Plaintiff v First Defendant

1. Mr Karakulahian and his son became registered proprietors of the Property on 1 April 2019.
2. The circumstances in which the Property came to be sold, and the first defendant's knowledge and approval of the sale, were in dispute. Further, the first defendant relies in part upon Amadio-type unconscionability[1] in support of his caveatable interest alleging, or at least suggesting, that Mr Elliott and Mr Haddad acted unconscionably in effecting the sale. Accordingly, the background goes into some detail about the relevant history drawn from Mr Elliott's and the first defendant's affidavits and supporting documents.
3. The first defendant describes the circumstances as follows:

In about mid-2022 I had a conversation with John [Haddad], the substance of which was that he told me that his company his company wanted to purchase a block of land at Tullamarine, for which he needed finance. I said to him that he could use the Property or its proceeds of sale to assist him in acquiring this block. Raphael was not involved in this conversation.

After my conversation with John, I waited for approximately 2-3 weeks during which time I believed that John was attempting to obtain bank finance. At the end of this period, John rang me to say that he had found a buyer for the Property, Michael Elliott. At this stage, no contract of sale or Vendor Statement had been prepared, to my knowledge.

John and Michael then negotiated the sale of the Property. I had no involvement in these discussions. I did not know who prepared the contract of sale or vendors statement, and I gave no instructions in relation to the preparation. John made all those arrangements with Michael.[2]

1. The block of land in relation to which Mr Haddad was seeking assistance was located at 7 Adina Court, Tullamarine ('Tullamarine Property').
2. Mr Elliott describes the circumstances leading up to the sale as follows:

The reason that the Plaintiff acquired the Property was that a mutual friend of the First Defendant and me, one Mr Haddad, required funds concerning a separate development of land that Mr Haddad wished to undertake. In discussions between myself and the First Defendant, I said the Plaintiff would:

1. purchase the Property by paying $500,000 to the First Defendant and Raphael ... and issuing the units referred to above to the First Defendant [that is 499,999 Class B units in the unit trust and one class D unit in the unit trust];

2. On-sell the property to 1/3 party purchaser; and

3. pay the First Defendant $500,000 if such sum was available after sale and payment of the Plaintiff's liabilities to the first mortgagee, liabilities in respect of the agreement with the vendors, agents costs, marketing costs, legal and conveyancing costs, and the costs of holding the Property pending its on-sale.

...

I was not involved in the arrangements between Mr Haddad and the First Defendant.

The First Defendant said that the arrangement set out above was acceptable to him (or words to that effect).[3]

1. The plaintiff has produced a document titled 'Glen Iris Offer to Purchase and Profit Share'. The background in the document states, '[f]urther to your recent conversations with Michael Elliott, please find an offer to purchase the below noted Property for your consideration and acceptance.' The purchase price is $1,000,000 with a first payment of $500,000 and a second payment of $500,000 'at settlement of the resale of the store to a third party.' There are terms relating to vendor equity that provide:

(a) 'Unit Trust: The Developer will establish a new Unit Trust with a controlling Class of Unit with voting rights reserved for The Developer. A separate Class of Unit will be established for Vendor Equity and Vendor Profit Share. The rights, obligations and priorities of each party will be documented in the Unit Trust Deed.'

(b) 'Vendor Equity: The Vendor will contribute the balance of the Second and Final Settlement payment as Vendor Equity.'

(c) 'Vendor Equity Security: All rights in relation to the payment of the Vendor's Equity or the Vendor Profit Share will be reliant upon the terms of the final Class of Units in the Unit Trust.'

1. The terms also provide in relation to debt that '[t]he Developer will restructure and secure the debt at its sole and absolute unfettered discretion.'
2. The offer has been signed by the first defendant and his son, Raphael. Raphael is not a party and has given no evidence as to the circumstances surrounding this transaction.
3. On 20 December 2022, a contract of sale of the Property ('Contract') was executed. The Contract records the following:

(a) The vendors are identified as the first defendant and his son Raphael.

