ACN 103 830 333 (formerly S.J. Holdings (Aust) Pty Ltd) v Property Options 1 Pty Ltd [2023] NSWSC 938

Catchwords: MORTGAGES AND SECURITIES — mortgages — duties, rights and remedies of mortgagee — where mortgaged properties have been sold CONTRACTS — remedies — liquidated damages — debt — where properties subject to mortgage have been sold and appropriate remedy is balance due under the deed of loan LAND LAW — conveyancing — agreement to create or dispose of interest in land — oral agreement found in respect of one property and not in respect of the other Supreme Court New South Wales Medium Neutral Citation: ACN 103 830 333 (formerly S.J. Holdings (Aust) Pty Ltd) v Property Options 1 Pty Ltd [2023] NSWSC 938 Hearing dates: 3-4 April 2023 Decision date: 11 August 2023 Jurisdiction: Equity Before: Robb J Decision: See [ 96 ] – [ 102 ] Catchwords: MORTGAGES AND SECURITIES — mortgages — duties, rights and remedies of mortgagee — where mortgaged properties have been sold CONTRACTS — remedies — liquidated damages — debt — where properties subject to mortgage have been sold and appropriate remedy is balance due under the deed of loan LAND LAW — conveyancing — agreement to create or dispose of interest in land — oral agreement found in respect of one property and not in respect of the other Legislation Cited: Conveyancing Act 1919 (NSW), ss 23C, 54A Real Property Act 1900 (NSW), s 74O Cases Cited: Pipikos v Trayans (2018) 265 CLR 522; [2018] HCA 39 Texts Cited: Heydon JD, Heydon on Contract (2019, LawBook Company) Category: Principal judgment Parties: ACN 103 830 333 Pty Ltd (formerly S.J. Holdings (Aust) Pty Ltd) (First Plaintiff)Sam Agostino (Second Plaintiff) Jacqueline Pearce (Third Plaintiff) Property Options 1 Pty Ltd (First Defendant) Lora Taha (Second Defendant) Representation: Counsel: P Barham (Plaintiffs) L Taha (Defendant in Person) Solicitors: VL Macri Lawyers (Plaintiffs) File Number(s): 2019/326604 Publication restriction: Nil JUDGMENT These proceedings were commenced on 18 October 2019, when Parker J gave the original plaintiff, S . J . Holdings (Aust) Pty Ltd as it was then known, leave to file a summons in court. That company is now called ACN 103 830 333 Pty Ltd. I will simply call it the “ first plaintiff ” . The first and second defendants were Property Option s 1 Pty Ltd ( “ Property Option s ” ) and its sole director, Lora Taha , respectively . The object of the application was to obtain an order pursuant to s 74O of the Real Property Act 1900 (NSW) authorising the first plaintiff to lodge a further caveat on the title to certain properties owned by Property Option s , following the service of a lapsing notice by that company. Since the commencement of the proceedings, Sam Agostino, the sole director of the first plaintiff , and his wife, Jacqueline Pearce, have been added as second and third plaintiffs. As explained in detail below, t he properties over which leave to file the further caveats was sought had earlier been the subject of two contracts of sale between the parties. The first contract of sale was entered into in 2012, by which the first plaintiff sold certain land at Wallerawang to Property Options . The second contract of sale was entered into in 2013 , by which Mr Agostino and Ms Pearce sold certain land at Marula n to Property Options . Both Mr Agostino and Ms Taha deposed that they had a “ business relationship ” . The purpose of the 2013 transaction appears to have been to raise finance for the plaintiff s . The purpose of the 2012 transaction is less clear. In her evidence Ms Taha self-describes as “ a consultant and a referrer for loan [s] and mortgages to various bank s … .[but] not a mortgage broker ” . In July 2022, when her affidavit was sworn, Ms Taha was operating her business through Property Options. It emerged at the hearing following enquiries made by the plaintiffs ’ solicitor in response to a question from the Court that an external controller had been appointed for Property Options on 17 November 202 2 . That came as a surprise to the plaintiffs. It was not possible for the plaintiffs to conduct further enquiries to determine the nature and effect of the appointment of the external controller. In the circumstances, the only practical course available to the Court was to direct that the hearing proceed on the basis that further enquiries would be necessary to ensure that the proceedings were ultimately conducted properly and that the Court would be able to make orders against Property Options that the outcome of the proceedings would otherwise justify. On 6 April 2023 , two days after the conclusion of the hearing, the plaintiffs ’ solicitors provided to the Court two ASIC forms in relation to the appointment of the controller, both dated 28 November 2022. ASIC ’ s Form 505 indicate d that ANZ Banking Group Ltd had been appointed as controller of certain land at Marulan pursuant to a n instrument described as “ [ the mortgage number] … undated but registered 6 February 2014 ” . Consequently, it will only be possible for the Court to indicate provisionally the nature of any orders that it considers ought to be made against Property Options in these proceedings. It will be necessary for the plaintiffs to properly investigate the status of Property Options after this judgment is delivered, and to advise the Court what the consequences of that investigation are. The Court will then address the issue of whether any further steps in the proceedings should be taken to deal with the fact that an external controller was appointed, and the nature of the orders that may then be made in the circumstances. The hearing of these proceedings took place on 3 and 4 April 2023. The plaintiffs were represented by Mr P Barham of counsel. Ms Taha represented herself and Property Options . The defendants were, however, legally represented at the time they filed their defences and the affidavit that was sworn by Ms Taha. During the hearing, the plaintiffs called upon Ms Taha to produce documents in answer to a notice to produce that had been served on the defendants. Only six documents were produced, each of which related to the payment of rates for the Marulan property : Exhibit P3 . That may in part have been because the defendants ceased to have legal representation. One consequence of the absence of production was that the defendants did not have certain financial records that would usually be required to establish a number of claims made on behalf of the defendants that they paid money to or for the benefit of the plaintiffs. In some cases, the plaintiffs accepted in principle that some such payments had been made, but the effect of the absence of production of the records was that the