Reliance Capital Pty Ltd v Caratti [No 11]
[2025] WASC 454
•29 OCTOBER 2025
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: RELIANCE CAPITAL PTY LTD -v- CARATTI [No 11] [2025] WASC 454
CORAM: LUNDBERG J
HEARD: 29 - 31 JANUARY, 1 - 2, 5 - 8, 12 - 14 FEBRUARY, 15, 18 - 19, 25 - 27 MARCH, 8 APRIL 2024 AND 31 JULY 2024 (20 DAYS)
DELIVERED : 29 OCTOBER 2025
FILE NO/S: CIV 3136 of 2019
BETWEEN: RELIANCE CAPITAL PTY LTD
Plaintiff
AND
ALLEN BRUCE CARATTI
First Defendant
TINA MICHELLE BAZZO
Second Defendant
FILE NO/S: CIV 2283 of 2021
BETWEEN: RELIANCE CAPITAL PTY LTD
Plaintiff
AND
ALLEN BRUCE CARATTI
First Defendant
TINA MICHELLE BAZZO
Second Defendant
Catchwords:
Banking and finance - Commercial lending arrangements for two property developments with associated security including personal guarantees and mortgages - Joint hearing of two actions between common parties - Defendant guarantors are directors or shareholders of property development companies - Numerous defences and counterclaim raised by the defendants - Numerous amendments to the pleadings before, during and after trial - Turns on own facts
Banking and finance - Manner of appropriation of proceeds of sale by plaintiff financier - Whether appropriation of proceeds to particular outstanding debt a breach of contract - Contractual construction - Knowledge of the debtor and guarantors
Banking and finance - Whether top-up payments made by borrowers credited to loan agreement - Whether lender properly accounted for non-refundable interest charge under loan agreement - Whether payment in effect a prepayment of interest
Banking and finance - Whether plaintiff lender breached loan agreement in refusing or failing to advance further sums to borrowers pursuant to drawdown arrangements - Whether written request made by borrowers - Contractual discretion to withhold payment of further advances - Effect of garnishee notice served on lender by the Australian Taxation Office - Whether borrower has established counterclaim for damages based on the alleged delay in advancing funds - Causation and issues of proof
Corporations - Statutory unconscionable conduct claims made against plaintiff lender in several respects pursuant to s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) - Requirements to be established for statutory unconscionability - Whether claims made out
Estoppel - Whether representation made by plaintiff as to method of enforcement of guarantees - Defendants alleged that plaintiff represented it would exhaust its rights against the secured assets before seeking to recover under the guarantees - Whether estoppel demonstrated
Evidence - Rulings as to admissibility - Admission of documentary material pursuant to s 79C(2a) of the Evidence Act 1906 (WA)
Guarantees - Extension of principal loan agreement - Whether guarantor consented to extension of the loan agreement - Application of principles in Ankar Pty Ltd v Westminster Finance (Australia) Limited (1987) 162 CLR 549
Guarantees - Nature of obligations contained within guarantee instruments - Whether amounts claimed by plaintiff lender properly established - Whether prior demands required as element of the claims on guarantees - Whether costs and expenses properly claimed
Interest - Whether interest may be claimed by plaintiff lender at contractual rates on judgment sum or at statutory rates - Consideration of authorities - Application of Civil Judgments Enforcement Act 2004 (WA)
Mortgages - Claims that plaintiff acted in breach of duty and unconscionably whilst mortgagee in possession - Plaintiff acted as mortgagee in possession for some four years - No exercise of power of sale - Threshold issue as to whether claim for breach of duty may validly be made in absence of exercise of power of sale - Whether breach of duty on the facts - Whether conduct unconscionable contrary to statute
Legislation:
Australian Securities and Investments Commission Act 2001 (Cth), S 12CA, s 12CB, s 12CC, s12GM
Civil Judgments Enforcement Act 2004 (WA), s 8
Corporations Act 2001 (Cth), s 420A, s 1041H
Evidence Act 1906 (WA), s 79C, s 79D
Planning and Development Act 2005 (WA), s 159
Rules of the Supreme Court 1971 (WA), O 4A, O 20 r 6, O 21 r 5, O 26 r 8, O 59 r 9
Supreme Court Act 1935 (WA), s 32
Taxation Administration Act 1953 (Cth), s 260-5 of Schedule 1
Transfer of Land Act 1893 (WA), s 53
Result:
Plaintiff's claims in CIV 3136 of 2019 and CIV 2283 of 2021 upheld.
Defences and counterclaim dismissed.
Relief set out in Part VIII of the reasons.
Category: B
Representation:
CIV 3136 of 2019
Counsel:
| Plaintiff | : | R J S French & A J Tharby |
| First Defendant | : | Dr J T Schoombee & A P Rumsley |
| Second Defendant | : | Dr J T Schoombee & A P Rumsley |
Solicitors:
| Plaintiff | : | Bennett |
| First Defendant | : | Alan Rumsley |
| Second Defendant | : | Alan Rumsley |
CIV 2283 of 2021
Counsel:
| Plaintiff | : | R J S French & A J Tharby |
| First Defendant | : | Dr J T Schoombee & A P Rumsley |
| Second Defendant | : | Dr J T Schoombee & A P Rumsley |
Solicitors:
| Plaintiff | : | Bennett |
| First Defendant | : | Alan Rumsley |
| Second Defendant | : | Alan Rumsley |
Case(s) referred to in decision(s):
Ankar Pty Ltd v National Westminster Finance (Australia) Ltd [1987] HCA 15; (1987) 162 CLR 549
Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99
Australian Co-operative Foods Ltd v Norco Co-operative Ltd [1999] NSWSC 274; (1999) 46 NSWLR 267
Australian Securities and Investments Commission v Kobelt [2019] HCA 18; (2019) 267 CLR 1
Bank of Western Australia Ltd v Usalj [2010] NSWSC 991
Body Bronze International Pty Ltd v Fehcorp [2011] VSCA 196; (2011) 34 VR 536
Bofinger v Kingsway Group Ltd [2009] HCA 44; (2009) 239 CLR 269
Brueckner v Satellite Group (Ultimo) Pty Ltd (2002) 15 BPR 28,885
Bunbury Foods Pty Ltd v National Bank of Australasia Ltd (1984) 153 CLR 491
Caratti v Zhou [2024] WASCA 39
China and South Sea Bank Ltd v George Tan [1990] 1 AC 536
Clambake Pty Ltd v Tipperary Projects Pty Ltd [No 7] [2009] WASC 390
Commercial and General Acceptance Ltd v Nixon (1981) 152 CLR 491
Commissioner of Taxation v Park [2012] FCAFC 122
Commonwealth Bank of Australia v Lee (1996) 22 ACSR 574
Concut Pty Ltd v Worrell [2000] HCA 64; 75 ALJR 312
Cook v Fowler (1874) LR 7; HL 27
Deeley v Lloyds Bank Limited [1912] AC 756
DHJPM Pty Ltd v Blackthorn Resources Limited [2011] NSWCA 348; (2011) 83 NSWLR 728
Dwyer v Craft Printing Pty Ltd [2009] NSWCA 405
Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640
Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471
Evans v Braddock [2015] NSWSC 249
Fazio v Fazio [2010] WASC 263
Florgale Uniforms Pty Ltd v Orders [2004] VSC 65; (2004) 11 VR 54
Forsyth v Blundell (1973) 129 CLR 477
Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 76 NSWLR 603
Gattellaro v Westpac Banking Corporation [2004] HCA 6; (2004) 204 ALR 258
GE Capital Australia v Davis (2002) 180 FLR 250
George 218 Pty Ltd v Bank of Queensland Ltd [2015] WASC 434; (2015) 303 FLR 231
Gunn v Meiners [2022] WASCA 95
Haines v Bendall (1991) 172 CLR 60
Hardie v Shadbolt [2004] WASCA 175
Henry Roach (Petroleum) Pty Ltd v Credit House (Vic) Pty Ltd [1976] VicRp 26; [1976] VR 309
Investec Bank (Aust) Ltd v Glodale Pty Ltd [2009] VSCA 97; (2009) 24 VR 617
James v Australia and New Zealand Banking Group Ltd [2018] NSWCA 41; (2018) 97 NSWLR 663
Johnson Matthey Ltd v AC Rochester Overseas Corp (1990) 23 NSWLR 190
Jovanovic v Commonwealth Bank of Australia [2004] SASC 61; (2004) 87 SASR 570
Kakavas v Crown Melbourne Ltd [2013] HCA 25; (2013) 250 CLR 392
Kramer v Stone [2024] HCA 48; (2024) 99 ALJR 126
La Trobe Financial Asset Management Limited v Nikolyn Pty Ltd [2022] WASC 264
Laundy Hotels (Quarry) Pty Ltd v Dyco Hotels Pty Ltd [2023] HCA 6; (2023) 276 CLR 500
Lee v ATL (Australia) Pty Ltd [2023] NSWCA 327
Mailman v Challenge Bank Ltd [1991] NSWCA 182
MBF Investments Pty Ltd v Nolan [2011] VSCA 114
McCourt v National Australia Bank Ltd [2010] WASC 121
McKay v Commissioner of Main Roads [No 2] [2010] WASC 153
Mineralogy Pty Ltd v Sino Iron Pty Ltd [2022] WASCA 26
Mirabela Nickel Ltd (In Liquidation) (Receivers and Managers Appointed) v Mining Standards International Pty Ltd [No 7] [2023] WASC 155
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104
MWJ v R (2005) 222 ALR 436; [2005] HCA 74
Nannup Timber Processing Pty Ltd v Minister for Commerce [2014] WASC 438
Netglory Pty Ltd v Caratti [2013] WASC 364
Noon v Bondi Beach Astra Retirement Village Pty Ltd [2010] NSWCA 202
Oakland Investments (Aust) Limited v Certain Underwriters at Lloyds [2012] QSC 6
Pendlebury v The Colonial Mutual Life Assurance Society Ltd [1912] HCA 9; (1912) 13 CLR 676
Primewest (Mandurah) Pty Ltd v Ryom Pty Ltd As Trustee For Golden Asset Pty Ltd [2012] WASC 443
Province Leader of the Oceania Province of the Congregation of the Christian Brothers v Lawrence [2021] WASCA 77
R v Birks (1990) 19 NSWLR 677
Re J Brown's Estate [1893] 2 Ch 300
Reliance Capital Pty Ltd v Caratti [No 10] [2024] WASC 69
Reliance Capital Pty Ltd v Caratti [No 6] [2024] WASC 21
Reliance Capital Pty Ltd v Caratti [No 7] [2024] WASC 33
Rhodes v De Castro [No 2] [2023] WASC 93
Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596
Shepherd v Felt and Textiles of Australia Ltd [1931] HCA 21; (1931) 45 CLR 359
Siah v Wong [2021] WASC 19
Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19
Southern Goldfields Ltd v General Credits Ltd (1991) 4 WAR 138
State Bank of Victoria v Parry and Others (1989) 7 ACLC 226
Stubbings v Jams 2 Pty Ltd [2022] HCA 6; (2022) 276 CLR 1
Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245
Tanna v Deutsche Bank (Asia) AG [1997] ANZ ConvR 598
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165
Tricontinental Corporation Ltd v Commissioner of Taxation [1988] 1 QdR 474
Ultimate Property Group Pty Ltd v Lord [2004] NSWSC 114; (2004) 60 NSWLR 646
Union Bank of Australia Ltd v Puddy [1949] VLR 242
Walthamstow Pty Ltd v Caratti [2023] WASC 76
Walthamstow Pty Ltd v Caratti [No 3] [2023] WASC 413
Walthamstow Pty Ltd v Caratti [No 4] [2024] WASC 1
Walthamstow Pty Ltd v Caratti [No 5] [2024] WASC 2
Warner v Hung, in the matter of Bellpac Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (No 2) [2011] FCA 1123; (2011) 297 ALR 56
Waterman v Gerling Australia Insurance Company Pty Ltd [2005] NSWSC 1066
Webster Investments Pty Ltd v Anderson [2016] VSC 620
Westpac Banking Corp v Bell Group Ltd (in liq) [2009] WASCA 166
Westpac Banking Corporation Ltd v Kingsland (1991) 26 NSWLR 700
Table of Contents
PART I - OVERVIEW OF THE PROCEEDINGS
A. Summary
(1) Introduction
(2) Anketell Proceeding
(3) Hocking Proceeding
(4) Other entities controlled by Mr Caratti or Ms Bazzo
(5) Conclusion and orders
B. Trial listing
C. Written submissions for trial
D. The pleadings in the actions
E. Evidentiary rulings
F. Structure of these reasons
PART II - ANKETELL PROCEEDING: THE PLEADINGS
A. Introduction
B. Pleadings in the lead up to trial
C. Defences abandoned by the defendants
D. New defences and issues raised
E. Proposed amendment raised after trial
(1) Background
(2) Relevant power and principles
(3) Disposition
F. The final pleaded issues
(1) The plaintiff's claim
(2) Pleaded defences
G. The issues for determination
PART III - ANKETELL PROCEEDING: EVIDENCE AND FINDINGS
A. Introduction
B. Assessment of the witnesses
(1) Mr Steve Masel
(2) Mr Allen Caratti
(3) Ms Tina Bazzo
C. Fact finding process
D. Factual findings common to both actions
(1) Reliance Capital's business
(2) The property development business of Mr Caratti and Ms Bazzo
(3) Lending relationship between the plaintiff and the defendants
(4) Refinancing of loans originally made by Angas Securities
E. Factual findings specific to the Anketell Proceeding
(1) Original financing arrangements
(2) Anketell Loan Agreement
(3) Anketell Mortgage
(4) Anketell Security Agreement
(5) Extension of the Anketell Loan Agreement
(6) Events leading to the assignment to Reliance Capital
(7) The Anketell Assignment Deed
(8) The 2016 Anketell Deed of Guarantee
(9) Additional mortgages put in place
(10) Extension of the Anketell Loan Agreement
(11) Valuation of the Anketell Property
(12) Entering into possession of the Anketell Property
(13) Demands and notices issued by the plaintiff
PART IV - ANKETELL PROCEEDING: DISPOSITION
A. Relevant principles
B. First issue: the plaintiff's claim against Mr Caratti
(1) Components of the claim
(2) The plaintiff's loan account statement
(3) Initial amount upon transfer
(4) Accrued interest
(5) Interest on the judgment sum
(6) Costs and expenses
(7) Herdsman Technology settlement funds
(8) Caratti v Zhou [2024] WASCA 39
C. Second issue: the plaintiff's claim against Ms Bazzo
(1) Claim under the 2016 Anketell Deed of Guarantee
(2) Was a demand for payment required?
