Revised
Not Restricted
Suitable for Publication
IN THE COUNTY COURT OF VICTORIA
AT MELBOURNE
COMMERCIAL DIVISION
GENERAL LIST
Case No. CI-13-01116
AAA Concord Painting & Decorating Pty Ltd (ACN 111 933 870)
Plaintiff
V
Soleiman & Anor (according to the schedule of parties attached)
Defendants
--JUDGE:
WHERE HELD:
DATE OF HEARING:
DATE OF JUDGMENT:
CASE MAY BE CITED AS:
MEDIUM NEUTRAL CITATION:
HER HONOUR JUDGE KENNEDY
Melbourne
28, 29, 30 January, 3, 4, 5 and 10 February 2015
20 February 2015
AAA Concord Painting & Decorating Pty Ltd v Soleiman
[2015] VCC 114
REASONS FOR JUDGMENT
---
Catchwords:
Contract for sale of land to plaintiff- Property transferred into names of
defendants on settlement- whether plaintiff entitled to return of deposit
on basis of alleged oral loan agreement/ alternatively on a resulting trust
or equitable lien- whether plaintiff entitled to damages for breach of
agreement to pay for renovation works- whether first defendant entitled
to enforce loan agreement for payment of settlement monies - whether
first defendant entitled to damages for negligent renovation works
---
APPEARANCES:
Counsel
Solicitors
For the Plaintiff
Mr T. Bevan
Fernandez & Johnson
For the Defendants
Mr S. Matters
Neema Legal
COUNTY COURT OF VICTORIA
250 William Street, Melbourne
!Und efined Boo km ar k, I
HER HONOUR:
1.
In this matter, the plaintiff (AAA Concord) seeks the sum of $190,000, being a
10% deposit paid on the signing of a contract of sale for the property at 3 Berwyn
Crescent Templestowe (the property) which is registered in the names of the first
and second defendants (Mr Hamid Soleiman (Hamid) and his son, Atbin
Soleiman (Atbin)).
2.
The plaintiff says the first defendant agreed to pay the balance of the purchase
price for the property and to repay the plaintiff the deposit in order to purchase it
for himself and his son. It further claims that the defendants hold a 1/10th share
of the property on resulting trust for the plaintiff and/or that the plaintiff holds an
equitable lien to the value of the deposit of $190,000.
3.
The plaintiff also seeks $12,000 for renovations undertaken pursuant to an
agreement whereby the first defendant engaged it to carry out renovations on the
property.
4.
The defendants deny that any loan arrangement was reached as claimed, but
say that Hamid agreed to loan the amount necessary to settle the transaction to
the plaintiff (the first defendant by counterclaim) and/or its director (Mr Mehran
Sanai (Mr Sanai)) and/ or his wife (Ms Reema Rahmani) (the second and third
defendants by counterclaim).
5.
Hamid further Counter-claimed for a range of remedies to enforce this loan
including, primarily, specific performance of the personal obligation to pay the
loan monies of $1,841,799.11 (including stamp duty) with a re-transfer to the
plaintiff.1 In closing however he also belatedly requested that the court make an
order under s91 of the Property Law Act 1958 (Vic) for orders for sale together
with an order for repayment of the loan. Although the property is currently
registered in the name of Hamid and Atbin, the essence of Hamid’s position was
1
Defendants’ Particulars of Damage, 29 January 2015.
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that it was insufficient to cover the funds advanced by reason of diminution in
value.
6.
Hamid also sought damages by reason of alleged negligent works undertaken at
the property by AAA Concord and/or Mr Sanai.
7.
AAA Concord (and Mr Sanai and Ms Rahmani) then say that any such loan as
alleged by Hamid and Atbin creates a trust or mortgage and is unenforceable by
reason of ss53 and 54 of the Property Law Act 1958 (Vic) and/or s126 of the
Instruments Act 1958 (Vic).2
8.
However, Hamid and Atbin claim that the agreement was partly performed.3
9.
The pivotal issues are therefore:

whether AAA Concord is entitled to a return of the deposit?;

whether AAA Concord is entitled to damages for the works undertaken at
the property?;

whether Hamid is entitled to any relief to enforce the alleged loan
agreement?; and

whether Hamid is entitled to any damages for alleged negligent works?
10. Prior to resolving these issues it is necessary to set out the background facts.
Background
Parties
11. AAA Concord ran a painting and decorator business. Mr Sanai was its director
and Reema Rahmani was his wife. They were from Iran and were formerly good
friends with Hamid and his son, Atbin.
2
Reply to Amended Defence, 19 January 2015, paragraph 1; Further Amended Defence to Counterclaim, 28
January 2015 paragraph 17A
3 Reply and Rejoinder, 28 January 2015.
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12. Hamid was not a resident of Australia but regularly visited and had stayed at Mr
Sanai’s house. There was evidence to the effect that he was a relatively wealthy
man.
13. There was some dispute in the evidence as to precisely when the families met
and who did what for whom. However, the preponderance of this evidence
suggested they had met 8 or 9 years ago and had been very close. Hamid
accepted that Mr Sanai and his wife, Reema, had provided much assistance for
him early on including “looking after” their son who was studying here while they
returned to Iran. Further, that he was “very thankful”.
Tram Road
14. During 2009 Hamid became interested in purchasing a property in Tram Road
Doncaster where he could build up to 27 units and which had been found by his
son, Atbin.
15. Mr Sanai assisted Hamid in negotiating to buy this property who then provided a
deposit for it to his solicitor, Ms Abudi. Thus, a receipt dated 7 May 2009 was in
evidence which showed the sum of $181,000 received from Atbin being for the
“full deposit” relating to the Tram road property.4
16. However, the sale did not proceed given it appeared that the vendor wanted a
higher price. When Hamid was asked whether he still had a general interest in
looking for a property to invest in after that transaction fell over, he said “actually,
quite the contrary” although neither Counsel sought an explanation of why he
said this.
Contract of Sale re Templestowe property
17. By contract dated 12 December 2009 Mr Sanai executed a contract of sale on
behalf of AAA Concord for the purchase of the Templestowe property. The
purchaser was given as AAA Concord “or nominee”. The contract provided for a
4
Exhibit E.
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price of $1,900,000 with settlement due on 12 April 2010. AAA Concord paid a
10% deposit of $190,0000 immediately.
18. There was some evidence of Mr Sanai that he had a conversation with Hamid
(by telephone to Iran) prior to this purchase (though this was altered under cross
examination) and will be referred to in more detail below.
19. In any event, Mr Sanai accepted that he engaged a conveyancer and tried to
obtain finance himself in order to settle the property. He also accepted that, by
the time of the settlement due date of 12 April, he was unable to obtain finance.
20. It appeared that extensions for settlement were thereafter extended.
21. On 13 April Mr Sanai instructed his conveyancer to draw up a new transfer and
nomination forms into his and his wife’s name because he said that the bank
would not give him money unless it was in both names.
22. He thereafter continued to seek a loan.
23. However, on 19 April a rescission notice was served on AAA Concord.
24. The evidence of Hamid was that a conversation took place around this time
wherein he agreed to lend the outstanding amount to Mr Sanai. This is denied
by Mr Sanai and will be resolved below.
25. It is not in dispute that Hamid thereafter provided funds necessary to settle the
property and transfer it (including stamp duty) in the amount of $1,841,799.11.
This was done in several tranches commencing on 3 May 2010.
