.

20 In all events, no documents were produced in answer to the notice. Mr Mattin, who appeared for Percy & Michele, contended that the documents sought in paragraphs 1-4 of the notice were too wide and amounted to a fishing exercise, and that those paragraphs of the notice should be set aside. Furthermore he contended that Percy & Michele had not been given a reasonable time to comply with the notice contrary to Rule 35.08 of the Supreme Court (General Civil Procedure) Rules 2005.[4]

21 As to the documents sought in paragraph 3, regarding Percy & Michele's refinancing documents, Mr Mattin argued that such documents were irrelevant because they were no business of Mr Gangemi. Regarding the documents in item 5, Mr Mattin said they had been produced that day by Mr Bunnett in answer to the subpoena served on him. Regarding the documents in item 6, Mr Mattin said that it was Mr Gangemi who had the original of that document and it was not in his client's possession.

22 Mr Kendall QC, who appeared for Mr Gangemi, outlined numerous arguments as to why the notice to produce ought not to be set aside, and why the documents sought therein were necessary in order for his client's case to be advanced. I determined not to attempt to resolve that issue immediately. Rather, I decided to hear the arguments of the parties on the evidence as it stood and to reserve the question of whether Percy & Michele should be obliged to comply with the notice before making a final decision on the relief sought in the summons.

23 The question of whether or not leave should be given to Mr Gangemi to issue a subpoena for the attendance of Mr Sam Chirico was determined by a ruling I gave on the manner in which the case was to proceed. Mr Kendall wished to be able to cross-examine the plaintiff's witnesses as well as call oral evidence from Mr Chirico. I ruled that the matter should be heard by affidavit only, that cross-examination of Percy & Michele's witnesses would not be permitted and that Mr Gangemi would not be able to lead oral evidence from Mr Sam Chirico even if Mr Chirico's attendance could be secured.[5]

24 The precise nature of Mr Chirico's evidence was not outlined but I note that he is mentioned in evidence given by Mr Gangemi. It appears that Mr Chirico may have been a witness to the handing over of a photocopy of the Deed and Charge in July 2010 of which much more will be said later. In the circumstances of this case, and given the relative significance or otherwise of that occasion, it seems likely that any evidence which Mr Chirico might have been able to give would be of negligible value. It was certainly not apparent that it may be of such value as to justify delaying the hearing of the proceeding.

26 First, Percy & Michele argue that the interest claimed by Mr Gangemi in the caveat is not the interest for which he actually contends. Mr Gangemi does not dispute that his caveat describes the wrong interest. Whereas it describes the interest claimed as "estate in fee simple" he concedes that it should claim "an equitable interest as chargee".

27 Mr Gangemi argues that the Court has the power to amend, and should amend, a misdescription of the interest claimed. On the other hand Percy & Michele argue that the error in describing the interest claimed is fatal and cannot be amended.

28 Accordingly, the first issue is whether or not the caveat can, and if so should, be amended, or whether it should simply be removed because it does not claim to protect any interest which Mr Gangemi can sustain.

29 Secondly, Mr Gangemi asserts that he has recently uncovered a photostat copy of a 'Deed and Charge Agreement' ("the Charge") allegedly made on 4 May 2001 between Bloomingdale Holdings Pty Ltd ("Bloomingdale") and Mr Gangemi, as lenders, and Clapana Pty Ltd ("Clapana") as borrower. The Charge purports to charge the Maidstone property, then owned by Clapana, with payment of two sums of money lent to Clapana - $218,081.50 from Bloomingdale and $290,000 from Mr Gangemi. It is this charge which Mr Gangemi says is the foundation of his asserted interest in the Maidstone land now protected by his caveat.

30 Percy & Michele denies the authenticity of the Charge. In any event, it says that any claim by Mr Gangemi for an interest in the land pursuant to that Charge, or otherwise, has been released by an accord and satisfaction made, not once, but twice. It first relies upon a settlement agreement made between Mr Lanciana and Mr Gangemi, and their associated entities, in May of 2003. It then relies upon a further settlement agreement made in March 2010. It argues that the 2003 settlement and the 2010 settlement have each been the subject of determinations of this Court in its favour so that any rights which Mr Gangemi (or Bloomingdale) may have had in the Maidstone property have been fully and effectively released. Moreover, it contends that any claim which Mr Gangemi might once have had in respect of an interest in the Maidstone property is now statute barred and could not be litigated.

31 Accordingly, the second principal issue is whether Mr Gangemi has any extant interest in the Maidstone property arising from the alleged Charge given in 2001.

32 The third principal issue concerns the 2010 settlement. I have explained that it is relied upon by Percy & Michele as one of the bases upon which any interests which Mr Gangemi may have had pursuant to the alleged Charge have been released. Mr Gangemi contends that insofar as the 2010 settlement may have effected a release of his claims under that Charge, that settlement has been discharged by the repudiatory conduct of Percy & Michele which Mr Gangemi has accepted.

33 According to Mr Gangemi, therefore, the releases given therein are no longer effective and he is entitled to continue to pursue various legal proceedings which remain on foot to vindicate his rights as chargee of the Maidstone property. Although the 2010 settlement agreement obliged the parties to consent to all their various proceedings being struck out, the proceedings concerning the claim for the loan given in respect of the purchase of the Maidstone property have not been struck out and remain on foot.

34 Percy & Michele has a number of arguments in answer to Mr Gangemi's claim that the 2010 settlement has been terminated. It first highlights the fact that there is no proceeding on foot to set aside the 2010 deed of settlement. Next it says there is in fact no breach of the agreement. Alternatively, if there has been such a breach, that breach is not repudiatory and could only sound in damages. Accordingly it maintains that the settlement is still effective as a full release of the very claim which Mr Gangemi is asserting as the foundation for his alleged caveatable interest.

35 Next it says that, in any event, Mr Gangemi has made an election not to rely upon, or alternatively is estopped from asserting, a number of the alleged breaches said to found the repudiation because of his conduct after learning of the alleged breaches. In particular, Percy & Michele points to his conduct before Chief Justice Warren in a proceeding in June of this year.

36 Finally it argues that the 2010 settlement is not void ab initio unless it is set aside for fraud, and fraud has not been alleged.

37 Accordingly the third principal issue is whether or not the 2010 settlement has been discharged so that it no longer precludes Mr Gangemi from asserting an interest as chargee in the Maidstone property. Seen in this way the second and third issues are closely related.

38 Before embarking upon an analysis of the issues it is necessary to consider the nature of a proceeding under s 90(3) of the Transfer of Land Act for the removal of a caveat. The provision is in these terms:

Any person who is adversely affected by any such caveat may bring proceedings in the Court against the caveator for the removal of the caveat and the Court may make such order as the Court thinks fit.