D. Third issue: the enforcement representation as an estoppel
(1) The pleaded allegations
(2) Relevant principles
(3) Has the representation been established?
(4) Has reasonable reliance been established?
(5) Has detriment been established?
(6) Conclusion
E. Fourth issue: statutory unconscionability
(1) The pleaded allegations
(2) Relevant legislation
(3) Relevant principles
(4) Has unconscionable conduct been demonstrated?
(5) Conclusion
F. Fifth and sixth issues: the conduct of the plaintiff as mortgagee in possession
(1) The pleaded allegations
(2) Relevant principles
(3) A threshold issue
(4) Has a breach of duty or unconscionable conduct been demonstrated?
(5) Conclusion
G. Seventh issue: the Waverley Estate allegations
(1) The pleaded allegations
(2) Factual findings
(3) Disposition
(4) Conclusion
PART V – HOCKING PROCEEDING: THE PLEADINGS
A. Introduction
B. Pleadings in the lead up to trial
C. Defences and allegations abandoned by the defendants
D. New defences and issues raised
E. Proposed amendment raised after trial
(1) Background
(2) Relevant power and principles
(3) Disposition
F. The final pleaded issues
(1) The plaintiff's claim
(2) Pleaded defences
G. Issues for determination
PART VI – HOCKING PROCEEDING: EVIDENCE AND FINDINGS
A. Introduction
B. Factual findings specific to the Hocking Proceeding
(1) Precursor to the financing arrangements
(2) The Hocking Loan Agreement
(3) Hocking Mortgages
(4) Hocking Guarantor's Acknowledgement
(5) Drawdowns pursuant to the Hocking Loan Agreement
(6) Extensions of the Hocking Loan Agreement
(7) Interest charges and various payments to the plaintiff
PART VII – HOCKING PROCEEDING: DISPOSITION
A. Relevant principles
B. First issue – plaintiff's claim against Ms Bazzo
(1) Quantum of the claim
(2) Early repayment charges
C. Second issue - the top-up payments allegation
D. Third issue - the non-refundable interest charge
E. Fourth issue – alleged breach of the Hocking Loan Agreement
(1) The pleaded allegations
(2) Relevant terms of the Hocking Loan Agreement
(3) Findings of facts
(4) Disposition
F. Fifth issue – the demands made to Ms Bazzo and Mr Caratti
(1) The pleaded allegations
(2) Service of the demands
(3) The shortfall statement sent to Ms Bazzo on 13 July 2021
(4) The demand issued to Ms Bazzo on 22 September 2021
(5) The demand issued to Ms Bazzo on 9 November 2021
(6) The demand issued to Mr Caratti on 9 November 2021
(7) Disposition
G. Sixth issue – the extension of the Hocking Loan Agreement
(1) The pleaded allegations
(2) Factual findings
(3) Disposition
H. Seventh issue – the claim against Mr Caratti under the guarantee
I. Eighth issue – Ms Bazzo's counterclaim
(1) The pleaded allegations
(2) The statutory unconscionable conduct claim
(3) A threshold issue
(4) Sales Shortfall Claim
(5) Lost Compensation Claim
(6) Conclusion
PART VIII – CONCLUSIONS
ATTACHMENT A Reasons for evidentiary rulings on 13 and 14 February 2024
ATTACHMENT A.1 Rulings in relation to Defendants' objections
ATTACHMENT A.2 Rulings in relation to Plaintiff's objections
LUNDBERG J:
PART I - OVERVIEW OF THE PROCEEDINGS
A. Summary
(1) Introduction
The claims in these actions arise out of financing arrangements into which the parties entered between 2013 and 2016, associated with residential property developments in the Perth area.
The financing arrangements involved the advancement of substantial sums of money to the borrowers (which included the second defendant) through loan facilities, which were accompanied by forms of security from the borrowers and from others, including personal guarantees. The loan facilities included relatively high rates of interest. The plaintiff lender asserts that the funds advanced under these loan facilities were not repaid, and sues the defendants through two actions in this court to recover the loss.
The two actions were heard at a single trial between 31 January and 8 April 2024, over the course of some 19 days. The trial was conducted in two phases, with the first phase heard in January and February 2024, and the second in March and April 2024, following a four week break. This two-phased approach to the trial was caused in no small part by the late evidentiary objections and pleading amendments agitated by the defendants.
The decision of the court in both actions was reserved on 8 April 2024, with a further interlocutory hearing held on 31 July 2024 to consider the plaintiff's post-trial pleading amendment applications.
The evidence in each action was ordered to stand as evidence in the other action, given the commonality between them.
The plaintiff in both actions is Reliance Capital Pty Ltd trading as Reliance Finance and Mortgage Services (Reliance Capital). The plaintiff is a financing company based in Perth, which provides lending services to a wide range of borrowers. The plaintiff was formerly known as Walthamstow Pty Ltd. I will refer to the plaintiff throughout these reasons as Reliance Capital unless the context requires otherwise.
Mr Steve Alick Masel is a director of the plaintiff company. Mr Masel was 69 years of age at the time of the trial. He is the driving force behind the plaintiff. Both his brother (Mr Tony Masel) and his son (Mr Jonathon Masel) also work in the business.
The defendants in both actions are Mr Allen Caratti and Ms Tina Bazzo. Mr Caratti and Ms Bazzo are property developers. They have been in a de facto relationship since the early 1990s. They were thus in that relationship during the period in which these financing arrangements were entered into, and during the course of the dispute.
Mr Caratti's age at the time of trial was not specified, although he appeared to be in his late 60s. Ms Bazzo was 57 years of age.
The financing arrangements which are the subject of these actions are not the first transactions between these parties. It is uncontentious that Mr Masel and Mr Caratti have had a long business association with each other, stretching back to around 1999/2000. Mr Masel, through Reliance Capital, provided finance to Mr Caratti and his business interests on numerous occasions over this period.
(2) Anketell Proceeding
The first of the actions, being CIV 3136 of 2019, concerns a financing arrangement for a property development situated in the suburb of Anketell to the south of Perth, specifically at 82 Treeby Road in Anketell.[1] I will refer to this action as the Anketell Proceeding and to the financing arrangement as the Anketell Financing Arrangement.
[1] In the documents, the development is referred to as either the Anketell development or the Treeby Road development.
The principal sum advanced to the borrowing entity under the Anketell Financing Arrangement was approximately $2.4m. The borrowing entity is now in liquidation.
A material aspect of the sequence of events which underlie the Anketell Proceeding is that the plaintiff entered into possession of the relevant mortgaged property as mortgagee in possession. The plaintiff remained in possession for around four years before returning the property to the registered proprietor, the second defendant.
In the Anketell Proceeding, the plaintiff seeks monetary relief against both defendants pursuant to the written guarantees which were entered into by the defendants as part of the Anketell Financing Arrangement, and which formed part of the security arrangements put in place for the benefit of the plaintiff.
There was another financier involved in the transaction which underpins the Anketell Proceeding, namely Angas Securities Limited,[2] which was the original financier for the Anketell property development.
[2] On occasions, in some of the financing documents, the company is referred to as Angas Securities Pty Ltd, but nothing turns on this description.
The role of Angas Securities was short lived in this regard. Angas Securities transferred and assigned the right, title and interest in the relevant securities to Reliance Capital in February 2016.
Angas Securities also provided finance to the defendants and their entities in respect of other property developments which are not the central subject of these actions. As with the Anketell Financing Arrangement, the other loan arrangements were also refinanced by the defendants, through assignments to the plaintiff, in around 2014. I will address these other arrangements when considering the evidence.
The Anketell Financing Arrangement was entered into by Gucce Holdings Pty Ltd as the borrower, in its own right and as trustee. That company was at all relevant times owned and controlled by Mr Caratti. The company has since changed its name to GH1 Pty Ltd. I will refer to that entity in these reasons as GH1.
The second defendant, Ms Bazzo, appointed administrators to GH1 on 4 April 2017. This occurred in the wake of legal proceedings against the company brought by the Deputy Commissioner of Taxation in respect of taxation liabilities. Liquidators were subsequently appointed. GH1 has been in liquidation since 22 May 2017.
(3) Hocking Proceeding
The second of the actions, being CIV 2283 of 2021, concerns a financing arrangement for a property development situated in the suburb of Hocking to the north of Perth. The various lots in the development were marketed as the 'Tuxedo Rise Estate'. I will refer to this action as the Hocking Proceeding and to the financing arrangement as the Hocking Financing Arrangement. The principal sum advanced under this financing arrangement was approximately $5.7m.
