Scald Pty Ltd v Turner Developments Pty Ltd - [2014] ACTSC 72

SCALD PTY LTD v TURNER DEVELOPMENTS PTY LTD AND OTHERS
[2014] ACTSC 72 (30 April 2014)

EQUITY – rectification – multi-party loan agreement – mistake in documentation provided to solicitors – whether common intention between parties established – court not satisfied that common intention existed – rectification refused

Catanzariti v Romano [2009] ACTSC 38
Green v AMP Life [2005] NSWSC 370
Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603
Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603
Waldorf Australia Pty Ltd v Elias Construction Group Pty Ltd [2010] NSWSC 164
Slee v Warke (1952) 86 CLR 271
Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603
Jones v Dunkel (1959) 101 CLR 298
Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389

No. SC 823 of 2009

Master Harper
Supreme Court of the ACT

Date: 30 April 2014

IN THE SUPREME COURT OF THE     )
  )          No. SC 823 of 2009
AUSTRALIAN CAPITAL TERRITORY           )

BETWEEN: SCALD PTY LTD
Plaintiff

AND: TURNER DEVELOPMENTS PTY LTD AND OTHERS
Defendants

ORDER

Judge:   Master Harper
Date:   30 April 2014
Place:   Canberra

THE COURT ORDERS THAT:

the counterclaim be dismissed.

the action be stood over to 7 May 2014 for mention and the fixing of a date for submissions as to the directions to be made for the further hearing of the action.

This proceeding arises out of a dispute between companies and persons involved in a joint venture for the development of the Space apartment complex in Turner. The plaintiff company was a party to the joint venture, and was also a lender to the joint venture. The first defendant company, Turner Developments Pty Ltd, was the joint venture vehicle, and was incorporated for that purpose.

Most of the persons behind the parties which were participants in the joint venture were experienced in the construction industry, and in many cases did work for the joint venture for which they were paid at commercial rates. The sole director of the plaintiff company, Scald Pty Ltd, is Mr Scott Kovacs. He had the company incorporated for the purpose of the joint venture. His expertise was in electrical design. His company undertook electrical design work for the joint venture and was paid for it. There is no complaint in that regard.

The company, in its capacity as trustee for the Scald settlement, lent money to the joint venture at interest. A number of other companies and some individuals also made loans in the same way.

The expectation of all concerned was that the venture would generate a profit sufficient to pay back the borrowed moneys and interest, and in addition to provide a return to the joint venture participants. In the event the venture did not make a profit. Not only was there no profit for distribution to the participants, but there was, and remains, insufficient to repay the borrowings and interest in full.

In the circumstances it is common ground that the funds available should be used to repay the outstanding borrowings and interest to the extent possible, on a pro rata basis. The dispute is about how much the plaintiff is entitled to be repaid.

The proceeding

The proceeding was commenced by originating claim in September 2009. An amended statement of claim was filed in December 2009 against nine defendants. The first defendant, as I have said, is the company which was incorporated as the vehicle for the joint venture. The fifth and ninth defendants are individuals. The other six defendants are companies. All of the defendants except the first lent money to the joint venture at interest.

The pleadings

The plaintiff asserts in the statement of claim that in June 2004 it lent $230,000.00 to the plaintiff at an interest rate of 18% per annum. In September 2004 the plaintiff lent a further $45,000.00 at the same rate. By December 2006 the moneys lent had not been repaid, and no interest had been paid. The parties entered a written agreement in December 2006 in which the lenders agreed to extend time for repayment of their loans. In consideration the first defendant agreed to capitalise the interest due to each of the lenders, to pay interest on the capitalised amount, and to secure the borrowings by mortgage over the land on which the apartments were being constructed. Each of the parties executed two documents to give effect to the arrangement, a loan agreement and a mortgage. Both documents were executed on or about 13 December 2006. The loan agreement recited that each defendant had advanced to the first defendant, prior to the date of the agreement, the amount detailed opposite the name of that lender in a schedule to that agreement. The schedule contained a list of seventeen amounts, including two amounts against the name of the plaintiff company. The total amount was $3,139,485.21.

The plaintiff went on to assert in the statement of claim that the lenders held their rights under the agreement as tenants in common, in a proportion determined by dividing the sum or sums for each party by the total. The plaintiff then asserted that the first defendant had sold the property the subject of the mortgage, and that in or about December 2008 had made repayments to the lenders other than in the agreed proportion. The plaintiff acknowledged that it had received $73,977.46 but said that this represented a proportion of 6.512% of the total whereas it should have been paid 12.713%. The plaintiff sought an account and payment of such amount as was found to be payable under the agreement or under statute.

The plaintiff further said that to the extent that the first defendant had made payments to any of the other defendants in excess of their entitlements, such defendants had received those proceeds in the knowledge of a breach by the first defendant of a fiduciary duty to the plaintiff and should be required to account to the plaintiff for the amount of overpayment received.

The plaintiff further asserted implied terms of the loan agreement, and breaches of those terms by the first defendant and by any of the other defendants which had received an overpayment.

The schedule showed two amounts against the name of the plaintiff, $335,371.51 and $63,752.05, these being the capitalised amounts up to December 2006 after accruing interest.

The sixth defendant Mart Pty Ltd, shown in the schedule as a lender for $70,835.52, has not appeared or participated in the proceeding. There is no evidence of service on the company and the plaintiff has not sought any orders against it. I infer from all of the evidence that Mart Pty Ltd has not received an overpayment, and is probably in the same position as the plaintiff.

In December 2009 the defendants other than the sixth defendant, represented by the same solicitors, filed a defence and counterclaim. They pleaded in the defence that the terms of the 2004 transactions had become merged in the 2006 agreement. They said that the schedule to the 2006 agreement did not record the correct amounts of the sums advanced by each lender and did not reflect the true agreement between the parties. They asserted that repayments had been made in accordance with that true agreement. They admitted the implied terms alleged in the agreement but denied any breach of them.

By way of counterclaim, the defendants pleaded that by an administrative error, the amounts which appeared in the schedule to the December 2006 loan agreement had been inserted instead of the correct loan amounts. They included as an attachment to the counterclaim a list of lenders and amounts they said should have been set out in the schedule. The total of those amounts was $6,268,444.01. The amounts for Scald Pty Ltd were unchanged. The names of the lenders appear to have been the same but in respect of some lenders a number of further loans were listed.

The plaintiff filed a defence to the counterclaim denying that the common intention to the 2006 agreement was other than what was set out in the written loan agreement.

The solicitors for the defendants were asked for further and better particulars of the defence and counterclaim. They provided particulars of the “true agreement” to the effect that this was a reference to the common understanding of the parties as to the effect of the agreement they intended to enter. The commonly understood effect was said to be that the agreement would reflect the total amounts of the loans made by each of the parties plus capitalised interest. They said that the understanding had been reached from about November 2006 following discussions by Goran Adzic, Peter Bowyer and Michael de Simone on behalf of the first defendant with the various persons behind the lender companies. They said that Mr Adzic had spoken with Mr Kovacs. They then said that on 13 December 2006 all parties had met at the offices of Meyer Vandenberg prior to signing the agreement, at which time the details of the agreement were explained to the parties by Mr Paul Green, a solicitor with Meyer Vandenberg.

They said that the substance of the discussions and the explanation was that the agreement would include terms that all unpaid sums lent by each lender to the first defendant, together with interest payable to 31 December 2006, would be calculated as a capitalised amount; interest would then be payable by the first defendant on the capitalised amount at 18% per annum; the principal and interest would be paid by the first defendant from the profits of the development project; and the loans would be secured by mortgage over the land.

They were asked for particulars of the administrative error. They replied that this occurred when Mr de Simone as director of the first defendant prepared a spreadsheet on his laptop computer to show all outstanding loans made by the lenders for the first defendant, including interest accrued to 31 December 2006. When emailing the spreadsheet to Meyer Vandenberg, the solicitors instructed to prepare the loan documentation, Mr de Simone accidentally attached an incorrect and incomplete schedule. The schedule was not checked before the parties executed the loan agreement, and the error was not detected until some time later.

These particulars were subsequently amended to add the information that the common understanding between the parties, that is the “true agreement”, was reached at a management committee meeting on 8 November 2006, in addition to certain other discussions. Some of those discussions were deleted from the particulars previously given, including the reference to any conversation between Mr Adzic and Mr Kovacs. The assertion that the parties had met on 13 December 2006 at the offices of Meyer Vandenberg, and that Mr Green had explained the agreement to them, was also withdrawn. The management committee meeting had been attended by Mr de Simone, Mr Adzic, Mr Kovacs and also Mr Peter Bowyer, Mr John Martone and Mr Lovre Vatavuk. All of these were directors of Turner Developments Pty Ltd at that time, as well as being, in some cases, directors of companies which were parties to the loan agreements. The solicitors for the defendants identified the individual participants to the “true agreement”, in some cases as individuals and in others as representing their companies, as those in attendance at the management committee meeting and also Mr Robert Milicevic (on behalf of the third defendant), Mrs Agi de Simone (fifth defendant), Mr Michael Dunn (on behalf of the eighth defendant) and Mr Dal Molin (ninth defendant).

The affidavit evidence

The action having been commenced by originating claim, it would have been expected in the normal course that evidence at the trial would be given orally. Rule 6700 (1) of the Court Procedures Rules 2006 so provides. Notwithstanding this, the solicitors for both parties seem to have assumed that evidence in chief would be given by affidavit. This is an available course if the parties agree to it, unless the court otherwise orders. The parties must tell the court about the agreement before the proceeding is set down for trial: r 6701. It is not clear that the parties adverted to these provisions of the rules. In the early stages, at a directions hearing before a deputy registrar in March 2010, the solicitors asked for a number of directions by consent, including directions as to a timetable for filing and serving affidavits.