amounts paid could not be established with precision. As I understand it, a further consequence of the absence of production was that the plaintiffs were unable to determine the amounts secured by mortgages granted to other parties over the properties the subject of the plaintiffs ’ claims. The Court advised the plaintiffs that if the lack of response to the notice to produce had the effect that the plaintiffs were unable to prove factual details necessary for the proper formulation of any orders in their favour, the Court would permit the plaintiffs to serve subpoenas on third parties for the purpose of rectifying any deficiency. It will be necessary for the plaintiffs to advise the Court before any final orders are made whether the plaintiffs wish to avail themselves of this arrangement. The plaintiffs were given leave to file a further amended statement of claim on 4 April 2023. The plaintiffs claimed relief under a number of headings relating to different properties. It will be convenient in this case for the Court to deal separately with the relief claimed in relation to the different properties. The Wallerawang properties The first set of prayers related to a number of properties at Wallerawang (which are anonymised, in accordance with the Court ’ s practice ) as follows : The Wallerawang Properties 1. A Declaration that the First Defendant entered into a loan agreement with the First Plaintiff pursuant to the Deed of Loan between them dated 18 July 2012 (“Loan Agreement”). 2. A Declaration that the First Defendant entered into an agreement to mortgage and has mortgaged the properties at [redacted] Wallerawang NSW 2845, being lots 36, 37, 38, 39, 40 and 50 in Deposited Plan [redacted] (“the Wallerawang Properties”) to the First Plaintiff, pursuant to the Mortgage between them dated 18 July 2012 (“Mortgage”). 3. A Declaration that the Second Defendant guaranteed the obligations of the First Defendant pursuant to the Loan Agreement and/or Mortgage. 4. A Declaration that the First defendant is in breach of the Loan Agreement. 5. A Declaration that the First Defendant is in breach of the Mortgage. 6. A Declaration that the First Defendant is indebted to the First Plaintiff in the sum of $55,541.29 81 [sic] or such other sum as the Court may determine plus interest of $103,811.89 or such other sum as the Court may determine, pursuant to the loan agreement. 7. Order that the First and Second Defendant’s pay the said sum of $55,541.29 plus interest to the First Plaintiff and/or judgment for the same. 8. A Declaration that by virtue of the breach of the Mortgage, the First Plaintiff is entitled to exercise all such rights as it may have against the First Defendant pursuant to the Mortgage. 9. A Declaration that the Second Defendant is in breach of the guarantee. 10. A Declaration that by virtue of the breach of the Mortgage, the First Plaintiff is entitled to exercise all such rights as it may have against the Second Defendant pursuant to the guarantee. 11. Interest pursuant to the loan agreement alternatively pursuant to the Mortgage. The plaintiffs ’ Wallerawang claims were supported by allegations of fact in pars 1 to 26 of the further amended statement of claim . I n essence, the plaintiffs pleaded that the first plaintiff agreed to sell the six properties that were defined as the Wallerawang Properties to Property Options by contract of sale dated 18 July 2012 for the price of $55,000 for each lot, giving a total purchase price of $330,000 . Exchange and settlement took place on the same day. On settlement, the first plaintiff lent $270,000 to Property Options in accordance with a written loan agreement of that date (the “ Loan Agreement ” ). The amount of the advance was used to pay part of the purchase price. The Loan Agreement provided that the amount advanced was to be repaid on 18 January 2014, and would attract interest at the rate of 7% per annum. On default, the interest rate would be 9% per annum. Property Options was required to grant mortgages to the first plaintiff over the Wallerawang Properties to secure its indebtedness to the first plaintiff. The plaintiffs alleged that on settlement, Property Options consented to the lodgement of a caveat by the first plaintiff against the title to the Wallerawang Properties to secure its interests under the Loan Agreement. The plaintiffs then alleged that on settlement, the first plaintiff lent Property Options a further sum of $60,000 by way of vendor finance repayable in seven days, Ms Taha guaranteed repayment of the loan, and Property Options agreed that the additional loan would be secured by the Mortgage. This agreement was said to be an oral one. The plaintiffs allege that Property Options fail ed to repay the $270,000 and the $60,000 on the due dates. It also failed to pay the interest payable. Property Options also failed to pay the first plaintiff ’ s legal costs that the plaintiffs alleged was an obligation that was part of the agreement. The plaintiffs alleged that on 29 June 2015, the first plaintiff and the defendants entered into a Deed of Variation under which Property Options agreed to pay the first plaintiff the sum of $100,000 on the execution of the deed. The repayment date under the Loan Agreement was varied to 30 August 2015 . The plaintiffs alleged in par 19 that , between 30 August 2012 and 28 October 2015 , Property Options made nine separate payments to or for the benefit of the first plaintiff in the total amount of $274,458.71, leaving a principal balance of $55,541.29. This balance was stated to be “ excluding capitalised interest and/or legal costs ” . The first plaintiff ’ s claim was therefore for this amount plus the accumulated interest that Property Options had not paid as a result of not having made the principal repayments on time, together with the legal costs that remained unpaid. As the defendants were not legally represented at the time the further amended statement of claim was filed, for practical reasons the defence that was filed on their behalf on 23 April 2021 in response to the amended statement of claim was treated as their defence. The defendants admitted the contract for sale of the Wallerawang Properties as well as the execution of the Deed of Loan and the Mortgage. They admitted that Property Options did not repay the $270,000 by January 2014 and that it did not pay the legal costs. They also admitted that the parties signed the Deed of Variation. The defendants responded to the allegation that the first plaintiff loaned Property Options $60,000 at the time of settlement of the contract and that the loan was secured by the Mortgage by denying that allegation. The defendants responded to par 19 of the amended