The Hocking Financing Arrangement was entered into by Keris Pty Ltd as the borrower, as trustee for the Bradley Street Trust. Ms Bazzo was also a named borrower in that transaction in her capacity as trustee for the Gucce Holdings Trust.
Keris was at all relevant times owned and controlled by Mr Caratti.
In the Hocking Proceeding, the plaintiff seeks monetary relief against the first defendant pursuant to the written guarantee which was entered into by that defendant as part of the Hocking Financing Arrangement. The plaintiff also seeks relief against the second defendant as a principal borrower under the loan facility.
(4) Other entities controlled by Mr Caratti or Ms Bazzo
There are three other companies which are involved, directly or indirectly, in the transactions in the Anketell Proceeding. The companies are Herdsman Technology Pty Ltd, Byford Land Company Pty Ltd and Byford River Pty Ltd. Their precise roles will be explained in due course.
Mr Caratti was the sole director and shareholder of Herdsman Technology and Byford Land Company, at all relevant times. Ms Bazzo was the sole director and shareholder of Byford River, at all relevant times.
In the Hocking Proceeding, the entity Yanchep Investments Pty Ltd assumes a particular role, which will be explained in due course. Mr Caratti was the sole director and shareholder of that entity at all relevant times.
(5) Conclusion and orders
All of the claims in both actions are denied by the defendants. Numerous layers of defence have been pleaded by the defendants, including contractual, equitable and statutory defences, together with a counterclaim in the Hocking Proceeding. As I will explain, several of the initially pleaded defences fell away as the trial approached, and at trial.
In the Anketell Proceeding, the defendants assert that they relied on a representation made by the plaintiff that it would exhaust its rights against the secured assets before seeking to recover any shortfall under the guarantees. The defendants also challenge the conduct of the plaintiff whilst it was in possession of the Treeby Road property, and criticise the manner in which the plaintiff applied the proceeds from the sale of certain lots.
In the Hocking Proceeding, the defendants challenge the plaintiff's delay or failure to advance certain funds under the loan facility, and point to the extension of the loan agreement without their consent, among other defences and claims.
The plaintiff has said that the claims it brings to the court for resolution, being claims under detailed contractual instruments, should be simple and straightforward.[3] The plaintiff recognises that this has not proven to be the case, and rests the cause of the undue complexity of the proceedings, and the trial itself, on the 'multifarious, convoluted array' of defences pleaded by the defendants.[4]
[3] Plaintiff's Amended Outline of Opening Submissions dated 17 January 2024 [1].
[4] Plaintiff's Amended Outline of Opening Submissions dated 17 January 2024 [2].
There is much force in the plaintiff's submission. The defendants have been prepared to defend the claims 'trench by trench', disputing a very wide range of factual issues in both actions, which contributed to the length of the trial and of these reasons. Nonetheless, it should be observed that, as will be apparent in any event from the numerous interlocutory disputes in the actions and the course of the trial, both sets of parties fought this litigation in an aggressive manner.
A summary of the conclusions I have reached in the two actions is set out in Part VIII of these reasons.
B. Trial listing
On 16 March 2023, trial directions were made by the court to programme these actions to a single trial in November 2023.[5] Within my reasons for ordering that the actions be heard together, I explained my assessment of the degree of commonality between the actions.[6]
[5] Orders made on 16 March 2023 in both actions.
[6] Walthamstow Pty Ltd v Caratti [2023] WASC 76 [43] - [54].
As matters transpired, it was necessary for the originally listed trial to be vacated and re-listed to commence in late January 2024.[7]
[7] Orders made on 25 October 2023 in both actions.
The adjournment of the trial followed late applications for leave to amend pleadings and to serve witness statements. In my reasons at the time, I summarised the developments which led to the need to vacate the trial as follows:[8]
… in recent weeks there has been a flurry of activity from both the plaintiff and the defendants which has involved the extremely late filing of lay evidence by the defendants, late amendments to the defendants' pleadings, late amendments to the plaintiff's pleadings, late filing of further lay evidence by the plaintiff, the possibility of further expert evidence being required, and the possibility of further discovery being sought. To compound this, the solicitors for the plaintiff have changed twice in the last month or so.
[8] Walthamstow Pty Ltd v Caratti[No 3] [2023] WASC 413 (Walthamstow Pty Ltd v Caratti [No 3]) [2(d)].
A chronology of the numerous hearings in the lead up to trial can be seen in the reasons of the court published on 5 January 2024 as Walthamstow Pty Ltd v Caratti [No 4].[9]
[9] Walthamstow Pty Ltd v Caratti[No 4] [2024] WASC 1 (Walthamstow Pty Ltd v Caratti [No 4]) Attachment A.
The degree of commonality between the actions, and the force of the court's decision to have them heard at a single trial, diminished over time. I say this for two particular reasons. First, the issues arising on the pleadings in the Anketell Proceeding and the Hocking Proceeding changed somewhat following the court's decision in March 2023, and in the lead up to trial, through various pleading amendments.
Second, and importantly, the original orders made by the court on 16 March 2023 extended to a third action involving these parties, namely CIV 3016 of 2019. That action concerned the financing arrangements for a property development in the suburb of Piara Waters to the south east of Perth. The existence of three actions containing overlapping factual and legal issues was an important factor in the decision to have the single trial. However, the third action did not ultimately proceed to trial.
The court raised these changing circumstances with the parties on 20 October 2023. The court expressly enquired whether the course of events since March 2023 had been such that it was no longer appropriate for the two actions to be heard together at one trial.[10]
[10] Walthamstow Pty Ltd v Caratti[No 3] [7] - [8].
Although the basis for the court's orders on 16 March 2023 lost its strength over time, it did not wholly evaporate in my view. Significantly, no application was made by any of the parties to revisit or vary the orders directing that the actions be heard at a single trial.[11]
C. Written submissions for trial
[11] Walthamstow Pty Ltd v Caratti[No 3] [9].
The parties filed detailed opening and closing submissions for the purposes of the trial.
In the Anketell Proceeding, prior to the trial, the plaintiff relied on an amended outline of opening submissions dated 17 January 2024 and a reply outline dated 26 January 2024. By way of closing, the plaintiff filed an amended outline of closing submissions dated 27 March 2024, including an Annexure A. A further set of submissions dated 13 April 2024 was also relied upon by the plaintiff, however I have had regard to the version as redacted by the defendants, following a dispute in this regard.
In the Anketell Proceeding, prior to the trial, the defendants relied on an amended outline of opening submissions dated 19 January 2024. By way of closing, the defendants filed an outline of closing submissions dated 25 March 2024 a document entitled points in reply in closing dated 8 April 2024, and a document entitled updated notations on Annexure A dated 9 April 2024.
In the Hocking Proceeding, prior to the trial, the plaintiff relied on an amended outline of opening submissions dated 17 January 2024 and a reply outline dated 26 January 2024. By way of closing, the plaintiff filed an outline of closing submissions dated 27 March 2024 and supplementary submissions regarding the garnishee notice dated 3 April 2024. As with the Anketell Proceeding, a further set of submissions dated 13 April 2024 was relied upon by the plaintiff and I have had regard to the version as redacted by the defendants.
In the Hocking Proceeding, prior to the trial, the defendants relied on an amended outline of opening submissions dated 19 January 2024. By way of closing submissions, the defendants filed an outline of closing submissions dated 25 March 2024, and a document entitled points in reply in closing dated 8 April 2024.
Subsequent to the court reserving its decision following trial, the court invited submissions from the parties on a potentially relevant decision of the Court of Appeal, which was delivered on 23 April 2024, namely Caratti v Zhou.[12] Supplementary submissions were filed by the parties on 30 April 2024 in relation to that decision.
D. The pleadings in the actions
[12] Caratti v Zhou [2024] WASCA 39.
The pleadings in both actions were far from static. The frequency of the amendments increased in the lead up to the trial, continued during the trial and, indeed, persisted following the conclusion of the trial.
It will therefore be necessary within the reasons to clarify the pleaded cases for the plaintiff and the defendants, upon which I have determined the claims and defences. In doing so, some of the procedural history of the actions will need to be recounted, although that history is more fully explicated in the court's interlocutory reasons published in January and February 2024.[13]
[13] Walthamstow Pty Ltd v Caratti [No 3] (application for leave to amend pleadings and trial vacation); Walthamstow Pty Ltd v Caratti [No 4] (pleadings and particulars); Walthamstow Pty Ltd v Caratti [No 5] [2024] WASC 2 (Walthamstow Pty Ltd v Caratti [No 5]) (pleadings and subpoenas); and Reliance Capital Pty Ltd v Caratti [No 6] [2024] WASC 21 (Reliance Capital Pty Ltd v Caratti [No 6]) (defendants' application to amend defence in CIV 3136).
On 3 May 2024, almost a month after the trial had concluded, the plaintiff filed pleading amendment applications in both actions. The plaintiff sought leave to file a fresh pleading in the Anketell Proceeding, being a surrejoinder in the form of the minute of proposed surrejoinder dated 3 May 2024, no surrejoinder having previously been filed by the plaintiff. The plaintiff also sought leave to file an amended pleading in the Hocking Proceeding. These applications were strongly opposed by the defendants.
The amendment applications were heard on 31 July 2024. The court's determination in relation to the applications is addressed in Part II and Part V of these reasons.
E. Evidentiary rulings
Several evidentiary issues arose during the first phase of the trial of the actions, which were the subject of rulings by the court, followed by written reasons which were published to the parties. I have summarised below the issues which were the subject of the rulings and incorporated into these reasons as Attachment A the reasons which were provided to the parties on 14 February 2024.
The first issue concerned the objection raised by the defendants to the terms of [80] of the supplementary witness statement of Mr Masel dated 19 October 2023 in the Hocking Proceeding, which was amended by Mr Masel at the commencement of his evidence. The court ruled on 14 February 2024 that the objection should be disallowed.
The second issue concerned the objections raised by the defendants to the plaintiff's proposed tender of several documents which were additional to the original trial bundle which was prepared and provided to the court prior to the commencement of the trial.
The third issue concerned the objections raised by the plaintiff to the defendants' proposed tender of several documents which form part of the original trial bundle.
The fourth issue concerned whether the parties should have leave to apply to have Mr Masel recalled to give further evidence in chief or to be the subject of cross-examination (and any appropriate re‑examination).
F. Structure of these reasons
In Part II of these reasons, I will outline the claims pleaded by the plaintiff in the Anketell Proceeding, and the defences and other issues pleaded by the defendants in opposition to those claims. I will briefly explain the material pleading amendments which were granted or refused, both in the lead up to the trial and at the trial of the action. I will also explain how I propose to address the further pleading amendment application made by the plaintiff after the trial was reserved.
In Part III of these reasons, I will address the evidence in the Anketell Proceeding (and the evidence which is common to both actions), and record my findings as to the reliability and credibility of the witnesses who testified. I will in this section set out the factual findings which are necessary to be made in the Anketell Proceeding (and those common to both actions) in order to dispose of the claims and the defences raised in that action.
In Part IV of these reasons, I will explain my reasoning for disposing of the claims and defences in the Anketell Proceeding, and set out the additional finding necessary to dispose of the issues.
In Part V, Part VI and Part VII of these reasons, I will separately address the pleadings, evidence, and disposition of the claims in the Hocking Proceeding.