39 The provision confers a discretion upon the Court. The exercise of that discretion has been explained in a number of recent decisions of this Court. In Goldstraw v Goldstraw[6] Dodds-Streeton J summarised the jurisdiction in these terms:

Section 90(3) is in the nature of a summary procedure analogous to the determination of interlocutory injunctions. The Court's power under s 90(3) is discretionary. In that context, it is recognised that the caveator bears the onus of establishing that there is a serious question to be tried that he or she does have the estate or interest in the land claimed. That is, "in order to resist successfully the applications for removal of caveats [the caveator's] arguments must be directed towards the assertion of an interest in the subject land in the light of relevant principles of property and equity law". Further, if the caveator does establish the serious question to be tried in relation to the estate or interest claimed, the weight of authority indicates that the caveator must further establish that the balance of convenience favours the maintenance of the caveat until trial.

40 Warren CJ said in Schmidt v 28 Myola Street[7]:

... the proper exercise of the discretion under s 90(3) will involve considering: in which party's favour the balance of convenience lies; whether there is a serious question to be tried; and whether the caveator claims an interest wider than what the caveator may be entitled. These questions inform the ultimate consideration, that is, whether the caveator has discharged his or her onus of justifying the maintenance of the caveat. The process is comparable to the exercise undertaken in granting or denying an interlocutory injunction.

41 Warren CJ recently amplified upon that exposition in Piroshenko v Grojsman & Ors[8]:

Caveats under the Torrens system are treated by the courts as analogous to applications for interlocutory injunctive relief. Insofar as their registration is an administrative act, it is when application is made for their removal that the onus falls on the caveator to satisfy the two stage test used by the court when deciding whether to exercise its discretion to grant interlocutory injunctive relief. This approach has been established law in Australia since the decision of Lord Diplock in[1980] AC 331. Eng Mee Yon was approved by the Full Court of the Queensland Supreme Court of Appeal in Re Jorss' Caveat [1982] Qd R 458, 464-5. This two stage approach requires the caveator to establish that there is a serious question to be tried that they have the estate or interest which they claim in the land in question, and having done so, to establish that the balance of convenience favours the maintenance of the caveat on the Register of Titles until trial. This is still the approach taken by the courts in Victoria when deciding applications under s 90(3) of the Act. Goldstraw v Goldstraw [2002] VSC 491, [30]. See also, Theresa Bernstein v George Georgakakis & Anor [2010] VSC 52.

42 In Piroshenko her Honour went on to consider in more detail the element of "serious question to be tried". Her Honour observed that in Australian Broadcasting Commission v O'Neill[9] the High Court distinguished between the "prima facie case" test, established by the High Court in Beecham Group Ltd v Bristol Laboratories Pty Ltd[10], and what her Honour described as the lower threshold "serious issue to be tried" test established by the Privy Council in American Cyanamid Co v Ethicon Limited[11].

43 Her Honour drew attention[12] to the fact that Gummow and Hayne JJ, with whom Gleeson CJ and Crennan J concurred on the point, clarified an important point of difference between the relative onus placed upon an applicant by each test. Their Honours had explained the earlier decision in Beecham, in which the phrase "prima facie case" had been used in the following terms:

... their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial.[13]

44 Their Honours then emphasised the following statement by Kitto J in Beecham:

How strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and to the practical consequences likely to flow from the orders he seeks.[14]

45 Finally they contrasted those statements with what had been said by Lord Diplock in American Cyanamid, namely:

So unless the material available to the Court at the hearing of the application for an interlocutory injunction fails to disclose that the plaintiff has any real prospect of succeeding in his claim for a permanent injunction at the trial, the Court should go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that is sought. [emphasis added].

Those statements do not accord with doctrine in this Court as established by Beecham and should not be followed. They obscure the governing consideration that the relevant strength of the probability of ultimate success depends upon the nature of the rights asserted and the practical consequences likely to flow from the interlocutory order sought.[15]

46 Applying those principles to applications for the removal of caveat her Honour Warren CJ then said:

Therefore, consistently, in order for a caveator to satisfy the first limb of the test applied by the courts when deciding applications under s 90(3) of the Act, he or she must satisfy the court that:

there is a probability on the evidence before the court that he or she will be found to have the asserted equitable rights or interest; and
that probability is sufficient to justify the practical effect which the caveat has on the ability of the registered proprietor to deal with the property in question in accordance with their normal proprietary rights.[16]

47 The reference to "probability" in the first limb of what her Honour said must be satisfied is plainly qualified by the character of that probability as described in the second limb. Recalling what the High Court said in Australian Broadcasting Commission v O'Neill, showing a "prima facie case" does not mean that a plaintiff must show that it is more probable than not that he or she will succeed at trial.

48 Finally, her Honour cautioned against treating the two tests[17] as if they were the same, suggesting as follows:

... In order to avoid confusion as to the burden which must be discharged by the caveator, it may be that the courts would be better served by talking of a 'prima facie case giving rise to a serious question to be tried' or even 'a prima facie case with sufficient likelihood of success to justify the maintenance of the caveat' when deciding such applications.[18]

49 I will approach the analysis of Mr Gangemi's entitlement to retain the caveat by adopting the aforementioned principles.

50 A substantial body of evidence has been filed by both parties in respect of the application. For Percy & Michele Mr Lanciana has sworn four affidavits; 22 October 2010, 28 October 2010, 4 November 2010 and 8 November 2010. It has also filed affidavits from Mr Brendan Blott and Mr Richard Osborne, both also sworn 8 November 2010.

51 In opposition Mr Gangemi has sworn three affidavits, on 3 November 2010, on 11 November 2010, and on 12 November 2010. An affidavit from a handwriting expert, Mr John Ganas was also filed.

52 There have also been a very substantial number of exhibits tendered with the affidavits.

53 Not all of the evidence appears to be relevant to the resolution of this application. I will set out below what I consider to be the essential factual matters. Although there is a lot of detail that is debated in the various affidavits, for present purposes a good deal of that debate can be avoided by referring to events in more general terms sufficient to lay out the necessary factual background for identifying the issues to be weighed.

Mr Lanciana's and Mr Gangemi's business relationship

54 In 1997 Mr Lanciana and Mr Gangemi commenced a business relationship when, through companies they each controlled, they became associated in a property redevelopment in Williamstown. They soon became involved in a number of such property developments. Those included developments at 87 Stevedore Street, Williamstown, 86 Mitchell Street, Maidstone (ie. the Maidstone property) and 61-67 Buckley Street, Footscray.

55 These properties were purchased using various companies and unit trust structures in which Mr Lanciana and Mr Gangemi held interests. In some projects other persons, for example Mr Richard Osborne, also held interests.

56 The Maidstone property was purchased in mid-2000 and was registered in the name of Clapana as trustee of the Mitchell Street Unit Trust. A dispute exists between the parties as to whether the shares in Clapana were owned only by Lanciana interests, or by Lanciana and Gangemi interests. It is unnecessary for me to analyse that dispute.

57 On 4 May 2001 Clapana borrowed money from Perpetual Nominees Ltd ("Perpetual") to assist in purchasing the Maidstone property. Perpetual took a first registered mortgage over the property.