26. It is also not disputed that by Nomination Form dated 25 May 2010 executed by
Sanai (for AAA), Hamid and Atbin, AAA Concord nominated Hamid and Atbin as
“substitute Purchaser to take a transfer or conveyance in lieu of the Purchaser.”
27. The Property then settled on 26 May 2010.
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28. The transfer shows a transfer of the property from the vendor to Hamid and Atbin
“as tenants in common in equal shares.”
Performance of works by Mr Sanai
29. Mr Sanai thereafter obtained possession of the property (through Atbin) and
performed works on it.
He alleged this was done on instructions from Hamid
and/or Atbin though this was denied by both men.
30. Mr Sanai’s evidence was that he undertook works which included demolishing
three bathrooms; stripping the kitchen (leaving one cupboard and a sink only);
removing tiles; removing wallpaper; as well as painting. He claims that this work
took between 30-35 man days to complete.
31. It appears to not be in dispute that these works have (at least in part) reduced
the value of the property particularly given no substitute renovation works have
subsequently been undertaken.
Late 2010
32. Hamid returned to Australia later in 2010 (his passport confirms arrival on 21
October 2010). He claims to have had only had a couple of brief conversations
with Mr Sanai prior to that time wherein he was told by Mr Sanai: “you come here
and I’ll give your money back”.
33. Hamid alleges that he was upset when he saw the state of the property and
described broken kitchen cabinets, tiles “collapsed,” wallpaper taken off, and
curtains taken down. Atbin also gave evidence that the property was “completely
wrecked”: in fact the house was basically concrete apart from a bit of carpet for
one place upstairs.
34. Hamid claimed that he asked about whether Mr Sanai had secured finance to
pay back his loan. Mr Sanai told him he had tried to secure finance which was
not approved and that he had “had to do a quick renovation” so he could sell it
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quickly, but had bad luck with market values collapsing. This conversation was
denied by Mr Sanai.
35. Hamid then told him that he needed the money for a business because his visa
was a business visa and required him to establish a business. He further alleged
that Mr Sanai then put various proposals to him as to how they should proceed.
One apparently involved a partnership whereby Mr Sanai provided funds (partly
from a sale of his own property) and whereby they renovated and occupied the
property together. Another proposal was that they swap the house for a business
shop.
36. In the result, no party pleaded that any agreement was crystallised by any such
conversations. Further, although Mr Sanai accepts that he put his house up for
sale he said this was “because he wanted to sell it”, and not to fund some
proposal with Hamid. In any event, the house did not sell.
37. Nevertheless, as will be seen below, both men continued to engage architects
and other workers with an apparent view towards renovating the property.
38. The explanation of Hamid seemed to be that, having “fallen in a trap,” he had “no
other option” but to go along with such a course in order to “get his money out.”
His only other course was lodging a complaint against Mr Sanai which he had
now done and which (he complained) had now taken “three years…”
39. The explanation of Mr Sanai was that Hamid’s actions were consistent with Mr
Sanai’s account that the property always belonged to Hamid.
2011-2013
40. Whatever the motivation, it was not disputed that the two men arranged to see
Mr Cassisi, an architect, who prepared some plans for a substantial extension.
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41. The evidence of Mr Cassisi, consistent with the documentation (including the
invoicing), was that he regarded Hamid as his client (although he only spoke to
him through Mr Sanai as an interpreter).
42. Some time later Mr Laghaeian then became involved. He was a builder who was
acquainted with Mr Sanai (who had helped him when he moved to Melbourne in
January 2012). He was asked by Mr Sanai to be a project manager of the
property at that time, though it was not “official” and he did not take it “seriously”.
43. He attended the property as he had not formally started up in Melbourne at that
time and was in the process of moving and had spare time. He had lots of
“discussions” with both Mr Sanai and Hamid and said that they were “confused”
about what to do and had “no idea”, and he was trying to guide them. In particular
he was trying to obtain quotations from tradesmen to show them the costs
involved and told Hamid that the first design (of Mr Cassisi) was way too big and
costly. He therefore spoke to another architect (through another Iranian engineer
who had also become involved). He said he had “probably” spoken to “both”
men about this, though “mainly” Hamid.
44. There is an invoice from ATECH in the name of both Mr Sanai and Hamid dated
28 January 2012 for architectural services including drafting.5
45. Further works were also undertaken in relation to the property around this time
though there was conflicting evidence as to who was responsible for some of
these further works, including the removal of some internal walls,6 the removal of
air-conditioning ducts, and the cutting down of trees. Hamid accepted, however,
that he engaged Mr Kamran Marghzari, a labourer, to do some tasks around the
property including cutting the grass.
5
Exhibit C.
In terms of which walls were taken down, Mr Brown’s report appears to suggest that internal walls are missing
between bedroom 3 and 4, and between the meals/ dining/ lounge area (Exhibit 7, pages 116 and 123) with
cross-reference to “Existing Floor Plan” (Exhibit A, provided by Mr Cassisi).
6
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46. To the extent it is necessary I accept that Hamid gave the actual instruction to
remove the walls, consistent with the evidence of Kamran Marghzari (who did
the work). Hamid also accepted that he gave the instruction to remove the airconditioning ducts. I am unable to be satisfied as to who actually cut down the
trees, with both Mr Sanai and Hamid attributing the actions to each other and
given no-one appears to have actually seen the trees cut down (including Mr
Laghaeian).
47. However, even if Hamid gave instructions in relation to each of these matters,
they appear to have been undertaken with the tacit (or actual) approval and
knowledge of Mr Sanai in circumstances where both men were endeavouring to
“improve” and/or further renovate the property.
Thus the evidence of Mr
Laghaeian was that the walls were only removed after an Iranian engineer was
retained to see whether a beam was required and after “discussions” about this
by both Hamid and Mr Sanai who “both agreed”. Hamid’s evidence was also that
the ducts were removed at Mr Laghaeian’s request on advice from the engineer
that it was necessary if they were going to renovate the house to live upstairs
and downstairs.
48. In the result, however, Mr Laghaeian’s evidence was that he told “both of them”
that the cost of the renovations would be $600,000 to $700,000 on the basis of
the later (less ambitious) design and finished up.
49. His evidence was also that he asked Hamid to speak to Mr Sanai about payment
because he was a friend and it was embarrassing. Hamid then said he would
give him $2,000 for some expenses but that he would otherwise have to speak
to Mr Sanai. However, Mr Laghaeian left it at that given Mr Sanai had given him
support and accommodation when he first moved.
50. The end result appears to be that the property was further degraded by the
effluxion of time and attempts to further “renovate” it with the input of various
labourers and with no resolution.
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Breakdown of relationship
51. It appears that by around February 2013 the relationship between the parties had
broken down. Although there was divergence in the accounts of both men, on
each version it appeared that Mr Sanai was now demanding a return of the
deposit.
52. Thus, Mr Sanai alleged that his wife held a goodbye party for Hamid’s wife who
was returning to Iran. It appears that an incident arose with Hamid’s two sons,
who Mr Sanai says came late and behaved badly. Mr Sanai then said he
suggested they finish the relationship, that he did not want money for interest
and/or renovations, but said: “just give me my $190,000.” He then claimed that
Hamid said he could not give him the money because he did not have the money,
and wanted to start a business. Mr Sanai said he would give him some time, but
he would eventually have to give the money back. He then asked his lawyers to
contact him to get his money back.
53. Hamid says that Mr Sanai told him that he would expel him out of his country;
that he gave him 24 hours to pay $190,000 and if he did not he would take him
to court, and then he would not be able to reside in Australia.