(b) The vendors' legal practitioner or conveyancer is reported as being Lock Conveyancing Group.

(c) The purchaser is identified on page 1 as 'M Elliott' and in the particulars of sale on page 3 as 'Prospera Investment Holdings Pty Ltd ACN 661 543 424 as trustee for Gold Road Unit Trust No. 9.' The purchaser's legal practitioner or conveyancer is recorded as being Sather Legal.

(d) The price is recorded as $1,000,000 (inclusive of GST (if any)) with a deposit of $10 and the balance payable at settlement with the handwritten note 'refer to Special Condition 18'.

(e) Special Condition 18 provides as follows:

The parties agree that the consideration for the balance of the Payment which is payable at settlement will be passed as follows:

(a) 499,999 Class B units in the Gold Road Unit Trust No 9 issued for one dollar ($1.00) each;

(b) 1 Class D unit in the Gold Road Unit Trust No 9 issued for one dollar ($1.00); and

(c) cash of $499,990.00 transferred to a bank account nominated by the vendors,

with the cash to be paid and the units in the Gold Road Unit Trust No. 9 to be issued contemporaneously with settlement of the transfer of the property.

1. The Contract does not state that the units are to be issued only to the first defendant and not Raphael.
2. The first defendant describes the circumstances in which the Contract was signed as follows:

On 20 December 2022 John asked Raphael and me to sign the Vendor Statement and Contract of Sale ('Contact'), which we did. I trusted John with everything and signed the contract. I did not read it beforehand, and I received no explanation of it.

I thought the Property was being sold for $1,000,000.00 and was not told about any additional special conditions. John explained this to me, and I took his word for it.[4]

1. The first defendant deposes that he has no recollection of signing the 'Waiver of Advice' and that 'neither Raphael nor I received any money at settlement' but goes on to say 'I was told by John [Haddad] that $500,000 was paid directly to him by Michael.'[5]
2. On 20 December 2022, at 12:07 pm the first defendant wrote an email to Madison Marcus, being the solicitors acting on the transaction, under the subject heading 'Malvern Road Settlement Funds' stating:

Hi Jim,

I would like you to please transfer the full amount of the settlement for Malvern Road to the Elias Haddad account, this is to cover the mortgage of Darryl Roberts Loan. ...

Regards, Migo

1. On 20 December 2022, at 12:17 pm Catherine Gao of Madison Marcus responded to the email, writing to the first defendant and Mr Haddad as follows:

Hi Migo and John,

We refer to above matter and advise after we receive the full amount of the settlement for Malvern Road in our trust account, we will use the funds for settlement of 7 Adina Court.

Please advise us when the funds are transferred to our trust account and we can arrange the settlement as soon as possible to reduce the penalty.

(a) Settlement occurred.

(b) The plaintiff executed three unit certificates certifying that the first defendant held 499,999 'B Class' units, one 'D Class' unit and one 'E Class' unit in the Gold Road Unit Trust No 9.

(c) The first defendant executed and provided to the plaintiff a 'Certificate of Waiver of Independent Legal, Financial and Taxation Advice'.

(d) The plaintiff became registered proprietor of the Property.

1. At settlement, the Property was mortgaged to Bennetron Pty Ltd. The first defendant says he does not know the terms of the mortgage, but Mr Elliott deposes that 'since taking ownership of the property, the plaintiff has been unable to achieve a price that would allow it to cover all the costs referred to in paragraph [10(c)].'[6] Mr Elliott also deposes that 'the plaintiff is currently paying $7,000 per month in interest to the first registered mortgagee. That interest and other holding costs are eroding the equity in the property.'[7]
2. It is apparent from the above, and appears to be uncontroversial, that:

(a) The first defendant knew that Mr Haddad was in need of funds to purchase a property in Tullamarine.

