Kayali v Koca

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

PROPERTY LIST

S CI 2018 00562

MEHMET KAYALI	Plaintiff
v
SALIH KOCA	First Defendant
and
REGISTRAR OF TITLES	Second Defendant
AND BETWEEN:
SALIH KOCA	Plaintiff by Counterclaim
v
MEHMET KAYALI	First Defendant by Counterclaim
and
FILIZ KAYALI	Second Defendant by Counterclaim

---

JUDGE:	McDonald J
WHERE HELD:	Melbourne
DATES OF HEARING:	10–11, 13–14, 17–19, 24–28 October and 2, 4 and 23 November 2022
DATE OF JUDGMENT:	24 March 2023
CASE MAY BE CITED AS:	Kayali v Koca
MEDIUM NEUTRAL CITATION:	[2023] VSC 131

---

TRUSTS – Whether first defendant holds property subject to a constructive trust in favour of the plaintiff commensurate with $146,500 allegedly advanced by plaintiff in respect of the acquisition and upkeep of the property – Property not held by first defendant subject to constructive trust – Plaintiff does not have caveatable interest in the property – Registrar of Titles ordered to remove caveat lodged by plaintiff on the title of the property.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff and First Defendant by Counterclaim	In person
For the Defendant and Plaintiff by Counterclaim	Mr S Minahan	Pera Lawyers
For the Second Defendant by Counterclaim	In person

HIS HONOUR:

Introduction

On 7 July 2016 Mr Salih Koca signed a contract for the purchase of a property situated at 35 Heversham Grove, Greenvale, Victoria (‘Greenvale property’).[1] On 15 August 2016 Mr Koca paid a deposit of $41,000 being 5% of the purchase price of $820,000.[2] On 15 August 2016 Mr Koca paid the balance of the purchase price, with adjustments, in the sum of $782,997.18.[3] On 18 August 2016 Mr Koca paid stamp duty of $44,270 and a registration of transfer fee of $2,102.[4] The total outlay for the purchase of the property was $870,279.18. Shortly after settlement of the contract the plaintiff Mr Mehmet Kayali, his wife Ms Filiz Kayali and their two children moved into the Greenvale property. They continued to reside there until August 2017.
[1]Court Book filed on behalf of the first defendant dated 15 November 2022 (‘CB’) 803–805, Contract of sale dated 7 July 2016. The Greenvale property is more particularly described as Certificate of Title Volume 9458 Folio 143.
[2]CB1182, ANZ Business Advantage Statement.
[3]CB621, Email correspondence between Mr Tran and Mr Kolege dated 11 August 2016; CB1234, ANZ Business Advantage Statement; CB1238, ANZ Home Loan Statement.
[4]CB1238, ANZ Home Loan Statement.

On 18 September 2017 Mr Kayali lodged Caveat No. AQ257107L on the title of the Greenvale property claiming the ‘freehold estate’ interest in the property pursuant to an agreement with Mr Koca. On 18 February 2018 Mr Kayali commenced the present proceeding by writ claiming a declaration that he is the sole legal fee simple proprietor of the land at 35 Heversham Grove, Greenvale. As against the Registrar of Titles, Mr Kayali seeks orders directing the Registrar to amend the Register of Titles to record Mr Kayali as the sole legal fee simple proprietor of the land situated at 35 Heversham Grove, Greenvale.

The relief sought in the statement of claim filed on 16 February 2018 was based primarily upon the terms of a trust deed signed by Mr Koca and Mr Kayali dated 1 October 2016. The statement of claim pleaded that under the terms of the trust deed Mr Koca held the Greenvale property on trust for Mr Kayali. Mr Kayali maintained this claim in both an amended statement of claim and a further amended statement of claim (‘FASOC’). However, at a directions hearing on 7 October 2022 shortly before the commencement of the trial Mr Kayali disavowed any reliance upon the trust deed as the basis for a claim that Mr Koca held the property on trust for Mr Kayali pursuant to an express trust.[5]
[5]Transcript of Proceedings, T 6 L 29 – T 7 L 17, T 9 L 6–14 (7 October 2022).

Mr Kayali’s disavowal of a claim for relief based on the trust deed dated 1 October 2016 followed the filing of an expert report of Dr Tahnee Dewhurst on 22 September 2022. Dr Dewhurst’s unchallenged evidence is that the second page of the trust deed had been substituted and did not comprise part of the deed when it was signed by the parties on 1 October 2016.[6]
[6]Exhibit D-1, Expert Report of Dr Dewhurst 16 September 2022, 6; Transcript of Proceedings, T 284 L 12–16 (14 October 2022).

Mr Kayali appeared on his own behalf throughout the trial. During his opening submissions he confirmed that he no longer made any claim for the enforcement of the trust deed as an express trust. He confirmed that his claim based on trust is confined to a claim for a constructive trust as pleaded at [5B] to [5K] of the FASOC dated 23 August 2019.[7]
[7]Transcript of Proceedings, T 13 L 5 – T 14 L 13, T 23 L 6–11 (10 October 2022).

Mr Kayali claims that Mr Koca holds the Greenvale property subject to a constructive trust commensurate with $146,500. This is the amount of money which he contends he paid to Mr Koca to enable Mr Koca to complete the purchase of the property, together with amounts spent by Mr Kayali on maintenance and improvement of the property. In the further alternative, Mr Kayali seeks an order for damages or restitution in the sum of $146,500.

Mr Koca counterclaims against Mr Kayali and Ms Kayali. First, he seeks an order for removal of the caveat. Second, he seeks an order that Mr Kayali and Ms Kayali repay him the sum of $44,900 and 26,700 Turkish Lira (‘TL’) comprised of four loans advanced to Mr Kayali and Ms Kayali between January and July 2016.

I have concluded as follows. Mr Kayali has failed to establish that Mr Koca holds the Greenvale property subject to a constructive trust in his favour. Further, Mr Kayali has failed to establish that Mr Koca is indebted to him, or otherwise liable to make restitution for the sum of $146,500. Mr Kayali does not have any caveatable interest in the property. The Registrar of Titles will be directed to remove the caveat lodged on title to the Greenvale property. Mr Koca has established that Mr Kayali is indebted to him to the sum of $44,900 and 26,700 TL. In respect of the $35,000 loan which was advanced to Mr Kayali on 18 January 2016, Ms Kayali guaranteed repayment of this loan by Mr Kayali. As Mr Kayali has not repaid the loan, Ms Kayali is liable to do so in her capacity as guarantor. In respect of the other three loans advanced to Mr Kayali by Mr Koca, Mr Kayali is solely liable to repay the loans.

Background

Mr Kayali and Ms Kayali migrated to Australia from Türkiye in 2013. Initially their residence in Australia was subject to protection visas and they were provided with new identities.[8] They were subsequently granted permanent resident status in late 2015 or early 2016[9] and became Australian citizens in August 2018.[10] Prior to coming to Australia Mr Kayali had worked in Türkiye as a locksmith with particular expertise working with motor vehicles. Ms Kayali worked as a lawyer specialising in family and criminal law. She practised for 17 years as a member of the Istanbul Bar.[11] After arriving in Australia Ms Kayali completed a Juris Doctor degree at Deakin University, graduating on 17 March 2022.[12] Since arriving in Australia Ms Kayali has undertaken some work as a foreign registered lawyer but has not been admitted to practice as an Australian lawyer.[13]
[8]Ibid T 157 L 24 (11 October 2022).
[9]Ibid T 158 L 3–6.
[10]Ibid T 156 L 28.
[11]Ibid T 339 L 20–25 (14 October 2022).
[12]CB2675, Certificate of Qualification dated 17 March 2022.
[13]Exhibit P-2, Witness Statement of Filiz Kayali, [2].

Mr Koca arrived in Australia from Türkiye in 1986. His education level is primary school Year 5.[14] After arriving in Australia Mr Koca worked in factories and then started to do some panel beating work.[15] Since 2000 Mr Koca has owned and operated a panel beating business, ‘Salih Body Works’ operating from premises at 58 Mason Street, Campbellfield.[16]
[14]Exhibit D-3, Witness Statement of Salih Koca, [1], [3].
[15]Transcript of Proceedings, T 526 L 20–25 (18 October 2022).
[16]Exhibit D-3, Witness Statement of Salih Koca, [4].

Mr Kayali gave evidence that he first met Mr Koca in October 2015.[17] Mr Koca gave evidence that he first met both Mr Kayali and Ms Kayali in late 2015 at a barbeque in Shepparton at the residence of a friend, Mr Servet Doktoroglu.[18] When cross-examined Mr Kayali agreed that he first met Mr Koca in late 2015 at the home of Mr Doktoroglu.[19]
[17]Exhibit P-1, Witness Statement of Mehmet Kayali, [2].
[18]Exhibit D-3, Witness Statement of Salih Koca, [6].
[19]Transcript of Proceedings, T 165 L 23–24 (11 October 2022).

On 18 January 2016 Mr Koca deposited $35,000 in Mr Kayali’s bank account with the Commonwealth Bank of Australia.[20] Mr Kayali had met Mr Koca about ten times prior to 18 January 2016 when the $35,000 was deposited.[21] I accept Mr Koca’s evidence that within a very short period of time after first meeting Mr Kayali and Ms Kayali in Shepparton, Mr Kayali and Ms Kayali had become friends with Mr Koca and his partner Ayten Girgin. I reject Ms Kayali’s evidence that she did not meet Mr Koca until early February 2016 after the $35,000 had been deposited into Mr Kayali’s account.[22] I also reject Ms Kayali’s evidence that she first became aware of the $35,000 having been deposited in Mr Kayali’s bank account on 20 January 2016.[23]
[20]CB1181, ANZ Business Advantage Statement.
[21]Transcript of Proceedings, T 184 L 9–11 (13 October 2022).
[22]Exhibit P-2, Witness Statement of Filiz Kayali, [9]; Transcript of Proceedings, T 344 L 1–20 (14 October 2022).
[23]Transcript of Proceedings, T 347 L 4–7 (14 October 2022).

Mr Kayali and Ms Kayali were most unsatisfactory witnesses. In almost every instance where their evidence conflicts with that of Mr Koca I have rejected their evidence. Mr Kayali and Ms Kayali were prepared to advance any submission and give any evidence which they believed would advance their claim to having an interest in the Greenvale property. Their claims were largely unsupported by any objective evidence and were largely based on fabrications. The evidence before the Court overwhelmingly supports the conclusion that in the immediate aftermath of having met Mr Koca, Mr Kayali and Ms Kayali set about exploiting his generosity for their personal financial gain. As will be set out in this judgment, the extent of Mr Koca’s generosity towards the Kayalis was quite remarkable. I accept Mr Koca’s evidence that he was spellbound by Ms Kayali, who he saw as a highly qualified and respected lawyer. He felt ‘hypnotised’ by the Kayalis.[24] He advanced money to the Kayalis because he felt ‘small or pressured… tiny next to a solicitor’.[25] I have no hesitation in concluding that from the time of their first meeting, Ms Kayali projected an aura of wealth and success. Mr Koca, a poorly-educated man from a humble background was taken in by the Kayalis’ claims as to their wealth and status.
[24]Ibid T 661 L 16–17 (24 October 2022); T 862 L 19–26, T 878 L 7–13 (27 October 2022).
[25]Ibid T 532 L 4–8 (18 October 2022).

As at 30 December 2015 Mr Kayali’s bank account had a balance of $2.69.[26] Mr Kayali had a gold awards credit card with a credit limit of $8,000. On 31 December 2015 the account was overdrawn with a balance of $8,135.37.[27] On 5 January 2016 Ms Kayali’s ANZ bank account was overdrawn by $22.08.[28] For the financial year ending 30 June 2015 the income tax returns of Mr Kayali and Ms Kayali disclosed a combined income of $10,614[29] and $35,352 for the financial year ending 30 June 2016.[30]
[26]CB1544, Commonwealth Bank Statement.
[27]CB1547, Commonwealth Bank Gold Awards Credit Card Statement.
[28]CB2809, ANZ Business Advantage Statement.
[29]CB1252, Filiz Kayali 2015 Tax Return.
[30]CB1277, Filiz Kayali 2016 Tax Return; CB1328, Mehmet Kayali 2016 Tax Return. The 2016 return was the first tax return filed by Mr Kayali: Transcript of Proceedings, T 160 L 11–14 (11 October 2022).