statement of claim , which dealt with the repayments paid by Property Options , by saying that Property Options did not admit the paragraph and adding that Property Options : “ says that the First Defendant has paid the following amounts to the First Plaintiff: ” without finishing the sentence. If the defendants intended to plead that Property Options had repaid more than the amount alleged by the plaintiffs, they omitted to do so. The defence filed by the defendants did not challenge the validity of any of the terms of the Deed of Loan or the Mortgage , and it did not raise any specific defences to the claim made by the first plaintiff. The defence only put a number of allegations made by the plaintiffs in issue by denying or not admitting the allegations. Putting aside the contest about whether the first plaintiff made a loan of $60,000 to Property Options on the day when the sale of the Wallerawang properties took place, the only positive contest apparently intended by the defendants related to the amounts of the repayments that had been made in respect of the $270,000, but , as I have noted , the defence omitted to list the payments relied upon by the defendants. Ms Taha ’ s 1 July 2022 affidavit is the only source of information concerning the repayments that the defendants allege were made by Property Options . Ms Taha said that she made total payments of $51,458.74 by way of agreeing with evidence given by Mr Agostino that she had made a number of payments in that total amount. She also agreed with evidence given by Mr Agostino that she made payments to him of $100,000 and $120,000 on 29 June 2015 and 28 October 2015. However, in pars 15 to 18 of her affidavit she gave evidence of having made additional payments on “ numerous occasions ” , either in cash to Mr Agostino or by transfer into his bank account. Ms Taha gave specific evidence of having made individual payments of $500 to Mr Agostino and his wife. She said that she paid for Mr Agostino ’ s motor vehicle registration with her credit card , without specifying an amount paid. In par 18 of her affidavit, Ms Taha asserted a specific sum for the total amount that she had transferred into Mr Agostino ’ s bank account or into his home loan account. The sum stated was rejected as evidence because of the form in which the evidence was given. The result was that , apart from Ms Taha having made two additional payments of $500 that were not verified by any receipts, Ms Taha ’ s affidavit contained bare assertions as to additional amounts paid that were not quantified or substantiated by receipts. Ms Taha accepted in cross-examination at T 86.27 that she had produced no records to prove the additional payments that she claimed had been made to or for the benefit of the first plaintiff. Ms Taha said in her affidavit that she only caused Property Options to enter into the contract for the purchase of the Wallerawang properties because Mr Agostino asked her to do so, as he was being pressed by creditors that he was unable to pay. Ms Taha ’ s evidence was that she was not legally represented when she caused Property Options to enter into the transaction. She said that the contract for sale and the loan documents were not explained to her, and that the first plaintiff ’ s solicitor simply asked her to sign the documents. The plaintiffs ’ solicitors were VL Macri Lawyers (VL Macri). Ms Taha said at par 12: “… No one mentioned the Guarantee at the Settlement Meeting ” . However, the defence filed by the defendants did not allege any conduct on the part of the plaintiffs that might vitiate the Deed of Loan or the Mortgage, and the defendants did not seek any order that those documents be set aside. The evidence included copies of the contract of sale of the Wallerawang P roperties, the Deed of Loan and a Mortgage in registrable form, all of which were dated 18 July 2012. The contract of sale identifies Proctor & Associates as Property Options ’ solicitor, which is inconsistent with Ms Taha ’ s denial that the defendants were legally represented. The signature on behalf of the purchaser closely resembles Ms Taha ’ s signature on her affidavit. The contract of sale records that the deposit was $60,000 and that the balance payable on settlement was $270,000. The part of the contract of sale that is in evidence contains a term that the vendor had agreed to provide vendor finance of $270,000 on the terms of a draft Deed of Loan, Mortgage and C aveat annexed to the contract. The contract of sale contains no record that the first plaintiff loaned the deposit of $60,000 to Property Options . The Deed of Loan describe the first plaintiff as the Lender, Property Options as the Borrower, and Ms Taha as the Guarantor. Part 6 created a guarantee by Ms Taha of the obligations of Property Options in relatively standard form. Ms Taha appears to have executed the Deed of Loan separately on behalf of Property Options and herself. The Mortgage that was executed by Ms Taha on behalf of Property Options over the six Wallerawang P roperties acknowledged receipt by Property Options of the advance of $270,000. It does not secure the alleged additional loan of $60,000. The Caveat claimed that the first plaintiff had an equitable estate or interest in two of the Wallerawang P roperties by virtue of the Deed of Loan and Mortgage. In par 15 of his 23 December 2021 affidavit, Mr Agostino explained that when Ms Taha attended at the plaintiffs ’ solicitor ’ s office for the purpose of effecting settlement, she said that she had drawn cheques to pay land tax, council rates and “ for Sam ” . He said that Ms Taha said that she had left the cheques at her office, and that he instructed his solicitor to proceed with the settlement “ and she would account to me for the balance of the $60,000.00 due in due course. ” In par 16 Mr Agostino said that Ms Taha told his solicitor that she did not have a cheque to pay the solicitor ’ s fees and she would send it to the solicitor in the next couple of days. In response to this evidence, Ms Taha said in par 11 of her 1 July 2022 affidavit that at the settlement meeting she was given a copy of a cheque direction by the first plaintiff ’ s solicitor that was exhibited to Mr Agostino ’ s affidavit. The direction required Property Options to make the following payments: 1. Chief Commissioner of State Revenue $8,087.15 2. Lithgow City Council $37,144.27 3. V L Macri Lawyers $1,985.52 4. Sam Agostino $12,783.06 Total cheques for settlement $60,000.00 Ms Taha agreed that she said that she did not have the cheques necessary to make the payments in the cheque direction. This evidence establishes that the arrangement was that Property Options would pay the $60,000 deposit