PART II - ANKETELL PROCEEDING: THE PLEADINGS
A. Introduction
In this section of the reasons I will identify the pleadings in the lead up to trial, the defences which were abandoned by the defendants, the new defences and issues raised, and then address the application filed by the plaintiff following the trial to file a surrejoinder. Finally, I will summarise the issues which require determination following the trial.
B. Pleadings in the lead up to trial
The plaintiff filed the writ in this action on 17 November 2019. The action was managed within the General Division and admitted to the CMC List in January 2023.
The plaintiff proceeded to trial on the basis of the allegations detailed in the amended statement of claim dated 15 September 2023 (Anketell ASOC). The defendants filed their fourth amended defence on 17 September 2023 (Anketell 4AD).
Following some interlocutory disputation, but ultimately by consent, the plaintiff was granted leave to file a substituted reply pleading on 20 October 2023.[14]
[14] Folio 151 (CIV 3136). The background to this pleading, referred to as the second amended substituted reply, is explained in Walthamstow Pty Ltd v Caratti [No 3] [1] - [2] and [3] - [5].
On 24 November 2023, the court granted the defendants leave to file a rejoinder, which was filed on 27 November 2023 (Anketell Rejoinder).[15]
[15] Folio 175 [3] - [4] (CIV 3136).
The plaintiff then filed an amended version of its reply pleading without leave. The pleading was described as the third amended substituted reply dated 6 December 2023.[16] The amended pleading in effect sought to withdraw an admission concerning the Waverley Estate issue, as explained in the court's reasons published as Walthamstow Pty Ltd v Caratti [No 5].[17]
[16] Folio 179 (CIV 3136).
[17] Walthamstow Pty Ltd v Caratti [No 5] .
Ultimately the plaintiff accepted that leave was in fact required and the pleading issue was addressed on 22 December 2023 with orders being made, nunc pro tunc, on that date to permit the plaintiff to file the pleading.[18] Upon analysis, I characterised the plaintiff's amendments as being, in essence, more in the nature of a clarification than a substantial volte face on the part of the plaintiff.[19] I will refer to the plaintiff's third amended substituted reply dated 6 December 2023 as the Anketell 3ASR.[20]
[18] Folio 194, Orders made on 22 December 2023 [1] (CIV 3136).
[19] Walthamstow Pty Ltd v Caratti [No 5] [27] - [37].
[20] Folio 179 (CIV 3136).
In their opening submissions for trial, the defendants foreshadowed amendments to their pleadings which I will now briefly describe.
C. Defences abandoned by the defendants
I should first mention the aspects of the defence which were abandoned by the defendants. These matters were summarised in the court's reasons published as Walthamstow Pty Ltd v Caratti [No 6].[21]
[21] Reliance Capital Pty Ltd v Caratti [No 6] [8].
The defendants:
(a)abandoned the allegation that the pleaded enforcement representation, referred to in the pleadings as the 'Enforcement Representation', also constituted an enforceable agreement at law;[22]
(b)abandoned the allegation that the plaintiff's conduct in issuing certain demands, in light of the alleged enforcement representation, was misleading or deceptive contrary to s 12DA of the Australian and Securities Investments Commission Act 2001 (Cth) (ASIC Act) and s 1041H of the Corporations Act 2001 (Cth) (CA);[23] and
(c)abandoned the allegation that a settlement agreement had been reached by the parties in May 2022.[24]
[22] Anketell 4AD [21.5], [26], [28], [32.1] and [37.1].
[23] Anketell 4AD [32.3] and [37.2].
[24] Anketell 4AD [41].
Although the defendants abandoned aspects of the enforcement representation allegations, they nonetheless maintained at trial the principal allegation, said to operate as a promissory estoppel, that a representation had been made by Mr Masel to the effect that the plaintiff would exhaust its rights against the assets secured by the facilities before seeking to recover any shortfall from the defendants under the guarantees. That allegation is primarily pleaded at [21.4] of the Anketell 4AD.
Further, the defendants maintained the allegation that the conduct of the plaintiff in issuing certain demands, in light of the enforcement representation, constituted unconscionable conduct for the purposes of s 12CB of the ASIC Act, as pleaded at [32.4] and [37.3] of the Anketell 4AD.
D. New defences and issues raised
The defendants also sought to raise several new issues, as explained in the interlocutory reasons to which I have just referred.[25] It is necessary to mention them only briefly.
[25] Reliance Capital Pty Ltd v Caratti [No 6] [9] - [10].
The defendants sought to introduce an allegation that no further extension of the principal loan agreement beyond a certain date (being 31 October 2015) had been pleaded or was in fact effected. The defendants proposed to contend at trial on this basis that the defendants, as guarantors, had no liability, alternatively no liability incurred beyond that date.
I refused leave for this amendment as explained in the interlocutory reasons dated 5 February 2024.[26] The defendant sought to re-open the issue only days later, albeit in a modified manner, which I also refused.[27]
[26] Reliance Capital Pty Ltd v Caratti [No 6] [25] - [44] (refusing leave to amend [17] of the defence).
[27] Reliance Capital Pty Ltd v Caratti [No 7] [2024] WASC 33 (Reliance Capital Pty Ltd v Caratti [No 7]) [35] ‑ [54].
The defendants sought to introduce allegations that the plaintiff's demands dated 20 September 2018 and 31 May 2019 were invalid. I refused leave for these amendments as explained in the interlocutory reasons dated 5 February 2024.[28]
[28] Reliance Capital Pty Ltd v Caratti [No 6] [45] - [54] (refusing leave to amend [32], [33], [36] and [37] of the defence).
The defendants also sought to introduce further allegations concerning the plaintiff's conduct whilst mortgagee in possession, which focused on the alleged lapsing of approval from the Western Australian Planning Commission (WAPC) and the terms of a particular information memorandum. The defendants' primary allegations against the plaintiff in this regard, as to its conduct as mortgage in possession, had initially been introduced in November 2022. I granted leave for the further amendments which were sought to be made to [35.8A] and [35.10] of the defence, as explained in the interlocutory reasons dated 5 February 2024, but refused leave insofar as the defendants sought to open up the lapsing of the WAPC approval.[29]
[29] Reliance Capital Pty Ltd v Caratti [No 6] [55] - [64] (refusing leave to amend [35.8] and granting leave to amend [35.8A] and [35.10] of the defence).
A further amended defence was filed by the defendants on 6 February 2024 (Anketell Amended Defence).
The foregoing did not bring an end to the defendants' attempts to amend their defence at trial.
On 14 February 2024, during the course of the trial, the defendants mounted a fresh application to amend their defence in the Anketell Proceeding. The amendment was set out in the defendants' Minute of Proposed Re-Amended Defence dated 14 February 2024, which sought to introduce a new paragraph [40]. The proposed amendment essentially revisited the matters discussed at [73] and [74] above, which had been the subject of the court's reasons published on 5 and 13 February 2024.[30] I published reasons on 14 March 2024 for refusing leave.[31]
E. Proposed amendment raised after trial
(1) Background
[30] Reliance Capital Pty Ltd v Caratti [No 6] [25] - [44] and Reliance Capital Pty Ltd v Caratti [No 7] [35] ‑ [54].
[31] Reliance Capital Pty Ltd v Caratti [No 10] [2024] WASC 69.
After I had reserved my decision on 8 April 2024, the plaintiff sought leave to file a surrejoinder to the defendants' rejoinder dated 27 November 2023 (Anketell Proposed Surrejoinder).
The court received an email from the plaintiffs' solicitors by which the two applications were filed, by way of a minute of proposed orders, a supporting affidavit, and proposed minute of a fresh or an amended pleading in each action. The plaintiff relied upon the affidavits of Samuel Neil Howieson affirmed on 3 May 2024 in each action. Those affidavits were ultimately relied upon by the plaintiffs at the hearing on 31 July 2024, without objection.
No surrejoinder had previously been filed by the plaintiff.
The Anketell Proposed Surrejoinder is in the following terms:
1.As to paragraphs 5 of the Defendants' Rejoinder dated 27 November 2023 the plaintiff was not obliged by clause 5.4 of the Loan Agreement to apply the relevant proceeds in reduction of the Loan in circumstances where:
1.1 the loan to Byford River Pty Ltd contained an identical clause 5.4 to clause 5.4 of the Loan Agreement; and
1.2 in any event, the proceeds were not received from Herdsman in discharge of mortgage N263245.
2.Save to the extent that the Rejoinder otherwise contains admissions, the plaintiff denies each and every allegation therein.
These amendment applications were opposed by the defendants.
On Saturday, 4 May 2024, the court replied to the parties to indicate that a hearing date for the applications would be addressed on the following Monday.
On Sunday, 5 May 2024, the defendants' solicitors responded to the court and the plaintiff, objecting to the late applications and seeking a case management direction pursuant to O 4A r 2(2)(f) of the Rules of the Supreme Court 1971 (WA) (RSC) that eachapplication 'not be heard'. The defendants noted that the applications had been filed without prior conferral pursuant to O 59 r 9 RSC, although subsequent to that point the defendants did not agitate any opposition to the applications on conferral grounds.
So, at least initially, the defendants sought to persuade the court that the applications for leave should not be heard by the court, at all. It would not have been a proper exercise of the court's discretion, in my view, to simply reject the applications for leave without further hearing the plaintiff, and the defendants, on the questions raised. It was necessary to hear from the parties.
Accordingly, the matters were listed by the court for hearing on 31 July 2024, with directions made to allow both parties to file written submissions. The court received submissions from the plaintiff filed in each action dated 27 May 2024, and submissions from the defendants filed in each action dated 25 July 2024. No responsive affidavit material was filed or relied upon by the defendants in either action.
(2) Relevant power and principles
The court has power to grant leave to amend the pleadings at any time, including after the conclusion of a trial, when a decision has been reserved, and after the delivery of the court's reasons for decision: see O 21 r 5(2) RSC.
In the exercise of this power, there have been occasions where this court, and other courts relying upon similar provisions, have granted leave to permit pleadings to be amended late in the piece, including after the decision itself has been delivered.[32]
[32] Mirabela Nickel Ltd (In Liquidation) (Receivers and Managers Appointed) v Mining Standards International Pty Ltd [No 7] [2023] WASC 155 (Mirabela Nickel) (Hill J).
Naturally, applications for leave to amend a party's pleadings following a contested trial will typically give rise to difficult and nuanced questions for the court's determination. Such applications will require the court to carefully balance the competing interests of the parties, to assess the relative prejudice arising, and to examine applicable case management considerations and the manner in which the court's resources are being drawn upon.
The determination of the plaintiff's applications in these actions is relatively challenging. There are four primary reasons I say this. First, there has already been a high degree of intensive case management of these actions over the period which commenced in August 2023. Second, the issues raised in the present applications intersect and overlap with some of the issues already addressed by the court in the course of the interlocutory disputes which have previously arisen in these matters. Third, the actions themselves may fairly be described as examples of 'issue-rich' civil litigation in which the parties have adopted a vigorous adversarial approach. Fourth, the court is dealing with separate applications for leave in two actions which were heard together at a combined trial.
Further, and fundamentally, the issues sought to be raised by the plaintiff's amendments were the subject of submissions and discussions at points during the trial process. It might therefore be thought as surprising that applications for leave to amend the pleadings would be filed some four weeks following the conclusion of the evidence in the trial, rather than at some earlier point in time.
It should be observed that the plaintiff also requires leave pursuant to O 20 r 6 RSC to file the surrejoinder pleading in the Anketell Proceeding, being a pleading subsequent to a reply or a defence to counterclaim. The question of leave under that rule is coterminous with the consideration of leave under O 21 r 5(2) RSC, in my view.
