Plaintiff v First Defendant

1 The plaintiff, Iceland Properties Pty Ltd ('Iceland'), is the registered proprietor of a property located at 81 Gateway Boulevard, Epping, Victoria 3575: certificate of title volume 001503, folio 296 ('Gateway Boulevard property'). On 12 December 2019, the first defendant, Rakesh Palta, lodged a caveat on the title. The first defendant's caveatable interest is said to be an interest as a chargee under an agreement dated 2 July 2018 between the first defendant and the registered proprietors, Chashampal Singh Gill ('Mr Gill') and Iceland Cold Storage Pty Ltd.

2 It is common ground that Mr Gill is the sole director of Iceland, the registered proprietor of the Gateway Boulevard property. Iceland applies, pursuant to s 90(3) of the Transfer of Land Act 1958, for the removal of the caveat.

3 In Chan v Liu,[1] the Court of Appeal stated as follows:

In Piroshenko v Grojsman, Warren CJ outlined the principles that a court should apply when determining an application under s 90(3) of the Transfer of Land Act, in terms that have been accepted and followed in subsequent decisions. In particular, her Honour, having considered the authorities, concluded that, in order to resist an application for removal of a caveat, the caveator must persuade the court of the following:

(1) 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

(2) 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.[2]

4 Both Mr Upjohn KC, who appeared with Mr Rimmer for the first defendant, and Mr Robins KC, who appeared for Iceland, accept that this is a correct statement of the law as to the first limb of the test to be applied by a court when deciding an application under s 90(3) of the Transfer of Land Act 1958. It is only if the caveator satisfies this first limb that it is then necessary to address the question of whether the balance of convenience favours retention of the caveat.

5 The basis of the first defendant's caveatable interest is clause 8 of a loan agreement dated 2 July 2018:

In consideration of the lender entering in this deed, and in order to better secure the obligations of the borrower under this deed, the borrower hereby charges all of its rights title and interest in the borrower's real and personal property, including but not limited to the Security referred to in the Summary, in favour of the lender ("the Charge") [the Security referred to in the summary is the 'Property situated at 91 Gateway Boulevard Epping Vic 3076']. The Charge shall take effect from the dated of this deed and the borrower acknowledges that this deed is intended to create an interest in the Security in favour of the lender and that a caveat may be lodged against the Security to support that interest.[3]

6 The first defendant's caveat was lodged on 12 December 2019. From 12 December 2019 until immediately prior to the hearing of the application for removal, on 25 November 2022, the first defendant has relied upon a copy of the agreement dated 2 July 2018.[4] The signature page to this agreement is annexure A to this judgment. The original of the agreement is not in evidence.

7 Mr Palta deposed, in an affidavit affirmed 16 November 2022, that he signed the original of the agreement on or about 27 or 28 July 2018:

In or around June 2018, I requested that Gill enter into a loan agreement (Loan Agreement) that I prepared based on a document I had used in another transaction. I provided the document to him in draft in late June 2018. I dated it 2 July 2018 expecting us to sign up in the following week. However, Gill wanted to consult an adviser and so it took until late July before Gill and I signed the Loan Agreement.

Pages 68-74 of exhibit "RP-1" contains a copy of the Loan Agreement.

On or about 27 or 28 July 2018, Gill and I signed the Loan Agreement in the presence of Saurabh Handa, who was an employee of Abrol Associates at the time. Abrol Associates are my accountants. The Loan Agreement was signed in the carpark of Epping Plaza. Gill retained the signed copy and took it with him. A few days later, he gave me a photocopy of the signed agreement, which is the agreement I exhibited above.[5]

8 Mr Handa, whose signature appears three times as a witness on the copy of the agreement, affirmed an affidavit dated 16 November 2022, in which he deposed:

At or around the end of July 2018 I met with Rakesh (and shortly afterwards with another man who was subsequently introduced to me as Mr Gill, as described below) at the Epping Plaza car park. The reason for my attendance on Rakesh was that I was collecting from him some financial information and documents.

I had called Rakesh to request the provision of these financial documents and he asked me to meet him at Epping Plaza.