(b) The first defendant agreed to the Property being sold and agreed to approximately $500,000 being transferred to Mr Haddad for the purpose of purchasing the Tullamarine Property.

(c) The first defendant was told by Mr Haddad, after settlement, that $500,000 had been paid directly to him.

(d) Units were in fact issued in accordance with the terms of the Contract.

1. On 26 June 2024, 18 months after the sale, the first defendant lodged a caveat on title. The details are as follows:

CAVEAT AY144010N 26/6/2024

Caveator

MEGUERDITCH KARAKULAHIAN

Grounds of Claim

INTEREST AS CHARGEE

Prohibition

ABSOLUTELY

1. The principles for removal of caveats under s 90(3) of the TLA are well-known. The caveator bears the onus of establishing that:

(a) there is a serious question to be tried that he or she has an interest in the land claimed; and

(b) the balance of convenience favours that the caveat must remain until trial of the proceeding.[8]

1. The first defendant has sought leave to amend the caveat to claim 'a freehold estate based on an implied, resulting or constructive trust', although submits that if 'something could emerge that there is a charge' he would abandon the amendment application.
2. The parties were broadly in agreement as to the principles regarding amendment to a caveat. The Court has a discretion to permit amendment. Four relevant factors[9] going to the exercise of that discretion are:

(a) Whether the amendment is to the interest claimed, or just to the grounds. In the former case, it has been said that such changes are impermissible.[10] However, recent authority suggests there is power to make such amendments but the circumstances in which an amendment to the interest claimed will be permitted are likely to be 'special or exceptional.'[11]

(b) The circumstances in which the error was made.

(c) Courts should not readily act in a way which might encourage the belief that caveats can be imprecisely formulated and 'fixed up later'. They act as an injunction and can have powerful and serious consequences.

(d) The overall merits of the claim for a caveatable interest.

1. The first defendant acknowledged that it is not clear how it can be said that an interest as chargee arises in the circumstances.[12] I agree. Accordingly, if the caveat is to be sustainable, it must be on the basis of the interest claimed in the amended caveat, if permitted. I will consider each of the discretionary factors in turn.

Is the proposed amendment to an interest in the caveat?

1. The first defendant accepts that it is an amendment to the interest claimed.[13] That being the case, consistently with the authorities cited, the Court will be less inclined to permit the amendment.

In what circumstances was the caveat drafted?

1. The first defendant submits that 'the original caveat was drafted by a solicitor. So that should not necessarily be visited on my client.'
2. The plaintiff submits that the fact solicitors lodged the caveat weighs against amendment because it may be inferred the instructions were consistent with the existence of a charge, but there is no evidence at all as to what the first defendant told his solicitors about the circumstances justifying the caveat.
3. The plaintiff also notes that there is no explanation about Raphael's involvement or possible entitlement to part of the Property. He was on title before the sale, and apparently received no sale funds, nor any units in the unit trust. Even if some sort of trust may arise as a result of unconscionable dealing, it is unclear what interest Raphael may have and how that may impact, or dilute, the first defendant's interest.
4. After the plaintiff had made submissions raising a number of issues with the opposed amendment, including the absence of Raphael, the first defendant proposed an alternative amendment to claim 'a freehold interest over a moiety.' The first defendant further submitted that the explanation for Raphael's absence may be that 'he regarded himself as not losing anything because none of the consideration was to go to him anyway.'[14]

Would amendment encourage belief that amendments readily available?

1. As for not encouraging parties to believe they can readily amend caveats, the first defendant submits that he 'was not responsible for drafting the original caveat.'

What are the merits of the proposed amended interest?

1. The first defendant seeks to amend on the basis that the circumstances support a claim to a constructive trust on the basis of unconscionable dealing,[15] including against Mr Elliott as being knowingly involved. The circumstances relied on are that he believed the Property was being sold for $1,000,000 but the transaction was complicated and he:

(a) did not receive legal advice;

(b) was not told of any special conditions;

(c) did not receive advice on the nature and value of the units;

(d) was not given a copy of the trust deed; and

(e) did not know the terms of the subsequent mortgage.