The parties were not in disagreement as to the principles to be applied in determining applications such as the present, where leave is sought to amend pleadings after a decision has been reserved. Both parties made reference to Hill J's decision in Mirabela Nickel and to the authorities helpfully traversed by her Honour.[33]
[33] Mirabela Nickel [9] - [12] (Hill J).
There are, of course, discretionary factors which require close attention where an application for leave to amend a pleading is brought late in the proceedings, including after the decision at trial has been reserved. Those discretionary factors must be seen in the context of the modern principles of case management and having regard to the proper function of pleadings in civil litigation.
(3) Disposition
The plaintiff's primary position is that the issue the subject of the proposed amendment is already live between the parties on the pleadings and through the submissions filed prior to and during the course of the trial. The plaintiff submits, accordingly, that a surrejoinder is not required to permit it to rely upon cl 5.4 of the Byford River Agreement, and that it can permissibly dispute the defendants' proposed construction of cl 5.4 of the Anketell Loan Agreement on the pleadings as they stand.[34]
[34] Plaintiff's submissions dated 3 May 2024 [10].
Nonetheless, presumably out of an abundance of caution, the plaintiff seeks to file and serve the surrejoinder in the event that the court takes a different view.
The plaintiff's contention that the filing of the surrejoinder is not strictly required has force, and fairly reflects the course of the proceedings and the terms of the pleadings which were on foot prior to trial. Two points should be made in this regard.
First, the plaintiff had pleaded the existence of the Byford River Agreement at [29] of its reply, being Anketell 3ASR. The plaintiff had pleaded that the funds in question were not applied to the Anketell Loan Agreement because the loan to Byford River was secured by an 'earlier, higher-ranking mortgage', which had been given to secure a loan to Byford River.
Second, the defendants pleaded in response to the above matters, in the Anketell Rejoinder, that cl 5.4 of the Anketell Loan Agreement required that the net proceeds from the sale of the Waverley Estate lots be applied to the Anketell Loan Agreement.[35] The plaintiffs impliedly joined issue with this allegation by reason of O 20 r 15(2)(a) RSC.
[35] Anketell Reply [5].
In these circumstances, the operation of cl 5.4 of the Byford River Agreement was already an issue on the pleadings. However, even if I am wrong about that, and although the application to file the surrejoinder is extremely late, I would nonetheless have granted the application. The application ought be granted for the following discretionary reasons.
First, the amendment does not raise a fresh issue of which the defendants were previously unaware. The issue was the subject of submissions filed by the plaintiff prior to the commencement of the trial,[36] and is referred to in the plaintiff's reply, namely Anketell 3ASR. The plaintiff had submitted in writing that cl 5.4 of the Anketell Loan Agreement did not operate in the manner in which the defendants had contended (i.e. obligating the plaintiff to apply funds from the Waverley Estate sales to the loan to GH1 in preference to the loan to Byford River). That submission was advanced having regard to the identical clause in the Byford River Agreement.
[36] Plaintiff's amended outline of opening submissions dated 17 January 2024 [70] (Folio 198).
Second, the proposed amendment is not extensive and the issue is narrow in compass given the clauses in the two loan agreements are identical.
Third, the defendants did not raise their opposition to the plaintiff relying upon cl 5.4 of the Byford River Agreement until the cross‑examination of Ms Bazzo late in the trial, that is on 15 March 2024. At that point, there was a detailed debate as to the manner in which the Byford River Agreement was relevant to the proceedings, and the issue of relevance was held over.[37] Prior to that time, the plaintiff can reasonably be understood to have considered the issue as being 'live' in the proceeding.
[37] ts 1903 - 1915 (15 March 2024).
Fourth, there is no further evidence needed in order to allow the point to be agitated by the plaintiff, other than to formally admit Exhibit 238 into evidence, which was marked for identification during trial and the question of its tender was reserved.[38] The relevant material is otherwise already in evidence.
[38] ts 1915.
Fifth, if leave is denied and the issue is found not to be live between the parties, then cl 5.4 of the Anketell Loan Agreement, upon which the defendants rely, may be construed in an artificial vacuum that would not reflect the objective intentions of the parties when they entered into the loan. I accept there would be a risk of an erroneous construction resulting. That could be to the significant prejudice of the plaintiff as the proceeds of the relevant Waverley Estate properties in dispute are in the order of $1.8 m.
Sixth, in contrast, there is no material prejudice to the defendants arising from a grant of leave in respect of the proposed surrejoinder, given the issue was previously raised in submissions and there is no further evidence which they might adduce to respond to it.
F. The final pleaded issues
(1) The plaintiff's claim
The Anketell ASOC pleads a straightforward and relatively simple case against the defendants. As will be explained, many of the essential facts are the subject of admissions on the pleadings or agreed facts which have been filed, such that the existence and terms of the financing documentation is not in dispute between the parties.
The plaintiff pleads that a loan facility was established in November 2013 between Angas Securities and GH1, by which the initial sum of $2,012,000 was advanced to the borrower. I will refer to this as the Anketell Loan Agreement. That loan, which had a term of 12 months, was secured by a first registered mortgage over property in Anketell owned by GH1[39] and by a general security agreement.[40] I will refer to these instruments as the Anketell Mortgage and the Anketell Security Agreement.
[39] Anketell ASOC [4], [5], [8] - [10], [16].
[40] Anketell ASOC [7].
Within the Anketell Loan Agreement, the defendants guaranteed payment of the monies secured under the loan agreement and the mortgage.[41] The plaintiff pleads, among other provisions within the loan agreement, that the defendants as guarantors agreed to keep the lender indemnified from and against all and any loss damage cost charge or expense incurred by the lender in connection with or in consequence of or arising out of any event of default and agreed to pay all monies due to the lender by reason of the indemnity on demand.[42]
[41] Anketell ASOC [6], [11] - [15].
[42] Anketell ASOC [15], cl 14.1.
The plaintiff pleads that, on 10 December 2014, the loan was extended for a further term of 12 months through until 31 October 2015, which involved a further advance by the plaintiff of $400,000.[43] I will refer to the agreement by which this was effected as the Anketell Variation and Extension Agreement.
[43] Anketell ASOC [17] - [18].
The plaintiff then pleads the assignment and transfer of the securities by Angas Securities to the plaintiff, alleged to have occurred on 29 February 2016.[44] GH1 and the defendants are pleaded to have consented to this assignment.[45] I will refer to the assignment instrument as the Anketell Assignment Deed.
[44] Anketell ASOC [21].
[45] Anketell ASOC [22].
It is pleaded that the plaintiff paid the sum of $2,683,020.33 to Angas Securities as consideration for the assignment and transfer of the securities,[46] with the plaintiff agreeing to charge interest at a lower rate of 15.75% and a higher rate of 18.75% on the assigned loan.[47]
[46] Anketell ASOC [23].
[47] Anketell ASOC [24].
A further guarantee instrument is pleaded to have also been executed at the time of the assignment, being a deed of guarantee dated 29 February 2016, to which the plaintiff, Ms Bazzo, Herdsman Technology and Byford Land Company were parties. I will refer to this as the 2016 Anketell Deed of Guarantee. The plaintiff pleads that, among other provisions within that instrument, the plaintiff was entitled to demand and receive payment from the guarantors when any payment was due and was not required to proceed against GH1 or exhaust any remedies it may have against GH1 before doing so.[48]
[48] Anketell ASOC [28], cl 3.1
The following two diagrams (Diagrams A and B) provide an overview of the instruments which are the subject of the Anketell Proceeding:
By its pleading, the plaintiff also alleged that the defendants acknowledged that the amount owed by GH1 to the plaintiff as at 29 February 2016 was the total sum of $2,683,020.33, which comprised the principal sum of $2,412,000 and arrears of interest and costs in the sum of $271,020.33.[49]
[49] Anketell ASOC [30].
The plaintiff then pleads that the borrower, GH1, failed to make interest payments on the due dates as required under the Anketell Loan Agreement, and the plaintiff caused a notice of default to be served on Ms Bazzo as guarantor on 20 September 2018.[50] None of the monies demanded were paid by Ms Bazzo or any of the guarantors, and the plaintiff pleads it entered into possession of the property on 9 October 2018.[51]
[50] Anketell ASOC [31] - [32].
[51] Anketell ASOC [34] - [35].
On 31 May 2019, the plaintiff pleads that the default notice was served on Mr Caratti and the amount outstanding under the loan was demanded.[52]
[52] Anketell ASOC [36].
On the basis the defendants had not paid the monies demanded, the plaintiff sues them for payment of the principal and interest, alleging that the amount outstanding as at 11 December 2019 was $5,063,082.21, being the amount particularised in Annexure A to the Anketell ASOC.
The substantive relief claimed is as follows:[53]
[53] Anketell ASOC, Prayer for relief.
1. Payment of the principal sum of $2,412,000.00.
2. Interest on the principal sum and arrears of interest and costs from 5 December 2013 to 29 February 2016 in the sum of $271,020.33 pursuant to clause 4 of the Loan Agreement dated 18 November 2013, Deed of Assignment of loan dated 29 February 2016 and Schedule to the Deed of Guarantee dated 29 February 2016.
3. Interest on the capitalised sum of $2,683,020.33 and arrears of interest calculated at the rate of 18.75% on a daily basis capitalised monthly pursuant to clause 4 of the Loan Agreement dated 18 November 2013 from 1 March 2016 to judgment.
4. Interest on the judgment sum pursuant to clause 4 of the Loan Agreement at the rate of 18.75% per annum or pursuant section 32 Supreme Court Act 1935.
5. Costs on a solicitor/client basis, alternatively on a party/party basis.
(2) Pleaded defences
Having regard to the amendments made to the pleadings, the following matters were relied upon by the defendants at trial to resist the plaintiff's claims and will require determination by this court.
First, the defendants dispute whether the plaintiff has demonstrated the essential elements of the causes of action pleaded against the defendants and whether the plaintiff has established to the requisite standard the quantum which it claims. The manner in which the plaintiff has claimed interest, and sought to prove that aspect of the claim, is also the subject of dispute. The defendants maintain that the plaintiff had failed to demonstrate the amount claimed in the Anketell Proceeding and point to substantive and evidentiary difficulties in the plaintiff's case in this regard.[54]
[54] Anketell 4AD [39]; Defendants' Anketell Closing Submissions dated 25 March 2024 [10] ‑ [33]; Defendants' Anketell Points in Reply in Closing dated 8 April 2024 [3] - [23].
Second, the defendants plead a representation was made by the plaintiff that it would exhaust its rights against the assets secured by the loan facilities before seeking to recover any shortfall from the defendants. On the basis of this representation, the plaintiff is said to be estopped from enforcing its claims against the defendants until it has first exhausted its claims and remedies against the secured property.[55]
[55] Anketell 4AD [28.3], [32.1], and [37.1]; Defendants' Anketell Closing Submissions dated 25 March 2024 [35] - [42]; Defendants' Anketell Points in Reply in Closing dated 8 April 2024 [23] - [34].
The representation is pleaded in conjunction with the defendants' plea that they consented to the assignment of the Anketell Loan Agreement to the plaintiff. Absent that consent, the defendants plead that their guarantees would have been discharged because the extension of the loan agreement beyond its expiry date of 31 October 2015 would otherwise have increased their potential liability as guarantors.[56]
[56] Anketell 4AD [21.1] [ 21.5].