by providing the four cheques that were required by the direction. During the hearing, the plaintiffs provided to the Court a document called “ Plaintiffs ’ Amended interest calculation ” : MFI 2. This document set out the payments that Mr Agostino acknowledged had been made by Property Options , to which Ms Taha agreed in her evidence. It did not allow for any of the other additional, unverified payments alleged by Ms Taha. As I understand this document, it was based upon the amount of the principal and the amount repaid as alleged in the further amended statement of claim, but was a more complete calculation of the amount claimed by the plaintiffs. It started with the loan of $270,000 but added the legal costs claimed of $1,985.52, giving a total amount owing of $271,985.52. The amount of the costs was proved by a letter from VL Macri, addressed to Property Options dated 18 July 2012. That was the same amount as was stated in the cheque direction. MFI 2 recorded that on 30 August 2012, Property Options paid the stamp duty of $8,087.15 and the council rates of $37,569.56 that were required to be paid by the cheque direction. The calculation in MFI 2 was based on Mr Agostino ’ s evidence in his 23 December 2021 affidavit that Property Options had made payment s to the first plaintiff by bank cheque of $100,000 on 29 June 2015 and $120,000 on 28 October 2015. In order to understand the approach taken by the plaintiffs it is necessary to appreciate that in par 19 of the further amended statement of claim the plaintiffs started with a debt of $330,000. That was comprised of the amount of $270,000 advanced under the Loan Agreement and the further short-term advance of $60,000 made by the first plaintiff on 18 July 2012 when Property Options was not able to pay the balance of the purchase price. In MFI 2 the plaintiffs appear to have started with the purchase price of $330,000 and deducted the loan amount of $270,000, giving a balance of $60,000. The loan of $270,000 was not repayable initially until 18 January 2014, which was extended by the Deed of Variation to 30 August 2015. Accordingly, it would not be appropriate to apply repayments made by Property Options between 18 July 2012 and 30 August 2015 to repayments of the principal amount of $270,000. Instead, the plaintiffs have applied the payments to repayments of the short term $60,000 advance plus calculated but unpaid interest. That interest has been calculated at the default rate of 9% per annum. This exercise has been carried out by the plaintiffs for three separate periods. The first period is 18 July 2012 to 29 June 2015 when Property Options paid the amount of $100,000. That was shortly before the extended repayment date for the $270,000 of 30 August 2015. The plaintiffs calculated that the unpaid interest on the $271,985.52 for 1,075 days at 9% per annum was $72,094.79. By 29 June 2015, Property Options had made seven separate repayments (including the payment of the land tax and the council rates) in the total amount of $54,458.71. That was applied to the short term debt of $60,000, leaving an amount outstanding of $5,541.29. When the $100,000 was received by the first plaintiff, the first $5,541.29 was applied in repayment of this outstanding amount, leaving a balance of $94,458.71. The only way that the plaintiffs could apply this amount was in partial repayment of the $270,000, notwithstanding that the repayment date had not yet arrived. Consequently, the balance outstanding of the $270,000 debt was $177,526.81 as at 29 June 2015. The second period is 30 June 2015 to 28 October 2015 when Property Options paid the amount of $120,000 to the first plaintiff. The interest at the rate of 9% per annum on $177,526.81 for the 120 day period is $5,252.84. The plaintiffs applied the $120,000 to the total debt of $177,526.81, giving a balance of $57,526.81. The third period is 29 October 2015 to 3 April 2023, which was the first day of the hearing. During this period no further repayments were made by P roperty Options . The plaintiffs calculated the interest payable on the $57,526.81 at 9% per annum for 2,712 days (being 64 days +7 years + 93 days). The total amount of interest so calculated is $38,468.88. The final amount claimed by the plaintiffs is the balance outstanding on the $270,000 loan of $57,526.81 plus the amounts of interest calculated for the three periods to which no repayment has been apportioned, being $72,094.79, $5,252.84 and $38,468.88, giving total unpaid simple interest of $115,816.51. The total of the balance of the loan and the unpaid interest is $173,343.32, which is the total amount claimed by the plaintiffs. It follows from the consideration of the issues that is given above concerning the first plaintiff ’ s claim in respect of the Wallerawang P roperties that there was no contest between the first plaintiff and Property Options , save for the allegations made by Ms Taha in her affidavit that she had made more repayments on Property Options ’ behalf than the first plaintiff had acknowledged. The evidence that Ms Taha attempted to give on that issue was incomplete and unverified. I find that Property Options has not proved that it repaid to the first plaintiff a greater amount than is acknowledged in Mr Agostino ’ s affidavit and recorded in MFI 2. Consequently, as Property Options and Ms Taha, as its guarantor, have not pleaded any other defence to the first plaintiff ’ s claim, I find that both defendants are liable to the first plaintiff for the sum of $173,343.32 as at 3 April 2023. Counsel for the plaintiffs advised the Court that all of the Wallerawang P roperties have been sold, whether by Property Options or by a bank: see T 14.20. Consequently, the first plaintiff no longer seeks relief relevant to the enforcement of the Mortgage. The Caveat was evidently ineffective to prevent the properties being sold. The only order that can now be made is for judgment in favour of the first plaintiff against each of Property Options and Ms Taha for the amount of the outstanding debt. The Marulan Property The further amended statement of claim seeks the following relief in respect of the Marulan Property claim: 13. A Declaration that the First Defendant holds the property at [redacted] (“the Marulan Property”) on constructive or resulting trust for the Second and Third Plaintiffs. 14. Order that the First Defendant transfer the legal title of the Marulan Property to the Second and Third Plaintiffs. 15. Order that accounts be stated between the First Defendant and the Second and Third Plaintiffs. 