I drove into the car park of Epping Plaza and saw Rakesh's car and parked next to it. It was around morning time and before midday, as I remember needing to get back to the office. Rakesh handed me the financial documents I had requested. Rakesh then asked me if I could wait a couple of minutes to witness the signing of some documents.

I waited with Rakesh in the Epping Plaza car park for about 5 minutes before a man showed up, Rakesh introduced the man to me as Mr Gill. I had not met that man before that day. The man (introduced to me as Mr Gill) was carrying some papers (about 5 - 6 pages) with him. I remember that the front page said "loan agreement" but I did not know the details of it.

The man (introduced to me by Rakesh as Mr Gill) pulled out the signing page of the document and I watched him physically sign it in front of me. I watched Rakesh sign the same signing page. I then signed the signing page as a witness 3 times while the man (introduced to me as Mr Gill) and Rakesh talked to each other. As soon as I signed the signing page of the document, I left the Epping Plaza car park as I had to get to the office.

The man (introduced to me as Mr Gill) and Rakesh were still there when I left.

I confirm that the front page and the signing pages on the copy of the Loan Agreement now produced and shown to me hereto and marked "SH-1" are the same as in the document I witnessed in July 2018 and that the 3 witness signatures on that copy Loan Agreement are my signatures and further that I physically witnessed the man (introduced to me as Mr Gill) and Rakesh signing their signatures on the original of that Loan Agreement.

I confirm that the man who was introduced to me as Mr Gill and who I saw sign the Loan Agreement in front of me is the same man in the photo now produced and shown to me hereto and marked "SH-2".[6]

9 For his part, Mr Gill denies ever having signed the agreement exhibited to Mr Palta's affidavit, or any version thereof. Since October 2020, he has contended that the agreement relied upon by Mr Palta as the basis for his caveatable interest is a forgery.[7]

10 In a defence filed in County Court proceeding no. CI20 04459, in which Mr Palta sues Iceland to enforce the agreement, Iceland pleads, at paragraph 5 of its defence, that the agreement is a forgery. By letter dated 16 November 2020, Mr Palta's solicitors, who I infer were acting on instructions, stated:

The allegation made in paragraph 5 that 'it appears' Mr Gill's signature on the loan agreement has been taken from another document and superimposed on the loan agreement is scandalous. There is nothing on the face of the loan agreement from which such an allegation could be substantiated. It is denied.[8]

11 I now wish to set out some of the background of this proceeding. The application was first listed before me as a Judge in the Practice Court on 15 November 2022. The hearing was adjourned until 18 November 2022, to allow for the filing of further affidavits, and also for the parties to attend a judicial mediation. That mediation took place on 16 November 2022, but the matter was not resolved.

12 Upon the relisting of the application on 18 November 2022, I raised with Mr Upjohn that it appeared to me that the two signatures of Mr Gill on the copy loan agreement were identical, whereas, in contrast, there were slight differences in the signature of the witness Mr Handa. I raised with Mr Upjohn that the identical signatures of Mr Gill, which were allegedly made in a car park at Epping Plaza, constituted prima facie evidence of forgery.

13 The proceeding was further adjourned to 25 November 2022, to allow for an expert report to be filed by the plaintiff. That expert report was filed. It is a report of Ms Melanie Holt, dated 21 November 2022. At paragraphs 35 and 36 of her report, Ms Holt concluded as follows:

Based on the observations, limitations and assumptions outlined as well as the materials available, I am of the opinion the 'Gill' signature from PDF page 24 of the 'Lease of Real Estate' document dated 16 August 2016 is the source of the two 'Gill' signatures depicted on page 7 (the execution page) of the questioned Loan Agreement dated 2 July 2018, and not vice versa.

Therefore, the evidence provides no support for the claim that Mr Gill physically signed the original of the questioned Loan Agreement in his normal manner, as stated by Mr Palta and Saurabh Handa in their respective affidavits. Rather, the evidence provides extremely strong support for the belief that Mr Gill's signature from the 'Lease of Real Estate' document was placed onto the questioned Loan Agreement (twice) through a cut and paste manipulation either directly (i.e., from the original document) or indirectly (i.e., from a copy of this document). Hence, it is extremely likely that no original of the questioned Loan Agreement exists at all.[9]

14 Before addressing the submissions of the parties, it is necessary to set out some further background material. The loan agreement upon which Mr Palta relies records Mr Palta having loaned Iceland the amount of $2 million. The term of the loan is eight months. The $2 million is described as 'amounts previously advanced as agreed'. The interest rate is stipulated as a fixed interest rate of five per cent. Under the terms of the agreement, the principal and interest were repayable on 2 March 2019.