When Mr Kayali and Ms Kayali first met Mr Koca they were in a dire financial position. On 18 January 2016 Mr Koca deposited $35,000 into Mr Kayali’s bank account. Mr Kayali contends that these funds were for the purchase of locksmith equipment for a ‘joint venture’ under which he would be an employee of Mr Koca providing locksmith services from Mr Koca’s panel beating business premises.[31] I shall address later in this judgment the question of whether Mr Kayali was an employee of Mr Koca. It is clear that whatever the nature of the agreement between Mr Koca and Mr Kayali, a significant proportion of the $35,000 deposited into Mr Kayali’s bank account was immediately used for personal expenditure. On 19 January 2016 $8,000 was transferred to Mr Kayali’s credit card account, $2,303 was paid to Considine Real Estate for rent and $5,000 was transferred to Ms Kayali’s ANZ account.[32] Mr Kayali and Ms Kayali immediately set about improving their financial position by taking advantage of Mr Koca’s generosity. Ms Kayali, who was perceived by Mr Koca as a highly qualified and successful lawyer from Türkiye, was instrumental in achieving this outcome.
[31]Transcript of Proceedings, T 172 L 1–5, T 173 L 22–25 (11 October 2022).
[32]CB1544, Commonwealth Bank Statement; CB 2809, ANZ Business Advantage Statement.

The purchase of the Greenvale property

Mr Kayali and Ms Kayali unsuccessfully applied for a home loan of $460,000 in late 2015.[33] Ms Kayali gave evidence that the reason for the rejection of the loan application was that she and Mr Kayali had only been living in Australia for a short period of time.[34] I do not accept this evidence. I infer that the application was rejected because the Kayalis could not demonstrate to the satisfaction of the bank that they had capacity to service the loan they were seeking.
[33]Transcript of Proceedings, T 354 L 27 (14 October 2022).
[34]Ibid T 354 L 28–30.

The House Swap Agreement

The competing accounts of the Kayalis and Mr Koca regarding the purchase of the Greenvale property are totally irreconcilable. One of the principal areas of disagreement concerns the existence of a ‘house swap agreement’. The ‘house swap agreement’ is pleaded at [3E] and [3F] of the FASOC as follows:

3E. In or around November 2015:
(a) Mr Kayali met with the first defendant in the latter’s office at 58 Mason Street, Campbellfield, Victoria;
(b) Mr Kayali stated that he intended to sell the Plaintiff’s Istanbul Property to invest in a property in Australia with his cash deposit;
(c) The first defendant stated:
i. that he was planning to invest in Türkiye and had enough money to do so, but transferring money was very hard for him;
ii. that if Mr Kayali would like to sell the Plaintiff’s Istanbul Property to the first defendant, the first defendant would be happy to buy it;

(d) Mr Kayali provided photos of the Plaintiff’s Istanbul Property and its address to the first defendant.

3F. In or around early December 2015, Mr Kayali and the first defendant agreed that Mr Kayali would sell the Plaintiff’s Istanbul Property to the first defendant, and in return the first defendant would buy a property in Australia for the benefit of Mr and Mrs Kayali (the First Oral Agreement).
PARTICULARS
The agreement was oral, during discussions to the effect alleged between Mr Kayali and the first defendant in or around early December 2016.[35]

[35]CB150, Further Amended Statement of Claim dated 23 August 2019, [3E]–[3F].

As set out in the FASOC the alleged agreement was reached in December 2015. Mr Kayali’s evidence at trial departed from the pleadings. He gave evidence that an agreement was reached at the end of May or beginning of June 2016 that he would transfer his property in Istanbul, which was valued at US$650,000 to Mr Koca and in return Mr Koca would purchase a property of equivalent value in Australia and transfer it to Mr Kayali free of any encumbrance simultaneously in exchange for Mr Kayali transferring the Istanbul property to Mr Koca.[36]
[36]Transcript of Proceedings, T 36 L 4–7 (10 October 2022).

Mr Koca denies that there was ever any discussion with Mr Kayali or Ms Kayali about swapping houses. I accept Mr Koca’s evidence that Mr Kayali and Ms Kayali visited his house in June 2016 and told him that they had found a property which they wanted to buy. They told him they had a property in Istanbul which was on the market and which they expected would be sold within a month. They asked for his assistance to purchase the property. They asked him to pay a deposit of $41,000 and to sign the contract under his name with provision for a nominee so that he could nominate them as purchaser once the proceeds of sale of their Istanbul property arrived from Türkiye. He agreed to assist them.[37]
[37]Exhibit D-3, Witness Statement of Salih Koca, [20]–[21].

Mr Kayali gave evidence that:

Given the nature of [Mr Koca’s] present business banking arrangements, it would be far more advantageous if he purchased a residential property in Melbourne of equal or similar value to the Istanbul property, transferred the Melbourne property to me free of any encumbrances simultaneously in exchange for me transferring my Istanbul house to Mr Koca free of any encumbrances.[38]

[38]Exhibit P-1, Witness Statement of Mehmet Kayali, [5].

Mr Kayali did not advance any plausible explanation as to why Mr Koca’s ‘present business banking arrangements made a house swap a better option’. Mr Koca owns several properties in Türkiye.[39] Plainly, his business banking arrangements have not been an impediment to him acquiring properties in Türkiye. Further, there is no evidence of any contemporaneous valuation of the Istanbul property in the sum of US$650,000. Nor is there any evidence of Mr Koca seeking to obtain any such valuation. Mr Kayali gave evidence that Mr Koca and his friend and business associate, Taner Alinc, undertook research in respect of the Istanbul property via the internet in his presence.[40] I reject this evidence. However, I accept the evidence of Mr Alinc that in 2016 he did go online and saw a property for sale in the same apartment complex as Mr Kayali’s apartment, which had been on the market for nine to ten months and was being offered for sale for US$420,000.[41]
[39]Transcript of Proceedings, T 639 L 23 (24 October 2022); T 168 L 24–25 (11 October 2022).
[40]Exhibit P-1, Witness Statement of Mehmet Kayali, [4].
[41]Transcript of Proceedings, T 960 L 5–10 (28 October 2022).

Mr Kayali produced a statement from a real estate agent in Istanbul dated 18 October 2018 stating that the Istanbul property had been marketed for US$650,000.[42] The letter is in Turkish and was translated by the Court-appointed interpreter.[43] The letter states that the property was for sale from late 2015. The fact that the property was marketed with a sale price of US$650,000 does not mean that this was its true value. The property had been on the market since late 2015 but had not been sold.
[42]Plaintiff’s Court book filed 23 November 2022 (‘PCB’) at 1026, Letter from Atalay Insaat Mimarlik dated 18 October 2018.
[43]Transcript of Proceedings, T 38 L 4–20 (10 October 2022).

The terms of the contract for the purchase of the Greenvale property signed by Mr Koca on 7 July 2016 are inconsistent with the house swap agreement. The contract designated the purchaser of the property as Mr Koca ‘or nominee’. The existence of a nominee clause supports Mr Koca’s evidence that he signed the contract on the understanding that prior to settlement Mr Kayali would have sold his Istanbul property and would have the necessary funds to purchase the property as Mr Koca’s nominee. If, as contended by Mr Kayali, the parties had a house swap agreement on 7 July 2016, the transfer of the Istanbul property had to take place on 9 September 2016 when the contract for the purchase of the Greenvale property was due to settle. However, there is no evidence of Mr Kayali taking any steps to transfer the Istanbul property to Mr Koca. The contract for the Greenvale property was an unconditional irrevocable contract of sale. If any steps had been taken to transfer the Istanbul property to Mr Koca they would have needed to have been set in train by 7 July 2016 or immediately thereafter. There is no evidence of any such steps having been taken to transfer the Istanbul property once Mr Koca signed the contract for the purchase of the Greenvale property on 7 July 2016.

No steps were taken to transfer the Istanbul property to Mr Koca because there never was an agreement to transfer the Istanbul property. This conclusion is reinforced by Ms Kayali’s evidence regarding the marketing of the Istanbul property. If there was an agreement to swap houses the Istanbul property should have been taken off the market by 7 July 2016 when Mr Koca signed the contract to purchase the Greenvale property. In response to a question from Mr Minahan, who appeared for Mr Koca, as to whether the Istanbul property had been taken off the market by late July or early August 2016, Ms Kayali responded:

We didn’t actually take it off the market, the actual advertisement for the selling of the house had an expiry date, it was 12 August 2016. And that had expired, and then at a later time we put it back on the market.[44]

[44]Ibid T 439 L 8–12 (17 October 2022).

Ms Kayali’s evidence contradicts Mr Kayali’s evidence that in or around late April 2016 he instructed his Turkish real estate agent to remove the Istanbul property from the market.[45] I reject Mr Kayali’s evidence that he instructed his real estate agent to take the Istanbul property off the market. The property was not taken off the market prior to 7 July 2016 because the Kayalis were trying to sell the property to raise funds to acquire the Greenvale property as Mr Koca’s nominee under the terms of the contract he signed on 7 July 2016.
[45]Exhibit P-1, Witness Statement of Mehmet Kayali, [7].

On 15 July 2016 there was an attempted coup in Türkiye. Mr Kayali contends that in the immediate aftermath of 15 July 2016 Mr Koca advised him that he was not prepared to go ahead with the house swap agreement.[46] I reject this evidence. As there was no house swap agreement there was no agreement for Mr Koca to withdraw from.
[46]Exhibit P-1, Witness Statement of Mehmet Kayali, [9].

I accept Mr Koca’s evidence that about a month after 7 July 2016 he asked Mr Kayali and Ms Kayali what was happening with the sale of their Istanbul property. They told him that they had not been able to sell the property.[47] After the Greenvale property settled on 15 August 2016 Mr Koca agreed with Mr Kayali and Ms Kayali that they could move into the house. They agreed to pay rent to Mr Koca of $3,200 per month which would cover his mortgage expenses. They agreed that when they received the funds from the sale of the Istanbul property they would have to pay stamp duty to cover the costs of the transfer of the property into Mr Kayali’s name.[48]
[47]Transcript of Proceedings, T 536 L 29 – T 537 L 5 (18 October 2022).
[48]Ibid T 538 L 27–30.

Both Mr Kayali and Ms Kayali were emphatic that Mr Koca placed no time limit upon them to pay out the mortgage over the Greenvale property. Mr Kayali opened his case on the basis that after the attempted coup on 15 July 2016 he agreed with Mr Koca that Mr Kayali would be liable to repay Mr Koca the money he had expended on the deposit ($41,000) and stamp duty ($46,281) and all expenses related to the property and all instalments on the mortgage. He submitted that there was no date stipulated for repayment of the mortgage, ‘but whenever my property in Türkiye was to be sold, then I was to pay his mortgage’.[49] Mr Kayali said that he told Mr Koca ‘I’ll sell the [Istanbul] property like one or two years later. Three years, four years, whatever’.[50]
[49]Ibid T 41 L 6–13 (10 October 2022).
[50]Ibid T 41 L 14–19, T 45 L 13–15.

During his opening submissions, the following exchange took place between myself and Mr Kayali:

HIS HONOUR: How long do you say you had - what period of time do you say that you had to repay the $820,000, which Mr Koca had spent?
MR KAYALI: Initially, as Salih said, there’s no limit on time.
HIS HONOUR: No limit? Maybe 20 years.
MR KAYALI: (Direct) Maybe 20, maybe 10, maybe five. He say - (Through Interpreter) whenever your house sells, then you can do this, or it’s not important, or whenever you want. With this confidence, I - you know, the comfort that I went into this. But six months later my mind - I changed my mind.[51]

[51]Ibid T 58 L 25 – T 59 L 4.

During the course of Ms Kayali’s cross examination the following exchange took place between myself and Ms Kayali:

HIS HONOUR: Do you say that there was no time limit placed on you and your husband to repay the $820,000? Because that does seem quite remarkable. That is almost extraordinary that someone who has only known you for five or six months would agree to borrow $820,000 and place no time period at all for the repayment of that loan, but that’s your case, isn’t it?---
MS KAYALI: Yes.[52]

[52]Ibid T 439 L 25–31 (17 October 2022).