The purpose of the requirement in r 6701 for the parties to tell the court about an agreement for evidence at trial to be by affidavit is to give the court an opportunity to consider whether the proposed course is satisfactory so far as the court is concerned. Rule 6700, which provides that evidence at the trial of a proceeding started by originating claim must be given orally in open court, applies unless the court otherwise orders. Such an order is not within the jurisdiction of the registrar or a deputy registrar, subject to r 1611 as to formal consent orders. The registrar may make a consent order under that rule where the parties consent, but only where the registrar considers it appropriate. I am not critical of the deputy registrar in relation to the directions given in March 2010: it is apparent that the deputy registrar was not informed that what was proposed represented a departure from r 6700, or that the parties had reached an agreement to go to trial on affidavit evidence.

I said in Catanzariti v Romano [2009] ACTSC 38 at [15] that an affidavit would generally be inappropriate as a means of adducing evidence about disputed facts, particularly where there might be an issue as to the credibility of the deponent. At [11] I said that such a course deprived the court of the opportunity to observe the witnesses giving their evidence without the assistance of leading questions.

Affidavits will frequently be appropriate where they set out factual background which is not in contention. They will be entirely appropriate where the only or main issue is an issue of law and where a substantial dispute of fact is unlikely, to use words which appear in r 35. Unfortunately in the present case there is a substantial issue between the parties as to factual matters.

For the future, even where all parties agree that evidence in such a proceeding should be given by affidavit, it is important that the agreement be brought to the attention of the docket judge at an early stage in the proceedings, in case the judge is not of the same mind.

Affidavits were made in the defendant’s case by Mr Bowyer, Mr de Simone, Mrs de Simone, Mr Dunn, Mr Milicevic, Mr Dal Molin and Mr Green. The plaintiff’s solicitors filed and served two affidavits by Mr Kovacs.

All of the deponents were cross-examined during the course of the hearing.

Mr Bowyer in his first affidavit swore that he was a director of the first defendant (Turner Developments Pty Ltd) and also of the seventh defendant, Space Developments Pty Ltd. He became a director of the first defendant in December 2000 and secretary in December 2005. He annexed copies of company searches of both companies. Turner Developments Pty Ltd was incorporated in December 2000. By the time of trial he, Mr de Simone, and Mr Vatavuk were directors. A number of persons had previously been directors but were no longer by trial, including Mr Adzic, Mr Kovacs and Mr Martone. There were fourteen shares in the company, with two shares held by each of seven shareholders. These included Mr Bowyer, Mr Adzic, Mr Kovacs, Mr Martone and Canberra Contractors Pty Ltd, a company controlled by Mr de Simone.

Mr Bowyer explained in his affidavit the background to the joint venture. He said that in December 2000 six companies agreed to acquire blocks of land in Turner for development of residential units, as a joint venture, and entered a joint venture agreement.

In June 2001 Mr Kovacs took over from one of the original participants in the joint venture, through his company Scald Pty Ltd, and Mr Kovacs became a member of the management committee. Mr Martone took over from an original participant in the following month. Mr Kovacs and Mr Martone both became directors of Turner Developments Pty Ltd. They remained as directors until mid-2009.

Mr Bowyer said in the affidavit that there were delays in construction which led to problems with cashflow. Mr Adzic was project manager for the first stage, and requested the participants in the joint venture to provide an injection of capital by way of loan funds. Loans were made by a number of companies and individuals. Mr Adzic kept a computer record of the loans, updating this to show interest accrued from time to time. He provided printouts of this schedule when reporting to the management committee.

In mid-2004 the largest lender was Canberra Contractors Pty Ltd. Its director, Mr de Simone, requested that a mortgage be put in place to secure the loans by his company. A loan agreement and mortgage were executed by Turner Developments Pty Ltd and Canberra Contractors Pty Ltd in September 2004.

Mr Bowyer became project manager during the second stage of the development. He took over the role of preparing financial reports for meetings of the management committee, and taking and keeping minutes of management committee meetings.

He said that in about November 2006 he and Mr Adzic talked about securing loans which had not been covered by the 2004 mortgage. A proposal to that effect was put to the management committee at its meeting on 8 November 2006. Mr Bowyer deposed in relation to that meeting as follows:

29. On or about 8 November 2006 at the Committee Management meeting, the Management Committee discussed the cashflow and funding issues including the security of the funds raised and in particular the need for security for those sums lent which were not at that time protected by a mortgage. It was agreed by the Management Committee that a mortgage should be secured over the land to protect all funds lent to the Project and not just those lent by Canberra Contractors. Although I did not record it in the minutes, there was discussion and agreement by the members to details of the arrangement to the effect that all loans would be capitalised with interest at 18%.

Mr Bowyer annexed to his affidavit a copy of the minutes to that meeting. Those recorded as present were Mr Bowyer, Mr de Simone, Mr Martone, Mr Vatavuk, Mr Adzic and Mr Kovacs. The minutes run to two and a half pages, and cover ten agenda items. It is apparent from what is recorded about a number of the agenda items that sales of units were slower than expected and that there were cashflow problems. Item 5 on the agenda dealt with funding. The decision in relation to securing loans was as follows:

5.4 Mortgages are to be put in place on the funds that are outside those funds Covered by the mortgage put in place covering funds raised by MDS. PB/TBA

Mr Bowyer explained in his oral evidence that the word “covered” should not have commenced with a C in upper case. MDS was Mr de Simone; PB was Mr Bowyer and TBA meant “to be advised”.

Mr Bowyer went on in his affidavit to say that he and Mr Adzic arranged with Mr de Simone for the latter to instruct Meyer Vandenberg, on behalf of the joint venture participants, to prepare the documentation. He said that this required Mr de Simone to calculate the interest currently due to the lenders. Accrued interest was calculated at 31 December 2006. He was informed and believed that Mr de Simone had instructed Meyer Vandenberg to prepare the mortgage documents and had faxed or emailed to Meyer Vandenberg a spreadsheet he had prepared which was intended to set out the details of the loans, the interest accrued and the total of the capitalised sums.

Mr Bowyer said that his company, Space Developments, had lent $20,000.00 to the joint venture in September 2004, at an agreed rate of 18% per annum. The agreement about this had been oral between Mr Adzic on behalf of the joint venture, and Mr Bowyer on behalf of Space Developments Pty Ltd.

Mr Bowyer annexed to his affidavit a copy of a loan agreement executed by the parties and dated 13 December 2006. The parties were seven companies and two individuals. Some of the companies were described as acting in a trustee capacity. The agreement was executed by Turner Developments Pty Ltd as borrower. The agreement had annexed to it a schedule of lenders and sums advanced. There were seventeen sums advanced, in some cases more than one sum shown as having been advanced by the same lender. The agreement contained an acknowledgement by the borrower that prior to the date of the agreement the lenders had advanced to the borrower the sums listed in the schedule. The total amount was to be repaid to the lenders ninety days after the date of registration of the units plan for the second stage of the development. It was agreed that interest was to be payable on the amounts set out in the schedule at 18% per annum calculated monthly, not to be payable until the date for the payment of the principal.

Mr Bowyer also annexed a copy of the mortgage, dated 13 December 2006 and executed by the same parties as the loan agreement.

Mr Bowyer says that before he executed the loan agreement he checked the names of the lenders in the schedule, but did not check the amounts recorded against each name. He said that he “assumed that all loans were included as had been agreed”. He and Mr de Simone executed the loan agreement on behalf of the first defendant, as well as on behalf of their own companies.

Mr Bowyer did not discover that there was an error in the schedule until this was brought to his attention by Mr Kovacs in November 2008, following the first repayments. Payments were made on a pro rata basis to the lenders by a first payment on 19 November 2008, and a second payment on 25 November 2008.

Mr Bowyer swore a second affidavit in March 2011. He referred to paragraph 29 of his first affidavit, about the management committee meeting of 8 November 2006. He said:

I do not recall the actual words spoken or who said them, but one or more of the persons present said words to the effect “the loans to the joint venture raised by Michael de Simone were secured by a mortgage in 2004. Since then there have been further loans which are unsecured. They should be put on the same footing as the earlier loans. The interest on the earlier and later loans should be capitalised as at the end of December, and then a new mortgage given over them all”. Each of the other persons present then said words to the effect of “Yes” or “I agree”
2. In my previous affidavit I referred to a discussion leading to an agreement about an 18% interest rate. Some of the loans were originally at 18%, but some had had a 12.5% rate. Thinking about the actual words used for the purpose of swearing this affidavit, I am now unsure whether the discussion and agreement was to that effect or to the effect that the original rates should be carried through until capitalisation. I think that the latter might be the case, although it is not reflected in the 2006 loan agreement.

Mr Bowyer annexed to his second affidavit a copy of the minutes of a meeting of the management committee held on 6 December 2006, which recorded that the minutes of the meeting of 8 November 2006 had been accepted as a true and accurate record of the meeting. The minutes of the meeting on 6 December were in turn confirmed at the next meeting of the committee on 7 February 2007.

Mr de Simone also swore two affidavits. He was at the time a director of the first defendant, Turner Developments Pty Ltd, the second defendant Canberra Contractors Pty Ltd, the fourth defendant, Desi Nominees Pty Ltd and another company SCI Nominees Pty Ltd. That last company was one of the original participants in the joint venture in December 2000. Mr de Simone was a member of the management committee for the joint venture from the start, and attended those meetings each month. The day-to-day affairs of the project were undertaken by Mr Adzic for the first stage and Mr Bowyer for the second stage of the development. Mr de Simone said that it became apparent during 2001 that further funds would be needed to keep the project going. This issue was discussed each month. He undertook the task of raising funds, using companies which he controlled, members of his family, and acquaintances whom he persuaded to lend money for the project. These included his wife Agi de Simone; her parents, Mr and Mrs Peter; his sister, Ms Lopilato; a company controlled by Mr Dunn, and a company controlled by Mr Milicevic. He said that he had agreed with Mr Bowyer that the interest rate for these loans was to be 12.5% per annum. The total of the loans made up to about the middle of 2004 was $3,244,654.00. He said that in about mid-2004 he asked that the loans be secured. A loan agreement and mortgage were prepared, with Turner Developments Pty Ltd as borrower and Canberra Contractors Pty Ltd as lender. He annexed copies of the loan agreement and mortgage. They had been prepared by Meyer Clapham, a predecessor law firm to Meyer Vandenberg. They were both dated 3 September 2004. The mortgage was registered on the title to the land at Turner.