15 Mr Gill does not dispute that prior to July 2018, Mr Palta had advanced funds to Iceland, or to himself. In an affidavit affirmed 17 November 2022, he deposes that Mr Palta had advanced a total of $2,063,642, pursuant to an agreement under which Mr Palta would acquire a 25 per cent interest in Iceland.[10] Although Mr Gill agrees that funds had been advanced to him by Mr Palta, he denies that he was ever a party to the loan agreement of 2 July 2018.

16 On 25 August 2022, Iceland and a number of related entities, together with Mr Gill, entered into a deed of settlement in respect of oppression and winding-up proceedings, which had been commenced against them in the Supreme Court of Victoria in September 2021.[11] Under the terms of the deed, Mr Gill has agreed to buy out the interest of the plaintiffs in the oppression proceedings, the Lakhwinder parties, by payment of $6,500,000 on or before 4.00pm, 1 December 2022.

17 Mr Gill has paid a deposit of $650,000. The balance of $5,850,000 is payable on or before 1 December 2022. If Mr Gill does not pay the balance by 1 December 2022, his right to purchase the Lakhwinders' interest in the Iceland business will terminate. Mr Gill contends that Mr Palta's caveat is impeding his ability to raise the finance necessary to make payment by 4.00pm on 1 December 2022.

18 On an application for removal of a caveat, it is ordinarily not appropriate for a judge to enter into resolution of an underlying factual dispute.[12]

19 When the present application was listed for hearing before me on 15 and 18 November 2022, the authenticity of the loan agreement was hotly contested. As I pointed out to Mr Upjohn on 18 November 2022, the identical signatures of Mr Gill, and the manner of their presentation, constituted a prima facie evidence of forgery, and supported Mr Gill's contention that the signatures had been photoshopped from a lease agreement he had signed in 2016.

20 In response, Mr Upjohn pointed to the evidence of Mr Handa and Mr Palta that Mr Gill had in fact signed the original of the agreement in the Epping Plaza car park in late July 2018. He submitted that this evidence was sufficient to establish a probability that at trial, Mr Palta will be found to have a caveatable interest under the loan agreement.

21 The dispute as to the authenticity of the loan agreement has now been resolved. During the hearing on 25 November 2022, Mr Upjohn conceded that, based on Ms Holt's report, the signature of Mr Gill on the copy loan agreement is a forgery. Notwithstanding this concession, he submitted that Mr Palta had still discharged the onus of establishing a probability, on the evidence before the Court, that Mr Palta will be found at trial to have an interest in the Gateway Boulevard property, pursuant to the 2 July 2018 loan agreement.

22 Mr Upjohn submits that the loan agreement bearing Mr Gill's forged signature is a copy of an original version of the agreement which was in fact signed by Mr Gill in the Epping Plaza car park in late July 2018. He submitted that on the evidence currently before the Court, there is a probability that at trial, Mr Palta will establish the following: (1), that Mr Gill signed the original version of the loan agreement, in the presence of Mr Palta and Mr Handa, at Epping Plaza Shopping Centre, in late July 2018; (2), he took the original version of the agreement away immediately thereafter; (3), he then photoshopped his own signature over his genuine signature, in order to provide himself with grounds to be able to subsequently contend that the agreement is unenforceable; (4), in or around mid-August 2018, he provided a copy of the agreement bearing his forged signatures to Mr Palta.

23 As to the evidence currently before the Court which Mr Palta relies upon in aid of these four propositions, Mr Upjohn pointed to the following: (1), the undisputed evidence that Mr Palta loaned Iceland/Mr Gill $2 million; (2), the evidence of Mr Handa and Mr Palta as to the signing of the agreement in the Epping Plaza car park; (3), the evidence of Mr Gill that he is aware of applications, such as Adobe Photoshop, which can be used to transpose a signature from one document to another.