During the same exchange Ms Kayali stated that Mr Koca was not doing her and Mr Kayali any favour and that the house swap was a ‘win-win situation’ because under the terms of the house swap agreement Mr Koca would be acquiring a property in Istanbul of equal value to the Greenvale property.[53] The flaw in this response is that both Mr Kayali and Ms Kayali gave evidence that Mr Koca reneged on the house swap agreement after the attempted coup on 15 July 2016. On the case advanced by Mr Kayali and Ms Kayali there was no house swap agreement from mid-July 2016. Rather, there was a new agreement under which Mr Koca took out a mortgage of $820,000 but placed no time limit on when that money was to be repaid by Mr Kayali. Far from being a win-win situation, the benefit of this agreement flowed solely to Mr Kayali and Ms Kayali.
[53]Ibid T 440 L 21–25.

I accept Mr Koca’s evidence that after Mr Kayali and Ms Kayali moved into the Greenvale property they told him they would need three to six months to sell the Istanbul property. Mr Koca agreed to give them an additional six months, such that they had 12 months to repay the mortgage. If they repaid the mortgage the Greenvale property would be transferred to Mr Kayali without any additional payment, irrespective of whether the value of the property had increased during the previous 12 months.[54]
[54]Ibid T 774 L 5–12 (26 October 2022).

Notwithstanding the fact that Mr Koca had incurred a substantial debt to acquire the Greenvale property and was the registered proprietor of the property, Mr Kayali cross-examined Mr Koca as follows:

MR KAYALI: Because you had nothing to do with the house. Isn’t that right, Salih? This house was not yours, and you had no right to it, and wasn’t our agreement that, um, as long as I made the payments, the house was going to be – is mine and always going to be mine? Is that right?[55]

[55]Ibid T 773 L 29 – T 774 L 3.

On any view Mr Koca was extremely generous in his dealings with the Kayalis. In order to provide them with an opportunity to get a foothold in the property market he borrowed $870,000. It is common ground that Mr Koca agreed that upon the transfer of the property to Mr Kayali he would not seek any compensation for any increase in the value of the property. Mr Kayali stood to make a significant financial gain if he repaid Mr Koca’s mortgage within 12 months. When Mr Koca took out a loan to purchase the Greenvale property he believed that Mr Kayali would be able to sell his Istanbul property and would have sufficient funds to clear his mortgage. However, the agreement between Mr Koca and Mr Kayali was not open-ended. If Mr Kayali was not able to clear the mortgage within 12 months, the agreement to transfer the Greenvale property would come to an end.

The Trust Deed

I accept Mr Koca’s evidence that shortly after the Kayalis moved into the Greenvale property he told Ms Kayali that he wanted the agreement for the repayment of the mortgage recorded in writing.[56] It is common ground that on 1 October 2016 a trust deed[57] was signed by Mr Kayali and Mr Koca. It is also common ground that page two of the trust deed has been substituted sometime after the deed was signed on 1 October 2016. The deed cannot be relied upon to support a claim that Mr Kayali has an interest in the Greenvale property as a beneficiary under an express trust. Nevertheless, the contents of the deed, save for page two, and the evidence relating to the execution of the deed, are relevant to the issues which fall for determination.
[56]Ibid T 772 L 27–T 773 L 6.
[57]CB953, Trust Deed dated 1 October 2016.

Ms Kayali amended a trust deed which had been given to her by Mr Koca which had previously been prepared by Mr Koca’s solicitor, Mr Salih Tuncer.[58] One of the amendments drafted by Ms Kayali was clause 2.1(a). This clause, as amended, provided:

The trustee (Mr Koca) acknowledges that the beneficiary (Mr Kayali) paid:
(a)The purchase price for the property including ANZ Bank home loan repayments.

[58]Transcript of Proceedings, T 450 L 3 (17 October 2022).

Clause 4.1 provided:

The trustee acknowledges that the Beneficiary may, by notice given to the trustee, require the trustee to transfer the property to the beneficiary and the beneficiary has provided such notice to the trustee.

Clause 2.1(a) and clause 4.1 gave Mr Kayali the right to call for the transfer of the Greenvale property even though Mr Koca paid for the property and his debt had not been repaid by Mr Kayali. It is common ground that Mr Kayali did in fact serve a notice on Mr Koca calling for the transfer of the Greenvale property on 20 September 2017.

The right to obtain a transfer of the Greenvale property conferred by clause 2.1(a) and clause 4 was based on the fiction that Mr Kayali had purchased the property. Ms Kayali gave evidence that when drafting clause 2.1(a) she did not appreciate that clause 2.1(a), by reciting that Mr Kayali had purchased the property, was false. Her evidence was that clause 2.1(a) was simply intended to reflect the parties’ agreement that whilst the Kayalis occupied the property they would make monthly payments to Mr Koca which covered his mortgage payments.[59] I reject this evidence. Ms Kayali fully appreciated that Mr Kayali had not purchased the property and that the combined effect of clause 2.1(a) and 4 conferred a right upon Mr Kayali to call for the transfer of the property. This is in fact what occurred in September 2017. The fact that Mr Koca was prepared to sign the deed notwithstanding the inclusion of clause 2.1(a) and clause 4 was a consequence of his misplaced trust in Ms Kayali.
[59]Ibid T 452 L 17–22.

I accept the evidence of Mr Alinc, Mr Koca’s friend and business associate, that Mr Koca provided him with a copy of the trust deed prior to 1 October 2016. I also accept his evidence that he told Mr Koca that a problem with the deed was that it did not include an expiry date.[60] I accept Mr Koca’s evidence that when he read the deed in the presence of Mr Kayali and Ms Kayali prior to signing it on 1 October 2016, he observed that there was a date of ‘2018’ on page two of the deed. He told Ms Kayali the date should be 2017 so that the agreement would only operate for one year. Ms Kayali agreed that the reference to 2018 was a mistake and it was replaced by ‘2017’ and initialled by Mr Kayali and Mr Koca. Ms Kayali then took the agreement with her after it had been signed.[61]
[60]Ibid T 973 L2 9 – T 974 L 4 (28 October 2022).
[61]Exhibit P-2, Witness Statement of Filiz Kayali, [45].

Although Mr Koca had a misplaced trust in Ms Kayali he was also an experienced businessman. Prior to 1 October 2016 he had been told by Mr Alinc that the agreement needed to include an expiry date. He had previously verbally agreed with Mr Kayali that he had 12 months within which to repay Mr Koca’s $870,000 mortgage. I accept Mr Koca’s evidence that he amended page two of the trust deed to reflect this agreement. Subsequent to signing the deed this page was removed and a replacement page substituted which did not include a reference to 2018.

The Kayalis Vacate the Greenvale Property

In April 2017 Mr Koca asked Mr Kayali if he was going to be able to purchase the Greenvale property. Mr Kayali said that he would not be able to do so.[62] At this time Mr Kayali and Ms Kayali had separated, albeit they continued to live under the same roof.[63] Ms Kayali had been diagnosed with colon cancer and had decided to return to Türkiye with her two children.[64] Ms Kayali gave evidence that she contacted a real estate agent to sell the house ‘because I was the owner of the house’.[65] The estate agent, Mr Ray Biner, gave evidence that he was contacted by Ms Kayali seeking a valuation of the property. However, as to whether Ms Kayali had requested the property to be put on the market, his response was ‘definitely not’.[66]
[62]Transcript of Proceedings, T 614 L 11–15 (24 October 2022).
[63]Ibid T 246 L 3–6 (13 October 2022).
[64]Ibid T 459 L 17–20 (17 October 2022). Ms Kayali was not able to return to Turkey as planned due to the serious illness of one of her children.
[65]Ibid T 459 L 28–29.
[66]Ibid T 847 L 17–18 (27 October 2022).

Having been informed by Mr Kayali that he would not be proceeding with the purchase of the property, Mr Koca decided that he wished to get the Kayalis out of the property as soon as possible. He told them that a friend of his from Sydney, Osman Oz, had agreed to purchase the property. In fact there was no agreement with Mr Oz to purchase the property. Mr Koca told the Kayalis there was such an agreement in order to get them out of the property as soon as possible.[67] Having been informed of the proposed sale, Mr Kayali ceased making monthly rental payments between June and August 2017 and then moved out of the property with his family.
[67]Ibid T 617 L 22–29 (24 October 2022).

Shortly after the Kayalis vacated the property Mr Alinc was engaged by Mr Koca to prepare the property for sale. Mr Alinc is the owner of a company which undertakes commercial and residential building developments.[68] The work undertaken by Mr Alinc included fully repainting the house.[69] The painting was subcontracted to Perfect Choice Painting.[70] Mr Kayali gave evidence that in September 2017 he went to the Greenvale property to collect some of his possessions and observed that Mr Alinc and his family had taken up residence.[71] On 18 September 2017 he lodged a caveat on the title of the property and on 20 September 2017 he served a notice on Mr Koca calling for the transfer of the property.
[68]Ibid T 903 L 32 – T 904 L 2 (27 October 2022).
[69]Ibid T 918 L 3; CB1051, Alsa Constructions Tax Invoice dated 4 January 2018.
[70]Ibid T 919 L 25–26.
[71]Exhibit P-1, Witness Statement of Mehmet Kayali, [30].

I reject Mr Kayali’s claim for an interest in the property pursuant to a constructive trust. He occupied the property pursuant to an agreement which conferred upon him the right to acquire the property if he repaid Mr Koca’s mortgage within 12 months of taking up residence. Mr Kayali did not comply with the terms of the agreement and thereby relinquished any right to acquire the title to the property.

Alternative claim for recovery

I also reject Mr Kayali’s alternative claim for recovery of $146,500 which he claims to have advanced to Mr Koca. The $146,500 is comprised of $87,000 allegedly paid to Mr Koca as reimbursement for the $41,000 deposit paid on 7 July 2016 and $46,000 for stamp duty and registration of transfer fees. In addition Mr Kayali claims the following amounts:

·$20,000 paid to Mr Koca on 1 April 2016
·$12,000 being a debt owed by Mr Koca for the purchase from Mr Kayali of a Mazda M3 motor vehicle
·$9,000 paid to Mr Koca in July 2016
·$20,000 paid to Mr Koca in September 2016
·$26,000 paid to Mr Koca on 1 October 2016.

The balance of the $146,500 is alleged to be made up of:

(i)a combination of cash payments and bank transfers to Mr Koca by way of repayments of borrowings used by Mr Koca to settle on the purchase of the Greenvale property; and
(ii)$18,900 for other expenses associated with the maintenance and improvement of the Greenvale property, including insurance, duties and conveyancing costs.

Reimbursement of deposit

The FASOC pleads that on 17 July 2016 Mr Kayali agreed with Mr Koca’s proposal that $32,000 would be offset against the $41,000 deposit paid by Mr Koca on 7 July 2016.[72] The FASOC pleads that the $32,000 had been loaned to Mr Koca by Mr Kayali.[73] The particulars of the loans are pleaded as follows:

In or around the middle of March 2016, Mr Kayali paid $12,000 to the first defendant to enable the first defendant to buy a car.
In or around the end of March 2016, Mr Kayali agreed to lend the first defendant $20,000 to enable the first defendant to repair his business premises, which had been burnt.
On or about 1 April 2016, Mr Kayali gave the first defendant $20,000 cash (Mr Kayali’s Loans to the First Defendant).
[72]CB150, Further Amended Statement of Claim dated 23 August 2019, [3JA]–[3K].
[73]Ibid [3J(b)(iii)(C)].

The Mazda

Mr Kayali opened his case on the basis that he had loaned Mr Koca $12,000 in March 2016 and had paid this money into Mr Koca’s bank account.[74] The evidence given by Mr Kayali in relation to the $12,000 payment differed significantly from both the pleaded particulars of the loan in the FASOC and his opening submissions. Mr Kayali’s oral evidence was that Mr Koca purchased a damaged Mazda automobile at auction for $6,400, repaired it and then sold it to Mr Kayali for approximately $8,100 on 29 March 2016.[75] On 5 April 2016 Mr Koca offered to purchase the car back from Mr Kayali for $12,000 and then onsold the car to one of his customers for $15,000.[76]
[74]Transcript of Proceedings, T 34 L 19–20 (10 October 2022).
[75]Exhibit P-1, Witness Statement of Mehmet Kayali, [7A].
[76]Ibid.