54. This proceeding was then issued on 12 March 2013.
55. Subsequently reports of two expert were filed.
56. Thus, two reports of WB Simpson & Son of 15 April 2013 opine that if offered for
sale on the market (at that time) the property would realise in the range of $1.3
to $1.4 million.
57. Another report provided by RI Brown Pty Ltd dated 16 June 2014 opines that it
would take $444,500 to $520,500 to bring the property back to a fair and
reasonable condition for the purpose of on selling.
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Witnesses
Plaintiff
58. The plaintiff called Mr Sanai, Reema Rahmani, Soheil Laghaeian and Vito
Cassisi.
59. Having had the opportunity to observe Mr Sanai under examination and cross
examination I am unable to be satisfied that his evidence can be relied upon.
60. Although there may have been language issues, he appeared unable to answer
the most straightforward of questions, and gave evidence which was
argumentative, contradictory, and unresponsive. His evidence also suffered from
serious memory gaps.
61. His inability to give cogent evidence was amply demonstrated by his evidence in
relation to Tram Road which should have been relatively uncontroversial. Thus
he baldly rejected a suggestion that the property was located in 2009, before
rapidly changing to suggest that it was “maybe” 2009. He also argued that it was
“not the issue” when asked a simple question about the starting price.
62. Although some deficiencies in memory may be explicable by the effluxion of time,
he gave contradictory evidence about the pivotal conversation in the case. Thus,
under examination-in-chief, he suggested he had a conversation prior to signing
of the contract wherein Hamid asked him to buy the property, whereas under
cross examination he denied that Hamid asked him to buy the property before he
signed the contract and said that there was no discussion prior to purchase.
63. Reema Rahmani also presented as a highly unreliable witness. Thus she gave
vague evidence as to what, if any, instructions were given with regards to
renovations undertaken by her husband. She also, at times, evidenced a
reluctance to answer questions, was argumentative and also contradictory.
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64. By way of example, she was unable to provide any straightforward responses as
to the circumstances in which her husband attended the auction. Her evidence
was also that they were always “interested” in auctions, “going to Canberra” and
other places, though later contradicting this evidence, maintaining that they did
not go to Canberra for auctions at all.
65. She also presented as ready to give evidence she believed would assist the
plaintiff’s case regardless of its veracity. Thus she gave evidence of an alleged
“witnessing” conversation (which will be referred to below) which I did not find
credible and which was not supported by her husband’s evidence at all.
66. I found Mr Laghaeian to be a generally honest witness, though his evidence
lacked precision at times.
67. The evidence of Mr Cassisi added little to the documentation.
Defendants
68. As well as Hamid and Atbin, the defendants called Kamran Marghzari, Sianak
Assadi and William Cezan as well as the experts, Russell Brown and Darrell
Simpson.
69. Hamid gave evidence through interpreters.
70. His evidence was not perfect. Thus his evidence was, at times, unresponsive,
and he also appeared to understate his involvement in the subsequent works at
the property.
71. Under cross-examination, the plaintiff also highlighted various conflicts between
the original Defence and Counterclaim dated 19 April 2013 and the oral evidence
of Hamid. These included the date of the alleged conversation (23 April versus
May) and the period of the alleged loan (3 months versus 3-5 months).
72. However, although not completely consistent, the original pleading appears to
contain the pivotal elements of the alleged loan being that the loan was an
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“advance” of the balance of the purchase money (e.g. para 15(c)) which would
be paid back (15(e)) and, that, upon re-payment, the property should be
transferred back into the name of Mr Sanai. (19(g)).
73. Hamid also explained that he did not read the document which had not been sent
to him to read because he did not speak English. He also suggested that his
solicitor “did not understand Persian fully” which explanation I accept.
74. Overall, allowing for language difficulties, Hamid generally presented as a
genuine, careful witness who was prepared to make appropriate concessions
and who was able to provide coherent, cogent evidence. Most significantly, his
account as to his pivotal conversations with Mr Sanai about the property were
generally both consistent and credible.
75. I have therefore generally preferred the evidence of Hamid over that of Mr Sanai,
though it remains to consider this evidence in the light of all the other evidence
in the case.
Other witnesses
76. Atbin provided corroborative evidence which will be referred to below.
He
generally gave credible evidence and appeared ready to appropriately concede
matters he could not recall.
77. Mr Assadi provided evidence of peripheral value. Thus he gave evidence that
Mr Sanai told him he had “bought the house” prior to settlement. It was unclear
what conversation occurred after settlement.
At one stage he appeared to
suggest that Mr Sanai told him he “has got the house”. However, he also
suggested that Mr Sanai later told him he had sold it to Hamid. Overall it was
unhelpful.
78. Mr Cezan’s evidence also added little, though he alleged Mr Sanai told him at
some stage that he “bought the property” and asked him to fix a damaged pipe.
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79. The evidence of Kamran Marghzari (given through an interpreter) was, at times,
difficult to follow. His evidence that a wall was removed between bedroom 4 and
the family room also seems inconsistent with evidence of Mr Brown.7 However,
no credit issues were directly raised.8
80. The evidence of the two experts, Mr Brown and Mr Simpson, will be referred to
further below.
A
Whether the plaintiff is entitled to the deposit?
81. It is necessary to consider the evidence of both Mr Sanai and Hamid in more
detail to consider whether the plaintiff’s allegation that Hamid agreed to loan the
deposit to the plaintiff is established.
Evidence of Mr Sanai
Examination in chief
82. The evidence of Mr Sanai was that Hamid regretted missing out on the Tram
Road property, and said “if you find something else you think has potential for
renovation or demolition or something, you buy it”…. “help me with your
tradesman and I’ll bring the money and give you some profit.” In fact he claimed
that Hamid was “always” asking for him to scout out possible investment
opportunities.
83. About one or two months prior to auction he found the Templestowe property
which he considered to be a nice large property with opportunity for renovation.
He told Atbin about it, who looked at it with him.
84. He then had a conversation with Hamid who said:
"If you can, because you are in Australia, you organise it to put the deposit,
and if you can get the loan, you organise that, buy the property because
we don't want to lose that. After that, I will bring the money." So pay off
7
See footnote 6 above.
Counsel for the defendants submitted orally that he had been instructed of some interference with this witness.
However the matter was not, in the result, pursued such that it cannot be taken into account.
8
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the bank and then we do the renovations. So in this case we don't pay the
interest. I said, "All right. Not a problem." That's why I put the deposit on
the house (emphasis added)
85. Mr Sanai then attended the auction and was the successful bidder. His company
then paid the deposit.
86. He was unable to obtain finance but Atbin said his father would try and obtain the
money.
87. He subsequently had a conversation with Hamid (which appears to be in April
2010) although the precise nature of it was confused, even under examinationin-chief. Thus his evidence was that Hamid said:
"All right. My lawyer - immigration lawyer say put it under my name. If you
don't mind, we keep your money at the property. By the time we renovate
it, make a profit, give me a maximum two years because my wife find as
well." I didn't say anything. I said, "All right. That's all right. He is new in
the country. I'll wait four years." Until that night, that is what happened. I
said, "Hamid better to sort out this problem. If we want to finish it, finish it."
That's still I'm saying. If he give me - "All right, I want six months or one
year to finish that property and give you your money back," I am happy to
give him time to finish that.
Under cross examination
88. Contrary to his earlier evidence, under cross examination he actually denied that
Atbin went out to the property to look at it with him and claimed he “checked the
property” instead.