16. In the alternative to order 14 sought above, Order that the First Defendant pay the Second and Third Plaintiffs damages as assessed. The plaintiffs pleaded in the further amended statement of claim that prior to 12 December 2013, Mr Agostino and Ms Pearce were the registered proprietors of the Marulan Property. They then pleaded that in November and December 2013, Mr Agostino on his own behalf and on behalf of Ms Pearce entered into an agreement with the defendants that was partly oral and partly implied. The terms of the agreement were alleged in par 28 as follows: a. the First Defendant would assist the Second Plaintiff with the provision of finance on the security of the Marulan Property; b. the Second Plaintiff and the Third Plaintiff would transfer the legal title of the Marulan Property to the First Defendant, provisionally, to enable funds to be borrowed by it on the security of the Marulan Property; c. the First Defendant would obtain finance on the Marulan Property and make payment of all the finance so obtained to, or as directed by, the Second Plaintiff; d. the Second Plaintiff would repay the total finance obtained, all interest incurred on such finance and any other outgoings or expenses incurred by the First Defendant in respect of the Marulan Property in accordance with the terms of the loan and any security; e. upon the Second Plaintiff repaying the total finance obtained and provided to him, or as directed by him, together with interest incurred on such finance and any other outgoings or expenses incurred by the First Defendant in respect of the retention of the Marulan Property on behalf of the Second and Third Plaintiffs, the First Defendant would either: i. transfer the legal title to the Marulan Property back to the Second Plaintiff and Third Plaintiff (“Re-transfer”), or ii. with the consent of the Second Plaintiff and the Third Plaintiff, list the Marulan Property for sale, sell it and account to the Second Plaintiff and the Third Plaintiff for the purposes of sale (“Sale”). f. the First Defendant would do all necessary acts and things to ascertain and advise the Second Plaintiff and the Third Plaintiff of all amounts required to be repaid so as to enable payment and the Re-transfer or Sale; g. other than the Re-Transfer or Sale, the First Defendant was not otherwise to transfer or deal with the legal title to the Marulan Property; and h. the beneficial interest in the Marulan Property would be retained by the Second Plaintiff and the Third Plaintiff at all times, subject to any security to the lender of the finance. The plaintiffs alleged that the last three of the terms set out above were implied. The agreement that Mr Agostino and Ms Pearce pleaded in relation to the Marulan Property was entirely oral. Whether the agreement was a contract for the sale of land, or was intended to create some other interest in land, s 54A or s 23C of the Conveyancing Act 1919 (NSW) respectively might be relied upon by a party to the agreement by way of defence to establish either that no action or proceeding may be brought upon the agreement or that the intended interest had not been created. A party wishing to raise such a defence should ordinarily plead it in their defence, leaving it open to the party seeking to enforce the agreement or establish the interest to plead any available response to the defence, such as acts constituting part performance, in their reply: see Heydon on Contract ( Lawbook Co , 2019 ) at [6.510]. The plaintiffs alleged acts of part performance of the oral agreement in apparent anticipation of the possibility that Property Options would raise a defence based upon the fact that the agreement that they relied upon was wholly oral, by pleading acts of part performance in par 29 of their further amended statement of claim. The acts of part performance relied upon by Mr Agostino and Ms Pearce were that on 12 December 2013, Mr Agostino and Ms Pearce transferred the title of the Marulan Property to Property Options , on 4 February 2014 Property Options used the Marulan Property as security to obtain loan finance, which was provided to or paid in accordance with the direction of Mr Agostino . Property Options made payments totalling $47,586.82 to or on behalf of Mr Agostino, and Property Options paid municipal rates and insurance in respect of the Marulan Property on behalf of Mr Agostino and Ms Pearce. The $47,586.82 was made up of a payment of $10,000 to Mr Agostino ’ s ANZ bank account on 11 February 2014, payment of outstanding council rates of $12,586.82 on 25 February 2014, and a deposit of $25,000 into Mr Agostino ’ s ANZ bank account on 26 February 2014. The plaintiffs alleged that Property Options breached the agreement on about 4 February 2014 by granting a mortgage over the Marulan Property to the ANZ bank to secure an advance of $695,000. The plaintiffs claim that Mr Agostino and Ms Pearce were not aware of, and did not consent to, this advance, and the borrowing was not on-paid to Mr Agostino. They also alleged that the defendants have breached the term of the agreement pleaded in par 28(f) of the further amended statement of claim by failing to advise Mr Agostino and Ms Pearce of all amounts required to be repaid so as to enable the re-transfer of the Marulan Property to Mr Agostino and Ms Pearce . F inally, the plaintiffs alleged that the defendants have breached the term of the agreement pleaded in par 28(e) by failing to account for the money paid to them on the Marulan Property, failing to arrange a discharge of the mortgage, failing to re-transfer title to the Marulan Property, and failing to list the Marulan Property for sale. The plaintiffs allege that as a result of these breaches of the oral agreement, Mr Agostino and Ms Pearce have suffered loss and damage. By their defence, the defendants effectively admitted that Property Options became the registered proprietor of the Marulan Property i n about December 2013. They denied the agreement pleaded in par 28 of the further amended statement of claim. They alleged that Property Options had paid a total of $195,000 to Mr Agostino and Ms Pearce plus $35,000 in water and council rates as set out in a schedule in par 29 of the defence . The payments consisted of monthly amounts of $2,500 between March 2014 and August 2020. The defendants also admitted that Property Option s mortgage d the Marulan Property to the ANZ bank on 4 February 2014. The defence did not respond specifically to the fact that the further amended statement of claim had anticipated that the defendants would raise a defence based upon the fact that the agreement was entirely oral. The defendants responded to the allegations of fact that were made, but they did not allege that the agreement was unenforceable as a matter of law. The defendants did not submit at the hearing that the agreement was