58 It was also in connection with the purchase of the Maidstone property that Mr Gangemi alleges that he and his company, Bloomingdale, lent money to Clapana which loans were secured by the Charge. A copy of the document said to evidence that charge has recently surfaced. The authenticity of the document is hotly contested. I will say something more about the circumstances of it surfacing later.

59 But for the moment I observe that the document alleged to be a photocopy of the signed Charge, Exhibit AG 26, purports to record a loan from Mr Gangemi to Clapana of $290,000, a loan from Bloomingdale to Clapana of $218,081.50, and the charging by Clapana of its interest in the Maidstone property in favour of the two lenders.

60 By May 2003, as mentioned earlier in this judgment, the relationship between Mr Lanciana and Mr Gangemi had broken down. That appears to be one fact on which the parties agree. Between May 2003 and September 2003 Mr Lanciana and Mr Gangemi held meetings in an attempt to resolve their dispute. A resolution of their dispute was facilitated by the services of a Mr Mick Gatto and a Mr Mario Condello, a circumstance which later led Mr Gangemi to argue that his agreement to a settlement which was reached was procured by duress.

61 Both Mr Gangemi and Mr Lanciana signed a document dated 9 September 2003 entitled Heads of Agreement ("the 2003 settlement"). The 2003 settlement commences with the following sentence:

The following are the terms upon which various matters in dispute between the stated parties are to be settled.

62 The parties to the 2003 settlement included Clapana, the companies owning the Stevedore Street and Buckley Street properties, Mr Gangemi, Bloomingdale, Mr Lanciana and some other entities and persons. The terms of settlement were stated to take effect upon the signing of the 2003 settlement. Importantly, clause 6 of the agreement provided that Mr Gangemi and Bloomingdale would sign and deliver to Mr Lanciana documents effecting Mr Gangemi's transfer of interests in Clapana and the Mitchell Street Unit Trust - that is to say, his interests in the Maidstone property. He similarly agreed to deliver documents effecting his transfer of interests in the Stevedore Street and Buckley Street properties.

63 On 1 October 2004 Clapana was placed into liquidation and was deregistered on 2 March 2005.

64 Mr Lanciana claims that following the 2003 settlement Mr Gangemi executed an instrument of transfer for the transfer of his units in the Mitchell Street Unit Trust and that, accordingly, since that time neither Mr Gangemi nor Bloomingdale has held any interest in the Maidstone property or any units in the Mitchell Street Unit Trust. For his part Mr Gangemi alleges that the transfer of units Mr Lanciana relies upon is a forgery.

65 On 6 July 2005 in this Court Bloomingdale commenced proceeding 7021 of 2005 which Mr Gangemi refers to as "the main proceeding". By that proceeding Bloomingdale claims declarations that it is the owner of 50 percent of the units in the Stevedore Street Unit Trust and the Mitchell Street Unit Trust, and seeks injunctions restraining Mr Lanciana and others from taking any steps to deal with the Stevedore Street property or the Mitchell Street property. Mr Lanciana consented to the giving of undertakings not to deal with the properties until trial. That proceeding has never been heard or determined.

66 Another of the many proceedings that were instituted between the parties from around 2005 onwards was a proceeding in this Court, number 9563 of 2006 commenced by Bloomingdale and Gangemi against 63 Buckley Street Pty Ltd ("the Buckley Street proceeding").

67 The Buckley Street proceeding has been heard and determined. It was decided by Hargrave J on 22 May 2008 after 18 sitting days of trial[19]. Critical to the resolution of the Buckley Street proceeding was the question of the validity of the 2003 settlement. As noted earlier Mr Gangemi alleged that the 2003 settlement was invalid and unenforceable principally upon the ground that his signature was procured by duress. In the course of a substantial and lengthy judgment his Honour held, amongst other things, as follows:

490 Fifth, I reject Mr Gangemi's claims that his signatures to the Heads of Agreement and the documents signed by him pursuant to the Heads of Agreement were procured by duress. If that is not so, Mr Gangemi has nevertheless affirmed the Heads of Agreement by his conduct or should be estopped from alleging that the Heads of Agreement are not binding by reason of any duress.

491 Sixth, the Heads of Agreement constitute a binding agreement between Mr Lanciana and Mr Gangemi.

492 Seventh, the Heads of Agreement were not terminated or abandoned as contended for by Mr Gangemi.

493 Eighth, pursuant to the Heads of Agreement Mr Gangemi transferred full ownership and control of 63 Buckley to Mr Lanciana. Subsequently, Mr Lanciana transferred full ownership and control of 63 Buckley to Mr Jafari. Although these steps were attended by gross informality and procedural error, they were nevertheless valid or else will be the subject of declarations of validity under s 1322(4)(c) of the Corporations Act 2001 (Cth).[20]

68 Although the Buckley Street proceeding was focused upon the transfer of interest in the Buckley Street property, the upholding of the 2003 settlement[21] by Hargrave J provides a solid foundation for a conclusion that, by the terms of the agreement, Mr Gangemi and Bloomingdale became bound to divest themselves of any interest in the Maidstone property.

69 Both Mr Gangemi and Bloomingdale appealed Hargrave J's judgment but on 15 December 2009 the Court of Appeal upheld his Honour's findings and dismissed the appeal with costs.[22] In the Buckley Street proceeding criticisms were made by Hargrave J of both Mr Lanciana and Mr Gangemi as witnesses, although it may be said that the most damning criticisms on credibility were made in respect of Mr Gangemi. Nevertheless Hargrave J also made significant criticism of Mr Lanciana concerning his attention to discovery. Mr Lanciana's failure to make appropriate discovery was also the subject of an (unsuccessful) application to the Court of Appeal for a new trial.[23]

70 In the application before me Mr Gangemi seeks to make use of those criticisms by seeking to characterise Mr Lanciana's failure to discover the alleged Deed and Charge (Exhibit AG-26) as yet another instance of his established misconduct in this regard. The argument, to which I will return in due course, seems to use the following logic: because Mr Lanciana has been shown in the past to have failed to give discovery of documents adverse to him which he ought to have discovered, the Court should more readily draw the inference that Exhibit AG-26 is a genuine document which Mr Lanciana has sought to conceal. In my view, any past misconduct on the part of Mr Lanciana in respect of discovery has little if any relevance to the decision I need to make.