89. He also said that he had no discussion about the purchase of this property with
Hamid prior to purchase, and that he was trying to buy it for himself. Further that
he was not told by either Hamid or Atbin to buy it and paid for the deposit from
savings that the company had itself
90. He then tried to nominate it into his name and later his and his wife’s name and
tried to get a loan himself. He agreed that it was going to be his house because
he wanted to buy the house.
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91. It was not until “after April” that Hamid asked for it to be in his name and told him
he wanted to buy it or “maybe after” April or May. Up until 12 April Hamid had
not told him he wanted to purchase the property and had not made a decision as
to whether he wanted it or not, because he did not have the money.
92. He also denied that he rang up Hamid and asked for money because he was in
trouble after the rescission notice. He said Hamid said he would send the money
if it was put under Atbin’s name and that when he came to Australia he would
finish the house and give him his money back, and if he made a profit he would
give him “some profit” as well. Shortly thereafter his evidence was also that
Hamid said: “Don’t worry if you’ve got difficulties to get the loan, I’ve got money
here…I will buy this property and put it under my name because I asked the
immigration lawyer ….”
93. He denied that Hamid agreed to lend the money to him at his request.
Evidence of Hamid
94. The evidence of Hamid was that he first heard about the Templestowe property
in about May 2010 when Mr Sanai called him. His evidence was that Mr Sanai
said:
"I have purchased a property. I have been on a trip. I have been away for
three months."
He said, "I've been on a journey. Now that I've come back the payment the settlement is due and I haven't been able to pay for the property and
my money has not been ready. And I am losing $190,000 of the deposit I
have paid already. The vendor - the landlord has given me a deadline of
two weeks to pay the balance otherwise I will lose my deposit." And he
asked me if I could lend him this money. He said, "I would be able to pay
you interest. Whatever you say should be fine. Lend me this money so
that I will not lose that $190,000."
95. Hamid asked for some time to think.
96. The next day Mr Sanai called him back. Hamid said he was very hesitant but was
reluctant to tell him no, as he did not want him to lose his $190,000. His evidence
was:
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I told him, "Look, Mehran, I'm happy to lend you this money but there is a
condition. The property has to be under my name." He said, "That was
absolutely no problem. I have full trust in you. Look, I wasn't here. If I
were here I would be able to secure the finance. I'll be able to secure the
finance in three to five months and I'll pay your money back." I was like,
"Mehran, look, are you sure you will be able to do this? This money is all
my life. I'm planning to come here and live here. I need this money. Are
you sure you will be able to do this?" And he was, "Rest assured, there is
no problem. There are already five customers for this property prospective buyers for this property." And I said, "No problem. I'll be able
to do that for you."
97. He thereafter instructed Atbin to transfer the money to purchase the house (which
was funded partly from the sum of $800,000 which was in Australia, and partly
from Iran). There was a delay, given financial sanctions in Iran.
98. Under cross examination Hamid admitted that he had earlier wanted to buy
something in 2008 or 2009. However he denied asking Mr Sanai to keep his eye
out for another property after Tram Road fell over. He claimed that he told Ms
Abudi to buy Tram road and then that “was the end”. He also said that it was
“quite the contrary” to a situation where he had a general interest in looking for
property after Tram Road fell over.
99. Hamid also accepted that he could not really recall the actual date of the pivotal
conversation with Mr Sanai (though he put it at towards the end of April or early
May). He also accepted that Mr Sanai had also said that the house was worth
$2.5 million, which he had not included in his account under examination.
Nevertheless, he generally politely maintained his position to the effect that he
agreed to provide a loan provided the property was put under his name.
Other evidence
Reema Rahmani (Mr Sanai’s wife)
100. Reema Rahmani claimed to have had a conversation with Atbin prior to the
auction (as well as afterwards) who told her of things he was interested in doing
at the property. She also claimed that she and Atbin went to the property shortly
after this auction. However, this evidence contradicted her own evidence that
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the first time she went to the property was after the settlement had occurred. It
was also denied by Atbin.
101. She also claimed that there was a conversation in 2012 which took place at
Hamid’s home wherein Hamid and Mr Sanai were present (with Atbin possibly
upstairs). She claimed that Hamid called her in from the backyard, said “you’re
like my little sister” and “I want you to be a witness to what I’m saying.” He then
said “I have the money and just give me one year. I need time.” She described
this witnessing as a “Persian thing” equivalent to having something on paper.
102. As indicated already, I did not find this evidence credible. It was denied by Hamid,
and was not the subject of any evidence from Mr Sanai at all.
Atbin
103. Atbin claimed that he had a conversation “way before” money was requested,
wherein Reema said:
"I've - we've purchased this beautiful house. You should see it. It's got a
tennis court, vineyard. It's got a swimming pool."
104. He also gave evidence of a conversation with his father as follows:
“My father called me and said Mehran has purchased a property, as in he has
paid deposit for a property, and apparently, the time to pay the rest of the
money has passed and he has asked me to lend him money and he'll give it
back in a couple - actually, he said that and I said, "You're not going to do that,
are you? It's a big amount of money," and he said just put the house in our
name. There shouldn't be any problem and he said that he's going to give us
the money back in a couple of months.”
105. This was not challenged under cross examination.
106. He also denied having conversations with Reema, wherein he showed things
about the house he was interested in doing.
107. Overall, there was little criticism raised against Atbin’s evidence which I generally
found to be credible. I have also preferred it to the extent it conflicted with that of
Reema Rahmani.
VCC 114
17
JUDGMENT
Whether plaintiff’s loan agreement established
108. The plaintiff cited a number of factors to support the existence of the alleged loan
agreement, particularly:9

that it was consistent with the earlier intention to purchase and develop
Tram Road;

that it was consistent with subsequent conduct including the involvement
with works and retention of Mr Cassisi;

that the loan agreement alleged by Hamid was “unusual and inherently
implausible”; and

that there was no written account or demand for interest.
109. However, there was no suggestion that Tram Road was ever to be purchased in
the name of Mr Sanai; rather the deposit monies were provided by Hamid
(through Atbin) with an apparent intention to purchase it in his own name. It is
therefore of little assistance.
110. As indicated already, the subsequent conduct, even if admissible,10 is explicable
given Hamid’s evidence was that he effectively “went along” with things to try to
fix the house and recover his substantial funds (rather than sue his friend).
Indeed, the subsequent conduct of Mr Sanai is in some ways less explicable
given his subsequent involvement appears to extend well above that of a creditor
for a deposit in the sum of $190,000.
111. I also do not consider the loan to be “unusual” or “implausible.” The absence of
interest might ordinarily be significant, but is explicable given the (then) close
friendship between the two families within a close-knit cultural context.
Plaintiff’s Outline of Argument, 8 February 2015, pages 2 – 3.
See Cheshire & Fifoot Law of Contract, 10th Australian Edition, LexisNexis Butterworths Australia 2012, page
433-434 including cases cited therein.
9
10
VCC 114
18
JUDGMENT
112. Turning, then, back to the oral evidence, consideration must be given to the
account of Mr Sanai himself. As indicated already, it was utterly unsatisfactory
on the pivotal conversations concerned and I do not accept it. I also reject the
evidence of Ms Rahmani, which lacked credibility.
113. I further accept and prefer the cohesive and credible account of Hamid, which
was also corroborated by that of his son.
114. There are also some objective factors that support his account. These, critically,
include the receipt of the rescission notice which makes it much more likely that
Mr Sanai was in trouble and in need of funds as Hamid maintained.