Third, and allied to the above plea, the defendants contend that by demanding payment before exhausting its claims and remedies against the secured property, the conduct of the plaintiff was unconscionable for the purposes of s 12CB of the ASIC Act. The defendants plead they are entitled to relief under s 12GM of the ASIC Act to confirm the plaintiff cannot demand payment from the defendants without first exhausting its claims and remedies against the secured property.[57]
[57] Anketell 4AD [32.4] and [32.5], and [37.3] and [37.4]; Defendants' Anketell Closing Submissions dated 25 March 2024 [35] - [42]; Defendants' Anketell Points in Reply in Closing dated 8 April 2024 [76].
Fourth, the defendants challenge the conduct of the plaintiff in taking possession of the secured property as mortgagee in possession, and its conduct whilst in possession. The defendants allege that in exercising the power of sale of the secured property as mortgagee in possession, the plaintiff breached the duties owed to the defendants, which conduct has caused the defendants to suffer loss and damage.[58]
[58] Anketell 4AD [35.11] and [35.13]; Defendants' Anketell Closing Submissions dated 25 March 2024 [79] ‑ [98]; Defendants' Anketell Points in Reply in Closing dated 8 April 2024 [55] - [59].
Further or alternatively to the preceding paragraph, the defendants allege that in exercising the power of sale of the secured property as mortgagee in possession, the plaintiff acted unconscionably contrary to s 12CB of the ASIC Act, which conduct has caused the defendants to suffer loss and damage.[59]
[59] Anketell 4AD [35.12] and [35.13]; Defendants' Anketell Closing Submissions dated 25 March 2024 [79] ‑ [98]; Defendants' Anketell Points in Reply in Closing dated 8 April 2024 [55] - [59] and [76].
Fifth, the defendants challenge the manner in which the plaintiff collected the proceeds of settlement of certain other properties and only applied some of those proceeds in reduction of the amounts owing under the loan agreement.[60] The other properties in question were the lots at the Waverley Estate, another property development which was controlled by the defendants and was the subject of financing arrangements with the plaintiff. The effect of this conduct was, according to the defendants, to expose the defendants to a greater liability under the guarantee.
G. The issues for determination
[60] Anketell 4AD [39.1] - [39.2]; Anketell Rejoinder [3] - [7]; Defendants' Anketell Closing Submissions dated 25 March 2024 [68] - [78]; Defendants' Anketell Points in Reply in Closing dated 8 April 2024 [47] ‑ [54].
Having regard to the pleaded cases of the parties and the primary contentions agitated at trial, the following issues fall for determination by the court in the Anketell Proceeding.
First, whether the plaintiff has discharged its onus on the balance of probabilities to establish the essential elements of the claim against Mr Caratti pursuant to the guarantee contained within the Anketell Loan Agreement, including the demands alleged to have been served on Mr Caratti and the validity of the assignment of the Anketell Loan Agreement to the plaintiff by Angas Securities. In this regard, it is necessary to consider whether the plaintiff has discharged its onus on the balance of probabilities to establish the quantum of the claim against Mr Caratti in respect of the guarantee. I have addressed this issue at [334] to [460] of these reasons.
Second, whether the plaintiff has discharged its onus on the balance of probabilities to establish the essential elements of the claim against Ms Bazzo pursuant to the guarantee contained within the 2016 Anketell Deed of Guarantee, including the demands alleged to have been served on Ms Bazzo and the quantum of the claim. I have addressed this issue at [461] to [472] of these reasons.
Third, whether the defendants have discharged their onus on the balance of probabilities to establish that the enforcement representation was made by Mr Masel and that the legal effect of that representation was to estop the plaintiff from pursuing the claims on the guarantees in the circumstances.[61] The plaintiff denies the representation was made, relies upon the terms of the executed instruments, and asserts the second defendant has expressly agreed, by the terms of the 2016 Anketell Deed of Guarantee itself, that she did not rely on any such representation.[62] I have addressed this issue at [473] to [551] of these reasons.
[61] Anketell 4AD [28.3], [32.1], and [37.1].
[62] Anketell 3ASR [13].
Fourth, whether the defendants have discharged their onus on the balance of probabilities to establish that the enforcement representation was made by Mr Masel and that the conduct of the plaintiff in pursuing its claims on the guarantees was unconscionable in the circumstances within the meaning of s 12CB of the ASIC Act.[63] I have addressed this issue at [552] to [599] of these reasons.
[63] Anketell 4AD [32.4] and [32.5], and [37.3] and [37.4].
Fifth, whether the defendants have discharged their onus on the balance of probabilities to establish that the plaintiff owed them certain duties whilst acting as mortgagee in possession and relevantly breached those duties. The defendants have pleaded and must also prove that the breach caused the defendants to suffer loss and damage, being their exposure to liability for interest to the plaintiff which accumulated between 5 October 2018 to 15 September 2022, and the interest that has and continues to accumulate from 16 September 2022.[64] I have addressed this issue at [600] to [771] of these reasons.
[64] Anketell 4AD [35.2], [35.3], [35.11] and [35.13].
Sixth, and related to the fifth point, whether the defendants have discharged their onus on the balance of probabilities to establish that the plaintiff's conduct whilst acting as mortgagee in possession was unconscionable for the purposes of s 12CB of the ASIC Act. The defendants have pleaded and must also prove, that this conduct caused the defendants to suffer loss and damage being their exposure to liability for interest to the plaintiff which accumulated between 5 October 2018 to 15 September 2022, and the interest that has and continues to accumulate from 16 September 2022.[65] I have also addressed this issue at [600] to [771] of these reasons, together with the fifth issue referred to above.
[65] Anketell 4AD [35.12] and [35.13].
Seventh, whether the defendants have discharged their onus on the balance of probabilities to establish that the plaintiff failed to apply the proceeds of settlement of the lots at the Waverley Estate in reduction of the amounts owed by GH1 under the Anketell Loan Agreement. The defendants contend the guarantees have been rendered unenforceable by reason of the alleged breach of contract and the alleged unconscionable conduct involved in the misapplication of the funds,[66] and alternatively contend the amount claimed by the plaintiff must be reduced in the circumstances.[67] Whether these consequences flow from the conduct must therefore also be considered. I have addressed this issue at [772] to [848] of these reasons.
[66] Anketell Rejoinder [7].
[67] Anketell 4AD [39.1] and [39.2].
PART III - ANKETELL PROCEEDING: EVIDENCE AND FINDINGS
A. Introduction
In this section of the reasons, I will summarise the evidence to the extent that is necessary and set out the findings of the court for the purposes of the Anketell Proceeding.
First, I have recorded my assessment as to the reliability and credibility of the witnesses who gave evidence at trial. This assessment is necessarily relevant to the evidence in both actions. Second, I have set out my factual findings in respect of matters which relate to the relationship between the parties and the financing transactions in both proceedings. Third, I have set out the specific findings required in the Anketell Proceeding.
B. Assessment of the witnesses
(1) Mr Steve Masel
Mr Masel was the sole witness called by the plaintiff to give evidence at trial. Mr Masel gave evidence over the course of three days, on 6, 7 and 8 February 2024. His evidence in chief was primarily given in the form of several written witness statements.[68]
[68] ts 1191 - 1193 (6 February 2024).
In the Anketell Proceeding, Mr Masel's evidence in chief was contained in his amended witness statement dated 25 October 2023 and his amended supplementary witness statement dated 25 October 2023.[69] In the Hocking Proceeding, Mr Masel's evidence in chief was contained in the witness statement dated 22 May 2023 and the supplementary witness statement dated 19 October 2023.[70]
[69] These statements are Exhibits P1 and P2 (Folios 156 and 157).
[70] These statements are Exhibits P3 and P4 (Folios 61 and 98).
In respect of matters which were contentious, the plaintiff filed witness outlines which gave notice of the substance of Mr Masel's evidence on those issues, which were then the subject of viva voce evidence in chief by Mr Masel.
Mr Masel was cross-examined extensively by counsel for the defendants. His credibility and reliability is the subject of spirited submissions from the defendants' representatives. As explained below, I reject these challenges to Mr Masel's credibility and to his reliability.
Mr Masel gave his evidence at trial in a confident, calm and clear manner. It was plain to the court that Mr Masel has had considerable experience in the business of lending, including in relation to the provision of finance to property developers. I formed the impression that Mr Masel was a careful and prudent businessman who took steps in dealing with his business affairs to document matters which were material or important to him.
Further, and relatedly, it was evident that Mr Masel approached the business of lending funds to property developers and others in a manner which was particularly cognisant of the risks involved in such arrangements.
While the process of lending funds for property developments carries an inherent commercial risk for the lender, as Mr Masel recognised in his evidence, it was evident to the court that he was particularly conscious of the importance of structuring the finance arrangements and his security position to mitigate or manage these risks.
Mr Masel has some hearing difficulties and on occasions it was necessary for him to ask counsel for the defendants to repeat a particular question or to look directly at him when speaking, to assist Mr Masel's hearing. While this process lengthened his evidence somewhat, it was not a process that reflected on Mr Masel in any adverse way. Rather, it reflected, in my view, the importance which Mr Masel placed on ensuring his evidence was correct and that he properly understood the question directed to him.
Overall, on the basis of my observations during the trial, I found Mr Masel to be a generally credible and reliable witness who gave his evidence in a careful and considered manner, and without any prevarication or dissembling. On the subject of disputed conversations, as I will explain in more detail later in these reasons, it is apparent that Mr Masel maintained a strong and clear memory of those discussions. Mr Masel's evidence in chief was not disturbed in any significant respects through the process of cross-examination.
Overall, as further explained below, where there was an inconsistency between the oral evidence and recollections of Mr Masel, on the one hand, and Mr Caratti or Ms Bazzo on the other, on issues of substance, I would prefer the evidence of Mr Masel.
(2) Mr Allen Caratti
Mr Caratti and Ms Bazzo were both called to give evidence at trial and, as with Mr Masel, were both cross-examined extensively by counsel for the opposing party.
Neither Mr Caratti or Ms Bazzo may be described as naïve or unsophisticated in any sense. They are far from neophytes in the world of commercial and residential property development, as I will explain further in due course.
Mr Caratti's evidence in chief was primarily given in the form of several written witness statements.[71]
[71] ts 1935 ‑ 1951.
In the Anketell Proceeding, Mr Caratti's evidence in chief was contained in his witness statement dated 27 September 2023.[72] In the Hocking Proceeding, Mr Caratti's evidence in chief was contained in the witness statement dated 27 September 2023.[73]
[72] This statement is Exhibit D15 (Folio 256).
[73] This statement is Exhibit D16 (Folio 180).
As with Mr Masel, in respect of matters which were contentious, the defendants filed a witness outline which gave notice of the substance of Mr Caratti's evidence on those issues, which were then the subject of viva voce evidence in chief.
Mr Caratti's credibility and reliability is challenged by the plaintiff. Those challenges have considerable force, in my respectful view, and accord with my own impression during his evidence that Mr Caratti was not an impressive witness. I have reached this view for the following reasons.
First, there were instances in the evidence where I found Mr Caratti to be more inclined when testifying to resort to speeches in support of his own cause than to give accurate and specific answers to the questions. A similar observation can be made concerning the evidence of Ms Bazzo. For example, when challenged in cross‑examination as to his contention that Mr Masel had been 'sitting back waiting for interest to accrue' while in possession of the Anketell Property, given that various emails had been sent to Mr Caratti by Mr Masel, Mr Caratti insisted that Mr Masel had simply sat on the property for four years and did nothing with it.[74] That answer was self‑serving and not responsive to counsel's question.
[74] ts 2046 - ts 2051 and ts 2097.