71 Before coming to the settlement document which the parties signed on 5 March 2010 I need first to make reference to some issues which were involved in proceeding 7021 of 2005 which Mr Gangemi refers to as "the main proceeding". In that proceeding, in an affidavit sworn in response to an application brought by Lanciana interests for security for costs, Mr Gangemi set out the circumstances in which Bloomingdale borrowed the moneys which it subsequently lent to Clapana to enable it to complete the purchase of the Mitchell Street property.[24]

72 More significantly, in proceeding number 6036 of 2007 in which Mr Gangemi is plaintiff and Clapana is first defendant, Mr Gangemi alleged that on 4 May 2001 he lent Clapana, as trustee of the Mitchell Street Development Unit Trust, $283,428.64 to settle the purchase of the Mitchell Street property. He alleged that Clapana had failed to repay the loan and, as well as seeking payment of the debt, he sought a declaration that he was entitled to be indemnified from the assets of the Mitchell Street Development Unit Trust in respect of the amount owed by Clapana to him.[25]

73 In short, in at least two proceedings, Mr Gangemi asserted the existence of the 2001 loan to Clapana and sought some relief in respect of it. It was against this general background that the parties came to execute a further settlement agreement on 5 March 2010 headed "Deed of Settlement" ("the 2010 Deed").

74 The parties to the 2010 Deed included Mr Lanciana, 87 Stevedore Street Pty Ltd, Michie Investments Pty Ltd, Bloomingdale Holdings Pty Ltd and Mr Gangemi (amongst others). Michie Investments Pty Ltd ("Michie") was a company incorporated by Mr Lanciana which, for a time, succeeded Clapana as registered proprietor of the Maidstone property and trustee of the Mitchell Street Unit Trust.

75 The recitals listed 14 proceedings (defined as the "Proceedings") which the parties had initiated. They included proceedings 7021 of 2005 and 6036 of 2007 in this Court. They further recited Mr Lanciana's assertion that pursuant to the 2003 settlement Mr Gangemi was, amongst other things, required to cause Bloomingdale to transfer its unit in the Mitchell Street Unit Trust to Lanciana[26]; that Bloomingdale and Mr Gangemi denied Mr Lanciana's said assertion[27]; and then, most critically, set out the following

N Bloomingdale and Gangemi have agreed that an instrument whereby Bloomingdale's unit in the Mitchell Street Unit Trust was transferred to Lanciana, previously disputed, was effective in transferring that unit.

O Bloomingdale and Gangemi have agreed that Lanciana, Michie and their privies are the sole persons entitled to deal with the Mitchell Street Unit Trust and the property at 86 Mitchell Street, Maidstone.

P The parties have agreed to settle the Proceedings and claims on the terms of this Deed.

76 By clause 2 of the 2010 Deed the parties each covenanted and declared that the recitals to the deed were true and correct and formed part of the agreement set out in the deed. Bloomingdale had to deliver to Mr Lanciana's solicitors a withdrawal of a caveat lodged on the title of the Mitchell Street property[28]. The deed provided for the discharge of undertakings given by one or other of the parties in specified proceedings, including those given by Mr Lanciana in proceeding 7021 of 2005.[29]

77 By clause 5.2 of the 2010 Deed, subject to and in consideration of the terms of the deed, the parties mutually released and forever discharged each other from all the claims and proceedings arising out of the defined Proceedings or related to the subject matter of those proceedings. Furthermore, by clause 7 the parties agreed that they may each plead the deed as a bar to any action or proceeding brought against each other in relation to any of the matters alleged in the Proceedings.

78 Significantly, from the point of view of Mr Gangemi, clause 9 set out a confidentiality provision in the following terms:

9.1 Each party agrees to keep as confidential the terms of the Deed and the contents of all negotiations leading to its preparation, and will not disclose or discuss any of that information without prior written approval of the other party, except:

(a) as specifically contemplated by the Deed;

(b) to the extent required by law;

(c) to the extent required to instruct the parties professional advisers;

(d) to the extent required by the financiers of the parties pursuant to their usual financing arrangements; and

(e) to the extent required to enforce the Deed.

79 Regrettably that was not the end of the story. Following the execution of that deed Mr Lanciana incorporated the plaintiff, Percy & Michele. He did so on 24 March 2010. On the same date, as sole unit holder of the Mitchell Street Unit Trust, Mr Lanciana resolved to appoint Percy & Michele as the new trustee of the trust and the company resolved to accept that appointment.

80 On 3 May 2010 Perpetual served a notice of default under the mortgage over the Maidstone property and demand was made for repayment to Perpetual of the sum of $1,960,943.71.

81 Mr Lanciana attempted to arrange refinance of the loan from Perpetual and needed to establish that a new trustee (not in liquidation, as Clapana was) had been appointed to the trust. Accordingly, in an application made in proceeding 7021 of 2005 Percy & Michele sought a declaration from this Court that it had been validly appointed as trustee of the Mitchell Street Unit Trust, and that the Maidstone property vested in Percy & Michele as trustee of the trust. Out of an abundance of caution it also sought a vesting order under s 51(2) of the Trustee Act 1958 (Vic) to vest the Maidstone property in the new trustee company as trustee of the trust.

82 Somewhat amazingly Bloomingdale opposed the making of the orders. The matter came before Warren CJ on 4 June 2010 and was decided in favour of Percy & Michele on 7 June 2010[30]. Amongst other things her Honour said the following:

... It is curious that the plaintiff [ie Bloomingdale] seeks to agitate, as it does, in the face of the heads of agreement [ie the 2003 settlement] and the terms of settlement contained in the deed [ie the 2010 Deed] to which it has already agreed.[31] ...

... Indeed, on the face of things, and for the purposes of exercising the present discretion, most of the complaints made by the plaintiff are irrelevant and/or tantamount to frustrating the heads of agreement and the terms of the deed. A number of matters were raised both in the affidavits of Mr Gangemi, and in the course of submissions, that I would regard as irrelevant in the present context.[32]

... Ultimately it was urged on behalf of Mr Lanciana that Mr Gangemi, through his affidavits, sought to re-agitate disputed matters that were settled by the deed, as well as matters that were substantially the subject of a trial in this Court before Hargrave J, and which were later the subject of an unsuccessful appeal of Hargrave J's first instance decision.

I am so persuaded. The various principles with respect to the application of documents such as the deed are set out in the relevant authorities. The formal contract records the parties' bargain, and if they later find the bargain to be less than satisfactory then it is something they must wear.[33]

83 In the result her Honour made the orders sought by Mr Lanciana. Those orders made 7 June 2010 included that:

...

2 The Court declares that the property situate at and known as 86 Mitchell Street, Maidstone in the State of Victoria ... vests in Percy & Michele Pty Ltd as trustee of the Mitchell Street Unit Trust.

3 It is ordered that the property ... and all of the estate and interest therein do vest in Percy & Michele Pty Ltd as trustee of the Mitchell Street Unit Trust to be held by it upon the trusts of the Mitchell Street Unit Trust. [Title particulars and ACN omitted].

85 Prior to the hearing before the Chief Justice in June, but after the 2010 Deed in March, it is alleged that Mr Lanciana, in breach of the confidentiality terms of the 2010 Deed, revealed the contents of the deed to Mr Richard Osborne and Mr Kourosh Jafari causing them, so it is said, to join in as applicants to a Federal Court proceeding commenced by Mr Lanciana to set aside a Personal Insolvency Agreement executed by Mr Gangemi on 7 September 2009. Under the 2010 Deed Mr Lanciana was obliged to consent to orders in that proceeding that it be struck out and that he, Mr Lanciana, would pay costs.