The
Westpac bank statements of Hamid also show a deposit of $800,000 into a term
deposit on 4 December 2009, making it less likely that he was contemplating an
immediate substantial purchase.11
115. I therefore accept that Hamid agreed with Mr Sanai that he would lend the
amount necessary to settle the transaction and enable a transfer to occur; that
Mr Sanai would arrange for the property to be transferred into Hamid’s name
(and/or a name nominated by him) and held as security pending repayment; and
that the loan would be repaid within 5 months.
116. Given it was intended that the property was to be transferred as security, I further
consider that the amount agreed to be loaned included the stamp duty
necessarily payable. It follows that the total amount loaned was $1,841,799.11.
117. The agreement therefore involved a promise to repay money with a transfer of
an interest in property as security, but subject to the proviso that the property
would be retransferred upon repayment. This would appear to embody all the
necessary elements of a “mortgage” although it is, strictly, unnecessary to so
describe it.12
11
Exhibit F.
Waldron v Bird [1974] VR 497 at page 501 per Gillard J as cited in Fisher & Lightwood’s Law of Mortgage,
2nd Australian Edition, LexisNexis Butterworths Australia 2005, page 16.
12
VCC 114
19
JUDGMENT
118. I am therefore not satisfied that any agreement was made to loan the deposit to
the plaintiff (or Mr Sanai) as alleged.
Whether resulting trust or equitable lien established
119. The plaintiff submitted that when the property was transferred into the names of
Hamid and Atbin there was no intention that they should benefit from the portion
of the purchase price constituted by the deposit,13 which beneficial interest they
always retained.
120. It further alleged that, even if the plaintiff’s version of events was rejected, then
the deposit should be returned by reason of the imposition of a resulting trust or
by reason of an equitable lien.14
Resulting Trust
121. Where a person pays the purchase price of property and causes it to be
transferred to another or to another and himself jointly, the property is presumed
to be held by the transferee or transferees upon (resulting) trust for the person
who provided the purchase money.15 The presumption, however, may be
rebutted by the contrary actual intention of the purchaser although, where both
parties have contributed to the purchase money, the intentions of both are
material.16
122. The “contrary intention” has clearly been demonstrated here. Thus I have found
that Mr Sanai (and Hamid) intended for the entire property to be held by Hamid
and Atbin as security pending repayment. In this context, the intention of the
controlling director, Sanai, also equates to that of AAA Concord (who in fact
executed the nomination form).
Plaintiff’s Outline of Argument, 8 February 2015, paragraph 54.
Plaintiff’s Outline of Argument, 8 February 2015, paragraphs 55-56.
15 Calverley v Green (1984) 155 CLR 242 at page 266 per Deane J; page 246 per Gibbs CJ; page 255 per
Mason and Brennan JJ. Muschinski v Dodds (1985) 160 CLR 583 at page 589 per Gibbs CJ.
16 Muschinski v Dodds (1985) 160 CLR 583 at page 590 per Gibbs CJ; page 612 per Deane J. Calverley v
Green (1984) 155 CLR 242, at page 251 per Gibbs CJ, page 255 per Mason and Brennan JJ, page 269 per
Deane J.
13
14
VCC 114
20
JUDGMENT
123. In the case of a security for an advance, the interest of the security holder in the
property is constituted by the dollar amount (plus any applicable interest and
other costs payable by the borrower) of the debt owed by the borrower. In the
event that the loan is not repaid, the borrower is entitled only to the amount left
after the security holder has taken the funds to which it is entitled. If there is no
amount left, then the borrower gets nothing.
124. This is to be compared with the case of property held on (resulting) trust for
contributors to the purchase price in proportion to their contributions, where each
contributor has an interest in the property fixed at a percentage determined by
their respective contributions. If the property is sold, the funds obtained on sale
are distributed to each party according to their percentage share in the property,
regardless of the amount obtained on sale.
125. The findings above are that the parties intended that Hamid and Atbin were to
hold the entire property as security pending repayment. This intention exists
regardless of whether the transaction is enforceable as a mortgage (see below).
A “presumed intention” of resulting trust cannot then prevail over the actual
intention of the parties as established by the overall evidence,17 which, in this
case, is inconsistent with a resulting trust.
126. Put another way, an intention that Mr Sanai would be entitled only to the residual
amount left after the satisfaction of the debt he owed to Hamid is contrary to an
intention that Mr Sanai would be entitled to a fixed percentage of the proceeds of
any sale.
Equitable lien
17
Muschinski v Dodds (1985) 160 CLR 583 at page 612 per Deane J.
VCC 114
21
JUDGMENT
127. The plaintiff then relied on the decision of Hewett v Court18 and alleged that a
purchaser’s lien arose upon part-payment of the purchase price which was not
discharged by the transfer of the property to Hamid and Atbin who “remain
indebted to AAA Concord arising from a payment made in relation to the
acquisition of the property”.19
128. The case of Hewett involved a consideration of the principles which govern the
creation of a purchaser’s lien. The court20 found that a purchaser of a
prefabricated home had an equitable lien over the house for the amount of the
purchase price paid. The judgment of Deane J sets out the circumstances
sufficient for imposition of an equitable lien as follows:21
“…. (i) that there be an actual or potential indebtedness on the part of the
party who is the owner of the property to the other party arising from a
payment or promise of payment either of consideration in relation to the
acquisition of the property or of an expense incurred in relation to it…..(ii)
that the property….be specifically identified and appropriated to the
performance of the contract….and (iii) that the relationship between the
actual or potential indebtedness and the identified and appropriated
property be such that the owner would be acting unconscientiously or
unfairly if he were to dispose of the property….to a stranger without the
consent of the other party or without the actual or potential liability having
been discharged.” (emphasis added)
129. Applying these principles, it may be accepted that on payment of the deposit AAA
Concord obtained an equitable lien over the property securing a debt in the
amount of the deposit. In the event that the vendor refused to proceed with the
transfer (assuming no default) or in the event that the vendor became insolvent,
this equitable lien would entitle AAA Concord to possession of the property until
the deposit was repaid to it.
However, it could not be said that the vendor
continued to owe to AAA Concord that debt after transfer of the property.
On
transfer of the property, that debt was satisfied and extinguished. The fact that
the plaintiff directed the vendor to transfer the property into the names of Hamid
18
(1983) 149 CLR 639.
Plaintiff’s Outline of Argument, 8 February 2015, paragraph 57, citing the judgment of Deane J in Hewett v
Court (1983) 149 CLR 639.
20 Gibbs CJ, Murphy and Deane JJ, Wilson and Dawson JJ dissenting.
21 Ibid, page 668.
19
VCC 114
22
JUDGMENT
and Atbin does not mean that somehow that debt (owed by the vendor to the
plaintiff ) continued to exist.
130. As to the dealing between AAA Concord and Hamid, it is equally clear that no
equitable lien arose. The first requirement according to Deane J is an actual or
potential indebtedness on the part of the owner (that is Hamid and Atbin) to
another party (that is AAA concord). However, as found above, I have rejected
the plaintiff’s allegation that Hamid owed the deposit to the plaintiff (or Mr Sanai).
The evidence did not establish that any other amount was owed by Hamid (or
Atbin) to the plaintiff. Rather, as found above, it is Mr Sanai who owes a debt to
Hamid. It is therefore unnecessary to consider the other requirements laid down
by Deane J for the imposition of an equitable lien.
131. It follows that the plaintiff is not entitled to a return of the deposit on the basis of
a resulting trust and/or an equitable lien.