unenforceable because of the absence of a memorandum or note of the agreement. That appears to be because they in substance accepted that there was an agreement. In these circumstances, the Court will proceed upon the basis that the enforceability of the agreement has not been challenged because of the absence of writing. It will therefore not be necessary for the Court to decide whether the acts of part performance alleged by Mr Agostino and Ms Pearce were effective to make the agreement enforceable. In his 23 December 2021 affidavit, Mr Agostino deposed to a number of conversations with Ms Taha the effect of which was that he needed to borrow money on the security of the Marulan Property to pay debts, but he was advised by Ms Taha that he would not be able to get a loan in his name. The essence of the agreement was as stated by Mr Agostino in par 31 as to the following statement made to him by Ms Taha: “What we will do is you transfer it to me, I’ll borrow the money, pay the Council, give you the rest of the money and when you’re ready to pay back what I’ve outlaid and what it’s cost me and I’ll transfer it back.” The primary response of Mr Agostino, as stated by him was: “…as long as I can get the property back as I want to develop. Otherwise I would just sell it.” Mr Agostino then said that he caused the plaintiffs ’ solicitor to prepare a contract of sale that was dated 20 November 2013, which led to the Marulan Property being transferred to Property Options on 12 December 2013. The contract of sale is dated 20 November 2013 and provided for the sale of the Marulan Property by Mr Agostino and Ms Pearce to Property Options for a price of $125,000, with a deposit of $12,500 and for the balance of $112,500 to be paid at settlement after 42 days. There is no reference in the contract to any agreement that Property Options would re-transfer the Marulan Property to Mr Agostino and Ms Pearce upon repayment of the purchase price. Mr Agostino acknowledged that sums of $10,000 and $20,000 had been paid by Property Options into his ANZ bank account and that Property Options had paid $12,586.82 to the local council. Property Options granted a mortgage over the Marulan Property to the ANZ bank. The mortgage that is in evidence is not dated, but it bears a recording that mortgage duty was paid on the basis that the amount secured was $695,000. The Deed of Variation made 29 June 2015 in relation to the Wallerawang Properties contains a notation that “ on or before the finalisation of the Deed of Loan dated 18 July 2023 the parties will finalise their dealings in respect of [the Marulan Property] ” . The Deed of Variation extended the final repayment date to 30 August 2015. No further explanation of this notation was provided. On 13 November 2015, VL Macri sent an email to Property Options ’ former solicitors, Proctor & Associates, in which they advised that they acted for Mr Agostino and Ms Pearce and stated that their clients required that the Marulan property be transferred back to their names. The email acknowledged that Property Options had obtained finance on the property and advanced an amount to the clients. It said that the clients had not seen any of the statements and were unaware of the principal and interest that had to be accounted for. The email requested a copy of the relevant statements so that instructions could be obtained in relation to the accounting between the parties. VL Macri sent a further email to Proctor & Associates on 19 November 2015 to advise that Ms Taha had telephoned the writer ’ s secretary and stated that once the money was paid back to the bank the Marulan property could be transferred back to Mr Agostino and Ms Pearce. The email stated that the Marulan property was transferred to Ms Taha ’ s company for the purposes of obtaining finance for Mr Agostino ’ s and Ms Pearce ’ s benefit. It acknowledged that Mr Agostino and Ms Pearce were aware that a sum of money was repayable. It said that VL Macri ’ s instructions were consistent with what Ms Taha had said and that Ms Taha ’ s company held the legal title to the property with the beneficial interest remaining with Mr Agostino and Ms Pearce subject to the repayment of the finance obtained and paid to them. The email stated that Mr Agostino and Ms Pearce had never received a bank statement or reconciliation of any kind, and that they were unaware of the nature of the financial facility that was obtained in order to pay money to them. It said that Mr Agostino and Ms Pearce “ are merely seeking to reconcile the principle [ sic ] and interest and obtain a payout figure so that arrangements can be made for the payment of that figure at which time the legal title of the property will be reconveyed to them. ” In a further letter from VL Macri to Proctor & Associates dated 16 December 2015, they noted that they had not received replies to their 13 and 19 November 2015 emails. They enclosed a memorandum of transfer in anticipation of settlement, and stated that Mr Agostino and Ms Pearce required the matter to be finalised prior to 23 December 2015. They acknowledged that in order to finalise the transaction it would be necessary to determine what principal and interest was payable by Mr Agostino and Ms Pearce. They stated that it was their clients ’ understanding that payments had been made in their favour as follows: $12,586.82 in favour of Goulburn Council; $10,000 to the clients ’ bank account; another $ 25,000 in favour of the clients ’ bank account; and $2 , 856 in stamp duty and $209 in LPI registration fees. LV Macri noted that Property Options was to advise what interest was payable on the facility obtained and used to provide those funds to the clients, and requested that they be provided immediately with a reconciliation of the principal and any interest payable. The letter concluded: We enclose copy of Mortgage [number stated] provided by our clients which appears to suggest that the subject land has been provided as security to the ANZ Bank for a total facility of $695,000.00. In those circumstances your client will need to arrange a partial discharge of that mortgage in order to be able to provide clear title on settlement. Please treat this matter as urgent as our clients have been trying to elicit the information and arrange a settlement for over a month now and are insistent on the matter being finalised before the Christmas vacation. We await your reply. On 22 December 2015, Ms Taha sent an email to VL Macri on behalf of Property Options . The email stated that it was in response to VL Macri ’ s email of 16 December 2015. That email is not in evidence. Ms Taha said in her email: In January 2014 Mr Agostino approach me for a loan