86 Mr Gangemi contended that the revelation to Mr Osborne and Mr Jafari of the terms of settlement has, in effect, made it impossible for Mr Lanciana to fulfil his obligations under the deed. Mr Gangemi says that the termination of that Federal Court proceeding was the principal benefit to him of entering into the 2010 Deed.

87 By letter dated 16 April 2010[34] Mr Gangemi's solicitors wrote to Mr Lanciana's solicitors complaining that, in breach of the confidentiality clause in the 2010 Deed, Mr Lanciana had revealed the contents of that deed to Mr Christopher Bunnett. Mr Gangemi's solicitors warned that if Mr Lanciana had breached the deed of settlement Mr Gangemi would have various rights including but not limited to damages against Mr Lanciana.

88 No reference was made to the alleged breach of confidentiality before Chief Justice Warren, in June 2010, as grounds for resisting the declarations sought in that application by Percy & Michele, recalling that the basis for seeking the declaration was to give effect to the entitlements of Percy & Michele under the 2010 Deed. In other words, Mr Gangemi and Bloomingdale did not raise the alleged breaches of confidentiality, which they then knew about and had complained of, as a basis for setting aside the 2010 Deed upon which Percy & Michele's application depended. More will be said about the significance of that fact later.

89 Secondly, Mr Gangemi claims that in July 2010 he received a telephone call from a person by the name of Joe Lugara who informed Mr Gangemi that he had certain documents that were on Mr Lanciana's desk at his office in Mitchell Street. Mr Gangemi had not met Joe before but that he attended a meeting with Joe who introduced himself and then gave him a photostat copy of the Deed and Charge Agreement of May 2001 which is Exhibit AG-26.

90 Mr Gangemi did not do anything about this document immediately but on 27 September 2010 his solicitors, Isakow Lawyers, wrote to Mr Lanciana's solicitors with a letter purporting to accept repudiation of the 2010 Deed and a notice of termination of the said deed. In the notice of termination of the deed Bloomingdale and Mr Gangemi relied upon a number of grounds including disclosure of the deed and terms of settlement to Mr Bunnett, solicitor and agent for Mr Osborne, and to Mr Jafari, and also for failing to make discovery in proceeding 7021 of 2005 of the alleged Deed and Charge Agreement, Exhibit AG-26.

91 To complete the relevant chronology, on 11 October 2010 Mr Gangemi lodged the caveat on the title of the Maidstone property, that is, the caveat which is the subject of the present application.

92 The picture presented by the authorities on whether or not an amendment may be made to a caveat, upon an application for removal of the caveat, is not entirely consistent.[35]

93 The power to amend a caveat has been derived from the discretionary power contained in s 90(3), or its equivalents in other jurisdictions, for the court to "make such order as the court thinks fit". That power has been recognised in various cases to be broad enough to permit an amendment to a caveat[36].

94 In Midwarren Estates Pty Ltd v Retek & Stivic[37] Menhennitt J distinguished between a power in the court to make an amendment to the scope of the protection given by a caveat, on the one hand, and, on the other, an amendment to the estate claimed in the caveat. His Honour was of the view[38] that the authorities recognising a power to amend only recognised a power of the former type, and not the latter. His Honour did not consider that the provisions of s 90(3) of the Transfer of Land Act authorised the making of an amendment to the estate claimed. And, although he was cautious not to be taken as deciding there may not be some inherent power to do so, his Honour nonetheless expressed his own opinion that there was no other inherent power to authorise an amendment which would result in the substitution of an entirely inconsistent estate or interest.[39] Even if there was such a power, and because the amendment was strongly opposed, his Honour was further of the view that because what was sought to be done was so different from, and inconsistent with, what was originally claimed he would not, as a matter of discretion, grant the amendment.

95 Mr Gangemi prefers to rely on what Gillard J said in S & D International Pty Ltd (in liq) v Malhotra[40]. However it is plain that in that case Gillard J was not dealing with the amendment of an estate or interest claimed, but rather the grounds upon which that estate or interest was claimed. It is not therefore inconsistent with the decision in Midwarren Estates.

96 In my view there is force in the argument that s 90(3) should not be construed so as to empower the court to amend a caveat by substituting an entirely different estate or interest claimed. I say so for the following reasons.

97 First, s 89(1) of the Act permits any person claiming "any estate or interest in land" to lodge with the Registrar a caveat forbidding the registration of any instrument affecting "such estate or interest". Section 90(3) permits any person who is adversely affected by "any such caveat" to bring proceedings in the Court for its removal. It is in those circumstances that the Court is given a discretion to make "such order as [it] thinks fit".

98 As a matter of statutory construction it is arguable that the power to make such orders as the Court thinks fit, in the context of an application for the removal of "the caveat", is a power in respect of that caveat and not some other caveat. A power, in effect, to substitute an entirely different caveat for the one that was lodged pursuant to s 89(1) does not seem to fall comfortably within the ambit of the discretion.

99 Secondly, and consistently with the first point, in some circumstances the lodging of a caveat can have an affect upon the rights of third parties in the context of potential priority disputes.[41] That circumstance calls into doubt the proposition that Parliament intended the court to have a power, in the context of resolving a dispute between a caveator and a registered proprietor, to potentially affect third parties' interests.

100 These considerations suggest that the discretion to amend is limited in the way suggested by Menhennitt J. Mr Kendall characterised Menhennitt J's view as "old law". I do not think it can be so characterised. The same view has been expressed in New South Wales where, in Depsun Pty Ltd v Tahore Holdings Pty Ltd[42] McLelland J said:

In my opinion the Court is empowered to make an order for the amendment of the prohibitory provisions of a caveat (see Re Victorian Farmers Loan & Agency Co Ltd; Queensland Estates Pty Ltd v Co-Ownership Land Development Pty Ltd) although not of the provisions defining the interest claimed (see Re Spencer; Midwarren Estates Pty Ltd v Retek & Stivic) [citations omitted][43].

101 Having referred to these authorities, and canvassed these views, I do nonetheless recognise that the power expressed in s 90(3) is wide and unqualified. Ultimately, the better view may be that although the power is to be construed as being wide enough to amend the estate or interest claimed, in appropriate circumstances, nevertheless when exercising its discretion the court should generally be less inclined to amend the interest or estate claimed than to amend the grounds of the claim or the scope of the protection asserted.

102 I do not find it necessary to resolve that issue. As Menhennitt J did in Midwarren Estates, I am able to decide this question by addressing whether, even if the power exists, I would exercise my discretion to allow an amendment to the estate claimed.

103 In Midwarren Estates the facts were similar to the present case. The caveator had claimed an interest in the estate in fee simple whereas the facts only justified a claim in the nature of an equitable lien over the land. The present case is analogous. An interest as chargee is wholly inconsistent with an interest as registered proprietor of the estate in fee simple. A proprietor of the estate in fee simple can not charge his or her own land for a debt due to him or herself.