24 I reject Mr Upjohn's submission that on the basis of this evidence, there is a probability that at trial, Mr Palta will establish he has an interest as a chargee of the Gateway Boulevard property. The matters referred to by Mr Upjohn constitute a very tenuous basis for the asserted caveatable interest.

25 First, I place very little weight on the evidence of Mr Handa. His affidavit was affirmed on 16 November 2022, two days prior to the scheduled hearing on 18 November 2022, at which the authenticity of the agreement was going to be squarely in issue. The affidavit was deposed prior to Ms Holt's expert report being filed.

26 The affidavit is very specific insofar as Mr Handa deposes that the signature page of the loan agreement exhibited to his affidavit and marked SH-1 is the same as the signature page of the document which he witnessed in the Epping Plaza car park. His evidence is unequivocal that the signature page on the copy loan agreement is the same as the original version of the agreement. This evidence is plainly incorrect, given Ms Holt's evidence, and the concession now made, that Mr Gill's signature on the copy loan agreement has been forged.

27 Putting to one side the expert evidence of Ms Holt, it is readily apparent that the text and presentation of Mr Gill's two signatures on the signature page of the copy loan agreement are identical. It is implausible that this level of identity could have been achieved in circumstances where Mr Gill is said to have signed the loan agreement in a car park at the Epping Plaza shopping centre.

28 Second, Mr Upjohn's submission that there is a probability that at trial it will be established that Mr Gill himself perpetrated the forged signature is also implausible. Mr Upjohn invites the Court to infer that Mr Gill photoshopped his signature, in late July-early August 2018, to provide himself with an argument that he could subsequently advance that the agreement was not enforceable.

29 I accept Mr Robins' submission that there is no evidence which suggests that the business relationship between Mr Gill and Mr Palta, in July or August 2018, was such that Mr Gill would have been motivated to fabricate a pretext for not repaying the loans advanced to him by Mr Palta.

30 Further, it is implausible that within two to three weeks of signing the original version of the loan agreement, in the presence of Mr Handa and Mr Palta, Mr Gill would have provided Mr Palta with an agreement which plainly contains a forged signature. It makes no sense at all that Mr Gill would have jeopardised his commercial relationship with Mr Palta by presenting him with a forged document.

31 Mr Upjohn points to Mr Gill's evidence of his awareness of applications such as Adobe Photoshop as supporting an inference that it was Mr Gill himself who has forged his own signature. The fact that Mr Gill is aware of applications such as Adobe Photoshop provides little foundation for an inference that, having contended for more than two years that his signature on the loan agreement has been forged, Mr Gill was the person responsible for the forgery.

32 To the contrary, the contention that, within two weeks of having signed the original version of the agreement, in the presence of Mr Handa and Mr Palta, Mr Gill would have presented Mr Palta with a document with a plainly forged signature, in order to lay the foundation for subsequently avoiding the enforcement of the agreement, is quite implausible.

33 Mr Palta has failed to establish that there is a probability, on the evidence before the Court, that at trial he will be found to have an interest in the Gateway Boulevard property as a chargee under the original version of the loan agreement, a copy of which bears Mr Gill's forged signature.

34 If I am wrong, and Mr Palta has established a probability that, on the evidence currently before the Court, there is a probability he will be found to have the asserted caveatable interest, that probability is not sufficient to justify the practical effect which the caveat is having on the ability of Iceland to deal with its property in accordance with its normal proprietary rights.

35 Mr Palta has therefore failed to satisfy the first limb of the test which is to be applied by courts when determining an application under s 90(3) of the Act. It follows that an order should be made for the removal of the caveat from the title of the Gateway Boulevard property.

36 As Mr Palta has failed to establish that there is a probability, on the evidence before the Court, that at trial he will be found to have an interest in the property as chargee under the loan agreement, it is unnecessary to consider the balance of convenience. Had it been necessary to do so, I would have concluded that the balance of convenience favours the removal of the caveat.