The deed of loan identified a principal amount of $2,094,654.00 and further advances of $1,150,000.00 as owing and to be secured by the mortgage. The deed provided for an interest rate of 12.5% on the principal and 18% on the further advances. The principal and the further advances were defined by reference to a schedule to the deed setting out names, amounts and dates. I set these out as follows:

Lender Further Advances Interest Rate Start Date

1. Canberra Contractors $400,000.00 12.5% 29.10.2001

2. Canberra Contractors $100,000.00 12.5% 12.04.2002

3. Canberra Contractors $100,000.00 12.5% 2.07.2002

4. Desi Super Fund $150,000.00 12.5% 16.07.2002

5. Dunn Super Fund $150,000.00 12.5% 15.08.2002

6. Canberra Contractors $100,000.00 12.5% 19.09.2002

7. S and A Peter $100,000.00 12.5% 2.10.2002

8. Desi Super Fund $125,000.00 12.5% 2.10.2003

9. Dunn Super Fund $200,000.00 12.5% 16.10.2003

10. A Lopilato $80,000.00 12.5% 23.10.2003

11. Desi Super Fund $300,000.00 12.5% 25.02.2004

12. Canberra Contractors $289, 654.00 12.5% 29.09.2002

[Subtotal] $2,094,654.00

13. Canberra Contractors $500,000.00 18% 11.03.2004

14. Rovera Constuctions [sic] $320,000.00 18% 11.03.2004

15. Desi Super Fund $80,000.00 18% 11.03.2004

16. Desi Super Fund $70,000.00 18% 14.07.2004

17. A de Simone $130,000.00 18% 14.07.2004

18. Dunn Superfund [sic] $50,000.00 18% 14.07.2004

[Subtotal] $1,150,000.00

The deed of loan was expressed to secure the existing borrowings as set out in the schedule, plus future borrowings from the lenders up to an overall limit of $5,000,000.00.

Mr de Simone said that he had had a conversation with Mr Bowyer before arranging the further advances, and that they had reached agreement on an interest rate for those advances of 18% per annum.

Mr de Simone explained in his affidavit that in August 2004 Mr and Mrs Peter asked for their money back. They were paid out, the funds coming from a further loan by Rovera Constructions of $100,000.00, and a payment of $4,166.76 by way of accrued interest, paid by Desi Superfund and treated as a further loan to the joint venture.

He explained that item 12 on the schedule represented the value of work which had been done by Canberra Contractors up to 2002 which the joint venture had not been in a position to pay for at the time. By agreement with Mr Bowyer and Mr Adzic on behalf of the joint venture, this was converted to a loan. Some time after the execution of the deed of loan and the mortgage, the amount was by agreement reduced to $269,118.00.

Mr de Simone said that after the execution of the deed of loan and the mortgage, further sums were raised for the joint venture by Mr Bowyer. Mr de Simone was not involved in these arrangements. These were loans by Scald Pty Ltd (Mr Kovacs); Mart Pty Ltd (Mr Martone); Space Developments Pty Ltd (Mr Bowyer); and David Dal Molin, a friend of Mr Bowyer. These loans amounted to $395,000.00, and were made at an interest rate of 18% (it appears from other documentation in evidence that these loans were made between June and September 2004). Mr de Simone said that at some point Desi Nominees paid out his sister, Ms Lopilato.

As to the management committee meeting in November 2006, Mr de Simone said:

20. At its meeting held on 8 November 2006 the Management Committee discussed the cashflow and funding issues of the development including a proposal to secure the funds raised that were outside those funds already covered by the mortgage put in place securing the funds raised by me on behalf of Canberra Contractors. My recollection of the effect of the discussion was that it was resolved that all of the loans made should be secured with the funds lent capitalised with the interest due on those sums and that the capitalised amounts would attract an interest rate of 18% until paid.

He said that Mr Bowyer asked him to prepare a schedule of all loans made to the joint venture and to calculate interest due to the lenders at 31 December 2006.

Mr de Simone annexed what he said was a true copy of the schedule which he prepared.

He said that Mr Bowyer had also asked him to contact Mr Green at Meyer Vandenberg to give instructions for the preparation of a loan agreement and mortgage. He said that he spoke to Mr Green on the telephone, and said words to the following effect:

There have been further loans made to the project since we did the documentation in 2004. We want new loan and security documentation in the same terms as the previous documentation which will cover all of the loans made secured by a mortgage to sit as a second mortgage behind the bank mortgage. The existing loans and interest will be capitalised. The capitalised sums will comprise the principal loan sums and the interest rate applicable to all is 18% per annum. I will send you a schedule of the lenders and principal sums. The previous document showed Canberra Contractors as the sole lender. This time the individual lenders should be set out.

Mr de Simone said that he either faxed or emailed the spreadsheet he created to Meyer Vandenberg. He had been unable to locate the facsimile or email. He said that he did not give a copy of the spreadsheet to any of the lenders before this, nor did he ask anyone to check the interest calculations.

I attach, as an annexure to these reasons, a copy of the loan schedule, exhibit MDS3 to Mr de Simone’s first affidavit, which he swears that he transmitted to Meyer Vandenberg by either fax or email on a date he does not specify. I shall take into account the fact that he swore the affidavit some four years after the event.

Mr de Simone says that he and Mr Bowyer executed the loan agreement on behalf of the first defendant, and that he executed it on behalf of the second and fourth defendants. He did not check the schedule before signing the document. Hence he did not notice that the schedule to the agreement omitted loans 1 to 12 in the loan schedule which he says he sent to the solicitors. The list of loans in the schedule to the agreement commences with loan number 13 in his schedule, and follows through with the other loans to the end, loan number 30. The schedule to the loan agreement omits item number 20 from Mr de Simone’s loan schedule, where he had not entered any amounts, and it reverses the order of loans 27 and 28. The schedule to the loan agreement also expands the names of the lenders. The amounts in the schedule to the loan agreement otherwise correspond precisely with the capitalised (principal plus interest) final column in Mr de Simone’s loan schedule. The loan schedule to the agreement also has a total for the loan amounts, which is not a figure which appears in Mr de Simone’s document.

Mr de Simone says in his affidavit that he did not discover that there was an error in the schedule to the loan agreement until about November 2008 when the first repayments were due to be made to the lenders.

By November 2008 it was clear that there were insufficient funds to repay all loans. Mr de Simone says that “it was decided that the surplus available would be paid to the lenders in proportion to the sums loaned by each lender”. He does not say in his affidavit who made this decision. He said that he instructed Meyer Vandenberg to make the payments out of funds they held in trust on behalf of the joint venture.

In March 2011 Mr de Simone swore a second affidavit, most of which was verbatim with Mr Bowyer’s second affidavit, as to what had happened at the management committee meeting on 8 November 2006. In particular, the words quoted in the first paragraph are identical in the two affidavits. Mr de Simone also used identical words to express his second thoughts about whether the discussion and agreement about the interest rate for the earlier 12.5% loans was to be 18% in the future, or to remain at 12.5%. He had also had second thoughts about his discussions with Mr Green, Mr Milicevic, Mr Dunn and his own wife as to what he had said to them at the time on that interest rate issue (in his first affidavit he had recalled that he told each of them that the interest rate for the future would be 18%).

Ms Agi de Simone swore an affidavit in November 2010. She deposed to a conversation with her husband in about November 2006 when he said words to the effect “We are going to do documents to cover all loans made to the project. The amounts outstanding will be capitalised and interest at 18% paid in the future with a new mortgage to cover everything”. She had earlier lent $50,000.00 to the joint venture at 12.5% in about September 2003, and further amounts of $150,000.00 in mid-2004 at 18%. She signed the loan agreement in December 2006 but did not check the calculations, relying on her husband and on the solicitors. She subsequently assigned her loans to the Desi Superannuation Fund and received some payments from the fund by way of consideration.

Mrs de Simone did not swear a further affidavit prior to trial, although she gave oral evidence.

Mr Dunn swore an affidavit in November 2010. He deposed to Mr de Simone speaking to him in November 2006 to the following effect:

“We want to document the loans that have been made to the Project and to provide security to all the lenders. As we are not able to pay out the loans at this time, we will calculate the interest due on each loan and the capitalised amount being the principal and interest will attract an interest rate of 18% per annum. All loans made to the Project would be included in the written agreement and the funds loaned would be secured by way of a mortgage over the development. The loans and interest due on them will be paid from the profits of the Project”.

Mr Dunn said that during September 2006 Mr de Simone had come to him with the loan agreement and mortgage for execution, and had said words to the effect:

“Here are the written documents as agreed. They provide that the loaned sums are to be capitalised with the presently outstanding interest and that an 18% interest rate will apply to the capitalised amount until repayment of the loan and interest from profits. This arrangement covers all loans that have been made to the Project and the mortgage will protect all the lenders”.

Mr Dunn said that he took the documents home where he and his wife signed them. He glanced over the figures in the schedule to the loan agreement but did not check them. Mr Dunn did not swear a further affidavit before the hearing. He gave oral evidence.

Mr Milicevic also swore an affidavit in November 2010. Through his company, he had lent $320,000.00 to the joint venture in March 2004 and a further $100,000.00 in August 2004. He swore in his affidavit that in February 2004 Mr de Simone had approached him and asked whether he would be prepared to lend money to finance the project at an interest rate of 18%. He had agreed to this.

He then said that in August 2004 he had lent a further $100,000.00 at 12.5%, the lower rate being because his loan was replacing an existing loan at that rate.