104 So what are the factors which should be taken into account in the exercise of discretion? As I say, the first and a powerful one, is the fact that the amendment sought is to the interest claimed and not just the grounds of claim or the scope of the protection. Secondly, I have regard to the circumstances in which the error was made. Mr Gangemi was at all relevant times represented by lawyers and had legal advice available to him. He nonetheless lodged the caveat on his own behalf. It cannot sensibly be said that he should be given some leeway due to legal ignorance or unavailability of legal advice. Next I am of the view that the court should not readily act in a way which might encourage the belief that caveats can be imprecisely formulated and then "fixed up later". As has been pointed out, caveats act as an interlocutory injunction (albeit by an administrative act) and can have powerful and serious consequences. Wrongly formulated caveats should not easily be tolerated.

105 Finally, of course, the court should have regard to the overall merits of the claim for a caveatable interest of the kind which is sought by the amendment. In other words, it should have regard to all of the same considerations which arise on the application of removal for a caveat in the terms sought. This then brings into play all of the matters which I am about to discuss on the question of removal (assuming I am prepared to allow the amendment).

106 On all of the relevant considerations, and for the reasons which I am about to explain, I refuse the application by Mr Gangemi to amend the caveat.

Does Mr Gangemi have an interest as chargee in the Maidstone land?

107 It is for Mr Gangemi to establish a prima facie case that he has an interest in the Maidstone land with sufficient likelihood of success to justify the maintenance of the caveat.

108 The caveat now claimed (assuming I were to allow an amendment) is an equitable interest as chargee. The interest is said to stem from the Deed and Charge, a copy of which is alleged to be Exhibit AG-26. As I have mentioned the authenticity of that document is robustly disputed.

109 The circumstances of its recent production are in my view dubious. They are said to have been produced by a man, unknown to Mr Gangemi, who simply telephoned him, unsolicited, offering to provide him with a photocopy of a document which he allegedly found on the desk of Mr Lanciana. That person, Mr Lugara, has not himself deposed to those circumstances. Mr Gangemi wanted to adduce evidence from a Mr Chirico who may have been able to corroborate the actual handing over of the photocopy document to Mr Gangemi. Even if such corroboration might have been obtained, it would not have changed the overall cloud of suspicion that surrounds this recent document.

110 Exhibit AG-26 purports to be a charge given by Mr Gangemi and Bloomingdale to Clapana. It is signed by Mr Gangemi for himself and for each of the two companies of which he was a director. It also purports to contain a signature of Mr Lanciana near the foot of the execution page, although the reason why his signature might appear there is not immediately obvious. As I have said, Mr Lanciana vigorously disputes having ever signed such a charge although he is not able to categorically dispute that the replica of his signature appearing as it does on the photocopied page is a true copy of his signature.

111 Mr John Ganas, a forensic examiner of documents, has sworn an affidavit in which he exhibits a report. In that report he says that he examined and compared the signature purporting to be that of Mr Lanciana on Exhibit AG-26 with other specimen signatures of Mr Lanciana. In his opinion there were

indications that the questioned 'Pasquale Lanciana' signature appearing on the document ... was written by the writer of the 'Pasquale Lanciana' signature specimens. The questioned signature exhibits the similar combination of fluency, construction and spatial proportions associated with the specimen formations and no significant dissimilarities were detected between the questioned signature and the specimen signatures.

112 I do not have to form any definitive conclusion as to whether the signature appearing on AG-26 is a replica of a true signature by Mr Lanciana or not. Suffice it to say that a photocopy signature appearing on a photocopy page is not an ideal basis for signature comparison. Further, photocopying of documents permits all sorts of manipulation. Whilst I cannot and do not draw any particular inferences as to whether such manipulations have occurred, and if so by whom, the production only of a photocopy document at this late stage does nothing to dispel any of the other doubts that arise due to the strange circumstances of its production.

113 There are a number of other oddities about the document itself. It does not bear the appearance of preparation by a solicitor yet both Mr Lanciana and Mr Blott, a solicitor who regularly acted for the parties, suggest that such documents were ordinarily prepared by a solicitor. Mr Blott says it is not his document. It has the hallmarks of amateurish production. The monetary amounts of the loan are inserted in the heading against the names of the parties. The recitals are part recitals and part terms, and do not flow logically. The charge is not well expressed nor is it explicitly linked to the debt obligation. All in all it is a curious document.

114 Mr Gangemi admits, as logically he must, that he has always known of the existence of the charge. However he also concedes he never once mentioned it in any of the proceedings which have been instituted between the parties over many years. He makes no mention of it in any affidavit nor is it the subject of any claim. In particular it is not the subject of the claim in proceeding number 6036 of 2007 in which he sues for the very loan which is the subject of the alleged charge. He only seeks a declaration of entitlement to be indemnified from the assets of the Mitchell Street Unit Trust without mentioning any interest by way of charge in the Maidstone property itself.

115 Such a failure calls for explanation, and a good one. The only explanation proffered is that, because he did not have a copy of the charge agreement, and acting upon legal advice (not corroborated in this proceeding), he thought it not appropriate to mention it. I find it difficult to imagine, given the litigious propensity of the parties, that if he knew of the existence of the charge document and believed it to be in the possession of Mr Lanciana, Mr Gangemi would not have made strenuous applications for the discovery and production of that particular document. I infer from the concession that the charge was never mentioned in any proceeding that no such application was made.

117 Taking all of this into account in my view the alleged Deed and Charge, Exhibit AG-26, is a highly dubious basis for contending the existence of the charge being claimed. The recent "surfacing" of the document after the loss of the case before Warren CJ, and in the face of an imminent mortgagee sale, also causes me to treat its authenticity with suspicion.

118 But there are other factors as well which in my view diminish the probability that Mr Gangemi could establish the existence of a charge, today, so as to justify the maintenance of the caveat.

119 Any such interest as he may have had as equitable chargee was, in my view, released or was divested by him by the terms of the 2003 settlement. That agreement was and remains enforceable as determined by Hargrave J. By that agreement both Mr Gangemi and Bloomingdale agreed, in consideration of entering the deed, to divest themselves of any interest in the Maidstone property. That would include any interest as chargee.

120 Furthermore, if there is any doubt about that, by the 2010 Deed they acknowledged in Recitals N and O the effectiveness of the 2003 settlement as entitling Mr Lanciana, Michie (the predecessor in title of Percy & Michele) and their privies as "the sole persons entitled to deal with the [Maidstone property]". The legal effect of that acknowledgment contained in a deed is well established.[44] Mr Gangemi (and, for that matter, Bloomingdale) is now estopped from contending to the contrary, subject perhaps to any argument about the possible discharge of the deed to which I will return.