Putting to one side the inconsistency between this evidence and the pleaded case, the notion that within one week of selling a car to Mr Kayali, Mr Koca would buy it back for a 50% premium, is quite implausible. It is equally implausible that notwithstanding Mr Kayali’s very poor financial position he would either advance $12,000 to Mr Koca to buy a car, or alternatively, sell him a car valued at $12,000 but not seek immediate payment. Further, contrary to Mr Kayali’s claim that he transferred ownership of the vehicle to Mr Koca on 5 April 2016, there is evidence consistent with Mr Kayali continuing to be the registered owner of the vehicle post this date. Mr Kayali continued to receive CityLink fines post-April 2016 because he was registered with VicRoads as the owner of the vehicle.[77]
[77]Transcript of Proceedings, T 216 L 22–24 (13 October 2022).

Further, on 6 March 2018 Mr Kayali wrote to Mr Koca’s lawyers as follows:

I would also like to inform you that I sold the car to you as part of the purchase of the house, I will no longer be the registered owner and have nominated the fines under the owner.[78]

[78]CB731, Email from Mehmet Kayali to ASAP Property Lawyers and Salih Koca dated 6 March 2018.

First, this is an admission that although he claimed to have sold the vehicle to Mr Koca in April 2016, Mr Kayali continued to be the registered owner of the vehicle for the next 23 months. Second, Mr Kayali’s claim that he sold the vehicle to Mr Koca as part of the purchase price for the Greenvale property is not credible. On his own case there was no discussion between Mr Kayali and Mr Koca about the house swap agreement until the end of May or beginning of June 2016.[79] Under the house swap agreement, Mr Kayali was not making any contribution to the purchase of the Greenvale property. Rather, Mr Koca was to purchase the property for Mr Kayali and the Istanbul property was to be transferred to Mr Koca. Although I have rejected the existence of the house swap agreement, Mr Kayali’s evidence that the $12,000 was part of the purchase price of the house is completely at odds with the way he puts his own case. I accept Mr Koca’s evidence that Mr Kayali and Ms Kayali approached him in June 2016 with a request for assistance with the purchase of the Greenvale property. The alleged sale of the vehicle from Mr Kayali to Mr Koca in April 2016 could not have had anything to do with the purchase of the Greenvale property.
[79]Transcript of Proceedings, T 36 L 4–7 (10 October 2022).

Mr Kayali’s claim that there was an agreement between himself and Mr Koca in April 2016 that the $12,000 purchase price for the Mazda would form part of the purchase price for the Greenvale property is totally implausible. There was no agreement for the sale of the vehicle from Mr Kayali from Mr Koca for $12,000. The alleged sale is a fabrication. The alleged sale underpins Mr Kayali’s implausible contention that he paid the deposit on the Greenvale property. The other two components of the $41,000 deposit are said to be a $20,000 loan from Mr Kayali to Mr Koca on 1 April 2016 and a $9,000 loan on 8 or 9 July 2016, or alternatively, 13 August 2016. I shall address each of these alleged loans in turn.

The $20,000 Loan

Mr Kayali gave evidence that around the end of March 2016 he orally agreed to lend Mr Koca $20,000 to enable Mr Koca to undertake repairs of his business premises in Campbellfield which had been damaged in a fire. According to Mr Kayali, Mr Koca told him that he needed $60,000 for the repairs and he wanted to avoid obtaining finance through his business line of credit due to the high interest he would be required to pay. Mr Koca said that once Mr Kayali found a suitable home, Mr Koca would pay for the house and repay the $20,000 debt.[80] Mr Kayali gave evidence that he paid $20,000 in cash to Mr Koca on 1 April 2016 at Mr Koca’s residence, 15 Stockdale Crescent, Dallas.[81]
[80]Exhibit P-1, Witness Statement of Mehmet Kayali, [7B], [7C].
[81]Transcript of Proceedings, T 206 L 8–10 (13 October 2022).

Mr Kayali’s evidence that he loaned $20,000 to Mr Koca on 1 April 2016 is extremely implausible. It is common ground that on 18 January 2016 Mr Koca deposited $35,000 into Mr Kayali’s bank account. As set out earlier in this judgment at the time of the deposit Mr Kayali’s financial position was very poor. For the year ending 30 June 2016 his taxable income was $21,600.[82] On his own account he did not start working for Mr Koca until April 2016 when he commenced part-time employment. On his evidence he did not commence full-time employment until June 2016.[83]
[82]Ibid T 162 L 16–20 (11 October 2022).
[83]Ibid T 705 L 15–20 (25 October 2022).

On Mr Kayali’s evidence Mr Koca asked him for a loan of $20,000 prior to Mr Kayali commencing work as a part-time employee on 1 April 2016. Mr Koca did so in order to avoid paying interest on his business loan account. This evidence is implausible in light of the fact that on 7 July 2016 Mr Koca borrowed $41,000 to pay for the deposit on the Greenvale property, borrowed $46,000 for stamp duty and registration of transfer fee and $779,000 to pay the balance of the purchase price.

I accept Mr Koca’s evidence that in March 2016 there had been a fire at premises he owned at 62 Mason Street, Campbellfield.[84] I accept his evidence that the repairs to the premises cost $80,000 to $90,000 and were undertaken by friends who worked in the construction industry who he paid in instalments over a 12-month period.[85] I also accept Mr Koca’s evidence that he neither requested nor received $20,000 from Mr Kayali towards the costs of the repairs. I reject Mr Kayali’s evidence that upon receipt of $20,000 Mr Koca said he would repay the $20,000 when Mr Kayali found a suitable home. There was no discussion between Mr Kayali and Mr Koca about Mr Koca assisting Mr Kayali with the purchase of a home until June 2016.
[84]Ibid T 619 L 30 – T 620 L 1 (24 October 2022).
[85]Ibid T 546 L 4–11, T 548 L 20–31 (18 October 2022); T 621 L 11–14 (24 October 2022).

Ms Kayali gave evidence that she observed Mr Kayali give Mr Koca $20,000 in cash and also observed Mr Koca count the money and ‘put the money in his pocket’.[86] This evidence is implausible. Assuming the $20,000 cash consisted entirely of $100 notes there would be 200 notes. On no view would Mr Koca have been able to put such a substantial volume of cash into his pocket.
[86]Exhibit P-2, Witness Statement of Filiz Kayali, [12].

Finally, there is the question of the source of the $20,000 which Mr Kayali says he paid to Mr Koca on 1 April 2016. On 23 March 2016 Mr Kayali’s bank account with the Commonwealth Bank of Australia had a balance of $84.67.[87] Ms Kayali’s ANZ Bank account had a balance of $450.57 throughout the period 7 March 2016 to 5 April 2016.[88] On 27 March 2016 Mr Kayali deposited $20,000 in cash into his account via the CBA branch in Broadmeadows.[89] On 1 April 2016 Mr Kayali withdrew $21,000 from the Dallas branch of the CBA.[90] Mr Kayali gave evidence that he reached an agreement with Servet Doktoroglu under which Mr Kayali agreed to transfer $20,000 from an account he had in Türkiye for Mr Doktoroglu’s wife who was living in Türkiye at the time. The $20,000 given to him by Mr Doktoroglu was to compensate Mr Kayali for the $20,000 he transferred to Mr Doktoroglu’s wife from his account in Türkiye.[91]
[87]CB1546, Commonwealth Bank Statement.
[88]CB2817, ANZ Business Advantage Statement.
[89]CB1546, Commonwealth Bank Statement.
[90]CB 2018, Commonwealth Bank Smart Access Statement.
[91]Transcript of Proceedings, T 208 L 7–22, T 210 L 3–7 (13 October 2022).

Mr Doktoroglu was not called to corroborate Mr Kayali’s evidence that he received payment of $20,000 from Mr Doktoroglu to compensate him for the transfer of $20,000 from Mr Kayali’s account with a bank in Türkiye to Mr Doktoroglu’s wife. Further, no documentary evidence was tendered by Mr Kayali evidencing the transfer of $20,000 from a bank account in his name in Türkiye to an account in the name of Mr Doktoroglu’s wife. Further, Ms Kayali gave evidence which is inconsistent with that of Mr Kayali regarding the $20,000:

On or around end of September 2016, Mehmet told me he borrowed money from his friend, Mr Servet Doktoroglu with the amount of $20,000 to make a payment to Mr Koca. I observed Mehmet repaid $10,000 in cash to Mr Servet Doktoroglu in end of November 2017 in Broadmeadows shopping centre. I later transferred the $10,000 from my ANZ bank account to Mr Servet Doktoroglu’s bank account in May 2021.[92]

[92]Exhibit P-2, Witness Statement of Filiz Kayali, [41].

Ms Kayali’s oral evidence was that Mr Doktoroglu could not send money to Türkiye but was aware that Mr Kayali had money in a bank account in Türkiye:

Because they weren’t able to send $20,000 from here to the account in Türkiye there, and because there he knew that we had money in our account in Türkiye, and he requested of us because his wife was in Türkiye at that time, ‘Could you send $20,000 - equivalent to $20,000 to my wife’s account in Türkiye and so I will give you that money from here.’[93]

[93]Transcript of Proceedings, T 408 L 25–31 (17 October 2022).

The evidence set out in Ms Kayali’s witness statement is inconsistent with her oral evidence. If her oral evidence is to be believed there would have been no reason for any money to be repaid to Mr Doktoroglu because Mr Kayali had already transferred $20,000 to Mr Doktoroglu’s wife in Türkiye in mid-2016. The evidence of Mr Kayali and Ms Kayali that $20,000 was given to Mr Koca by Mr Doktoroglu on 1 April 2016 is a fabrication.

I also reject the evidence given by Ms Zumrut Yelegin, who was called to give evidence on behalf of Mr Kayali. Ms Yelegin gave the following evidence:

I can’t remember the date exactly but I came across Mehmet at the shopping centre - it’s been a long time - at the Broadmeadows Shopping Centre. He had like a thick sort of - whether it was a paper bag or an envelope but it was thick. It was white, so it could have been like an envelope or a paper bag. He said hello and I said hello back and I asked about Filiz and that was it. I said, ‘What’s that in your hand?’ And he said to me that Filiz sent some money from her account to [Doktoroglu] in the Türkiye account. We didn’t go into too much detail because he was in a rush but Servet gave this to me. Because Filiz gave the money to them in Türkiye, he said, ‘Let’s meet in the Broadmeadows Shopping Centre’ and he gave the money, so, ‘I don’t want to keep it on me, I want to put it into the bank account.’ Then we - we didn’t talk too much, that’s all it was. Like then he ran off but I noticed the envelope because it looked like money.[94]

[94]Ibid T 505 L 18 – T 506 L 3 (18 October 2022).

Mr Kayali did not give evidence that he met Ms Yelegin on the day Mr Doktoroglu is supposed to have handed him $20,000 in cash. Ms Yelegin’s evidence does not support a finding that Mr Kayali handed Mr Koca $20,000 in cash on 1 April 2016. The financial position of Mr Kayali and Ms Kayali on 1 April 2016 was extremely poor. They were in no position to be advancing a $20,000 loan to Mr Koca. As set out in this judgment I have upheld Mr Koca’s claim that on 28 March 2016 he loaned Mr Kayali 9,700 TL and $9,900 on 22 April 2016. These loans were in addition to the $35,000 he loaned Mr Kayali on 18 January 2016. It beggars belief that at the same time Mr Koca was advancing loans to Mr Kayali he would have requested a loan from Mr Kayali of $20,000. Further, the notion that Mr Kayali provided Mr Koca with a $20,000 loan so that Mr Koca could avoid paying interest on a loan drawn down on his business account makes no sense in light of Mr Koca’s subsequent conduct, borrowing very large amounts of money at the behest of Mr Kayali and incurring substantial interest liability on those borrowings.