He said that in November 2006 Mr de Simone had spoken to him, using words to the effect:

“The joint venture participants want to ensure that the loans made to the project are protected. We are going to prepare a loan agreement for the lenders and lodge a mortgage over the land to protect the loans. The loan agreement will record all loans made to the project and the mortgage will cover all loans made to the project whether they have been made before the loan agreement was signed or afterwards. The security will cover every loan made to the project. I will add up the loans made, and calculate the interest due to that date and the interest will be added to the principal sum loaned and from that date forward interest will accrue on the total capitalised sum at the rate of 18% until repaid”.

During the following month Mr de Simone came to him with the loan agreement and mortgage. Mr Milicevic and his wife signed the documents without checking the details of the schedule to the loan agreement.

Mr Milicevic did not swear a further affidavit before trial. He also gave oral evidence.

Mr Dal Molin is a brother-in-law of Mr Bowyer. He swore an affidavit in November 2010. He swore that he had been invited by Mr Bowyer to lend funds at 18% for the project, and had agreed to do so. He deposed that in November 2006 Mr Bowyer had spoken to him about the proposal to document the loans and provide mortgage security to the lenders, and had told him that existing loans would be capitalised and would attract 18% interest on the capitalised amount. Mr Bowyer subsequently brought him the loan agreement and mortgage which he signed. He did not say in his affidavit that he was ever told that there had been earlier loans at 12.5%, and that lenders at that rate would be advantaged by the proposed arrangement.

Mr Green, a senior solicitor, swore an affidavit in November 2010, and gave oral evidence. He deposed that he had been the solicitor for Turner Developments Pty Ltd during the period of the joint venture. In late 2006 Mr Kovacs and Mr Martone had seen him. Mr Kovacs had said that he needed his loan money back. Mr Adzic had told him at the time he lent the money that it would be paid back at the end of the first stage, but he had more recently been told that there was no money available to pay him back. Mr Martone said that he wanted his money back too, and was worried that there might not be any money to repay him at the end of the second stage. Mr Green said that he informed them that their loans were at call but unsecured. He told them there would not be much point in demanding payment as the joint venture would be unable to pay. They would be able to appoint a receiver but this would represent a default with their first mortgagee and would expose them individually as guarantors in respect of any shortfall. He said that he would speak to Mr de Simone to see whether it might be possible to provide them with security, which would be an improvement on their position.

Mr Green said that he then spoke to Mr de Simone and asked whether there was any possibility of repayment of the loans to Mr Kovacs and Mr Martone. Mr de Simone said that there was no money available to pay them back, and asked Mr Green’s advice as to what should be done. Mr Green said that he replied with words to the effect:

“I am concerned that their loans are at call. If they were to demand repayment you will have only a short period of time to repay the loans otherwise the company would be in default and they could make an application to have a receiver appointed. This would then amount to a default under your loan with LM Investments and could result in the windup of the project and expose the guarantors personally to claims for any shortfall. It also seems unfair that some of the private lenders are secured while a number of others are unsecured creditors. As a minimum I think all of the joint venture participants and their relatives that have loaned money to the project should become secured lenders. The loan should be repaid at the end of stage 2 after the first mortgagee is paid out. This will have two benefits. Firstly, the participants will improve their position from unsecured creditors to secured creditors and secondly, by providing a loan agreement with a repayment date at the end of the project you will remove the risk of a statutory demand that exists at present”.

Mr de Simone said that he would talk to Mr Bowyer and get back to Mr Green.

Subsequently Mr de Simone called him to say that he and Mr Bowyer were happy to replace the existing Canberra Contractors mortgage with one including all of the then lenders, with similar arrangements to those with Canberra Contractors.

Mr Green annexed to his affidavit a copy of notes that he took by way of instructions for the new facility. The note is in his handwriting and is both difficult to read and cryptic. It is clear that the note includes the words “new facility - all loans and interest – capital P as discussed” and the words “loan agreement plus mortgage”. Other words included are “schedule TBA” and “replace current facility”.

Mr Green said that he could not recall the purpose of some of the short notations he had made on the page. He did remember Mr de Simone saying words to the effect:

“We will provide a mortgage facility for all current loans. The principal for the current loans will be the initial loan plus interest owing up to the date of commencement of the new facility. I want you to prepare a loan agreement and a mortgage. Can you check if the indemnity deed covers only the first stage or the whole project. I will provide you with a schedule of the loan amounts and interest advanced by each of the lenders. The new mortgage is to replace the mortgage currently held by Canberra Contractors”.

Mr Green said that he gave instructions to a junior solicitor at his firm, Philip Clacher, to prepare the documentation in accordance with those instructions.

Mr Green said that Mr de Simone subsequently provided him with a schedule of the amounts representing the new principal amount owed to each lender. Mr Green understood that this was an agreed amount calculated as the initial loan plus capitalised interest. He said that when the documentation had been prepared he gave it to Mr de Simone who was to arrange for its execution by the parties. Mr Green did not recall discussing the loan or mortgage with any of the borrowers or giving any advice to any borrower about the documents or their execution.

Mr Green did not say anything in his affidavit about what interest rate was to apply for the future.

There was no affidavit by Mr Clacher, and he did not give evidence. By the time of the hearing he had left the firm. It was accepted that he had been approached by the solicitors for the defendants to make a statement, but had no recollection about any of the matters in issue which might have helped either party.

For the plaintiff, Mr Kovacs swore two affidavits. In December 2010 he took issue with Mr Green, saying that he did not attend a meeting with Mr Green and Mr Martone at Mr Green’s office in late 2006. He and his wife did have a meeting with Mr Green at his office in September 2006. His version of the discussion was that he told Mr Green that he had had to sell his house because Mr Bowyer would not return the money he had lent to the joint venture. Mr Green had told him that he should get a mortgage to secure the amount owing.

Mr Kovacs also took issue with a statement in the further and better particulars given by the solicitors for the defendant, that Mr Adzic had spoken to him to the effect set out in the particulars. He said that when he executed the loan agreement and mortgage in mid-December 2006, it had not been his intention that his company enter an agreement with the terms set out in the particulars. Mr Kovacs did not in that affidavit set out his version of the general history of the matter or any conversations that he had with Mr Adzic or anyone else representing the interests of the joint venture at that time.

In his second affidavit, sworn in March 2011, Mr Kovacs merely took issue with the paragraphs of the second affidavits by Mr Bowyer and Mr de Simone, as to the words spoken or their effect, during the management committee meeting in November 2006. He denied saying words to the effect set out, and denied saying words to the effect “Yes” or “I agree”. Mr Kovacs did not in that affidavit set out his own recollection of anything said during that meeting by him or by anyone else present.

During the course of the hearing Ms Ross, a solicitor with Bradley Allen, the solicitors for the defendants, swore an affidavit annexing two title searches which explain the history of the registration and discharges of the various mortgages. A brief chronology is as follows:

7 November 2002 Mortgage to Permanent Trustee Australia Ltd

28 February 2005 Mortgage to Canberra Contractors Pty Ltd

10 August 2006 Discharge of mortgage to Permanent Trustee Australia Ltd

Mortgage to Permanent Trustee Australia Ltd

Variation of priorities of mortgages

9 August 2007 Discharge of mortgage to Permanent Trustee Australia Ltd

23 November 2007 Mortgage to Commonwealth Bank of Australia

3 December 2007 Application to register units plan

14 December 2008 Discharge of mortgage to Canberra Contractors Pty Ltd

Discharge of mortgage to Commonwealth Bank

Mortgage to Canberra Contractors Pty Ltd and eight others

9 June 2009 Partial discharge of mortgage to Canberra Contractors Pty Ltd and others (sale of unit)

The search up to the registration of the units plan relates to the entire site. Entries after that relate only to one unit. As I have mentioned, by the date of registration of the mortgage to Canberra Contractors and others in December 2008, there were only eight units remaining unsold of the original seventy-four units.

The oral evidence

All of the witnesses whose affidavits were read gave oral evidence and were cross-examined.

Mr Bowyer accepted that the minutes he had prepared of the management committee meeting on 8 November 2006 constituted the only available contemporaneous record of what had happened at that meeting. He said that he had typed the minutes himself, from a handwritten record he made during the meeting in an exercise book. He had looked for his exercise books but had not been able to find the one in which these notes had been made. He did not recall precisely how long after the meeting he typed the minutes. He said that his practice in that regard varied. He said that he would sometimes type the minutes a week after the meeting, but sometimes it might not have been until he was preparing the agenda for the next meeting, perhaps a day before the next meeting. He said that he had located some of his old exercise books, but regrettably none of these were produced to the court, and I do not know whether the typed minutes were verbatim with his notes or whether there was generally some difference between them. All I can say is that there is no evidence that Mr Bowyer, in the course of the meetings, made notes any more extensive than eventually appeared in the minutes or, in particular, that he recorded contributions by individual committee members during discussions. Bearing in mind that he was the project manager, reporting to the meeting in that capacity, and also a participant in the joint venture and a lender through a company he controlled, I infer that he would have played an active role in the discussions during the meeting, making it extremely unlikely that he recorded in detail what everyone was saying as the meeting proceeded.

Mr Bowyer confirmed that all members of the management committee were provided with a copy of the minutes, usually shortly before the next meeting, a month later.

Mr de Simone also gave oral evidence. His understanding was that the 2004 mortgage in favour of Canberra Contractors Pty Ltd secured only loans 1 to 18. This proposition seemed to be generally accepted by the parties at the time. It seems to me that the view is incorrect, and that the mortgage also secured loans 19 to 25, being further advances by the same lenders. Clearly it did not secure loans 26 to 30, which were by new lenders.

Having said that, there must also be an argument that the 2004 deed of loan and mortgage did not secure loans by any entity other than Canberra Contractors Pty Ltd itself, as that company was the only lender which was a party to each of the documents. The contrary argument is that the deed of loan annexed a schedule listing the lenders and amounts, so that the borrower and mortgagor, Turner Developments Pty Ltd, must be taken to have been well aware of the identities of the lenders and of any intention that the documents secure all of those loans. Whether the deed of loan secured the loans by all the lenders is a question of law which I do not need to determine at this stage of the proceedings.