121 Mr Lanciana further contends, in any event, that any claim which Mr Gangemi might have had for an interest in the land is statute barred. That may well be so. The date for commencement of the cause of action on the charge was argued by Mr Mattin to be the date of the demand made for the debt. Mr Lanciana says that must have been in late 2003 or early 2004 such that the claim would be barred by November 2010. In my view the evidence is not sufficiently clear to establish when the cause of action accrued, even if the event for its commencement as suggested by Mr Mattin is correct. The point was not really debated by counsel for Mr Gangemi but, in the present circumstances, I would not regard the argument that any claim must be statute barred as being determinative.

122 There is no proceeding presently on foot by Mr Gangemi to vindicate his alleged claim for a caveat. He says that he will revive and run the existing proceedings which have not been struck out. As I have said, in none of them does he presently assert the existence of a charge but no doubt they could be amended to do so. Although Mr Mattin argued that the absence of a current claim asserting the charge was a matter of significance, in my view it has little significance other than in the context I have already described.

123 The final consideration is that the existence of an equitable interest as chargee might have been expected to be put forward by Mr Gangemi as some sort of impediment to Warren CJ making the unqualified vesting order which her Honour made in June of this year. Those orders were made as a means of implementing the effect of the 2003 settlement and the 2010 Deed. The existence of Mr Gangemi's alleged charge over the Maidstone property would have been entirely inconsistent with the effect of those two agreements and one might have thought that the Charge would have been mentioned. However it was not raised.

124 I will return shortly as to how that circumstance may be deployed in an argument on election, but for the moment it is worth noting that the fact that it was not mentioned before her Honour raises the question as to whether or not it may be recent invention.

(a) on the one hand, there is far too much suspicion surrounding the existence of the Charge and the authenticity of Exhibit AG-26, and,

(b) on the other, subject only to the argument that the 2010 Deed may have been discharged, far too powerful are the arguments that any interest that Mr Gangemi and Bloomingdale might have had in the Maidstone property have been fully divested,

for there now to exist a prima facie case as to the existence of a continuing equitable interest as chargee sufficient to justify the maintenance of the caveat.

126 I need then to consider the issue of the alleged termination of the 2010 Deed as a possible basis for disturbing this qualified conclusion.

127 By letter dated 27 September 2010 Mr Gangemi's solicitors wrote to Mr Lanciana's solicitors claiming that the 2010 Deed had been terminated by the acceptance of Mr Lanciana's alleged repudiatory conduct. The conduct relied upon was, in summary, as follows:

(a) Mr Lanciana breached clause 9.1 of the deed by disclosing its terms to Mr Bunnett, solicitor for Mr Osborne, and also to Mr Kourosh Jafari;

(b) Mr Lanciana attended a purported mediation of a Federal Court proceeding seeking to vary the terms of the deed of settlement inconsistently with his obligations under the deed; and

(c) Mr Lanciana breached his discovery obligations in various Supreme Court proceedings by failing to give discovery of the Deed and Charge Agreement dated 4 May 2001 (ie. the Charge).

128 Mr Lanciana does not dispute that he disclosed the existence and terms of the deed to both Mr Osborne and Mr Kourosh. However, he says that in neither case did the said disclosure amount to a breach of the 2010 Deed. In respect of the disclosure to Mr Osborne, he claims that such disclosure was necessary because Mr Osborne had refused to consent to the removal of a caveat over the Maidstone property without first seeing the deed. A copy of the deed was first provided to Mr Osborne's solicitor but Mr Osborne still refused to remove the caveat and Percy & Michele had to issue a proceeding to have the caveat removed.

129 In the case of Mr Kourosh, Mr Lanciana says that the deed was produced pursuant to a Notice to Produce served on Mr Lanciana's solicitors in a Federal Court proceeding and that the deed was produced to Jessup J and not otherwise.

130 The latter disclosure is likely to fall within an exception in the confidentiality clause, namely "to the extent required by law". However there does not seem to be an express exception which would cover the disclosure made to Mr Osborne. It may very well be therefore that the disclosure to Mr Osborne amounted to a breach of the confidentiality clause.

131 Nevertheless, I do not consider that such a disclosure constituted the breach of a kind which was contemplated by the parties to justify termination of the whole contract - that is to say, the breach of an essential term.[45] Nor do I consider that by such conduct Mr Lanciana could be said to have evinced an intention no longer to be bound by the provisions of the deed. In other words, I do not regard that conduct as constituting repudiatory conduct.

132 I accept the submission of Mr Mattin that if the disclosure to Mr Osborne did amount to a breach of the deed then the remedy would sound in damages only.

133 Mr Lanciana further points to the fact that Mr Gangemi knew of the disclosure to both Mr Osborne and Mr Kourosh by 16 April 2010 but did not elect to rescind the agreement. Instead, on that date Mr Gangemi instructed solicitors to write to Mr Lanciana's solicitors complaining about the disclosure and warning that Mr Gangemi "would have various rights including but not limited to damages against Mr Lanciana". Furthermore, Mr Gangemi (through counsel) appeared before Warren CJ to oppose the making of vesting orders in favour of Percy & Michele, amongst other things, without contending that the 2010 Deed had been rescinded.

134 Mr Lanciana argues that all of this conduct amounted to an election within the principle espoused in Sargent v ASL Developments Limited[46].

135 In that case the High Court held that by their unequivocal conduct with knowledge of the facts giving the right to rescind the contract, the vendors of land had elected to treat the contract as subsisting and were precluded from exercising the right to rescind it. After the date of the contract, the vendors had received from the purchasers payment of interest, instalments of principal and increased rates, and had joined with the purchasers in taking steps to bring the land under the operation of the Real Property Act 1900 (NSW).

136 I am not fully persuaded that in this case Mr Gangemi has necessarily taken unequivocal acts which are inconsistent with a right to rescind the contract - although I recognise some force in the arguments put forward by Mr Lanciana.

137 Mr Lanciana's final argument on this point is that, even if the 2010 Deed were discharged by the acceptance of repudiatory conduct on the part of Mr Lanciana, the discharge would only operate insofar as the agreement remained executory as at 27 September 2010. He relies upon the principle in McDonald v Dennys Lascelles Limited[47]. There Dixon J distinguished between the discharge of an agreement by the election of one party to treat the contract no longer binding upon him because of the breach by the other, on the one hand, and, on the other, the rescission of a contract because of matters which affect its formation, as in the case of fraud. In the former case all rights and obligations which arise from the partial execution of the contract continue unaffected whereas, in the latter case, the parties are to be rehabilitated and restored to the position they occupied before the contract was made.

138 On this analysis, argues Mr Mattin, the release in clause 5.2 of the 2010 Deed took effect upon the signing of the deed and is no longer executory. By that release Mr Gangemi has fully and effectively released Mr Lanciana and Michie Investments Pty Ltd (the predecessor in title to Percy & Michele) from all rights they may have had, but for the deed, arising out of or in any way related to the subject matter of proceedings. Such proceedings included those brought by Mr Gangemi and Bloomingdale for the loan allegedly made to Clapana in 2001 for the purchase of the Maidstone property.