The $9,000 Payment

Mr Kayali gave evidence that he gave $9,000 in cash to Mr Koca on 8 or 9 July 2016[95] or 13 August 2016.[96] Mr Kayali’s explanation as to the source of the $9,000 was entirely unconvincing. In the first instance he gave evidence that the source of the funds was $9,000 in cash which he had received from working.[97] However, this is unlikely because on his own evidence he did not start working full time with Mr Koca until the second half of June 2016.[98] Between 1 July and 15 August 2016 Mr Koca’s account with the CBA had a balance ranging between zero and $1,750.[99] During the same period Ms Kayali’s account with the ANZ Bank had a balance ranging between $5.43 and $1,000.[100] Mr Kayali then gave evidence that the $9,000 was sourced from $30,000 he had received from Mr Doktoroglu, US$37,000 and the sale of Ms Kayali’s gold.[101] Ultimately, he gave evidence that the $9,000 was sourced from US dollars which he kept in a safe at his home and funds from the sale of Ms Kayali’s gold.[102] Ms Kayali’s evidence was that the source of the funds was from cash kept in a safe at their home. This cash had come from the sale of 12 gold bangles worth $2,000 each. Four bangles were sold in 2015 and 8 bangles in 2016.[103] Ms Kayali gave evidence that when the bangles were sold the jeweller wrote down the weight of the gold which had been sold in grams and the equivalent cash payment.[104] No documents recording the sale of the gold or the proceeds received were produced by Ms Kayali despite her insistence on having kept the records.[105]
[95]Ibid T 226 L 24–30 (13 October 2022).
[96]Ibid T 225 L 21–23.
[97]Ibid T 227 L 6–16.
[98]Ibid T 714 L 10 (25 October 2022).
[99]CB2020–2021, Commonwealth Bank Smart Access Statement.
[100]CB2825, ANZ Business Advantage Statement.
[101]Transcript of Proceedings, T 228 L 8–11 (13 October 2022).
[102]Ibid T 228 L 25.
[103]Ibid T 416 L 1–3 (17 October 2022).
[104]Ibid T 416 L 9–12.
[105]Ibid T 416 L 6–16.

I reject the evidence of Mr Kayali and Ms Kayali that Mr Kayali paid Mr Koca $9,000 in cash. The evidence is a fabrication. It is an implausible attempt to make good the proposition that Mr Kayali repaid Mr Koca the $41,000 deposit for the purchase of the Greenvale property.

Reimbursement of stamp duty

Mr Kayali contends that he also paid Mr Koca $46,000 in cash equating to the stamp duty and registration of transfer of title which was paid by Mr Koca in mid-August 2016. There is no documentary evidence to support a finding that Mr Kayali made cash payments of $20,000 to Mr Koca on 21 September 2016 and $26,000 on 1 October 2016. The accounts given by Mr Kayali and Ms Kayali as to the source of funds to make these payments were, in equal measure, elaborate and unbelievable.

As to the alleged payment of $20,000 on 21 September 2016, Mr Kayali gave evidence that he tried to pay Mr Koca $46,000 but Mr Koca would only accept $20,000.[106] Between 18 August 2016 and 20 September 2016 Mr Kayali never had more than $290 in his CBA account.[107] During the same period Ms Kayali had a maximum of $5,000 and a minimum balance of 97 cents. There is no credible evidence before the Court to support a finding that Mr Kayali had access to $46,000 to fund the alleged payments to Mr Koca.
[106]Ibid T 238 L 2-3 (13 October 2022).
[107]CB2021, Commonwealth Bank Smart Access Statement

Mr Kayali gave evidence that the primary source of the funds was cash which his mother was keeping for him in a safe in Türkiye. He gave evidence that in early 2016 eight students aged between 16 and 18 years of age from Sirius College each brought $5,000 in cash with them on a return trip from Türkiye. They were given the money by Mr Kayali’s mother. The teacher who led the trip to Türkiye who helped to arrange for the children to bring the funds back into Australia is ‘in Sydney on duty there at the moment’.[108] There is no evidence to corroborate what, at face value, is a quite remarkable explanation as to the source of funds. Mr Kayali could have called the teacher who led the trip to Türkiye, his mother or one of the eight children (who would now be 23 to 24 years of age) to give evidence corroborative of his account. The notion that a teacher would arrange for school children on a school camp in Türkiye to bring $40,000 in cash into Australia beggars belief. Absent any corroborative evidence, I reject Mr Kayali’s evidence.

Mr Kayi’s evidence

[108]Transcript of Proceedings, T 238 L 5–28 (13 October 2022).

Mr Kayali did call evidence from Mr Melih Kayi to corroborate his evidence that on 1 October 2016 he made a payment of $26,000 cash to Mr Koca. Mr Kayi gave evidence that he was present at Mr Koca’s business premises on 1 October 2016 when Mr Kayali handed Mr Koca an envelope containing cash. Mr Kayi did not know how much money was in the envelope but he did see Mr Koca take the money out of the envelope and count it.[109] I do not accept Mr Kayi’s evidence.
[109]Ibid T 310 L 23–26 (14 October 2022).

Mr Kayi gave evidence that he painted the Greenvale property shortly after the Kayalis moved into the house in August 2016. He gave evidence that he was paid $12,000 for this work.[110] He confirmed that an invoice for $12,000 was in respect of this work.[111] Mr Kayi did not paint the house. The house was painted in August 2017 by Perfect Choice Painting, a sub-contractor engaged by Taner Alinc. Mr Koca requested Mr Alinc to have the house ready for sale after the Kayalis moved out.[112] The evidence clearly establishes that the colour scheme of the house when it was painted by Perfect Choice Painting matched the colour scheme at the time the house was marketed for sale in June 2016 prior to its purchase by Mr Koca.[113] The claim by Mr Kayali and Ms Kayali that they paid $12,000 to have the house painted is false. So too is the evidence of Mr Kayi that he painted the house. Mr Kayi was not a credible witness. I reject his evidence that on 1 October 2016 he witnessed Mr Kayali hand Mr Koca an envelope containing cash.
[110]Ibid T 306 L 23.
[111]CB916, Melih Painting Invoice dated 10 September 2016.
[112]Transcript of Proceedings, T 917 L 28–30 (27 October 2022).
[113]Ibid T 920 L 22; CB2470 – 2484, Realestate.com Photos.

Claims for other expenses

In addition to $12,000 for painting, Mr Kayali claimed a further $4,280 for carpet cleaning, hot water tank repair, swimming pool valve clean, landscaping/gardening and swimming pool repair.[114] None of the alleged items of expenditure are supported by documentary evidence. Absent corroborative evidence, I do not accept that any of the items of expenditure were incurred.
[114]CB243, Plaintiff’s Reply to Defendant’s Request for Further and Better Particulars, [38].

Alleged Mortgage Payments

It is common ground that between 14 September 2016 and 14 June 2017 Mr Kayali deposited $30,900 into Mr Koca’s home loan and business accounts.[115] The character of these payments is in dispute. Mr Kayali contends that the payments were mortgage payments. Mr Koca contends that the payments were rent, albeit that the payments equated to his monthly mortgage repayments on the $870,000 he had borrowed for the purchase of the Greenvale property. Irrespective of how the monthly payments are characterised, there is no basis for Mr Kayali to recover the $30,900 he deposited into Mr Koca’s bank accounts.
[115]Defendant, Closing Written Submissions filed 11 November 2022, [70]–[72].

On 14 July 2016, Raine & Horne undertook an appraisal of the monthly rental value of the Greenvale property and concluded that the property could be rented out for between $800 to $850 per week.[116] The monthly payments made by Mr Kayali between September 2016 and June 2017 equated with the market rental rate for the property. If, contrary to my earlier finding, Mr Kayali did have an interest in the property under a constructive trust it would be necessary for the value of that interest to be adjusted to reflect the benefit which he received from living in the property.[117] The benefit which Mr Kayali derived from living in the property equates to the $30,900 of rent he would have had to have paid to live in the property between September 2016 and June 2017.
[116]CB2016, Raine & Horne Rental Appraisal dated 14 July 2016.
[117]Owen v Stone [2001] 1 Qd R 419, 425 [23]; Dinsdale bht Protective Commissioner v Arthur [2006] NSWSC 809, [27]-[29]; Hill v Hill [2005] NSWSC 863, [45].

For similar reasons, Mr Kayali is unable to establish that Mr Koca is liable to make restitution of the payments. Mr Kayali’s claim is premised on a total failure of consideration.[118] Because Mr Kayali has enjoyed the benefit of occupying the property, there has been no total failure of consideration.
[118]Baltic Shipping Co v Dillon (1993) 176 CLR 344, 389; Mann v Paterson Constructions (2019) 267 CLR 560, 627 [168]

Conclusion

Mr Kayali’s claim that he has an interest in the Greenvale property pursuant to a constructive trust is rejected. So too is his alternative claim that Mr Koca is indebted to him, or otherwise liable to make restitution to him for the sum of $146,500. As Mr Kayali does not have any interest in the Greenvale property there is no basis for the caveat which he lodged on the title to the Greenvale property to remain in place. An order shall be made directing the Registrar of Titles to remove the caveat from the title to the Greenvale property.

Mr Koca’s counterclaim

Mr Koca counterclaims against Mr Kayali and Ms Kayali for four loans, which he contends he advanced to them jointly and which have not been repaid:

·$35,000 on 18 January 2016;
·9,700 TL on 28 March 2016;
·$9,900 on 22 April 2016;
·17,000 TL on 1 July 2016.

First Loan

On 18 January 2016, Mr Koca deposited $35,000 into Mr Kayali’s CBA bank account. The accompanying entry described the deposit as ‘loan for locksmith’.[119] Mr Koca contends that he loaned $35,000 to both Mr Kayali and Ms Kayali for the purpose of providing Mr Kayali with funds to purchase equipment for his locksmith business. Ms Kayali told Mr Koca that she and Mr Kayali were waiting for USD200,000 in funds to arrive from Türkiye and that in the meantime Mr Kayali needed funds to buy locksmith equipment. Mr Koca’s evidence is that he agreed to loan the money. He also agreed to a request from Mr Kayali to use space on the second floor of his business premises in Campbellfield for Mr Kayali to conduct his locksmith business from that space.[120]
[119]CB1544, Commonwealth Bank Statement.
[120]Transcript of Proceedings, T 191 L 6–8 (13 October 2022).

Mr Kayali accepts that the $35,000, which was deposited into his account on 18 January 2016, was for the purpose of purchasing locksmith equipment. However, he contends that the funds were not for his locksmith business. Rather, the funds were for Mr Koca’s locksmith business under an arrangement whereby he would employ Mr Kayali to provide locksmith services from his premises.[121]
[121]Ibid T 173 L 23–25 (11 October 2022); T 186 L 21 – T 187 L 13 (13 October 2022).

Did Mr Koca employ Mr Kayali?

I reject Mr Kayali’s evidence that $35,000 was a payment referable to an arrangement between Mr Koca and Mr Kayali pursuant to which Mr Kayali would be employed by Mr Koca. Mr Kayali established a business under the name ‘Melbourne Key Tag’ in 2014 and conducted that business from his home address thereafter.[122] Mr Kayali’s tax returns for the 2016 and 2017 financial years list both his home and business address as 55 David Street, Hadfield.[123] His 2017 tax return describes his main business as ‘labour supply services’.[124] There is no record in Mr Kayali’s tax returns of him being an employee of Mr Koca. Further, the 2017 tax return for the Salih Koca Family Trust (the commercial vehicle for Mr Koca’s panel beating business) includes salary and wages expenses with payment summaries for Nitish Kumar and Mr Koca’s son, Ercan.[125] There is no record of any payment having been made to Mr Kayali. Mr Kayali did not advance any credible explanation as to why his own tax returns did not disclose the alleged employment relationship between himself and Mr Koca. Further, there is no record of the $35,000 or any equipment purchased with those funds being claimed as a business expense by Mr Koca. Mr Koca’s failure to claim the $35,000 as a business expense is consistent with his account that the funds were by way of a loan to Mr Kayali.
[122]Ibid T 193 L 24–29 (13 October 2022).
[123]CB1328, Mehmet Kayali 2016 Tax Return; CB1354, Mehmet Kayali 2017 Tax Return.
[124]CB1354, Mehmet Kayali 2017 Tax Return.
[125]CB2098–2099, PAYG Summaries for Nitish Kumar and Ercan Koca.

There is no documentary evidence recording an offer of employment or the terms of employment on which Mr Kayali would be employed by Mr Koca. The only documentary evidence which does evidence an employment relationship consists of payslips dated 13 June 2016 to 1 November 2016.[126] The payslips were discovered by Mr Kayali. The payslips dated 13 June 2016 to 4 July 2016 describe Mr Kayali as a part-time office manager. The payslip dated 18 October 2016 describe him as a full-time mechanic. The identified positions of office manager and mechanic are inconsistent with the work as a locksmith, which Mr Kayali says he undertook as an employee of Mr Koca.
[126]CB792–798, Mehmet Kayali Payslips.