As to the position of his sister, Ms A Lopilato, Mr de Simone said that he had paid her $50,000.00 out of his own money. He did not give the date of this payment. He treated it as a loan from Desi Nominees Pty Ltd as trustee for the Desi Super Fund, because his intention was to treat the $50,000.00 payment as a contribution by him to the fund. He said that he owed his sister the balance of $30,000.00. His sister was unaware of the proceedings. He was asked in cross-examination whether the position was that he was asking the court to rectify a document so as to include a person who was not a party to the action, namely his sister. His response was that he had an understanding with his sister about the matter.

Mr de Simone was asked about the conversation described by Mr Green in paragraph [73] above. At first his evidence was that he did not have any conversation with Mr Green prior to 8 November 2006 about the subject matter discussed at that meeting. After reading the relevant paragraph of Mr Green’s affidavit, he accepted that the conversation may have taken place, but said that he had no specific recollection of it. He accepted that such a conversation would have been consistent with the question of security of the unsecured loans being raised at the management committee meeting. Counsel for the plaintiff sought a concession from Mr de Simone that the effect of an agreement to pay interest in the future on the 12.5% loans at 18% would have been to the disadvantage of the unsecured lenders. Mr de Simone would not make any such concession. The proposition seems to me self-evident.

Mr de Simone was cross-examined about his second affidavit, in which he expressed misgivings about his earlier definite statement that it had been agreed at the meeting to increase the interest rate on the 12.5% loans to 18%, including on the capitalised interest. He said that after he swore his first affidavit he had thought more carefully about that issue, and realised that he could not be completely sure that what he had said in the first affidavit was correct. He agreed that by the time of trial he thought that it might be the case that the agreement had been to run the earlier loans on at 12.5% after capitalisation.

Mr de Simone was adamant that he had sent his spreadsheet to Meyer Vandenberg after the management committee meeting in November 2006. He could not remember whether he had sent it by email or fax. He was “not too sure” whether he had printed the spreadsheet out in A3 paper, consistently with the exhibit to his affidavit, or on A4 paper.

Mr de Simone agreed that the effect of his second affidavit was that there were two competing versions of what had been agreed at the management committee meeting on 8 November 2006. The first version was that all thirty of the loans were to be capitalised as at 31 December 2006, and thereafter to carry interest at 18% per annum. The second version was that loans 1 to 12 were to be capitalised to that date, and thereafter to attract interest of 12.5% per annum, whilst loans 13 to 30 were to be capitalised to the same date and thereafter to attract interest at 18% per annum.

He was asked about the decision he had made jointly with Mr Bowyer in November 2008 to pay two distributions to the lenders. The question was whether the distributions had been in accordance with the spreadsheet. His answer was that neither had been. As he had said in his affidavit, the decision had been to pay the lenders in proportion to the amounts each of them had lent. He was asked again to agree or disagree with the proposition that the distribution had not been consistent with either version of the agreement he said had been made at the November 2006 management committee meeting. His response was that they were two different subject matters.

At the conclusion of a lengthy cross-examination, counsel for the plaintiff put to Mr de Simone that the individuals at the management committee meeting on 8 November 2006 all had different ideas of what the unsecured loans were. Mr de Simone agreed with that proposition.

Mr Dunn gave oral evidence. He said that his understanding was that none of the moneys he had lent to the joint venture had been secured until he executed the loan agreement and mortgage documents in December 2006. Mr Dunn is a civil engineer and a friend or acquaintance of Mr de Simone. His understanding about the position was based on what he had been told by Mr de Simone. His recollection was that he was told that after the execution of those documents, his loans would be capitalised and interest would thereafter run at 18% on all of the borrowings.

Mr Milicevic lent money on two occasions through his company Rovera Constructions Pty Ltd. The first loan was of $320,000.00 at 18%. Subsequently he lent another $100,000.00 which was used to pay out Mr and Mrs Peter. That loan was at 12.5%. He said that he specifically asked Mr de Simone whether his interest rate could be increased to 18% because he wanted his loan to be on the same terms as the others. He was unable to recall when he had that conversation with Mr de Simone.

Mrs de Simone and Mr Dal Molin were both briefly cross-examined on their affidavits. Mrs de Simone conceded that her information had come from her husband. Her understanding was that her loans would be at 18%.

Mr Dal Molin had obtained his information from Mr Bowyer, his brother-in-law.

Mr Green, the solicitor with Meyer Vandenberg, was cross-examined at some length. He was asked about his meeting in late 2006 with Mr Kovacs and Mr Martone, mentioned in paragraph [72] above. He said that he did not recall the date of that meeting, and did not make a file note about it. He agreed that at that time he was the solicitor for the joint venture. He had prepared the 2004 deed of loan and mortgage documents. He knew that some de Simone interests were secured. He knew that the de Simone interests were effectively the majority within the joint venture and the driving force of the project. Counsel for the plaintiff asked him who he had been acting for. His reply was that he had acted for Turner Developments Pty Ltd, as the joint venture vehicle. He had also acted for each of the participants in the joint venture. He regarded himself as having had the usual professional and fiduciary obligations to each of the joint venturers.

He had said in his affidavit that after his meeting with Mr Kovacs and Mr Martone, he “spoke to Michael de Simone (acting on behalf of Turner Developments Pty Ltd)”. Counsel asked him whether this indicated some sort of notional Chinese wall. He asked whether Mr Green had been aware that Mr de Simone must also have been mindful of the interests of Canberra Contractors Pty Ltd. His initial reply was that he did not understand the question. He said that he did not know the extent of the various loans at that time and was unaware that Mr de Simone was the major lender to the project. Nevertheless he had worded his affidavit in that way to make it clear that when he spoke to Mr de Simone, it was in his capacity as director of Turner Developments Pty Ltd and not solely in his capacity as director of Canberra Contractors Pty Ltd.

Counsel for the plaintiff asked Mr Green whether he thought he had discharged his fiduciary obligation to Scald Pty Ltd in taking instructions from Mr de Simone to prepare a loan agreement and mortgage pursuant to which loans which were already secured were to be capitalised and included in the new facility. Mr Green replied in the affirmative. Counsel suggested to him that this would have had the effect of diminishing the pool of funds available to the previously unsecured lenders. He said that he did not follow the question. Canberra Contractors Pty Ltd had already had security for their earlier loans, and he saw the new agreement and mortgage as weakening its position.

Mr Green said that he had passed on the instructions to prepare the document to Mr Clacher, but that the firm had no documents to confirm this. He recalled speaking to Mr Clacher, and would have given him instructions consistent with his own telephone instructions, but he did not recall the detail of the conversation.

He was asked whether the firm had opened a file in relation to this instruction. Mr Green said that a file had been opened on 14 December 2006. At the time there had been more than a hundred files for Turner Developments Pty Ltd. There had been individual files for the sale of each unit, and a number of other files dealing with matters that had arisen along the way.

Mr Green said that he was sure that the file had been opened on 14 December 2006, having checked the electronic file notes. He could not explain how the loan agreement and mortgage had been dated 13 December, the day before the file had been opened.

Mr Green could not recall the date when he had received instructions about the loan agreement and mortgage from Mr de Simone, and had no note about it.

Mr Green said that the 2006 mortgage was not immediately registered. It was registered in December 2008, after the registration of the units plan and the issue of individual certificates of title for the units. Instructions not to register the mortgage had been given by Mr de Simone and Mr Bowyer. When the mortgage was eventually registered, a fresh coversheet had to be typed, showing the volume and folio references to each of the units which were to be subject to the mortgage. By the date of registration, 15 December 2008, it appears that there remained only eight of the original seventy-four units in the name of Turner Developments Pty Ltd, the others already having been sold, so that the mortgage when registered, rather than being secured over the whole of the development, was secured over only eight units.

Mr Green was asked the reason why the mortgage could not be registered immediately. His reply was that registration of the mortgage would have required the consent of the first mortgagee. At that time the first mortgagee was Permanent Trustee Australia Limited as trustee for an institutional lender, LM Investments Pty Ltd. Mr Green’s firm had written to the first mortgagee seeking consent, but at about the same time a decision had been made on behalf of the joint venture to refinance the project with the Commonwealth Bank, and not to disclose the existence of the unregistered mortgage. Apparently the view was taken that this would have affected the decision of the Commonwealth Bank to finance the project. Accordingly the second mortgage was not registered until the Commonwealth Bank had been paid out and the first mortgage discharged. I infer that the funds to pay out the Commonwealth Bank came from the sales of units over the intervening period, explaining why there were so few units remaining within the joint venture by the time the mortgage was registered.

At that point in Mr Green’s evidence I expressed some concern that members in the position of the plaintiff, although they had executed a mortgage, really had no security because the mortgage was unregistered. Mr Green’s evidence was that those lenders were secured notwithstanding the fact that the mortgage was unregistered. It seems to me on reflection that that view was correct insofar as their ranking over unsecured creditors was concerned.

Counsel put to Mr Green that to replace the previous facility (the 2004 deed of loan and mortgage) it would have been necessary to achieve three things: the execution of the loan agreement, the execution of the mortgage and the registration of the mortgage; and that only the first two of those things were achieved. Mr Green merely said that after writing to LM Investments requesting consent to register the second mortgage, he had been instructed not to proceed with the registration. He was asked whether he had spoken to Mr Kovacs on behalf of Scald Pty Ltd, as a matter of fiduciary duty, to inform him that he had been instructed not to proceed with the registration of the mortgage. He said that he had not communicated with Mr Kovacs about this, but took the view that it was unnecessary because he had converted Scald from an unsecured to a secured position.