132. The plaintiff did not seek any other order to the effect that there should be some
rectification of the register and/or an accounting to it in the event of any excess
sale proceeds (by defence to counterclaim or otherwise). To the contrary, the
plaintiff evinced no interest in the property and appeared content for the property
to remain registered with Hamid and Atbin. AAA Concord (and Mr Sanai and Ms
Rahmani) also elected to plead the Statute of Frauds provisions to oppose any
order for enforcement of the defendant’s loan agreement including by way of
court-ordered sale. This was presumably given it was highly unlikely that there
would be any excess on a sale, given the diminution in the value of the security.
133. However, whatever the reason, the plaintiff sought the amount of the deposit only
on the basis of its alleged “loan agreement”, a resulting trust, and/or an equitable
lien. Given each of these claims have failed, the claim for the deposit must also
be refused.
B
VCC 114
Whether plaintiff entitled to sum of $12,000 for renovation works?
23
JUDGMENT
134. The plaintiff pleaded an agreement to the effect that Hamid “engaged the plaintiff”
to carry out renovations on the property which renovations it carried out “as
directed.”22
135. The plaintiff however conceded that it would be unnecessary to consider this
claim in the event it was unsuccessful as to Mr Sanai’s version of events; more
particularly if it was found that the property was always intended to be purchased
beneficially for AAA Concord, rather than Hamid and Atbin.23
136. It is unnecessary therefore to consider this claim further. However, for the sake
of completeness I will briefly record my findings as to whether AAA Concord was
really directed to undertake the works by Hamid as alleged.
137. The evidence of Mr Sanai was almost unintelligible on this matter. At one stage
he said he was asked to undertake preliminary works by Hamid “as well” as Atbin,
although no time or conversation was particularised. Thus his evidence was
largely constituted by bald assertions such as that “their father aware of that” and
that he was “talking all the time”.
138. Reema claimed that her husband was told by Atbin to do the works and that this
happened “a few times.” She claimed it occurred in 2011 but was unable to be
specific. She said: “he” wanted “things done” but had great difficulty spelling out
what was actually requested eventually citing “wallpaper; some painting, some
tiles….”
139. Under cross examination she claimed that Atbin “mentioned” wallpaper, tiles,
curtains and painting. When asked about colour she said it was “probably” just
to repaint but was unable to specify exactly what was to be painted.
140. Hamid denied having any conversation about Mr Sanai doing this work.
141. Atbin also denied passing renovation instructions to Mr Sanai.
22
23
Statement of Claim, 8 March 2013, paragraphs 11 and 12.
Plaintiff’s Outline of Argument, 8 February 2015, paragraph 14.
VCC 114
24
JUDGMENT
142. Overall I prefer the defendants’ witnesses and find that the works Mr Sanai
undertook (prior to October 2010) were done at his own volition and not at the
request of Hamid and/or Atbin. More particularly, I accept Hamid’s version of the
conversation with Mr Sanai (cited above) which was to the effect that Mr Sanai
had tried to undertake “a quick renovation” (himself) so he could sell the property
quickly.
143. It follows that the claim must fail.
Summary
144. The plaintiff has not established any entitlement to the deposit nor to the sum of
$12,000 for renovation works with the result that the claim must be dismissed.
145. It remains to consider Hamid’s Counterclaim.
C
Whether the defendants are entitled to enforce their alleged loan
agreement?
146. The terms of the loan agreement pleaded were as follows:
24
a)
The first defendant would loan to the second and third defendants by
counterclaim, alternatively to the plaintiff, the balance of the Purchase
Price and penalties owing pursuant to the contract of sale of land (“the
Loan Moneys”);
b)
The Property would be transferred into the name of the first and second
defendants as security for the Loan Moneys;
c)
The second and third defendants by counterclaim, alternatively the
plaintiff, would repay the Loan Moneys to the first defendant within a
reasonable time; and
d)
The first and second defendants would hold the Property on trust for the
second and third defendants by counterclaim, alternatively the plaintiff,
until the first defendant received payment of the Loan Moneys.24
Amended Defence and Counterclaim, 14 October 2013, paragraph 5A. Also see paragraph 17.
VCC 114
25
JUDGMENT
147. As indicated already, the defendants to the Counterclaim pleaded that the loan
agreement created a trust or mortgage and was unenforceable by reason of ss53
and 54 of the Property Law Act 1958 and/or s126 of the Instruments Act 1958.
148. Section 126 of the Instruments Act provides:
126 Certain agreements to be in writing
1) An action must not be brought to charge a person upon a special promise
to answer for the debt, default or miscarriage of another person or upon a
contract for the sale or other disposition of an interest in land unless the
agreement on which the action is brought, or a memorandum or note of
the agreement, is in writing signed by the person to be charged or by a
person lawfully authorised in writing by that person to sign such an
agreement, memorandum or note.
2)
It is declared that the requirements of subsection (1) may be met in
accordance with the Electronic Transactions (Victoria) Act 2000.
149. Section 53(1)(a) of the Property Law Act provides:
53 Instruments required to be in writing
1) Subject to the provisions hereinafter contained with respect to the creation
of interest in land by parol—
a) no interest in land can be created or disposed of except by writing
signed by the person creating or conveying the same, or by his agent
thereunto lawfully authorized in writing, or by will, or by operation of
law;…
2)
This section shall not affect the creation or operation of resulting, implied
or constructive trusts.
150. Section 54 further provides that (with the exception of leases taking effect in
possession for a term not exceeding 3 years), all interests in land created by
parol shall have the force and effect of interests at will only.
151. The contract alleged clearly involved a “disposition of land” into the names of
Hamid and Atbin as security pursuant to s53. More significantly, given the
reliance on the contractual covenant to repay the loan, the Counterclaim
constitutes an action brought to charge a person upon a contract for the
disposition of an interest in land within s126.
152. The defendants accept that, “regardless of whether or not the transaction is a
mortgage or a simple contract, it involves a disposition of real property which is
VCC 114
26
JUDGMENT
not sufficiently evidenced by a written memorandum”25 but relies on the doctrine
of part performance.
Part Performance
153. It has generally been accepted in the High Court26 that the orthodox interpretation
laid down in Maddison v Alderson27 is applicable. This test is that the alleged
acts of part performance must be “unequivocally and in their own nature referable
to some such agreement as that alleged.”28
154. This is to be compared with the more liberal approach contained in the House of
Lords decision of Steadman v Steadman29 that the acts “must be referred to
some contract, and may be referred to the alleged one; that they prove the
existence of some contract, and are consistent with the contract alleged.”
155. Further, in the High Court decision in Regent v Millett Gibbs CJ stated that it was
unnecessary to consider Steadman but it was “enough that the acts are
unequivocally and in their own nature referable to some contract of the general
nature of that alleged.”30
156. This principle has also been applied in Victoria.31
157. In Thwaites,32 Fullagar J set out the following as the order of questions which
arise in considering a plea of part performance:
1.
2.
Were the acts of alleged part performance [pleaded] actually done by the
respective plaintiff concerning whom the allegation was made?
In respect of each act of alleged part performance that was actually done,
was it on the balance of probabilities unequivocally referable to some
contract between the [parties], that is to say, was it such that, on the
probabilities, it must have been done with a view to performing such a
Defendants’ Submissions on Law, 7 January 2015, page 3.
Cooney v Burns (1922) 30 CLR 216, McBride v Sandland (1918) 25 CLR 69 and Waltons Stores (interstate)
v Maher (1988) 164 CLR 387, at pages 431 – 432.