There is no entry in Mr Kayali’s bank statements in respect of the wages recorded in the payslips. Mr Koca denied that he had ever seen or had any involvement in the preparation of the payslips.[127] Ercan Koca denied having had any role in the preparation of the payslips. His evidence, which I accept, was that he does not know how to make Excel spreadsheets.[128] He also stated that he did not send the email attaching the payslips to the Adult Migrant Employment Service from the Salih Body Works email address and signed off ‘AJ’. He gave evidence that although he is known as ‘AJ’ to some people, he did not use this nickname to sign off correspondence and struggled to write emails due to having grown up with dyslexia.[129] I accept this evidence. The payslips are not genuine business records of Salih Body Works and do not constitute evidence that Mr Kayali was an employee of Mr Koca.
[127]Transcript of Proceedings, T 705 L 27 – T 706 L 8 (25 November 2022).
[128]Ibid T 1060 L 1-2 (4 November 2022).
[129]Ibid T 1059 L 3-14.

Mr Kayali gave evidence that he commenced working as a part-time employee for Mr Koca in early April 2016, and a full-time employee from the second half of June 2016. I reject this evidence. However, even on this account, it is quite implausible that in mid-January 2016 Mr Koca would make a payment of $35,000 in respect of an arrangement under which Mr Koca was to employ Mr Kayali, where Mr Kayali did not commence full-time employment for another six months. The more plausible explanation of the transaction which occurred in January 2016 is that Mr Kayali and Ms Kayali exploited Mr Koca’s generosity. They convinced him that they were due to receive US$200,000 in funds from Türkiye in the near future and needed money in the interim period for the purchase of locksmith equipment for Mr Kayali’s locksmith business. As set out earlier in this judgment, immediately upon receipt of the funds, a substantial proportion of it was expended on matters entirely unrelated to locksmith equipment.

Mr Kayali points to five deposits of $2,635 into his CBA bank account, described as ‘Mehmet wages’ as evidence that he was an employee of Mr Koca.[130] Mr Koca admits that he made six deposits into Mr Kayali’s bank account during the period 20 October 2016 to 11 January 2017. He gave evidence that he made these deposits to assist Mr Kayali in his attempts to secure bank finance by creating an appearance that Mr Kayali had a regular income as an employee. Mr Koca gave evidence that after he deposited funds into Mr Kayali’s account Mr Kayali would withdraw the funds and then repay Mr Koca in cash.[131] Mr Koca gave evidence that the arrangement concluded in January 2017 because it was only intended to cover the period during which Mr Kayali was applying to the bank for a loan.[132] I accept Mr Koca’s evidence. It is supported by evidence which establishes that on four occasions Mr Kayali withdrew large amounts of cash immediately after ‘wages’ had been deposited into his account. Mr Kayali was paid on 16 November 2016 and withdrew $1,800 in cash on 18 November 2016.[133] Mr Kayali was paid on 2 December 2016 and withdrew $1,600 in cash on 5 December 2016.[134] Mr Kayali was paid on 16 December 2016 and withdrew $2,000 in cash on the same day.[135] Mr Kayali was paid on 11 January 2017 and withdrew $2,600 in cash on 12 January 2017.[136]
[130]CB1944, Commonwealth Bank Cheque Account.
[131]Transcript of Proceedings, T 631 L 17–28 (24 October 2022).
[132]Ibid T 631 L 29 – T 632 L 9.
[133]CB2022, Commonwealth Bank Smart Access Statement.
[134]Ibid.
[135]CB2023, Commonwealth Bank Smart Access Statement.
[136]CB2026, Commonwealth Bank Smart Access Statement.

Mr Kayali contends that throughout the second half of 2016 he was working full-time as a locksmith as an employee of Mr Koca. If this was the case there should have been significant amounts of money flowing into Mr Koca’s bank account referrable to the work undertaken by Mr Kayali as a locksmith. During the period 1 June 2016 to 31 December 2016 there are only two deposits into Mr Koca’s bank account referrable to locksmith duties undertaken by Mr Kayali. On 29 June 2016 Doctors of Coburg deposited $125 into Mr Koca’s account. On 10 November 2016 $2,432 was deposited by Safeman Australia.[137] Mr Koca’s evidence is that the $125 was paid into his account because Mr Kayali had given the customer Mr Koca’s bank account details when Mr Kayali was asked to provide an invoice. Mr Koca then paid Mr Kayali $125 in cash.[138] Mr Koca’s evidence is that the Safeman Australia deposit of $2,432 was payment from Mr Kayali as reimbursement for items of equipment which Mr Koca had purchased for Mr Kayali for use by Mr Kayali in his locksmith business.[139] I accept this evidence.
[137]CB2497, Commonwealth Bank Cheque Account Statement; PCB1593, Melbourne Keytag Invoice to Safeman dated 2 August 2016.
[138]Transcript of Proceedings, T 715 L 2–12 (25 October 2022).
[139]Ibid T 717 L 26 – T 718 L 28.

Mr Kayali’s evidence as to when his employment terminated was entirely unconvincing. When it was put to him that he did not cease working from Mr Koca’s premises until late April or May 2017 he responded: ‘I don’t recall the dates exactly’.[140] When cross-examined he was shown an invoice dated 29 March 2017 in the name of his own business which was paid into his own account. His evidence was that he may not have been working for Mr Koca at the time, or alternatively, that the invoice was a forgery.[141] As regards an invoice for $495 dated 3 April 2017 he stated: ‘If this has gone into my account at that date, that means I was not working with Salih’.[142] However, when asked when his employment with Mr Koca had terminated his response was that he could not remember. He then stated that ‘it may be’ that he was working for Mr Koca in early April 2017.[143] He then alleged that the invoice for $459 dated 3 April 2017 was ‘fraudulent activity’.[144] I reject this evidence. The payments for invoices issued by Mr Koca which were paid into his own account evidenced the fact that he was conducting his own business as a locksmith as had been the case for the entire period he was working out of Mr Koca’s premises.
[140]Ibid T 204 L 5–9 (13 October 2022).
[141]Ibid T 198 L 29 – T 199 L 11.
[142]Ibid T 200 L 5–6.
[143]Ibid T 200 L 8–11.
[144]CB2036, ANZ Business Extra Statement; Transcript of Proceedings, T 200 L 15 (13 October 2022).

Ms Kayali’s involvement in the first loan

I reject Ms Kayali’s evidence that she had no knowledge of the $35,000 deposit until 20 January 2016.[145] I accept Mr Koca’s evidence that Ms Kayali was present when Mr Kayali requested the $35,000. This request was made during the first half of January 2016. Mr Koca and his partner, Ayten Girgin, had attended Mr Kayali’s home for dinner. After dinner, Mr Kayali made two requests of Mr Koca. First, that he be permitted to use part of Mr Koca’s business premises to conduct his locksmith business. Second, that Mr Koca loan him $35,000 to enable him to purchase locksmith equipment. I accept Mr Koca’s evidence that Ms Kayali was present when this request was made and assured Mr Koca that the loan would be repaid. I accept Mr Koca’s evidence that Ms Kayali told him ‘I guarantee that I will pay you back if it doesn’t come from the business’.[146] Mr Koca loaned the $35,000 to Mr Kayali for use in his locksmith business, and Ms Kayali guaranteed that she would repay the loan if Mr Kayali did not.[147]
[145]Transcript of Proceedings, T 344 L 1–20 (14 October 2022); T 109 L 11–14 (11 October 2022).
[146]Transcript of Proceedings, T 523 L 20-22 (18 October 2022).
[147]Ibid T 859 L 7-16 (27 October 2022).

Ms Kayali played a pivotal role in leading Mr Koca to believe that she and Mr Kayali were wealthy and shortly would be receiving US$200,000 from Türkiye. Mr Koca’s perception of Ms Kayali as a successful lawyer was a significant factor in his willingness to loan $35,000 to Mr Kayali, a person he had only recently met. On 19 January 2016, $5,000 of the funds deposited by Mr Koca were transferred to Ms Kayali’s ANZ bank account.[148] This is inconsistent with Ms Kayali’s claim that she was not aware of the deposit until 20 January 2016.
[148]CB1544, ANZ Bank Statement; CB2809, ANZ Business Advantage Statement.

Mr Kayali and Ms Kayali were in serious financial difficulties in early January 2016. They had a large credit card bill and rent owing. Mr Kayali’s credit card limit had been exceeded.[149] Ms Kayali was fully aware of this situation. I have no hesitation in concluding that Mr Kayali and Ms Kayali jointly decided to try and persuade Mr Koca to advance funds for the stated purpose of buying equipment for Mr Kayali’s locksmith business. The true position is that they needed the money in order to repay outstanding debts and rent obligations.
[149]CB1544, ANZ Bank Statement.

Less than half of the $35,000 advanced by Mr Koca to Mr Kayali on 18 January 2016 was spent on locksmith equipment. Mr Kayali’s CBA account records a payment having been made of $14,839.86 on 1 March 2016 to Chang Hong Wang, a wholesaler of locksmith equipment based in China.[150] In addition there is evidence of DHL having shipped the following items of locksmith equipment to Mr Koca’s business premises subsequent to 1 March 2016:

·On 1 April 2016 a locksmith tool to the value of US$1,250;[151]
·On 23 May 2016 plastic key tags and a key cutting machine to the value of $220;[152]
·On 1 August 2016 a Dell computer and auto diagnostics machine to the value of US$2,832;[153]
·On 12 August 2016 key parts to the value of US$180;[154]
·On 19 August 2016 a diagnostic adapter to the value of US$80.[155]

[150]CB1545, Commonwealth Bank Statement; Transcript of Proceedings, T 187 L 21 – T 188 L 18, T 190 L 1–29 (13 October 2022).

[151]PCB732, Australian Customs Declaration dated 1 April 2016.

[152]CB1977, DHL Account 958314457 Shipment Summary; CB1986, DHL Statement dated 27 May 2016.

[153]CB1977, DHL Account 958314457 Shipment Summary.

[154]CB1977, DHL Account 958314457 Shipment Summary; CB2000, DHL Statement dated 15 August 2016.

[155]CB2012, Fly Industry Co Ltd Invoice dated 19 August 2016.

Of the items listed above the major item of expenditure is US$2,832 on 1 August 2016 for a Dell computer and auto diagnostics machine. This item of expenditure does not form part of the expenditure from the $35,000 deposited in January 2016 because, as will be discussed below, on 1 July 2016 Mr Koca had provided Mr Kayali with an additional loan of 17,000 TL for the purchase of this item of equipment.

Estoppel

Mr Kayali is liable to pay the $35,000 loan as a debt which remains unpaid. Insofar as Mr Koca contends that Ms Kayali guaranteed repayment of the $35,000 loan, Ms Kayali pleads reliance on s 126 of the Instruments Act 1958.[156] Mr Koca pleads in reply that Ms Kayali is estopped from relying upon s 126 of the Instruments Act 1958 as a means of avoiding liability to repay the $35,000 loan as a guarantor.
[156]CB2847, Amended Reply and Defence of the Second Defendant dated 28 October 2022, [44].

In Waltons Stores (Interstate) Ltd v Maher[157] Brennan J stated:

The Statute of Frauds and similar provisions prescribing formalities affecting proof of contracts have never stood in the way of a decree to enforce a proprietary estoppel… and, in principle, there is no reason why such provision should apply when any other equity is created by estoppel. The action to enforce an equity created by estoppel is not brought ‘upon any contract’, for the equity arises out of the circumstances. That is not to say that there is an equity which precludes the application of a statute. It is to say that the statute has no application to the equity.[158]
…
[T]o establish an equitable estoppel, it is necessary for a plaintiff to prove that (I) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiffs action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.[159]

[157](1988) 164 CLR 387.

[158]Ibid 433.

[159]Ibid 428-9; Settlement Group Pty Ltd v Purcell Partners [2013] VSCA 370, [43]; [124].

Mr Koca assumed that Ms Kayali was the guarantor of the $35,000 which he had loaned to Mr Kayali and that she would repay the loan if Mr Kayali was not able to do so. Ms Kayali induced Mr Koca to make this assumption by her assurances that she and Mr Kayali would in early 2016 be receiving US$200,000 and by holding herself as an experienced and successful lawyer. It was reasonable for Mr Koca to have assumed that Ms Kayali would guarantee Mr Kayali’s debt. Mr Koca acted in reliance on this assumption by depositing $35,000 into Mr Kayali’s bank account on 18 January 2016. Ms Kayali intended Mr Koca to rely on the assumption that she would guarantee repayment of the debt. Mr Koca will suffer detriment if Ms Kayali is able to avoid liability to repay the debt in circumstances where it would be unconscionable for her to resile from her assurance.[160] In these circumstances, Ms Kayali is estopped from relying upon the absence of a signed note or memorandum of the guarantee as a basis for avoiding liability to repay Mr Kayali’s debt.
[160]Sidhu v Van Dyke (2014) 251 CLR 505, 527 [77].