Mr Green confirmed that when he received instructions from Mr de Simone to prepare the loan agreement and mortgage documents, and when he passed those instructions on to Mr Clacher, he did not yet have the figures to be included in the schedule. The arrangement was that Mr de Simone was to calculate those and provide them. Mr Green had no recollection of receiving any instructions about any future interest rate. It was possible that he had received instructions about that but did not remember it or keep a file note. It was also possible that those instructions had been given to Mr Clacher direct. He was unaware whether there had been any direct contact between Mr de Simone or Mr Bowyer with Mr Clacher.

Mr Green was informed by counsel of the misgivings expressed in their second affidavits by Mr Bowyer and Mr de Simone as to whether the capitalised 12.5% loans were to attract interest in the future at 12.5% or at 18%. He said that his understanding had been that all loans were to be at a single interest rate from then on.

Mr Green’s attention was directed to some correspondence between his firm and Mr Weller, solicitor for the plaintiff, during the first part of 2009. He agreed that by that stage his firm was continuing to act for the joint venture, by this time in the course of a dispute with the plaintiff, a participant in the joint venture and a lender to the joint venture for which his firm had previously acted. He did not accept that he had acted for the plaintiff as a lender, only as a member of the joint venture. There is no suggestion that he ever articulated this difference to Mr Kovacs or that Mr Kovacs was aware of it.

Consideration of the evidence and factual findings

The events in contention took place late in 2006. The differences between the spreadsheet prepared by Mr de Simone containing details of all thirty of the loans and the schedule attached to the loan agreement dated 13 December 2006 does not seem to have been noticed by anyone involved until there was a partial distribution of funds at the end of 2008. The proceedings were commenced in September 2009. All of the affidavits on the defendants’ side were sworn or affirmed in November 2010, with supplementary affidavits by Mr Bowyer and Mr de Simone in March 2011. The oral evidence was given in September 2011.

Thus the affidavits were prepared some four years after the events in contention, and the oral evidence was given almost five years after those events.

It is inevitable that memories of precisely what words were used during conversations, when and where conversations took place and who was present, will fade as the years go by. The principal players in the events were mostly men with particular experience in specialised areas of building construction. By and large they have come across to me, particularly with the opportunity to assess them giving oral evidence, as practical people who tended to leave paperwork and matters of detail to the lawyers.

There was no suggestion on either side that any witness was intentionally giving untruthful evidence. I formed the view that each of the witnesses I saw was doing his or her best to remember the events of some years earlier and to give their best recollection of what had happened and what had been said by whom.

The particular task which falls to me is to consider whether at the management committee meeting on 8 November 2006 there was a meeting of the minds of those present as to precisely what was being decided.

I accept that the intention of Mr de Simone, when he was delegated the task of preparing figures to be given by way of instructions to Mr Green or Mr Clacher at Meyer Vandenberg, was to include in the schedule of loans and lenders all thirty of the loans. I accept that in the process of instructing the solicitors a mistake was made. Mr de Simone’s recollection is hazy as to precisely how he got the schedule to the solicitors. I find it extraordinary that the solicitors do not have a record of receipt of the schedule, whether it was, as Mr de Simone remembers it, by fax or email, or whether it was in some other way.

I did not find Mr Green’s evidence particularly helpful. I accept that he, too, was giving evidence generally from his recollection rather than from any contemporaneous records, of events of some years earlier. I accept that he was at the time a busy solicitor with something in excess of a hundred files on behalf of the joint venture, and no doubt numerous other clients and files for which he was responsible. It is regrettable, and again somewhat extraordinary, that the firm’s file in relation to the transaction was either unavailable or so sparse as to be of no assistance in refreshing the memories of Mr Green and Mr Clacher. The file note taken by Mr Green by way of instructions to prepare the loan agreement and mortgage was so sketchy as to be largely unintelligible to anyone other than Mr Green, and by the time he gave evidence much of it was unintelligible even to him.

It does seem to me that Meyer Vandenberg were in a position of potential conflict of duty as between Turner Developments Pty Ltd and the lenders. Some of the lenders were participants in the joint venture and others were not. Mr Green’s oral evidence was that his firm acted for the participants individually as well as for the first defendant as vehicle for the joint venture, but did not act for any of the lenders. If that was the position it should have been explained in painstaking detail to the lenders, particularly those, like the plaintiff, which were participants. There is no evidence that any of them was advised to obtain independent legal advice.

This might not have mattered if all the solicitors had been doing was documenting something which had been agreed to all along and had formed the basis of the relationship between the various parties. But this was not the case. Mr de Simone was, on Mr Green’s evidence, the driving force behind the entire project. He was, through Canberra Contractors Pty Ltd and Desi Nominees Pty Ltd, by far the largest lender, to the extent of some 80% of the 12.5% loans. Entities associated with Mr de Simone would have derived an enormous benefit if their 12.5% loans were to be capitalised and thereafter to attract interest at 18%. There was probably even an advantage to them out of the capitalisation process, even if they had remained at 12.5%, because absent capitalisation only the principal would have attracted simple interest at that rate, not the principal plus accumulated interest over, in respect of some of the loans, as long as five years.

It is clear on the evidence that Mr De Simone personally intended to capitalise the 12.5% loans and thereafter to charge interest of 18% on the capitalised sum. His change of heart in March 2011 clearly related to his recollection of what had been said and agreed upon during the management committee meeting, rather than what he had intended himself.

Of the six men present at the management committee meeting, only three swore affidavits and gave evidence. There has been no explanation for the failure to call Mr Adzic and Mr Vatavuk. Both were directors of the first defendant. Neither was a lender. They would appear to have been the only ones at the meeting with no interest in the outcome of the proceeding. They must be seen as in the camp of the first defendant. I draw the available inference that if either or both had given evidence, that evidence would not have assisted the case for the defendants.

I do not draw any inference adverse to either side from the fact that Mr Martone did not give evidence.

I am not satisfied on the basis of the evidence of Mr de Simone or Mr Bowyer precisely what was said during the meeting about agenda item 5 in relation to funding, and in particular 5.4 in relation to the proposed mortgage or mortgages. The minute prepared by Mr Bowyer was cryptic in the extreme. I accept that there must have been a great deal more said at the meeting, but I cannot be satisfied on the evidence that it was made clear to those present that what Mr de Simone and Mr Bowyer intended was to include all of the previously secured loans in a new mortgage which was to take the place of the existing one. All that the minute says is “mortgages are to be put in place on the funds that are outside those funds covered by the mortgage put in place covering funds raised by MDS”. I accept that regardless of whether or not as a matter of law loans number 19 to 25 were secured by the 2004 mortgage, everyone involved assumed they were not. I therefore accept that the minutes are evidence of an agreement to cover loans 19 to 25 as well as loans 26 to 30 by a fresh mortgage. If that had happened, the 12.5% loans would have remained in place at that rate, and loans 13 to 18 would have remained in place at 18%, secured by the existing registered mortgage but not capitalised so as to attract interest upon interest in the future. I cannot be satisfied that there was any agreement reached during the meeting as to capitalisation of principal and interest. Certainly capitalisation is not envisaged by the minute, which all in attendance confirmed at the next meeting of the management committee.

It was in my mind a telling piece of evidence when Mr de Simone conceded at the end of his cross-examination that persons at the management committee meeting may well have had different understandings about which loans were to be secured by the proposed mortgage. It seems to me highly likely that a number of people at that meeting had different ideas about precisely what the proposed arrangement was.

In the event, all of the parties executed a loan agreement which, it seems to me, is unlikely to have been what any of them intended. But I am far from satisfied that there was a common intention between all of them as to what should have been included in the agreement, and what the schedule of loans to be secured by it would look like. It is clear that Mr Kovacs at least, and probably others who had been at the meeting, did not see the full schedule as prepared by Mr de Simone until long after the execution of the loan agreement and the mortgage, and indeed long after the registration of the mortgage.

Rectification – the principles

In Green v AMP Life [2005] NSWSC 370 at [171], Campbell J defined rectification as follows:

Rectification is an equitable remedy which enables a document which sets out legal rights in a way different to the way the parties intended, to be corrected so as to give effect to their intention. Insofar as rectification is granted of contracts, it is only of those contracts which were intended by the parties to be wholly expressed in writing, or of those parts of the partly written contract which were intended to be expressed in writing.

It has been said that the purpose of rectification is the prevention of unconscientious conduct, and that the remedy is a manifestation of the maxim that equity looks to the intent rather than the form: Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603 at 667.

Rectification refers to rectification of documents rather than of agreements. It is not a means of reformulating the terms of an agreement set out in a document.

Campbell JA explained how rectification works in practice, in Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603 at 711:

The remedy that is granted is, as with all equity’s remedies, one that will seek to undo, so far as is possible, the departure, that the litigation has shown to exist, from equity’s standards of conscientious behaviour. The way this is achieved, when a remedy of rectification is granted, is by rewriting the contract so that it no longer departs from the common intention of the parties. The rewriting is done in a quite literal sense – the proper form of order identifies the precise words of the contract that are to be struck out, the precise words that are to be inserted, and where those words are to be inserted. As well the order usually . . . involves calling in the original document and actually endorsing the order on the instrument that is to be rectified. In that way the executed contractual document is no longer able to be a potential source of error and confusion, by appearing to state legal relations that in truth are not as the document says.

In the same case, Campbell JA noted at 713 that short of clear and convincing evidence, there is a danger that an order for rectification may impose a contract on a party that he or she did not make. Thus the standard of proof is conventionally seen as higher than in the routine civil action. Barrett J said in Waldorf Australia Pty Ltd v Elias Construction Group Pty Ltd [2010] NSWSC 164 at [14]:

The insistence upon a high degree of proof in this area is a recognition of two realities: first, that persons who take the trouble to record their agreement in writing (particularly when they are, as here, assisted by lawyers) must generally be presumed to intend their written bargain to prevail over what they have not written; and, second, that it is easy for one such party, upon becoming dissatisfied after the event with some element of the written component, to seek to brand it as inaccurate.

Rectification is an equitable remedy and can be denied on discretionary grounds such as unclean hands, laches or acquiescence.