Second, and allied to the example just given, Mr Caratti's evidence as to the criticisms of Mr Masel while in possession of the Anketell Property lacked any substance and yet he maintained those criticisms throughout his evidence.
At one point, it was drawn to Mr Caratti's attention that a particular conversation was described in his witness statement as having occurred more than a year before Mr Masel took possession of the property, to which Mr Caratti responded that the date in the witness statement must be wrong.[75] Indeed, Mr Caratti then insisted that other dates in his statement must be wrong. In context, it is more likely that Mr Caratti was wrong about the discussion, and the dates in the statement were correct, yet Mr Caratti maintained his position in evidence. This reflected poorly on Mr Caratti, in my view.
[75] ts 2046 - ts 2051.
Further, Mr Caratti was dismissive of evidence drawn to his attention as to the steps taken by Mr Masel and the plaintiff during the period of possession, which rationally undermined his criticism of Mr Masel.[76] Mr Caratti's evidence in this regard demonstrated a strongly held, but baseless, animosity towards Mr Masel. That animosity towards Mr Masel had a real tendency to permeate much of Mr Caratti's evidence and the manner in which he gave it.
[76] ts 2089, ts 2096 and ts 2101.
Third, Mr Caratti was not prepared in his evidence to accept certain uncontentious matters, in circumstances which indicated Mr Caratti was more prepared to assert his case than give accurate evidence. I do not accept these were occasions where Mr Caratti was simply being cautious in his evidence. Rather, Mr Caratti was more inclined to amplify his defence in the proceedings. I will refer to some examples, which were highlighted by the plaintiff in closing submissions, which provide illustrations of the point just made.
At ts 1954, counsel for the plaintiff cross-examined Mr Caratti as to the terms of the loan agreement:
FRENCH, MR: So interest under this agreement, interest is payable on a monthly basis, isn't it?---
CARATTI, MR: Not if it's capitalised.
FRENCH, MR: But I'm asking about the agreement?---
CARATTI, MR: That's not how I read it, so I just - - -
FRENCH, MR: You read it differently?---
CARATTI, MR: I can't agree with you on that.
FRENCH, MR: Okay. Well, can you tell me what part of this agreement makes you read it as allowing for capitalisation of interest?---
CARATTI, MR: Well - - -
FRENCH, MR: Just take me to the part of the agreement where you read it differently?---
CARATTI, MR: There's a higher and there's a lower rate there, and - and it worked on the basis that these things were paid at the back end. That's how it worked.
At ts 1956, following an objection by counsel for the defendant which I ruled against, Mr Caratti continued in his evidence:
FRENCH, MR: Can you point - this agreement doesn't provide for the payment of interest upon the sale of lots anywhere, does it?---
CARATTI, MR: That's how it operated.
FRENCH, MR: But I'm asking about the agreement. I'm not asking about how it operated. Just this agreement. This agreement did not provide for the payment of interest upon the sale of lots?---
CARATTI, MR: I can't agree with that. I would have to read every line of it then. I would have to sit there and read every line of it. I'm not going to agree with you if I don't believe that.
FRENCH, MR: But I - well, but I just took you to 3.2 which is one sentence.
The borrower shall pay the interest every month.
Why can't you agree with me with that?---
CARATTI, MR: Because it never operated that way.
FRENCH, MR: But I'm not asking about how it operated. I'm just asking about the agreement.
Fourth, the manner in which Mr Caratti gave evidence in chief as to a crucial aspect of the Anketell Proceeding, namely whether the enforcement representation was in fact made by Mr Masel, lacked specificity, was inconsistent with the pleaded case, and was wholly unpersuasive.
The interchange with counsel which is extracted at [509] of the reasons reveals Mr Caratti's testimony, in his evidence in chief, that there was one conversation with Mr Masel on the issue, when the pleaded case refers to two distinct conversations - the first being by telephone and the second being a meeting at the offices of the defendant.
(d)In the circumstances, it is reasonable to infer that a purpose of the preparation of the document was to capture the costs incurred in the construction of the road known as Parma Link, drawn from various other documents and invoices which provide the relevant detail of those costs.
(e)I should observe that the document is undated and does not contain details of its author, although from all the surrounding circumstances of the proceedings, it can reasonably inferred in my view that the document emanates from the records of the Mammoth Group (and is prepared in the ordinary course of that entity's business). Counsel for the plaintiff raised a number of attacks on the document in this respect.[515] Of course, as Solomon J observed in Rhodes v De Castro [No 2], the admission of a statement pursuant to s 79C does not of itself prove conclusively the truth of the statement, and the weight to be accorded to the statement remains an issue for assessment at the conclusion of the trial proceedings.
[515] ts 1459 (8 February 2024).
(f)Finally, I should note that the circumstances are not such as to warrant exercising the discretion in s 79C(6) to reject the admission of the statements in the document even though they fulfil the requirements of admissibility set out within the provision. The circumstances of the case, and of the nature of the document, are such that it is open to the plaintiff to test the veracity of the document through cross-examination of the witnesses proposed to be called by the defendants.
Exhibit 87 – Tuxedo Rise Hocking – Stage 1D price list
This single-page document is headed 'Tuxedo Rise Hocking – Stage1D' and 'Price list as at 9 November 2015'. On its face, it purports to record the prices for lots in the development which is central to the claims in the Hocking Proceeding, including contracted prices.
The document was the subject of cross-examination of Mr Masel on 8 February 2024, during which the plaintiff's objection to the document was maintained.[516] Mr Masel accepted he could well have received the document on around 9 November 2015, although he could not remember each individual document of this type.
[516] ts 1473 – 1475 (8 February 2024).
The plaintiff's objection to the document was that it infringed the hearsay rule. The defendants sought to tender the price list pursuant to s 79C(2a) of the Evidence Act.[517]
[517] ts 1568 – 1571 (12 February 2024).
The objection to the document is disallowed. The document may be tendered pursuant to s 79C(2a). In my view:
(a)The relevant statements contained in the price list are matters of fact and direct oral evidence of those facts would be admissible. The prices for which the lots were sold, which are said to form part of the counterclaim in CIV 2283, are matters of fact.
(b)Further, it may be inferred that the prices and other information stated in the document are ultimately derived from source documents such as individual contracts.
(c)Further, I was satisfied the document was prepared by a person or entity in the ordinary course of the business of that person or entity for the purpose of recording any matter relating to that business. When viewed as a whole, the document (which was discovered by the defendants) presents on its face as a summary of the listed prices and contract prices for each lot in the development.
(d)The weight to be accorded to the statements in the price list remain a matter for submission. Mr Caratti and Ms Bazzo can be questioned as to the veracity of the document in due course. I see no basis to reject the document pursuant to the discretion in s 79C(6).
Exhibit 119 – Email from Ms Bazzo to Mr Masel attaching sales spreadsheet
This document is an email from Ms Bazzo to the email address used by Mr Masel, purportedly sent on 5 August 2016. The email indicates it attaches the latest sales spreadsheet. The email shows that there was an attachment thereto. The second page is similar in nature of Exhibit 87 above, namely a price list for the Tuxedo Rise Hocking development. The price list states it is 'as at 5 July 2016'. The fact the document was provided to the plaintiff in August 2016, relatively proximate to the date of the list, is a relevant feature of the evidence which can assist the Court to draw appropriate inferences as to the genuine nature of the sales spreadsheet and the fact it was created in the course of the defendants' business.
The email is properly admitted as a business record. The price list falls within s 79C(2a) of the Evidence Act for the same reasons as Exhibit 87 above. The observations I have made above in relation to questions of weight and veracity in respect of that document apply equally to Exhibit 119.
Exhibit 134 – Email from Mr Ferrante to Mr White re Hocking Titles
This document consists of a series of emails from Mr Fred Ferrante of the Mammoth Group to Mr Brett White of Remax Extreme, a real estate agent. The emails passed between these persons (and others) in around May 2017 and June 2017. The subject matter is the Tuxedo Rise development. The substance of the emails purport to concern the delay in the finalisation of titles for the lots forming part of the development.[518]
[518] ts 1572 (12 February 2024).
The plaintiff objected to the document on the basis that none of the witnesses who have given or are to give evidence were copied into these emails and the relevance of the document was somewhat obscure (if it was relied upon for a non-hearsay purpose). The defendants assert the document is an internal communication of the defendants to their agent and is contemporaneous with [85] of the witness statement of Ms Bazzo filed in CIV 2283. The emails were said to be dealing with a concern about the delay in contracts with selling agents.
The tender of the document infringes the hearsay rule. That explains why the defendants sought to tender the document for a non‑hearsay purpose. That purpose was said to be to identify the contemporaneous communications between the agents and the defendant in respect of sales while they were dealing with the plaintiff in respect of the City of Wanneroo payment fees. As further explained, the defendants say the emails show there were communications between agents, that they were waiting on the Landgate clearance, and they were inquiring in relation to people who were purchasing the blocks, referring to it as a 'blockage'.
The view I formed was that the emails appeared to be relied upon for the truth of their contents (and that could be the only basis for tender), and as none of the senders or recipients of the emails were to be called, the contents of the emails was hearsay and should not be admitted. Thus the objection should be upheld. The information within the email appeared to form part of the defendants' counterclaim in the Hocking Proceeding, with the aspect of delay being a relevant feature of the claim, which needed to be proven by the defendants. The mere dispatch or receipt of the document was not a matter of relevance in the proceedings, so the purported limited basis for tender did not assist the defendants, in my view.
I therefore ruled the objection should be upheld. Even if the contents of the emails was relevant to any matter in issue, it was effectively and in substance being relied upon for the truth of its contents, and as the document was hearsay and not otherwise admissible, its tender should thus be rejected.
Exhibit 135 – Email from Mr Caratti to Mr Masel attaching price list
This document is similar in substance to Exhibit 119. It is an email from Mr Caratti to Mr Masel sent on 25 July 2017 attaching a price list for the Tuxedo Rise development, as at 25 July 2017. The fact the document was provided to the plaintiff on 25 July 2016, proximate to the date of the list, is a relevant feature of the evidence which can assist the Court to draw appropriate inferences as to the genuine nature of the price list and the fact it was created in the course of the defendants' business.
The email is properly admitted as a business record. The price list falls within s 79C(2a) of the Evidence Act for the same reasons as Exhibit 87 above.[519] The observations I have made above in relation to questions of weight and veracity in respect of that document apply equally to Exhibit 135.
[519] ts 1574 (12 February 2024).
Exhibit 137 – Emails from Mr Caratti to Mr Masel attaching construction costs
This document consists of an email from Mr Ferrante of the Mammoth Group to Mr Caratti sent on an unknown date, then onforwarded to Mr Masel on 26 July 2017. The subject matter is described as:
Lots 79 & 80 Nicholas Road, Hocking – Subdivision Construction Costs for Hinckley Pwy & Intersection with Majorca Elbow.
The email to Mr Masel includes a statement from Mr Caratti that he is attaching the claim under s 159 (of the Planning and Development Act 2005 (WA)), and goes on to say:
…of which they have to pay 50% of which is $875,000 payable after they get there [sic] titles It's a debt that I can claim from the subdivider.
The document is said by the defendants to relate to the counterclaim pleaded in [49(d)] of the Amended Defence and Counterclaim dated 6 February 2024.
There are two attached documents, consisting of a schedule of construction costs, very similar in nature to Exhibit 206, but relating to Hinckley Parkway and the intersection with Majorca Elbow, and a roadworks and drainage plan for Lot 79 of Nicholas Road.
An email exchange between Mr Ferrante and Mr Masel is also included as part of the exhibit, sent and received on 26 July 2017 attaching links to provisions of the legislation, which appears to then be forwarded to Mr Masel on the same date.