Second loan

On 28 March 2016 Mr Koca transferred 9,700 TL to Mr Mehmet Usta.[161] Mr Usta is a supplier of locksmith and automotive parts based in Türkiye. Mr Koca gave evidence that on 28 March 2016 Mr Kayali asked him to transfer funds to Mr Usta for the purchase of locksmith equipment and he agreed to do so. There was no discussion about when the funds would be repaid because Mr Koca understood that Mr Kayali was still waiting for funds to be transferred from Türkiye.[162] Mr Kayali put to Mr Koca in cross-examination that the 9,700 TL had been transferred to Mr Usta for the purchase of Volkswagen airbags.[163] Mr Usta gave evidence to the same effect.[164]
[161]CB1178, Akbank Statement.
[162]Transcript of Proceedings, T 530 L 8–9, L 20–23 (18 October 2022).
[163]Ibid T 662 L 19–21.
[164]Ibid T 996 L 28–30.

I place little weight on the evidence of Mr Usta. He gave evidence from Türkiye via video link on 2 November 2022, the thirteenth day of the trial. Mr Kayali had been granted leave to reopen his case to call evidence from Mr Usta. I have serious doubts as to the authenticity of documents referred to by Mr Usta. One such document was a photograph of an invoice addressed to Mr Koca for five Volkswagen Polo airbags in the sum of 9,700 TL, with a notation ‘paid 28 March 2016’.[165] On the face of the document it confirms Mr Kayali’s account that the 9,700 TL was transferred to Mr Usta by Mr Koca as payment for automotive parts. I am not satisfied the invoice is a genuine business document. It does not include any component for GST nor a TL currency conversion rate. Nor does it have the formal title of Mr Usta’s business. The format and content of the invoice are in stark contrast to an invoice dated 28 July 2016 in the sum of US$2,032 which was for a Zed-FULL locksmith machine forwarded by Mr Usta to Mr Koca’s business premises in August 2016.[166] Mr Usta was asked, during the course of his cross-examination, to forward to the Court the original of the invoice for the Volkswagen airbags which he said had been purchased by Mr Koca for 9,700 TL. He agreed to do so but did not subsequently forward the original of the invoice.
[165]CB2644, Invoice dated 25 March 2016; Transcript of Proceedings, T 1008 L 16–24 (2 November 2022).
[166]CB2632, Altun Anahtar Invoice dated 28 July 2016; Transcript of Proceedings, T 1019 L 15–17 (2 November 2022).

Mr Kayali referred to a text message which he sent to Mr Usta on 1 June 2016. The message was translated by the Court-appointed interpreter as follows: ‘Hello Usta. Salih brother has asked about the VW airbag again. If you can sort this out that will be good. Greetings’.[167] This text message was more than two months after Mr Koca transferred the 9,700 TL to Mr Usta’s account. I am not satisfied that the text message relates to the transfer of funds on 28 March 2016.
[167]CB2645, Text Message from Mehmet Kayali to Mehmet Usta dated 1 June 2016; Transcript of Proceedings T 998 L 30 – T 999 L 1 (2 November 2022).

On 4 May 2016 Mr Koca transferred 2000 TL to Mr Usta’s account. On 16 March 2017 Mr Koca transferred 300 TL to Mr Usta’s account. [168] Mr Koca denied that those payments evidence an ongoing commercial relationship between himself and Mr Usta. He gave evidence that he made the payments at the request of Mr Kayali.[169] I accept this evidence. I do not place any significant weight on the fact that Mr Koca did not make a claim for recover of the 2,300 TL transferred to Mr Usta in May 2016 and March 2017. This equates to approximately $1,000, a relatively insignificant amount to be the subject of litigation in the Supreme Court of Victoria.
[168]CB1178 – 1179, Akbank Statement.
[169]Transcript of Proceedings, T 695 L 27-30 (25 October 2022).

I accept Mr Koca’s evidence that he transferred 9,700 TL to Mr Usta at the request of Mr Kayali for the purchase of locksmith equipment for use in Mr Kayali’s business. Unlike the $35,000 loan in mid-January 2016, I am not satisfied that Ms Kayali was present at the time when Mr Kayali requested Mr Koca to transfer the funds. Nor am I satisfied that Ms Kayali agreed to repay the 9,700 TL in the event that it was not repaid by Mr Kayali. Mr Kayali is solely liable to repay 9,700 TL to Mr Koca.

Third loan

On 22 April 2016 Mr Koca transferred $9,900 to the account of Mrs Mahide Kayali.[170] Mrs Mahide Kayali is Mr Kayali’s mother. I accept Mr Koca’s evidence that Mr Kayali requested Mr Koca transfer the funds to his mother’s bank account in Türkiye. I accept his evidence that the purpose of the loan was to assist Mr Kayali’s brother who was experiencing financial difficulties at that time.[171] Mr Kayali advanced no plausible explanation as to why Mr Koca would be transferring funds into Mr Kayali’s mother’s bank account in Türkiye other than pursuant to a request to do so from Mr Kayali. The money was a loan to Mr Kayali for the benefit of his brother. I am not satisfied that Ms Kayali was present at the time Mr Kayali requested the funds be transferred. Nor am I satisfied that Ms Kayali guaranteed repayment of this loan in the event that Mr Kayali was unable to do so. Mr Kayali is solely liable to Mr Koca to repay the sum of $9,900.
[170]CB1180, Commonwealth Bank International Money Transfer.
[171]Transcript of Proceedings, T 531 L 15–19 (18 October 2022); T 684 L 20–23 (25 October 2022).

Fourth loan

On 1 July 2016 Mr Koca deposited 17,000 TL into the bank account of Ms Yuksel Usta, the daughter of Mehmet Usta.[172] Mr Kayali’s evidence, which was corroborated by Mr Usta, was that the funds were for the purchase of a Zed-FULL locksmith machine. Mr Koca’s evidence is that he did not know that the funds were for the purchase of a Zed-FULL machine. His evidence is that he was asked by Mr Koca to transfer the funds to Ms Usta and agreed to the request.[173]
[172]CB1178, Akbank Statement.
[173]Transcript of Proceedings, T 700 L 3–10 (25 October 2022).

A Zed-FULL machine was delivered to Mr Koca’s business premises on 31 July 2016.[174] The value of the Zed-FULL machine was significantly less than 17,000 TL. An invoice from Ms Usta dated 28 July 2016 addressed to ‘Salih Pty Ltd’ for the Zed-FULL machine and a Dell computer is for the sum of US$2,832.[175] The invoice nominates the US dollar/TL exchange rate as one US dollar equals 3.01495417 TL. This equates to approximately 8,500 TL. Ultimately, nothing turns on the discrepancy between the 17,000 TL deposited in Ms Usta’s account and the actual cost of the Zed-FULL machine. Irrespective of whether all of the 17,000 TL was spent on locksmith equipment, the money was deposited in Ms Usta’s account at the request of Mr Kayali.
[174]CB1991, DHL Tax Invoice dated 1 August 2016.
[175]CB1997, Altun Anahtar Invoice dated 28 July 2016.

Mr Kayali contends that the Zed-FULL machine was not for his locksmith business but rather for the locksmith business which was being conducted by Mr Koca with Mr Kayali as an employee. For the reasons set out earlier in this judgment I reject Mr Kayali’s contention that he was ever an employee of Mr Koca. Throughout 2016 Mr Kayali was conducting a locksmith business in his own right, albeit he had permission from Mr Koca to conduct that business from part of Mr Koca’s business premises. The 17,000 TL was a loan advanced by Mr Koca to Mr Kayali.

I am not satisfied that Ms Kayali was present at the time the request was made by Mr Kayali for funds to be transferred into the account of Ms Usta. Nor am I satisfied that Ms Kayali guaranteed repayment of this loan in the event that Mr Kayali was unable to do so. Mr Kayali is solely liable for repayment of the 17,000 TL loan.

Procedural Fairness

By her closing submissions dated 18 November 2022, Ms Kayali put in issue whether she had been given a fair trial. In this regard, she made two objections regarding the conduct of the proceeding:

During the trial, while I was on [sic] the witness box, as a witness-in-chief of the Plaintiff, the Plaintiff was not given the right [to] examine me to clarify most of the matters in dispute between Mr. Koca and Mr. Kayali and myself. I was cross-examined only by Mr. Koca’s barrister, Mr. Minahan. Likewise, as a Second Defendant by Counterclaim and [sic] I was not given the opportunity to question any of the witnesses other than Zumrut Yelegin and Salih Koca so in that sense I don’t think I had a very fair trial.

Exchanges concerning the extent of Ms Kayali’s interest in the proceeding

There were at least two exchanges between myself and Ms Kayali concerning the extent of Ms Kayali’s interest in the proceeding. Ms Kayali was given the opportunity to make submissions on this issue. Ms Kayali accepted that her role in the proceeding was discrete and limited to the four loans which Mr Koca alleged he made to Mr and Ms Kayali jointly.

During the course of Ms Kayali’s opening submissions, there was the following exchange:

HIS HONOUR: Well, I think you’re now moving away from the matters and the development to the claims for you. All right? I think you’re now standing up and actually presenting the case on behalf of your husband.
MS KAYALI: Yes, yes.
HIS HONOUR: Which I’m not going to permit you to do. I’ve found your opening submissions very helpful in relation to the loans.
MS KAYALI: Yes.
HIS HONOUR: I followed very clearly the material you’ve taken me to. That’s all been very helpful. But unless you’ve got anything else relevant in relation to the claims against you personally, I don’t really think there’s much more you can assist me with, Ms Kayali.
MS KAYALI: Okay…
HIS HONOUR: I don’t see how any of this has got anything to do with any of the claims against you personally. As I’ve said, I’m only interested in hearing from you relevant submissions in respect of the claim which is made against you for alleged loans totalling $50,000. The matters you’re going to now have got nothing to do with it, Ms Kayali.
MS KAYALI: Okay.
HIS HONOUR: All right? Your role in this proceeding, is really quite discrete. You are not here to be the barrister for your husband. All right?
MS KAYALI: Yes.
HIS HONOUR: Your right to address the court is within quite narrow compass. You have made submissions which have been helpful. I’m not shutting you down, but I’m not interested in hearing matters from you, which do not relate to the claims against you, all right? So have you finished the submissions relating to the issue of whether you are indebted to Mr Koca in the sum of $50,000? Now, you’re finished?
MS KAYALI: I just want to add something, in Turkish, again.
INTERPRETER: I don’t accept any of responsibility for these four loans or knowledge of the portfolio, except for the $35,000 which I have made a statement about that.[176]
(emphasis added)

[176]Transcript of Proceedings, T 136 L 2 – T 138 L 14.

A similar exchange occurred prior to the commencement of Ms Kayali’s cross-examination of Mr Kayali:

MS KAYALI: Can I ask about anything and everything, or is it just in regards to the money?
HIS HONOUR: I think as I indicated yesterday to you, Ms Kayali, your interest in this proceeding is confined to the claims which are made against your personally.
MS KAYALI: Okay.
HIS HONOUR: For recovery of loans said to have been made to you. Do you disagree with that?
MS KAYALI: Yes, Your Honour.
HIS HONOUR: You do disagree with that?
MS KAYALI: Sorry?
HIS HONOUR: Do you disagree with that? It seems to me that’s the - your standing in the proceeding is as the second defendant to a counterclaim, and the claim made against you personally is for the return of, I think, about $50,000. That’s the extent of your interest in the case; you’re not here to act as an advocate on behalf of the plaintiff. So I’m giving you an opportunity to dispute that if you want to dispute it, but it seems to me that that’s a fair summation of the situation.
MS KAYALI: Thank you very much for that. (Through Interpreter) There’s going to be questions that I’m going to ask, but they might seem like it’s not regarding all this, but it’s all connected. So that’s where my questions come from.
HIS HONOUR: Well if I think the question is not permissible I won’t allow it.
MS KAYALI: (Direct) Of course, yes, for sure.
HIS HONOUR: And you really should only be permitted to cross-examine the witness, that is to ask a leading question, in relation to those issues. That is in relation to the four loans.
MS KAYALI: (Through Interpreter) I am going to try not to do that, and if I do of course you will warn me.
HIS HONOUR: I will do more than warn you. Yes, thank you, Ms Kayali.[177]
(emphasis added)

[177]Ibid T 254 L 18 – T 255 L 22.