37 An assessment of the strength of Mr Palta's prima facie case is relevant to the assessment of the balance of convenience. If, contrary to my findings set out above, Mr Palta had established a prima facie case, it is properly characterised as a weak prima facie case. Whilst the caveat remains in place it is a significant impediment to Mr Gill obtaining the finance he needs to make the payments to the Lakhwinder parties under the deed of settlement.

38 Mr Robins acknowledged that Mr Gill does not currently have an unconditional offer of finance. Nevertheless, there is evidence which supports a finding that if the caveat is removed he will have the opportunity, which he currently does not have, to obtain finance in accordance with the terms of the offer from Accelerated Loans Pty Ltd annexed to his affidavit of 24 November 2022.

39 I consider that the lower risk of injustice in the present proceedings is to order the removal of the caveat. I acknowledge that the effect of so doing is to deprive Mr Palta of security for the funds, which it is accepted he has advanced to Mr Gill. The circumstances of the present case are quite unusual. For a period of more than two years Mr Palta claimed a caveatable interest pursuant to a loan agreement which he now accepts to bear Mr Gill's forged signature. For the first time on 25 November 2022 he claimed a caveatable interest on the basis that Mr Gill himself had forged his own signature on the copied loan agreement, having previously signed the original of the agreement.

40 This argument is implausible. There is a very significant risk of injustice if, notwithstanding the implausibility of that contention, the court determined that the caveat should remain in place.

41 The plaintiff seeks an order that the first defendant pay its costs on an indemnity basis. The unusual circumstances of this case warrant a departure from the usual order that costs be paid on the standard basis.

42 On 15 and 18 November 2022, the defendant resisted the removal of the caveat on the basis of an agreement which he now concedes is a forgery. He had been on notice of the plaintiff's contention that the loan agreement was a forgery for over two years, but has never taken any steps to establish the authenticity of the agreement. Rather, through his solicitors, as I have set out above, he labelled the allegation of forgery as 'scandalous'. Only on 25 November did the defendant accept that the agreement is forged, but has now proceeded, on a very tenuous basis, to allege that Mr Gill himself is the perpetrator of that fraud.

43 Although the defendant only received the expert report of Ms Holt shortly before the hearing on 25 November 2022, as I pointed out during the course of the hearing on 18 November 2022, it was readily apparent from the identical nature of the signatures of Mr Gill on the signature page of the copy agreement, that there was a prima facie case of forgery. It should have been readily apparent to the defendant, prior to coming to Court on 15 November 2022, that the agreement which he relied upon as the basis for a caveatable interest to resist the application for the removal of the caveat had been forged.

44 The unusual circumstances of the case, and in particular the conduct of the first defendant in resisting the application for removal on the basis of a forged document, and then subsequently making allegations of forgery directed to Mr Gill on a very tenuous basis, justify an order for indemnity costs.

1. On or before 4.00pm on 29 November 2022, the First Defendant withdraw caveat no. AS806145C from the folio of the Register volume 11503 folio 296.

2. The first defendant pay the plaintiff's costs on an indemnity basis to be taxed in default of agreement.

[1] [2020] VSCA 28.

[3] Exhibit RP-1 to the Affidavit of Rakesh Palta affirmed 16 November 2022, 71.

[5] Affidavit of Rakesh Palta affirmed 16 November 2022, [10]-[11].

[6] Affidavit of Saurabh Handa affirmed 16 November 2022, [3]-[10].

[7] Exhibit CSG-9 to the Affidavit of Chashampal Singh Gill affirmed 9 November 2022.

[8] Affidavit of Chashampal Singh Gill affirmed 9 November 2022, [34].

[9] Expert Report of Ms Melanie Holt dated 21 November 2022, [35]-[36].

[10] Affidavit of Chashampal Singh Gill affirmed 17 November 2022, [6]-[10]; Exhibit NGB-1 to the Affidavit of Naim George Bittar affirmed 14 November 2022, 1-4[4].

[11] Proceeding no. S ECI 2021 03319; The deed of settlement is Exhibit CSG-11 to the Affidavit of Chashampal Singh Gill affirmed 9 November 2022.

[12] Ek v Red Eagle International Pty Ltd (atf Chunan Bai Hybrid Unit Trust) [2022] VSCA 254, [25]; Lee v Yap [2021] VSCA 297, [80].