As with the other documents which attracted objections, discussed above, the construction costs schedule which forms part of Exhibit 137 was provided to the plaintiff by email at a time which was proximate to the creation of the document itself. This assists the Court to draw appropriate inferences as to the genuine nature of the schedule and the fact it was created in the course of the relevant business.
I formed the view the objection, based on hearsay and opinion, should be disallowed and the tender should be accepted, largely for the same reasons as with Exhibit 206. I concluded the document was capable of being tendered pursuant to s 79C(2a) of the Evidence on the basis that the statements in the document were derived from genuine business records maintained by the Mammoth Group. The observations I have made above in relation to questions of weight and veracity in respect of that Exhibit 206 apply equally to Exhibit 137.
E.Leave to apply to recall Mr Masel
Following a concern raised by counsel for the defendants after Mr Masel had completed his evidence, I raised with the parties whether any application might be made to recall Mr Masel to avoid any prejudice which may have been caused by reason of certain objections being held over during the course of his evidence.
The view I formed was that it was in the interests of justice to allow the parties to make an application to have Mr Masel recalled to give further evidence in chief or to be the subject of cross-examination (and any appropriate re-examination), to be confined to the matters and documents the subject of the evidentiary rulings made on 14 February 2024.
I made orders to this effect on 14 February 2024, as follows:
[4]By 5.00pm on Friday, 16 February 2024, any party shall file and serve any application to recall Steven Alick Masel to give evidence at the continued trial of these actions, such application to identify the grounds of the application and to be supported by an affidavit (and any such application to be confined to the matters and documents the subject of the Court's rulings given on 14 February 2024).
[5] In the event an application or applications are filed and served in accordance with order 4 above, any party opposing such an application is to give notice of that opposition (stating the grounds of that opposition) to the court and to the other party by no later than 5.00pm on Friday, 23 February 2024.
[6]Any application or applications filed and served in accordance with order 4 above will be heard and determined at the directions hearing on 1 March 2024.
As to the basis on which the grant of leave would be assessed in this regard, I drew the attention of the parties to the principles expressed by Gummow, Kirby and Callinan JJ in MWJ v R,[520] and by Gleeson CJ in R v Birks,[521] albeit in the criminal law context, as well as the discussion in Cross on Evidence (14th Edition) at [17460].
[520] MWJ v R (2005) 222 ALR 436; [2005] HCA 74 [40].
[521] R v Birks (1990) 19 NSWLR 677, 681F.
As matters transpired, no application was made by either party to recall Mr Masel.
ATTACHMENT A.1
Rulings in relation to Defendants' objections
| No. | TB | Date | Description | Ruling |
| 1 | 229 | 5 Oct 2016 | Email from Steve Masel to Marian Mendoza, Subject: Fw Loan Statements | Tender not pressed by the plaintiff. No ruling required. |
| 2 | 230 | 20 Sept 2018 | Schedule to Default Notice, dated 20 September 2018 | Defendants object to tender. Objection to the tender is disallowed. |
| 3 | 231 | 31 May 2019 | Letter from Taylor Smart Lawyers to Byford Land Pty Ltd dated 31 May 2019 | Defendants object to tender. Objection to the tender is disallowed. |
| 4 | 232 | 7 June 2019 | Letter from Tina Bazzo to Taylor Smart Lawyers, dated 7 June 2019 | Defendants object to tender. Objection to the tender is disallowed. |
| 5 | 233 | 6 July 2021 | Copy Final Statement, dated 6 July 2021 | Defendants object to tender. Objection to the tender is disallowed. |
| 6 | 234 | 4 Oct 2021 | Copy Loan Statement titled Tina Bazzo (Hocking) – Mortgage 6.0M (with handwritten notes), dated 4 October 2021 | Defendants object to tender. Objection to the tender is disallowed. |
| 7 | 235 | Various | Bundle of copies of letters and correspondence from Walthamstow Pty Ltd to Gucce Holdings Pty Ltd and Tina Bazzo re Mortgage | Plaintiff does not seek to tender this document. No ruling presently required. |
| 8 | 223 | 28 Feb 2017 | Letter from Steve Masel to Daleside Pty Ltd, Mortimer Land Company Pty Ltd, 110 Nicholson Road Pty Ltd Tax Invoice dated 28 Feb 2007 | Objection not pressed by the defendants. No ruling required. |
| 9 | 236 | N/A | Document produced on subpoena by Byford River Pty Ltd | Plaintiff does not seek to tender this document. No ruling presently required. |
| 10 | 237 | N/A | Document produced on subpoena by Byford River Pty Ltd | Plaintiff does not seek to tender this document. No ruling presently required. |
ATTACHMENT A.2
Rulings in relation to Plaintiff's objections
| No. | Description of Document | Date | Document | Plaintiff's Objection | Defendants' Response | Rulings |
| 1. | Hocking Subdivision Construction Costs for Parma Lane | Undated | DDD 228 EX-0206 | Hearsay, opinion | Within the direct knowledge of the witness and business record | Objection is disallowed. The court's ruling is that the statements in the document are derived from a genuine business record within the terms of s 79C(2a). The court will provide its reasons in support of that ruling in its final decision. Document to be included in the trial bundle. |
| 3. | Letter from Reliance Finance and Mortgage Services to Hocking Land Company Pty Ltd | 11.01.04. | DDD 16 EX-0007 | Description of document not admitted | Document no longer relied upon | No ruling required. Document to be excluded from the trial bundle. |
| 34. | Email from Allen Caratti to Steve Masel attaching valuation | 04.05.15. | DDD 255 EX-0136 | Hearsay, opinion | Document no longer relied upon | No ruling required. Document to be excluded from the trial bundle. |
| 47. | Allen Caratti email to Steve Masel attaching City of Wanneroo invoice | 05.10.15. | DDD 237 EX-0076 | Authenticity, provenance, receipt not admitted | Author called as witness | No ruling required on the basis the author is being called as a witness. Document to be included in the trial bundle. |
| 52. | Tuxedo Rise Hocking – Stage 1D price list | 09.11.15 | DDD 238 EX-0087 | Hearsay | Within the direct knowledge of the witness and business record | Objection is disallowed. The court's ruling is that the statements in the document are derived from a genuine business record within the terms of s 79C(2a). The court will provide its reasons in support of that ruling in its final decision. Document to be included in the trial bundle. |
| 55. | Report from Rowe Group to Steven Masel | 18.11.15. | DDD 174 EX-0091 | Hearsay, opinion | Relied upon for non-hearsay purpose the fact the document was provided | No ruling required, on the basis the document is not being relied upon for the truth of its contents. Document to be included in the trial bundle. |
| 57. | Letter from A Caratti to Gucci Holdings Trust | 20.11.15. | DDD 8 EX-0093 | Authenticity, provenance | Author called as witness | No ruling required on the basis the author is being called as a witness. Document to be included in the trial bundle. |
| 74. | Email from Tina Bazzo to Steve Masel attaching sales spreadsheet | 05.08.16. | DDD 245 EX-0119 | Relevance | [49(b)] counterclaim | Objection is disallowed. The court's ruling is that the statements in the document are derived from a genuine business record within the terms of s 79C(2a). The court will provide its reasons in support of that ruling in its final decision. Document to be included in the trial bundle. |
| 76. | Email from Tina Bazzo attaching invoice for legal advice | 13.12.16. | DDD 247 EX-0123 | Relevance | [6(d)] Reply [3.3] Rejoinder Document is no longer relied upon by the defendants. | No ruling required on the basis the defendants no longer rely upon the document. Document to be excluded from the trial bundle. |
| 81. | Email from Fred Ferrante to Brett White re Hocking Titles | 07.06.17 | DDD 253 EX-0134 | Relevance, hearsay | [49(b)] counterclaim Non-hearsay purpose | Objection is upheld. The court's ruling is that even if the document is relevant to matters in issue, as it is relied upon for the truth of its contents the document is hearsay and is not otherwise admissible. The court will provide its reasons in support of that ruling in its final decision. Document to be excluded from the trial bundle. |
| 82. | Email Allen Caratti to Steve Masel attaching price list | 25.07.17. | DDD 254 EX-0135 | Hearsay | Within the direct knowledge of the witness and business record | Objection is disallowed. The court's ruling is that the statements in the document are derived from a genuine business record within the terms of s 79C(2a). The court will provide its reasons in support of that ruling in its final decision. Document to be included in the trial bundle. |
| 83. | Emails from Allen Caratti to Steve Masel attaching construction costs | 26.07.17 | DDD 256 EX-0137 | Hearsay, opinion | Within the direct knowledge of the witness, business record and non hearsay purpose as to communication sent | Objection is disallowed. The court's ruling is that the statements in the document are derived from a genuine business record within the terms of s 79C(2a). The court will provide its reasons in support of that ruling in its final decision. Document to be included in the trial bundle. |
| 97A | Copy of the valuation report for lot 35 Treeby Rd Anketell, dated 12 January 2018 | 12.01.2018 | DDD-183 EX-0154 | Hearsay, opinion | Document no longer relied upon | No ruling required. Document to be excluded from the trial bundle. |
| 104. | Email from Allen Caratti to Steve Masel with Valuation Report for the Treeby Road property, prepared by CBRE Property Valuers | 11.05.18 | DDD 274 EX-0161 | Hearsay, opinion | Document no longer relied upon | No ruling required. Document to be excluded from the trial bundle. |
| 110. | Valuation, 19 October 2018 | 19.10.18 | DDD 188 EX-0170 | Hearsay, opinion, relevance | Document no longer relied upon | No ruling required. Document to be excluded from the trial bundle. |
| 111. | Valuation received under instruction from Jonathan Masel | 08.11.18. | PSD 13 EX-0174 | Hearsay, opinion, relevance Plaintiff no longer presses relevance objection. | Non hearsay purpose, fact valuation received [35] Defence Document no longer tendered for hearsay purposes. | No ruling required, on the basis the document is not being relied upon for the truth of its contents. Document to be included in the trial bundle. |
| 115. | Anketell Road structure plan Objection not pressed. | 2020 | DDD 275 EX-0001 | Relevance, provenance, description of document not admitted. | As the objection is not pressed, the defendant need not complete this row. | No ruling required. Document to be included in the trial bundle. |
| 116. | Valuation report Treeby Road Anketell | 19.05.22. | DDD 276 EX-0192 | Hearsay, opinion, relevance | Document no longer relied upon | No ruling required. Document to be excluded from the trial bundle. |
| 119. | Realcommercial.com.au search Churchill Knight | 10.07.23 | DDD 280 EX-0201 | Relevance, hearsay | [35] defence Admissible as a published statement, not as to the truth of its content. | No ruling required. Document to be included in the trial bundle. |
| 120. | Realcommercial.com.au search | 10.07.23 | DDD 278 EX-0199 | Relevance, hearsay | [35] defence Admissible as a published statement, not as to the truth of its content | No ruling required. Document to be included in the trial bundle. |
| 121. | Realcommercial.com.au search | 10.07.23 | DDD 279 EX-0200 | Relevance, hearsay | [35] defence Admissible as a published statement, not as to the truth of its content | No ruling required. Document to be included in the trial bundle. |
| 122. | Realcommercial.com.au search | 10.07.23 | DDD 281 EX-0202 | Relevance, hearsay | [35] defence Admissible as a published statement, not as to the truth of its content | No ruling required. Document to be included in the trial bundle. |
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
LM
Associate to the Honourable Justice Lundberg
29 OCTOBER 2025
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