27 (1883) 8 App Case 467.
28 Ibid, at page 479.
29 [1976] AC 536, at page 546.
30 (1976) 133 CLR 679, at page 683.
31 Thwaites v Ryan [1984] VR 65, McMahon v Ambrose [1987] VR 817 and Richardson v Armistead [2000] VSC
551.
32 [1984] VR 65, at page 76.
25
26
VCC 114
27
JUDGMENT
3.
contract?
If yes to 2, what was the general nature of the contract to which the acts
so pointed, that is to say, to which they were “unequivocally referable”?
158. The acts pleaded were that the defendants by counterclaim: 33
(a)
directed the plaintiffs by counterclaim to pay moneys to the vendor of the
property; and
(b)
nominated the plaintiff by counterclaim and the second defendant as
transferees of the property.
159. The particulars provided then cite telephone conversations which were not
established by the evidence.
160. Taking a strict view of the pleadings the claim must fail at the outset as the acts
pleaded were actually done by Mr Sanai (and/or his wife and/or AAA Concord)
and not Hamid.34
161. However, the case proceeded on the basis that the acts of part performance were
really constituted by the transfer of funds to third parties together with the
acceptance of the transfer of the property into the names of Hamid and Atbin (by
execution of the nomination form and the transfer).35
162. Some reference was also made in written submissions to the works undertaken
by Mr Sanai on the property36 although this was not really relied upon in oral
submissions, nor was it pleaded. This was appropriate given any such actions
were taken by Mr Sanai not Hamid and are accordingly irrelevant. Moreover, to
the extent Hamid (rather than Mr Sanai) participated in any works, such actions
were equivocal since (absent an oral explanation) they were just as consistent
with an absolute transfer as a security interest.
33
Reply and Rejoinder, 28 January 2015, paragraphs 1 and 2.
ANZ Banking Group v Widin (1990) 102 ALR 289, at page 302 per Hill J and McMahon v Ambrose [1987]
VR 817, at page 846 per Marks J.
35 It was conceded that payment of money alone cannot constitute sufficient acts of part performance,
Defendants’ Submissions on Law, 7 January 2015, page 4.
36 Defendants’ Submissions on Law, 7 January 2015 at page 4.
34
VCC 114
28
JUDGMENT
163. I accept that the transfer of funds and the acceptance of the transfer of the
property were done by the relevant party (Hamid) seeking to enforce the
agreement for the purposes of the first step in Thwaites.
164. Secondly, on the balance of probabilities, I consider that the payment of funds
and the taking of the transfer were unequivocally referable to “some contract”
between the parties. Although the parties were friends I consider that the transfer
of the title into the name of the defendants together with the advance of such a
significant amount of money was referable to some legally binding agreement,
not merely a friendly arrangement.
165. Next, however, the issue is what was the general nature of the contract to which
these acts were “unequivocally referable”.
166. The defendants submit that “unequivocal” is used in a special sense citing the
observations of Hill J in ANZ v Widin.37
167. However, while referring to a “special sense”, Hill J acknowledged that the liberal
approach in Steadman had not been generally adopted. Further, while his
Honour suggested that there was much to be said for the adoption of Steadman
in Australia, he accepted that this was a matter for the High Court.38 He also
actually applied the “orthodox view” in that case to find that the acts (in obtaining
an indemnity agreement, taking a mortgage in blank and authority to complete,
and endorsing bills) were “unequivocally and in their own nature referable to a
contract of the general nature of that alleged.”39
168. The “unequivocal” test has been consistently applied by the High Court and in
Victoria. The case of Widin does not suggest that some different test should be
applied by this court.
37
38
39
(1990) 102 ALR 289, at page 303 per Hill J.
(1990) 102 ALR 289, at page 305 per Hill J.
Ibid.
VCC 114
29
JUDGMENT
169. Turning then to the facts of the present case, the acts of taking a transfer of the
title and advancing funds are consistent with the taking of security as alleged.
However such acts are also just as consistent with the taking of an absolute
transfer (as the plaintiff alleged).
170. The acts in this case might also be compared with the handing over the custody
of title deeds which was traditionally seen as an accepted method of providing
security. However, while the handing over of title deeds did not of itself imply
another different type of transaction, the actions of payment and taking an
absolute transfer are referable to at least two possible types of agreement
(namely both an absolute transfer and a security).
171. Put another way, I am unable to be satisfied that the acts of part performance
alleged are “unequivocally” and in their own nature referable to some sort of
security/mortgage arrangement as that alleged.
172. It follows that the claim based on part performance must fail.
Fraud on the statute
173. In closing submissions the defendants sought to make further submissions based
on the more general principle that the court should not allow the Statute of Frauds
to be made an instrument of fraud as referred to by Hope J in Last v Rosenfeld40
and cited in the recent High Court decision of Theodore v Mistford Pty Ltd .41
174. The defendant also cited Ciaglia v Ciaglia.42
175. In Theodore Mr Theodore entered into a contract to purchase a business from
Mr Mistford, the contract requiring Mr Theodore to obtain a mortgage in
registrable form and duplicate certificate of title in certain land belonging to his
mother. The duplicate certificate of title was provided, but the transaction settled
without provision of the instrument of mortgage. The purchaser subsequently
40
[1972] 2 NSWLR 923, at page 927.
(2005) 221 CLR 612, at pages 623-624.
42 (2010) 269 ALR 175.
41
VCC 114
30
JUDGMENT
defaulted. Mrs Theodore then sued for the return of the duplicate certificate
without payment of the debt while Mistford counterclaimed for payment of the
debt out of the proceeds of the sale of the land.
176. The High Court considered various issues which included whether the equitable
mortgage could be enforced absent writing, given the provisions of s11 Property
Law Act 1974 (similar to the Victorian s 53 PLA) and s59 (similar to s126 of the
Victorian Instruments Act).
177. The High Court stated that the case was not to be approached as one of
agreement, since an immediate effective security had been created and no
judgment upon a personal covenant to repay the monies was sought.43 This
meant that it was unnecessary to give attention to s59.
178. In terms of s11, the Court stated that the “ultimate question” was whether in the
circumstances found at trial, the respondent vendor having completed the sale
contract (and handed over their business) on the faith of the duplicate certificate
of title, the appellant had been entitled in equity to the return of that instrument
without satisfying the secured indebtedness. 44 In so saying, the court cited the
principle from Last v Rosenfeld45 cited above.
179. Ultimately, the court did not consider s11 a bar to enforcement and found that
Mrs Theodore was not entitled to the return of the instrument.
180. The case is firstly distinguishable since the critical remedy sought in this case
was a judgment upon the personal liability to repay the loan moneys, based on
the oral agreement, rather than access to the security.
181. Secondly, although the “established limits” of the doctrine are unclear, I do not
consider that any failure to enforce the alleged loan agreement here would allow
the Statute of Frauds to be made an instrument of fraud. In the absence of equity
Theodore v Mistford Pty Ltd (2005) 221 CLR 612 at paragraphs 27 – 28.
(2005) 221 CLR 612 at paragraph 30.
45 Last v Rosenfeld [1972] 2 NSWLR 923 at pages 927-928.
43
44
VCC 114
31
JUDGMENT
intervening in Theodore, the appellant would effectively be allowed to regain the
title to the property while using the Statute to repudiate the true basis on which
that property was held. This is distinguishable from the present case where
Hamid and Atbin are registered title holders and Mr Sanai is not relying on the
statute to reject this position. To the contrary, as indicated already, he generally
raised no objection at all to the property remaining with Hamid and Atbin.