Further, an error in a written contract does not necessarily mean that rectification is the appropriate remedy. It may be that the true meaning of the document can be determined by applying rules of construction. This approach is usually adequate where there is ambiguity, and where there are obvious typographical or grammatical errors.

Rectification of a written contract generally requires there to have been a common mistake by all parties to it, such that the written contract fails to give expression to their true intention. Rectification for common mistake relates to a situation where an agreement between the parties has been put into a written contractual document, but the agreement has not been properly recorded. The party seeking rectification is expected to advance convincing proof that the written contract does not embody the final intention of the parties. The omitted ingredient must emerge from such proof in clear and precise terms. It is not for the court to assume the task of making the contract for the parties. If the court is satisfied that one of the parties was mistaken at the time of execution of the contract, but that the intention of the other party was in accordance with the written contract, rectification will not be ordered: Slee v Warke (1952) 86 CLR 271. It is not enough to establish that the written agreement does not represent the common intention of the parties. The true intention of the parties must in addition be established: Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603 at 655.

Have the defendants made out a case for rectification?

The defendants have not satisfied me on the evidence that there was a common intention reached at the management committee meeting on 8 November 2006 which all present understood and which was capable of then being recorded as a written contract.

Both Mr de Simone and Mr Bowyer are now uncertain whether the agreement in relation to loans 1 to 12 was that interest from 1 January 2007 was to run at 12.5% or at 18%. The minute of the meeting is silent on that question.

Mr Dunn was at the meeting and gave evidence that to the best of his recollection all loans were to be capitalised and from then on to run at 18%. However, his recollection of or understanding of other important matters was unreliable. His understanding at the time he gave his evidence was that none of the loans prior to the 2006 mortgage were secured. I was not satisfied from his evidence that he had a clear recollection of what took place at the management committee meeting.

Mr Milicevic gave evidence that the first amount his company lent to the joint venture was at 18%. He subsequently lent a further amount at a lower rate, which he recalled was at 12%, that loan being used to pay out an earlier lender at the lower rate. His evidence was that he asked for that rate to be increased to 18% because he wanted “to be equal with everything else”. I take it from that that his understanding was that his second loan at the lower rate was the only loan not at 18%. He seems to have been unaware that there were a number of other loans at the lower rate.

Mr Dal Molin came in as a lender at 18% only with the last group of lenders. His loan was loan number 30. He did not mention in his affidavit or his oral evidence that he had ever been made aware that there were some loans at a lower rate, and that the effect of the proposed agreement was to increase the rate on those loans to 18%.

Mr de Simone’s sister, Ms Lopilato, is not a party to the proceedings. Her brother gave evidence that she was unaware of the proceedings at all. Of the $80,000.00 she had lent to the project, he had paid her back $50,000.00 out of his own money but she was still owed $30,000.00 at the time of trial. His evidence did not descend into detail about what if any interest had been paid to her. She was clearly, by the time of the management committee meeting, and still by the time of trial, a lender to the joint venture to the extent of at least $30,000.00, but knew nothing of what was going on.

I am satisfied that a mistake was made in the preparation of the loan agreement, in the sense that what was prepared by the solicitors was not what Mr de Simone, who gave the instructions, intended them to prepare. In particulars given between solicitors, which I infer were prepared on his instructions, the defendants said that the mistake happened because Mr de Simone accidentally attached an incorrect and incomplete schedule. The evidence is clear that Mr de Simone prepared the schedule to send to the solicitors after the management committee meeting, and that he did not email it to the other lenders for checking before he did so. Mr de Simone collected the agreement from the solicitors and took it to the various lenders for execution mostly at their homes. No one suggested that any of them should get independent legal advice before signing or executing it. I am satisfied on the evidence that all of those who did so did not check the figures and simply trusted Mr de Simone and the solicitors to have got it right. It was never suggested to Mr Kovacs that he realised that there had been a mistake made prior to or at the time he executed the agreement and the mortgage. There is no suggestion that he realised at any stage that a mistake had been made and sought to take advantage of it.

At the same time, counsel for the defendant was critical of Mr Kovacs, or perhaps of those advising the plaintiff, for his failure to give his own version of what was said during the management committee meeting. The affidavit evidence of Mr Kovacs differed from that of all of the deponents in the case for the defendants, in that Mr Kovacs simply denied some things which had been said by other witnesses, without giving his own version of events. This was not taken any further when he was called to give oral evidence. I infer that counsel for the plaintiff made a forensic decision not to adduce oral evidence from Mr Kovacs as to what I might call his story.

I accept the submission of counsel for the defendants, that failure by counsel to ask questions in chief of a witness can come within the principles in Jones v Dunkel (1959) 101 CLR 298. This is endorsed in Cross on Evidence (7^th Australian Edition), Heydon, LexisNexis, 2004 at [1215] where the learned author says at page 44:

. . . the principles of Jones v Dunkel apply to the failure by a party to ask a witness called by the party questions in chief, at least where the most natural inference is that the party feared to do so.

This application of the principle was approved by Handley JA, with whom Kirby P agreed, in Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418-419. A court should not draw inferences favourable to a party where that party had the opportunity to prove the facts in question by direct evidence and failed to do so.

Having said that, I must bear in mind that by arrangement between the parties, I was asked to hear and determine the counterclaim only. In relation to the counterclaim, the onus lies on the defendants. There is no onus on the plaintiff to prove anything. Counsel for the plaintiff is not inviting me to find facts on the basis of inferences in circumstances where this would have been unnecessary if Mr Kovacs had given direct evidence about any such facts. Counsel for the plaintiff simply submits that on the evidence I cannot be satisfied that there was a common intent between all of the parties to the loan agreement executed in December 2006 as pleaded.

That is the situation in which I find myself. It is unnecessary for me to arrive at a finding of fact as to what was in the mind of Mr Kovacs when he executed the agreement on behalf of the plaintiff company. I am not satisfied that there was an intention which was common to all of the other parties to the agreement, to execute an agreement with the terms pleaded in the counterclaim. In those circumstances the claim for rectification fails.

I was informed that the arrangement between the parties to have the counterclaim heard first had been arrived at on the basis that the decision would probably determine the entirety of the claim, or at least make it clear what the ultimate outcome was likely to be.

Application by plaintiff to amend

In February 2013, well after the hearing, the solicitors for the plaintiff filed an application for leave to amend the originating claim and the statement of claim, on the ground that the plaintiff had become aware of facts which identified an error in the form of the principal document governing the rights of the parties to the moneys in dispute.

The amendments sought involved the addition of six paragraphs to the statement of claim, to plead that at the time the December 2006 agreement was entered into, the defendants had intended the plaintiff to be mistaken as to its terms, having conducted themselves so as to divert the plaintiff’s intention of discovering the mistake by making false and misleading statements. The statements were said to have been made on 8 November 2006 by Mr Bowyer and Mr de Simone, to the effect that the agreement was to cover only those loans not already covered by the 2004 deed of loan; by executing the 2006 agreement, the plaintiff made the very mistake that the defendants intended, assuming that the lenders, amounts and proportions set out in schedule 1 to the agreement were consistent with those statements. By way of further relief the plaintiff wishes to seek rectification of the 2006 agreement to correct schedule 1 so as to limit it to loans 26 to 30.

The application is said to be made under r 501 (a) of the Court Procedures Rules 2006. The plaintiff says that the amendments are necessary for the purpose of deciding the real issues in the proceeding. The rule provides that all necessary amendments of the document must be made for that purpose, apparently leaving no discretion in the court. However, the court must be satisfied that the proposed amendment is necessary for that purpose.

A week before the hearing of the application for leave to amend, counsel for the plaintiff lodged written submissions. These attached a proposed amendment in somewhat different terms, adding another eight paragraphs. This proposal may be summarised as follows: prior to the execution of the December 2006 document, Mr Green, solicitor for the defendants, informed Mr de Simone on behalf of the defendants that the plaintiff was concerned about the lack of security for its loan. The parties then met on 8 November 2006 (the management committee meeting) and resolved that a mortgage or mortgages were to be put in place to secure the loans outside the de Simone funds secured by the 2004 mortgage. Mr de Simone then instructed the solicitors to draw up a document materially different in effect to the resolution, not only providing security for the unsecured loans, but in addition capitalising the de Simone loans and increasing their interest rate to 18%, and on the capitalised amount. Mr de Simone did not inform the plaintiff that the document he had instructed the solicitors to prepare was materially different, but rather represented to the plaintiff that the document was materially to the effect agreed at the management committee meeting. In the circumstances Mr de Simone suspected or should have suspected that the plaintiff would execute the document in the belief that it reflected the resolution. Mr de Simone instructed the solicitors to advise the plaintiff that the document was consistent with what had been resolved at the meeting. His conduct was unconscionable. The document should accordingly be rectified so as to limit its application to loans 26 to 30.

The question for me to determine is whether one or other of the proposed amendments is necessary for the purpose of deciding the real issues between the parties.

Counsel for the defendants submits that the proposed amendments are inconsistent with paragraphs 7 and 8 of the present statement of claim, and this does seem to be so. The plaintiff in those paragraphs seems to accept the form and substance of the loan agreement as executed, and to ask for an account between the parties on that basis. This would involve the agreement covering loans 13 to 30. In the proposed amendment, the plaintiff seeks to have the agreement rectified so that it covers only loans 26 to 30.

Another possibility, not proposed by either side, would be to apply the agreement to loans 19 to 30. Loans 1 to 18 were specifically covered in the 2004 deed of loan, but as counsel for the plaintiff points out, the deed included an all moneys clause covering future loans by the same parties up to a cap of $5m. Counsel for the plaintiff submits that in the circumstances loans 19 to 25 were already secured by the 2004 mortgage. My provisional view is that this is correct, but at the same time it seems clear on the evidence that none of the lenders of loans 19 to 25 thought that those loans were secured. All seem to have treated those loans as unsecured, and taken the view that they needed to be included in the security arrangements proposed for loans 26 to 30.