as we all know due to his history no lender will agree to lend him and due to the financial situation and hardship circumstances Mr Agostino was facing with creditors he asked me to obtain a loan for him under my name in exchange Mr Agostino offered me a property situated at [Marulan property]. i have agreed to take the security against the loan under my name or company (Property Option 1 P/L) There for Mr Agostino organised through his solicitors for the transfer of the property to my company none as property Option 1 P/L. witch i am a sole director. An overdraft of $70,000 been organised against the property as security. and the details as follows: 12/2013 STAMP DUTY FEE $2865.00 12/2013 REGISTRATION FEE $200.00 15/01/2014 OVERDRAFT/facility approval fee $1,300.00 11/02/2014 GOULBURN COUNCIL $12,586.82 11/02/2014 SAM AGOSTINO (ANZ BANK) $10,000.00 26/02/2014 SAM AGOSTINO (ANZ BANK) $25,000.00 15/01/2014 NRMA BUILDING INSURANCE $1339,16.00 15/01/2015 NRMA BUILDING INSURANCE $1368.85.00 ANZ BANK CHARGES ON FACILITY FEE AND DIBIT INTEREST CHARGES [The email then listed monthly “debit interest charged” between 4 March 2014 and 4 November 2015. It also listed amounts described as “overdraft facility fee” for the same period. The debit interest charged and overdraft facility fee for 4 December 2015 were described as “?????”. The email then continued] TOTAL AS PER THE 04/11/2015 $66,289.82. Macri lawyers fee $500. It is to be noted that this total amount of $66,289.82 is inconsistent with the claim made by the defendant in par 29 of the defence that Property Options had paid a total of $195,000 to Mr Agostino and Ms Pearce plus $35,000 in water and council rates. The schedule in the defen ce lists the $2 , 500 monthly payments under the heading "mortgage payments". Perhaps as a result of the failure of the defendants to answer the notice to produce served on them by the plaintiffs, there was no evidence that the monthly payments of $2 , 500 had been made by Property Options . However, as the arrangement alleged by the plaintiffs was that the Marulan Property was only transferred into the name of Property Options in order to enable it to borrow relatively small amounts for the benefit of Mr Agostino and Ms Pearce, and only relatively small amounts were in fact paid for their benefit, as alleged by the plaintiffs , and as set out in Ms Taha's 22 December 2015 email, it is likely that the claim made in par 29 of the defence is misconceived. If, which has not yet been proved, the monthly mortgage repayments were made, the repayment s are likely to have been made in respect of a much larger loan borrowed by the defendants for their own purposes. On 17 May 2017, Mr Agostino and Ms Pearce received a sales inspection report and exclusive auction selling agency agreement from Ray White (agency agreement) . The copy of the document that is in evidence has been signed on behalf of the agent. As Property Options was the registered proprietor of the Marulan property, only that company could appoint an agent to sell the property. The agreement concerned the sale of the Marulan P roperty for an asking price of $250,000. On 15 November 2017, VL Macri sent a letter to the firm that then appears to have been acting for Property Options , Kekatos Lawyers ( Kekatos) , that enclosed the agency agreement and requested that the agreement be executed by Property Options . The letter stated: When the property is sold we propose the gross proceeds will be dealt with as follows: – 1. Payment of the agents agreed commission and expenses. 2. Payment of our costs & disbursements of acting in relation to the sale. 3. An amount equivalent to the capital tax liability of your client being set aside and held in trust pending lodgement of your client’s next tax return and for payment of upon issue of the assessment. 4. An amount be deducted and set aside representing principal and interest payable to your client and upon agreement of this figure release to your client. 5. Nett balance released to our client. Please confirm that this is your understanding of the arrangement. The letter enclosed correspondence with Property Options ’ previous solicitors and noted that there had been no further communications since 22 December 2015. The letter stated: “ Our client requires a proper accounting of interest payable on those amounts be made in order to ascertain the amount due and payable to your client with supporting documentation. ” It also noted that the director of Property Options – being Ms Taha – was leaving for overseas the next day until February 2018. It stated that it would be necessary for the agency agreement to be executed before Ms Taha left. On 16 January 2018, VL Macri sent a reminder letter to Kekatos in which they asked for the agency agreement to be forwarded as a matter of urgency. They sent a further reminder to Kekatos on 29 January 2018. As noted above, the plaintiffs commenced these proceedings on 18 October 2019. Ms Taha ’ s response to this evidence in her 1 July 2022 affidavit was to acknowledge the transfer of the Marulan Property to Property Options on 12 December 2013, but to deny that she ever had a discussion with Mr Agostino that the Marulan Property was to be held on trust. Although Ms Taha made this denial concerning a specific discussion about the property being held on trust, she confirmed Mr Agostino ’ s evidence as set out at [ 49 ] and [ 50 ] above. Ms Taha agreed in cross-examination at T 86.46 that the arrangement between Property Option s and Mr Agostino and Ms Pearce was that Property Option s would re-transfer the Marulan Property to them once they had repaid the amounts borrowed and given to them, and all related costs incurred by Property Options . Ms Taha agreed that payments totalling $42,586.82, as alleged by Mr Agostino, had been paid on behalf of Mr Agostino and Ms Pearce, but said that she had borrowed that money from the ANZ bank. Ms Taha also paid $2,865 stamp duty on the transfer. Ms Taha also said in her affidavit that she had paid insurance premiums to the NRMA of approximately $1,368 per annum from 2013 to 2020 and council and w ater rates from 2013 to 2020 of approximately $2,000 per annum. Ms Taha also said that the rental income from the Marulan Property since around 2014 has been paid to Mr Agostino as a result of some arrangement with the tenant that was made without her knowledge. It is to be noted that Ms Taha did not claim in her affidavit that the monthly repayments of $2 , 500 listed in the schedule in par 29 of the defence were made for the benefit of the plaintiffs. In his 18 August 2022 affidavit in reply, Mr Agostino acknowledged that Ms Taha may have paid the expenses in relation to the