182. It might have been different if the positions were effectively “reversed” such that
Hamid/Atbin pleaded the statutes and refused to retransfer the property
notwithstanding repayment. However, be that as it may, the real detriment
identified by Hamid in the present case is that Mr Sanai is seeking to deny the
oral agreement. This however will be the effect wherever the equivalent Statute
of Frauds provisions apply. I therefore do not consider that the case of Theodore
assists Hamid.
183. The case of Ciaglia v Ciaglia is also distinguishable. That case was concerned
with a situation wherein two brothers made an oral agreement that a brother
(Robert) would transfer his half share in a property to another brother (Pasquale)
who would lend him $195,000. Pasquale was further to transfer the share back
upon repayment. Despite repayment the share was not transferred back. The
principal issue in the proceeding was whether Pasquale’s widow held a halfshare on trust for Robert with one of the issues being the writing requirements of
the equivalent NSW statutes.
184. In terms of the formalities issue, White J canvassed a wide range of cases which
illustrated that “equity will not permit a party to rely upon [the Statute] to resist
proof that an apparently absolute conveyance was intended to be by way of
security only and to deny a mortgagor’s right to redeem and obtain a retransfer
of the mortgaged property. To do otherwise constitutes a fraud on the statute.”46
46 Ciaglia
VCC 114
v Ciaglia (2010) 269 ALR 175, at paragraph 65.
32
JUDGMENT
His Honour also found part performance in any event, including by way of
repayment of the moneys.47
185. The present does not concern a case wherein the mortgagor’s right to redeem is
being denied. Again, it does not concern a situation wherein an (apparent)
absolute owner is attempting to rely on the Statute to repudiate the true state of
affairs and deny another party’s interest in a property.
186. Therefore, although there appear to be circumstances where the “fraud on the
statute” principle will be more generally applied (beyond part-performance), I do
not consider that the current case comes within any of the authorities cited.
187. I am accordingly unable to be satisfied that the agreement is enforceable.
188. If the agreement was enforceable it would have been necessary to consider the
issue of remedy further. However, Counsel for Hamid accepted that the various
relief he sought all depended on successfully establishing the existence of an
enforceable agreement.
189. The result in this case is somewhat unsatisfactory given the agreement found to
exist cannot be properly enforced by this court. Nevertheless, the provisions
relied upon remain the law in this State, as does the “unequivocal” test previously
cited.
190. Given the alleged agreement is unenforceable Hamid’s claim must fail.
D
Whether defendant is entitled to damages for alleged negligent works?
191. Hamid further sought damages for diminution in value of the property (or costs of
rectification) by reason that AAA Concord and Mr Sanai failed to take reasonable
care in carrying out renovations on the property.48
47
48
Ciaglia v Ciaglia (2010) 269 ALR 175, at paragraph 102.
Amended Defence and Counterclaim, 14 October 2013, paragraphs 21 – 24.
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192. In closing this claim was not formally abandoned, though no oral submissions
were made to support it. In fact, Hamid conceded “that the evidence is far from
clear on the point regarding disentanglement of maintenance items and negligent
works.”49
193. I will presume that a duty of care would exist in the circumstances of this case.
194. However, there are two matters that are fatal to this claim, namely, negligence
and causation.
195. Hamid claims that the duty was breached when the plaintiff/ Mr Sanai “failed to
take reasonable care in carrying out the renovations at the property.”50 The
particulars of the claim were that the plaintiff “demolished significant portions of
the premises located at the property, without reinstating same, and such that the
premises are not fit of habitation”.
196. However, the evidence does not establish that the work undertaken by Mr Sanai
and/or AAA Concord was done negligently; rather the complaint was that it was
done at all. Put another way, there is no evidence that the kitchen and bathroom
were stripped in an incompetent manner, nor that wallpaper was removed
“negligently”.
197. The negligence action is therefore misconceived.
198. However, even if negligence was established, the evidence does not permit the
court to identify whether the acts of AAA Concord/ Mr Sanai can fairly and
properly be considered a cause of the diminution in value claimed. Instead, a
substantial part of the diminution set out by the experts appears attributable to
other factors including the ongoing effluxion of time (without maintenance) as well
as acts committed (at least in part) by Hamid himself.
49
50
Defendants’ Submissions on Law, 7 January 2015, page 7.
Amended Defence and Counterclaim, 14 October 2013, paragraph 23.
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199. Thus much of the report of Mr Brown cites factors such as the poor condition of the
tennis court and swimming pool. He further cites cracking, warped fly wire screens,
weeds and other general issues explicable by the general failure to maintain. 51
200. There are other factors cited which also appear to be attributable to actions taken
with (at least) the consent of Hamid himself. Thus, Mr Brown highlights that ceiling
space has become damaged as walls have been taken down without rebuilding the
ceiling at the time.52 He also notes “there had been an attempt to cut and remove
various trees and shrubs which had been in part successful and the driveway looks
abysmal”.53 Also that the air-conditioning system has been removed and “major
damage” done.54
201. Other measures Mr Brown recommends appear to be likely to result in an improved
property to that purchased in 2010 (e.g. installation of a safety fence to the pool and
of a handrail). In this context, I also note that Mr Brown inspected the property in
May 2014 and had no information as to the condition of the house when it was
purchased. He was therefore not in a position to fully assess the extent of any
damage caused by the works undertaken by AAA Concord.
202. The report of Mr Simpson is similarly “broad brushed.” Thus he describes that the
property was in “extremely poor condition”55 and “uninhabitable”56 when he saw it in
April 2013 and states:57
“Since the purchase date, partial demolition of interior walls and removal
of fittings and fixtures has been undertaken, including removal of plumbing
and electrical fittings and connections, rubbish is scattered around the
grounds, and the garden is badly overgrown with weeds, brickwork
damaged, and the tiled pool surround breaking away. There is paintwork
damage to external walls, whilst the whole of the interior is in disarray.”
51
Exhibit 7.
Ibid, page 116.
53 Ibid, page 115.
54 Ibid, page 117.
55 Exhibit 8, page 88.
56 Exhibit 8, page 102.
57 Exhibit 8, page 107.
52
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203. It is again unclear from this report the extent to which the loss in value is actually
attributable to the acts of the plaintiff.
204. In the absence of any attempt to disentangle the quantum of loss which might be
attributable to AAA Concord/ Mr Sanai alone, the court is thereby unable to
determine whether any loss would be sustainable.
205. In such circumstances the negligence claim must fail.
Summary
206. Hamid has not established an entitlement to relief based on his loan agreement, nor
on the basis of alleged negligent works.
207. It follows that the Counterclaim must also be dismissed.
E Conclusion
208. The claim will be dismissed.
209. The Counterclaim will be dismissed.
210. I will hear from the parties as to the question of costs.
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SCHEDULE OF PARTIES
BETWEEN:
AAA CONCORD PAINTING AND DECORATING PTY LTD
(ACN 111 933 870)
Plaintiff
-andHAMID POURGHORBANI SOLEIMAN
First Defendant
-andATBIN POURGHORBANI
Second Defendant
AND BETWEEN:
HAMID POURGHORBANI SOLEIMAN
Plaintiff by Counterclaim
-andAAA CONCORD PAINTING AND DECORATING PTY LTD
(ACN 111 933 870)
First Defendant by Counterclaim
-andMEHRAN SANAI
Second Defendant by Counterclaim
-andREEMA RAHMANI
Third Defendant by Counterclaim
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