During the course of Mr Koca’s evidence, Mr Kayali asked whether Ms Kayali could speak on his behalf and there was the following exchange:

HIS HONOUR: … do you want to ask questions or not?
MR KAYALI: I mean, if there are going to be questions on my behalf then I would prefer probably Filiz to continue with that. Because I haven't been feeling well and I’ve - not much (indistinct) the weekend. I mean, I’ve displayed all my - what I’ve got to say in court and everything here.
HIS HONOUR: Mr Kayali, one of the difficulties with your wife asking questions on your behalf is that the way in which Mrs Kayali is defending the claims by Mr Koca is not the same as the way you are defending those claims.
Mrs Kayali does not deny that Mr Koca lent you $55,000. Rather her defence is that if he did lend you $55,000, it has absolutely nothing to do with her and she knows nothing about it. That’s the way Mrs Kayali opened her case and it’s the way she cross-examined Mr Koca. So, there is a real problem in Mrs Kayali representing you and your defence in this case. Do you understand what I'm saying?
MR KAYALI: (Direct) Okay, I understand. (Through interpreter) So, is Filiz going to be able to actually respond to the - all the allegations made against her?
HIS HONOUR: Most certainly.[178]
[178]Ibid T 648 L 3–25 (24 October 2022).

Questioning of Ms Kayali

Ms Kayali was called to give evidence as a witness for Mr Kayali. She also gave evidence on her own behalf in her capacity as second defendant to the counterclaim. On 19 July 2022, Keith JR made orders following a directions hearing. Order 1 of the 19 July 2022 orders reads as follows:

The witness outline of Filiz Kayali dated 4 April 2022 will stand as the evidence Filiz Kayali in the proceeding for all purposes.

Ms Kayali personally prepared her witness statement and filed it in her capacity as the second defendant to the counterclaim. Consistent with the 19 July 2022 orders, Ms Kayali’s witness statement was tendered as her evidence-in-chief. The Court explained this course of action to Ms Kayali, to which she responded that she understood.[179] Ms Kayali was then given the opportunity to supplement the matters in her statement, to which she raised a number of new issues and clarified aspects of her statement. Following Mr Minahan’s cross-examination, Ms Kayali was given a further opportunity to clarify and supplement matters that were raised in her cross-examination.[180]
[179]Ibid T 338 L 25-6 (14 October 2022).
[180]Ibid T 492 L 20-2 (18 October 2022).

Ms Kayali submits that the conduct of the trial was not fair as Mr Kayali was not given the opportunity to examine her in order to clarify aspects of her evidence. Mr Kayali makes no such complaint. He did not seek to examine Ms Kayali, despite having examined and re-examined witnesses previously in the trial. Further, following his closing submissions, Mr Kayali commented on the conduct of the trial as follows:

I want to add to – it should be and it’s also – it seems like that, it’s a fair trial, so I – I agree what will the outcome will be. So I will respect what Your Honour orders. That’s the thing I want to say… Thank you very much for everything. Thank you.[181]

[181]Ibid T 1157 L 12 – 16 (23 November 2022).

I do not consider, in circumstances where Ms Kayali had been given multiple opportunities to clarify her evidence and where Mr Kayali had accepted that the trial had been conducted in a fair manner, that there is any basis to suggest that the conduct of the trial was unfair.

Examination of witnesses other than Mr Kayali, Mrs Yelegin and Mr Koca

Ms Kayali claims that she was denied the opportunity to question witnesses other than Mr Kayali, Mrs Yelegin and Mr Koca. The evidence of Dr Dewhurst, Mr Kayi and Mr Biner was not relevant to any of the four claims against Ms Kayali personally, and she did not seek to question them. Prior to Mr Alinc’s cross-examination, there was the following exchange:

MS KAYALI: (Through Interpreter) So it is only I can ask questions or - - -
HIS HONOUR: No, I think only Mr Kayali.
MS KAYALI: Okay.[182]

[182]Ibid T 922 L 7–10 (27 October 2022).

Mr and Ms Kayali did not make an application for Ms Kayali to be allowed to question either Mr Alinc or Mr Usta.

Mr Kayali informed the court that he and Ms Kayali had together prepared questions for the cross-examination of Ms Girgin.[183] Ms Kayali did not request to question Mr Ercan Koca. Further, Ms Kayali assisted Mr Kayali throughout his cross-examination of both Ms Girgin and Mr Ercan Koca.[184]
[183]Ibid T 1050 L 23 – T 1051 L 3 (4 November 2022).
[184]Ibid T 1037 L 18 - 20; T 1049 L 1 -18; T 1068 L 29 – 1069 L 9; T 1072 L 7; T 1077 L 27 – 1078 L 23 (4 November 2022).

Ms Kayali’s conduct during the trial

Although not bearing directly on the resolution of the issues for determination, it is necessary to record my findings regarding Ms Kayali’s conduct throughout the trial. It is necessary to do so in order to explain the basis for an order which I propose to make directing that a copy of this judgment be provided to the Victorian Legal Admissions Board for consideration in the event that Ms Kayali makes an application to be admitted to practice as an Australian lawyer. I shall direct that a copy of the judgment be provided to the Victorian Legal Services Board and Commissioner for consideration in respect of Ms Kayali’s registration as a foreign lawyer.

Ms Kayali practised as a lawyer in Türkiye for 17 years prior to coming to Australia. Her practice was primarily in family and criminal law. Upon arriving in Australia Ms Kayali obtained registration as a foreign lawyer. Further, Ms Kayali has completed a Juris Doctor degree from Deakin University. Ms Kayali is not admitted to practise as an Australian lawyer. In the event that Ms Kayali makes an application to be admitted to practice, when considering any such application, the Legal Services Commissioner should have regard to the findings regarding Ms Kayali’s credit recorded in this judgment.

In addition to findings which reflect adversely on her credit, Ms Kayali’s conduct throughout the trial was characterised by a marked disrespect for me as the trial judge and disregard for the right of Mr Koca to a fair hearing. Her conduct throughout the trial elicited numerous warnings including threats to have her removed from the court,[185] as well as threats to have security called to be present in the courtroom.[186] Her conduct included:

·Providing answers to Mr Kayali when questions were directed to him;[187]
·Threatening to leave the court in the middle of cross-examination;[188]
·Interjecting from the bar table whilst witnesses were giving evidence;[189]
·Storming out of the courtroom on two separate occasions, in response to a witness’ evidence and a ruling which she perceived to be unfavourable.[190]

[185]Ibid T 551 L 10–15 (18 October 2022); T 670 L 14–20 (24 October 2022); T 880 L 23 – T 881 L 7 (27 October 2022), T 962 L 30 – T 963 L 3 (28 October 2022).

[186]Ibid T 476 L 1-3 (18 October 2022).

[187]Ibid T 44 L 23-31 (10 October 2022).

[188]Ibid T 475 L 17 (18 October 2022).

[189]Ibid T 509 L 28-31, T 511 L 18, T 551 L 7-9 (18 October 2022); T 670 L 11–13 (24 October 2022); T 880 L 22 (27 October 2022).

[190]Ibid T 552 L 7–8 (18 October 2022); T 1023 L 26 (2 November 2022).

During the course of Mr Koca’s evidence I made a ruling that he would be permitted to give the balance of his evidence remotely. My ruling included the following:

Through their conduct, both the plaintiff and Mrs Kayali have crossed the boundary of what is acceptable behaviour in a court of law, even making due allowance for the fact that they feel very aggrieved by what they perceive to be the injustice visited upon them by the defendant and that they are very offended by the defendant’s evidence.[191]

[191]Ibid T 588 L 41 – T 589 L 6 (21 October 2022).

The following exchanges took place between myself and Ms Kayali during the trial:

HIS HONOUR: Please, Ms Kayali. That is completely inappropriate. It is completely inappropriate for you to be interjecting that way and do not do it again.[192]
[192]Ibid T 509 L 29–31 (18 October 2022).
…
HIS HONOUR: In the eight years I’ve been on the court, I’ve never experienced any sort of behaviour from any litigant that I’m having to deal with here. Ms Kayali, you’re not just a normal self-represented litigant, you are actually someone who holds a Juris Doctor and you, I’m told, practised for many years in Istanbul and all I’m asking you is to assist me in the conduct of this case by please showing me a little bit of respect, showing the court process some respect, don’t engage in arguments and fights with other people in the courtroom. It’s really very unhelpful for the court whole process.[193]
[193]Ibid T 511 L 18–28 (18 October 2022).
…
HIS HONOUR: Ms Kayali, it’s utterly and totally unacceptable for a party in legal proceedings to speak directly with an opposing party who is in the witness box during the course of their evidence. If there is any further outburst of that type for the remainder of this hearing you will be removed from the courtroom.[194]
[194]Ibid T 552 L 1–8 (18 October 2022).
…
HIS HONOUR: … your continued behaviour is really very troubling indeed, because you are compromising the fair conduct of this trial which is completely unsatisfactory.[195]
[195]Ibid T 670 L 23–26 (24 October 2022).
…
HIS HONOUR: You are to be quiet. If there is another outburst from you – if there is one further outburst from you, I am going to summon security and have you removed from the court. This must be the 20th time the transcript will record that I have found it necessary – which is extremely unusual for a judge to do so – that I have found it necessarily to directly raise with you your behaviour and your undermining of the due administration of justice in this state by your behaviour. It is utterly unprecedented in my experience as a judge. That’s the last warning you 1 will receive. Do you understand me?
MS KAYALI: Yes.
HIS HONOUR: Do you understand that’s the last warning? If you interject again, I will have you removed from the court if you do not voluntarily leave the court when directed to do so. On the record, do you understand that?

MS KAYALI: Yes, I understand that.
HIS HONOUR: Right. That’s your last warning, Ms Kayali.
MS KAYALI: Okay.[196]
…
HIS HONOUR: Look, Ms Kayali, again, this is your last, last warning. You really have completely crossed the boundaries as to what’s acceptable during the course of this case. I will not give you another warning because you are bringing the court into disrepute by your constant utterly inappropriate behaviour. If I hear one more word from you from the Bar Table, you will leave the courtroom.[197]
…
HIS HONOUR: … let the transcript record that Ms Kayali, in the midst of my exchange, has got up and just simply left the Bar table and walked out of the court.
One of numerous instances during the course of this trial where Ms Kayali has behaved in a most disrespectful manner to me as the judge and the institution of the court, many matters which have not been in the transcript. This is a case in which the transcript of these proceedings gives no clear, accurate record, no full, accurate record, of the behaviour of Ms Kayali, which, on many instances, has been amongst some of the most disrespectful behaviour that I have encountered in the eight years that I’ve been on the court. Let the transcript record that as a matter of objective fact.[198]

[196]Ibid T 880 L 23 – T 881 L 10 (27 October 2022).

[197]Ibid T 1001 L 5–12 (2 November 2022).

[198]Ibid T 1023 L 26 – T 1024 L 9 (2 November 2022).

Notwithstanding the emotional strain and stress which Ms Kayali must have felt as a result as a result of being a self-represented litigant, her conduct throughout the trial was unacceptable. I shall direct that a copy of this judgment be provided to the Victorian Legal Admissions Board and the Victorian Legal Services Board and Commissioner.

Conclusion

Mr Kayali’s claim that Mr Koca holds the Greenvale property subject to a constructive trust in Mr Kayali’s favour commensurate with $146,500 is dismissed. So too is Mr Kayali’s alternative claim for damages in the sum of $146,500. Mr Kayali does not have a caveatable interest in the Greenvale property. An order shall be made directing the Registrar of Titles to remove the caveat from the Greenvale property.

Mr Koca’s counterclaim against Mr Kayali is upheld in full. Mr Kayali will be ordered to pay Mr Koca $44,900 and the Australian dollar equivalent of 26,700 TL. Mr Koca is entitled to interest on this amount. Ms Kayali is jointly liable to pay Mr Koca $35,000 plus interest.

I shall provide the parties with an opportunity to make submissions on costs and the form of order to give effect to this judgment.

[2023] VSC 131

24 March 2023