By arrangement between the parties, I heard evidence on the counterclaim only. The plaintiff may wish to adduce further evidence on the hearing of its claim, and the defendants may wish to call further evidence in reply.

I am not of the view that the proposed amendments are required by the way in which the case has been run. Sometimes it is apparent by the close of evidence in a case that the parties on both sides have presented their cases inconsistently with the pleadings. It can then become necessary to direct that the pleadings be amended to reflect the reality. This is not such a case. The plaintiff has, reasonably in the circumstances, not sought to make out a positive case, but merely to defeat the claim by the defendants for rectification.

It seems to me preferable to leave the application to amend alive and not to determine it until the parties have had an opportunity to consider these reasons, and their next steps in relation to the claim by the plaintiff.

Both sides will already have incurred significant liability for legal costs to date. Continuation of the litigation will further deplete the funds of all parties to some extent, regardless of any order for costs which might eventually be made. In the circumstances it seems to me appropriate to refer the outstanding issues to mediation. I shall hear the parties before doing so.

Conclusion

The only order I make is that the counterclaim be dismissed. I shall stand the matter over for mention with a view to fixing a date when counsel can attend and make submissions about what directions should be made for the further hearing of the action.

I certify that the preceding one hundred and sixty four (164) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Master Harper.
Associate:
Date: 30 April 2014

Counsel for the plaintiff:  Mr DP Ash
Solicitor for the plaintiff:  Mr J Weller
Counsel for the defendants:  Mr RJ Arthur
Solicitor for the defendants:  Bradley Allen Love

Date of hearing: 13-15 September, 18 November 2011, 12 April 2013

Date of judgment: 30 April 2014

Annexure to Reasons
Space Developments Pty Ltd – Canberra ACT
Loan Schedule

Principal	%PA	Start date	Compl date	Interest to date	Days	Interest to 31/12/06	P&I to 31/12/06
1 Canberra Contractors	$400,000.00	12.50%	29/10/2001	30/09/2008	31/12/2006	1889	$258,767.12	$658,767.12
2 Canberra Contractors	$100,000.00	12.50%	12/04/2002	30/09/2008	31/12/2006	1724	$59,041.10	$159,041.10
3 Canberra Contractors	$100,000.00	12.50%	2/07/2002	30/09/2008	31/12/2006	1643	$56,267.12	$156,267.12
4 Desi Super Fund	$150,000.00	12.50%	16/07/2002	30/09/2008	31/12/2006	1629	$83,681.51	$233,681.51
5 Dunn Super Fund	$150,000.00	12.50%	15/08/2002	30/09/2008	31/12/2006	1599	$82,140.41	$232,140.41
6 Canberra Contractors	$100,000.00	12.50%	19/09/2002	30/09/2008	31/12/2006	1564	$53,561,64	$153,561.64
7 Rovera Super	$100,000.00	12.50%	2/08/2004	30/09/2008	31/12/2006	881	$30,171.23	$130,171,23
7 a Desi Super Fund	$4,166.76	12.50%	2/08/2004	30/09/2008	31/12/2006	881	$1,257.16	$5,423.92
8 Desi Super Fund	$125,000.00	12.50%	2/10/2003	30/09/2008	31/12/2006	1186	$50,770.55	$175,770.55
9 Dunn Super Fund	$200,000.00	12.50%	16/10/2003	30/09/2008	31/12/2006	1172	$80,273.97	$280,273.97
10 A Lopilato	$80,000.00	12.50%	23/10/2003	30/09/2008	31/12/2006	1165	$31,917.81	$111,917.81
11 Desi Super Fund	$300,000.00	12.50%	25/01/2004	30/09/2008	31/12/2006	1071	$110,034.25	$410,034.25
12 Canberra Contractors	$269,118.00	12.50%	29/09/2002	30/09/2008	31/12/2006	1554	$143,222.39	$412,340.39
Totals	$2,078,234.76	$1,041,106.26	$3,119,391,02
13 Canberra Contractors	$500,000.00	18.00%	11/03/2004	30/09/2008	31/12/2006	1025	$252,739.73	$752,739.73
14 Rovera Constructions	$320,000.00	18.00%	11/03/2004	30/09/2008	31/12/2006	1025	$161,753.42	$481,753.42
15 Desi Super Fund	$80,000.00	18.00%	11/03/2004	30/09/2008	31/12/2006	1025	$40,438.36	$120,438,36
16 Desi Super Fund	$70,000.00	18.00%	14/07/2004	30/09/2008	31/12/2006	900	$31,068.49	$101,068.49
17 A De Simone	$130,000.00	18.00%	14/07/2004	30/09/2008	31/12/2006	900	$57,698.63	$187,698.63
18 Dunn Super Fund	$50,000.00	18.00%	14/07/2004	30/09/2008	31/12/2006	900	$22,191.78	$72,191,78
19 Desi Nominees Pty Ltd	$150,000.00	18.00%	27/07/2004	30/09/2008	31/12/2006	887	$65,613,70	$215,613.70
20 Dunn Super Fund	-	18.00%	27/08/2004	31/08/2004	31/21/2006	856
21 Desi Super Fund	$30,000.00	18.00%	30/08/2004	30/09/2008	31/12/2006	853	$12,619.73	$42,619.73
22 A De Simone	$20,000.00	18.00%	30/08/2004	30/09/2008	31/12/2006	853	$8,413.15	$28,413.15
23 Desi Nominees p/l dividends	$150,000.00	18.00%	30/08/2004	30/09/2008	31/12/2006	853	$63,098.63	$213,098.63
24 Canberra Contractors	$200,000.00	18.00%	30/08/2004	30/09/2008	31/12/2006	853	$84,131.51	$284,131,51
25 Dunn Super Fund (cheque to c/c)	$50,000.00	18.00%	31/08/2004	30/09/2008	31/12/2006	852	$21,008.22	$71,008.22
Totals	$1,750,000.00	$820,775.34	$2,570,775.34
26 Scald	$230,000.00	18.00%	15/06/2004	30/09/2008	31/12/2006	926	$105,371.51	$335,371.51
27 Mart	$50,000.00	18.00%	07/09/2004	30/09/2008	31/12/2006	845	$20,835.62	$70,835.62
28 Scald	$45,000.00	18.00%	7/09/2004	30/09/2008	31/12/2006	845	$18,752.05	$63,752.05
29 Space	$20,000.00	18.00%	7/09/2004	30/09/2008	31/12/2006	845	$8,334.25	$28,334.25
30 Dal Molin	$50,000.00	18.00%	24/09/2004	30/09/2008	31/12/2006	828	$20,416.44	$70,416.44
Other Unit holders	$395,000.00	$173,709.86	$568,709.86
Totals	$4,223,284.76	$2,035,591.47	$6,258,876.23

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Citations

Scald Pty Ltd v Turner Developments Pty Ltd [2014] ACTSC 72

Most Recent Citation

Annee Pty Limited v Eliopoulos [2014] ACTSC 341

Cases Citing This Decision

3

Scald Pty Ltd v Turner Developments Pty Ltd [2016] ACTSC 279

Scald Pty Ltd v Turner Developments Pty Ltd [2015] ACTSC 270

Annee Pty Limited v Eliopoulos [2014] ACTSC 341

Cases Cited

8

Statutory Material Cited

0

Giuseppe Catanzariti v Domenico Rocco Romano as Executor of the Estate of the Late Francesco Marando and the Registrar-General of the Australian Capital Territory and Rocco Marando and Giuseppe Marando [2009] ACTSC 38

Green v AMP Life Ltd [2005] NSWSC 370

Newey v Westpac Banking Corporation [2014] NSWCA 319

Lender	Further Advances	Interest Rate	Start Date
1. Canberra Contractors	$400,000.00	12.5%	29.10.2001
2. Canberra Contractors	$100,000.00	12.5%	12.04.2002
3. Canberra Contractors	$100,000.00	12.5%	2.07.2002
4. Desi Super Fund	$150,000.00	12.5%	16.07.2002
5. Dunn Super Fund	$150,000.00	12.5%	15.08.2002
6. Canberra Contractors	$100,000.00	12.5%	19.09.2002
7. S and A Peter	$100,000.00	12.5%	2.10.2002
8. Desi Super Fund	$125,000.00	12.5%	2.10.2003
9. Dunn Super Fund	$200,000.00	12.5%	16.10.2003
10. A Lopilato	$80,000.00	12.5%	23.10.2003
11. Desi Super Fund	$300,000.00	12.5%	25.02.2004
12. Canberra Contractors	$289, 654.00	12.5%	29.09.2002
[Subtotal]	$2,094,654.00
13. Canberra Contractors	$500,000.00	18%	11.03.2004
14. Rovera Constuctions [sic]	$320,000.00	18%	11.03.2004
15. Desi Super Fund	$80,000.00	18%	11.03.2004
16. Desi Super Fund	$70,000.00	18%	14.07.2004
17. A de Simone	$130,000.00	18%	14.07.2004
18. Dunn Superfund [sic]	$50,000.00	18%	14.07.2004
[Subtotal]	$1,150,000.00

7 November 2002	Mortgage to Permanent Trustee Australia Ltd
28 February 2005	Mortgage to Canberra Contractors Pty Ltd
10 August 2006	Discharge of mortgage to Permanent Trustee Australia Ltd
Mortgage to Permanent Trustee Australia Ltd
Variation of priorities of mortgages
9 August 2007	Discharge of mortgage to Permanent Trustee Australia Ltd
23 November 2007	Mortgage to Commonwealth Bank of Australia
3 December 2007	Application to register units plan
14 December 2008	Discharge of mortgage to Canberra Contractors Pty Ltd
Discharge of mortgage to Commonwealth Bank
Mortgage to Canberra Contractors Pty Ltd and eight others
9 June 2009	Partial discharge of mortgage to Canberra Contractors Pty Ltd and others (sale of unit)