139 In my view Mr Mattin's argument is likely to be correct.

140 It follows from what I have said in respect of each of the foregoing arguments that the prospect that Mr Gangemi might disturb the conclusion that he has already divested himself of any interest as chargee by the combined effect of the 2003 settlement and the 2010 Deed, is extremely weak.

141 Little needs to be said about this argument. It was all but abandoned because of the restrictions on the evidence which may be given about events at a confidential mediation. I would not draw any inferences from the scant details that remained in evidence, still subject to objection, that Mr Lanciana engaged in repudiatory conduct by attending that mediation.

142 From what I have said already it will be evident that Mr Gangemi's prospect of establishing that any failure on the part of Mr Lanciana to give discovery of the disputed Charge amounted to such a breach of his obligations so as to constitute a ground for terminating the agreement is, to say the least, poor. Not only does it face difficulties on the facts but it also faces conceptual difficulties.

143 On all of the material I do not consider that Mr Gangemi has raised a prima facie case as to his entitlement to an interest as chargee of the Maidstone property sufficient to justify allowing the caveat to remain on the title. That is so whether the caveat remains in its present form or is amended as sought my Mr Gangemi.

144 I now turn to the consideration of the balance of convenience. The Court of Appeal in Bradto Pty Ltd v State of Victoria[48] said of this test, at [35]:

In our view, the flexibility and adaptability of the remedy of injunction as an instrument of justice will be best served by the adoption of the [Lord] Hoffman approach. That is, whether the relief sought is prohibitory or mandatory, the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been 'wrong', in the sense of granting an injunction to a party who fails to establish his right at the trial, or in failing to grant an injunction to a party who succeeds at trial.

145 The Maidstone land is some six acres of undeveloped land potentially available for development as a residential property. It represents significant value to Percy & Michele. Mr Lanciana, or his various entities, has been waiting since 2003 to exploit its commercial value. He has been held out from doing so by proceedings brought by Mr Gangemi and Bloomingdale, and by undertakings he necessarily gave, between 2005 and 2009.

146 Mr Lanciana's rights to the property have been affirmed by the 2010 Deed and further by the decision of Warren CJ on 7 June 2010.

147 The mortgagee is about to sell the property and Percy & Michele faces the risk of its loss. Mr Lanciana has given evidence that a refinancing opportunity is in the wind which would avoid the mortgagee sale but, in any event, as registered proprietor he says that he should be able to deal with the property as he sees fit. So, if a buyer for the property materialised between now and the mortgagee's auction to which Mr Lanciana wished to sell the property, he maintains he should be free to do so.

148 Mr Gangemi argues that the refinancing proposal put forward by Mr Lanciana is somewhat ephemeral. One such proposal has expired and the current proposal is by a new entity. Mr Gangemi also says that he is willing to lift his caveat to permit any refinancing as long as it can be re-lodged after the registration of a new mortgage. In correspondence with Mr Lanciana's solicitors Mr Gangemi was insisting upon some limitation in the amount to be refinanced as a condition for that offer.

149 For his part Mr Lanciana is not interested in such an offer. He wishes to be and to remain completely free to deal with the property as he sees fit having achieved the favourable outcome in court proceedings before Hargrave J and Warren CJ vindicating his position in respect of the 2003 settlement and the 2010 Deed.

150 Mr Lanciana also makes the point that Mr Gangemi has delayed in lodging his caveat in order to maximise the inconvenience and difficulty for Mr Lanciana as the day of mortgagee sale draws near. It is not possible to state any formed conclusions on that argument, although there may be some force in it. Mr Gangemi seemed to sit on his hands between July 2010, when he allegedly uncovered the missing Charge, and the end of September 2010 when he instructed solicitors to terminate the 2010 Deed for breach. It was not until 11 October that he lodged his caveat. That delay is not adequately explained. Nevertheless I am not convinced that any such delay has caused an obvious injustice so that it needs to be factored into my balancing of justice between the parties.

151 I need finally to mention that Mr Gangemi concedes that he could not give any meaningful undertaking as to damages should it later turn out that his caveat was not justified and Percy & Michele sustained damages as a result of it being lodged. Indeed, no undertaking was proffered at all. Mr Gangemi's only explanation is that his inability to proffer any undertaking is the consequence of Mr Lanciana's wrongful conduct in refusing to honour the charge given in favour of Mr Gangemi and Bloomingdale. This contention is something of a bootstrap argument presupposing, as it does, a view in favour of Mr Gangemi on the existence of the caveatable interest.

152 I have no doubt that, in all the circumstances, the course which appears to carry the lower risk of injustice is to order the removal of the caveat.

153 It remains only for me to deal with the argument which I reserved on the day of hearing in respect of the notice to produce served by Mr Gangemi on Mr Lanciana.

154 The first four categories of documents sought in the notice to produce[49] all concerned the proposal for refinance which Mr Lanciana says he wishes to pursue.

155 First and foremost I take the view that the notice to produce is tantamount to a request for discovery. Moreover, in its terms, it is too wide and therefore oppressive for the purpose of dealing with the particular point in issue. This case does not call for a thorough investigation of all the background and history associated with the proposal to refinance or sell the property. The only potential question was whether there was a concrete proposal or not, and in any event, in my view that issue was of second-tier relevance.

156 Furthermore, given the breadth and scope of documents sought, providing just over one business day notice for the production of such documents is unreasonable. This is particularly so given the procedural directions I gave to facilitate a smooth but urgent hearing.

157 Finally, given the relative importance or otherwise which I have accorded to the precise status of any refinancing proposal for the resolution of this case, I am not persuaded that any failure on the part of Mr Lanciana to answer the notice to produce is productive of any injustice.

158 For all of those reasons I do not consider it necessary to require Mr Lanciana to answer the notice to produce before disposing of the application.

159 For the reasons stated, I will order that the caveat number AH548361C be removed from the register. I shall hear the parties in respect of the appropriate orders to be made to give effect to this judgment.

[1] Bloomingdale Holdings Pty Ltd & Anor v 63 Buckley Street Pty Ltd & Ors [2008] VSC 168; Gangemi v Osborne & Anor; Bloomingdale Holdings Pty Ltd & Anor v 63 Buckley Street Pty Ltd & Ors [2009] VSCA 297; Bloomingdale Holdings Pty Ltd v 87 Stevedore Street Pty Ltd & Ors [2010] VSC 268.

[2] In these reasons where I refer to arguments advanced for Mr Lanciana I am referring to arguments advanced by him in his own right and on behalf of the plaintiff, unless the context indicates otherwise.

[3] Mr Lanciana subsequently swore a further affidavit deposing to that fact: Lanciana, 4 November 2010, paragraph 6.

[4] He referred to the commentary in paragraph 35.08.15 of Williams, Civil Procedure, LexisNexis.

At a glance

Court

Decision date

Before

Source

Judgment (240 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (3)