1. The plaintiff submits that the only basis upon which the alleged interest is based is an Amadio-type unconscionable conduct claim which would require that the first defendant was under a special disability, such as illiteracy or drunkenness, and that the plaintiff took advantage of that special disadvantage in an unconscientious way.
2. The plaintiff submits that there is no material upon which it could be concluded that the first defendant was under any special disability, and further that there is no basis upon which it could be concluded the plaintiff exploited any such disability even if it existed. In that regard, the plaintiff relies on the communications from the first defendant to the solicitors acting in the transaction in which he directs them to pay $500,000 to Mr Haddad, or at least as directed by him for the purposes of the Tullamarine Property. Further, the first defendant had given Mr Haddad a power of attorney and candidly states that he relied on Mr Haddad in respect of the transaction.

1. For the following reasons, I consider that the first defendant should not be permitted to amend the caveat.
2. First, the proposed amendment is to the interest claimed in the caveat. The authorities are clear that the Court will be less inclined to allow such amendments, and also that such amendments are likely to be allowed only where there are special circumstances. That is a factor that weighs heavily against the granting of the amendment having regard to the other discretionary factors discussed below.
3. Second, the first defendant has not adduced evidence as to the instructions that were given to the lawyer who drafted the caveat. It may be that the lawyer made an egregious error in describing the interest as chargee, or it may be that the instructions given by the first defendant were entirely consistent with that conclusion. The question as to which of those may have occurred, or whether some other explanation may be available, is left unanswered and unexamined given the state of the evidence. The first defendant bears the burden of persuading the Court to exercise its discretion to permit an amendment, and that lack of evidence, in this regard, weighs against an order for amendment.
4. Third, the consideration that caveats should not be amended lightly also weighs against an order.
5. Fourth, the merits of the claimed interest are not so strong as to support an order for amendment in all the circumstances. It is unclear precisely how a caveatable interest is said to arise from Amadio-type unconscionable conduct. Nor is it clear what special disability it is said the first defendant suffered from, and nor is there an adequate explanation of the plaintiff's knowledge of, and taking advantage of, any such special disability.
6. Accordingly, the application to amend is refused.
7. As discussed above, I am not satisfied that there is a serious question to be tried in relation to the existing claimed interest as chargee as discussed in Piroshenko v Grojsman.[16] That being the case, there is no need to consider the balance of convenience. The caveat will be removed.
8. The parties are directed to provide draft orders reflecting these reasons, including as to costs if they can be agreed. If they cannot the matter will be listed for further hearing.

[1] Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447 ('Amadio').

[2] Affidavit of Meguerditch Karakulahian sworn on 8 January 2026, [8]-[10] (emphasis added) ('Karakulahian Affidavit').

[3] Affidavit of Michael Cameron Elliott sworn on 26 November 2025, [10]-[12] ('Elliott November Affidavit').

[4] Karakulahian Affidavit (n 2) [11]-[12].

[6] Elliott November Affidavit (n 3) [13].

[8] Piroshenko v Grojsman [2010] VSC 240; (2010) 27 VR 489, [18] ('Piroshenko').

[9] White v White [2014] VSC 449, [15]-[22], citing Martorella v Innovision Developments Pty Ltd [2011] VSC 282 ('Martorella'); Percy & Michele v Gangemi [2010] VSC 530. See also Goldberg v Campbell [2022] VSC 24, [28]-[29].

[10] Midwarren Estates Pty Ltd v Retek & Stivic [1975] VicRp 56; [1975] VR 575, 577.

[11] White v White (n 9) [20], citing Martorella (n 9) [66].

[12] Transcript of Proceeding, Gold Road No 9 v Karakulahian (Supreme Court of Victoria, S ECI 2025 07196, Barrett AsJ, 12 March 2026) 3 ('Transcript').