Marulan Property for which she was entitled to recompense, but said that Ms Taha had not responded to repeated requests for Ms Taha to provide an account. Mr Agostino also accepted that he and Ms Pearce had received the rent for the Marulan Property since the date of the sale, and said that was because he and Ms Pearce were always the beneficial owners of the property. In relation to the loan of $695,000 borrowed from the ANZ bank, Ms Taha said that the money was borrowed for the business purposes of Property Options and was secured on the Wallerawang P roperties and the Marulan Property . Ms Taha ’ s evidence does not make it clear whether the mortgage encumbered other properties. Ms Taha said that she has not been able to keep up with the monthly payments on the advance made by the ANZ bank. Taha said in cross-examination at T 89.43 that she understood the ANZ bank was owed $370,000. It is significant that there was no evidence that the contract of sale for the Marulan Property was completed in the ordinary way or that the purchase price stated in the contract was paid. Ms Taha did not claim that Property Options had paid the price. It is also significant that Ms Taha was content for Mr Agostino and Ms Pearce to receive the rent from the tenant of the property. The contract for sale for the Marulan Property was prepared by VL Macri. The contract did not record that Property Options had a solicitor. I infer that VL Macri prepared the transfer. The evidence does not explain why VL Macri prepared a contract for sale , if that firm understood that the purchase price would not be paid and that there was an agreement between Mr Agostino and Ms Pearce and Property Options that Property Options would re-transfer the property to Mr Agostino and Ms Pearce if they repaid whatever amount had been borrowed on the security of the property and paid to or for the benefit of Mr Agostino and Ms Pearce. When VL Macri acted for Mr Agostino in respect of the Wallerawang Properties, they prepared the necessary Loan Agreement and Mortgage in order to document the transaction properly. There is no explanation in the evidence as to why VL Macri did not prepare a written agreement for execution by Mr Agostino and Ms Pearce and Property Options so that there would be a documentary record of that agreement. Nonetheless, the objective evidence available, although limited, is consistent with the oral agreement alleged by Mr Agostino and Ms Pearce having been made. Ms Taha, by her 22 December 2015 email to VL Macri extracted at [ 59 ] above admits that the purpose of the transfer was to enable Ms Taha or Property Options to obtain a loan for the benefit of Mr Agostino , as Mr Agostino ’ s financial situation was such that no lender would agree to lend to him. The evidence makes clear that the plaintiffs have, through their solicitors, been attempting to obtain information from Ms Taha about the principal and interest owing in respect of the Marulan Property since at least November 2015 in order to give effect to the agreement to re - transfer . As I have said, all Ms Taha contested was the issue of whether there had been discussion about whether Property Options would hold the Marulan Property on trust for Mr Agostino and Ms Pearce. It is probably unlikely that the parties would have conceived of the transaction in terms of the creation of a trust , unless they were prompted by advice given by VL Macri. It is much more likely that they satisfied themselves with the oral agreement that I find was made between them. The plaintiffs seek an order that the oral agreement be specifically performed, that is, that the legal title in the Marulan Property be reconveyed to Mr Agostino and Ms Pearce by Property Options , subject to repayment of the amounts transferred by Ms Taha to Mr Agostino or for his benefit . In MFI 2 the plaintiffs calculate interest of 7.93% per annum on what they say was the total amount advance d by Property Option s , being the $47,586.82 as outlined at [ 43 ] above, as well as on an additional $10,000 which they have allowed for payment of council rates for a 10 year period. That interest rate is stated in Ms Taha ’ s 1 July 2022 affidavit as being the interest rate that was applied by ANZ from the time that the loan was granted to 2019. The plaintiffs say the total principal and interest owing to Property Options in respect of the Marulan Property is $67,899.76 . The issue with the relief sought by the plaintiffs is that it is tolerably clear that ANZ have a registered mortgage over the property , and the amount secured may be as high as $695,000. While it is open to the Court to order specific performance of an oral agreement in relation to land where part performance is established ( Pipikos v Trayans (2018) 265 CLR 522 ; [2018] HCA 39 ), the Court is not inclined to make such an order when, as here, the reconveyance would be subject to the first registered mortgagee ’ s security interes t as the order would , in essence, be futile . In the alternative , the plaintiffs seek an order that Property Options pay to the second and third defendant damages “ as assessed ” . There is no evidence before the Court as to the current value of the Marulan Property. T he appropriate amount of damages would be the value of the Marulan Property less the amount of the repayments and interest owed by Mr Agostino and Ms Pearce. The Parramatta Property and the personal property of Ms Taha Ms Taha owns a property in Parramatta that the plaintiffs claim was charged by her to secure any amounts owing by the defendants to the plaintiffs. The further amended statement of claim include s the following prayers for relief: 17. A declaration that on 15 May 2018 the Second Defendant agreed to charge, and did charge, all of her real and personal property to the Second Plaintiff. 18. A Declaration that the [Parramatta Property], is charged to the Second Plaintiff to secure all indebtedness of all of the Defendants to all of the Plaintiffs. 19. A Declaration that the caveat registered No [stated] is valid and, subject to processes of LRS, may be re-recorded in the register. Alternatively, leave pursuant to section 74O of the Real Property Act 1900 for the second plaintiff to lodge a fresh caveat on [stated] to secure such sums as are found and allowed pursuant to these orders as owing by the defendant [sic] or any of them to the plaintiffs or any of them. Mr Agostino gave evidence in his 23 December 2021 affidavit that at some time after 26 February 2014 he discovered that Property Options had mortgaged the Marulan property to the ANZ bank on about 4 February 2014 to secure an advance of $695,000. He said that after a brief period of re-engagement with Ms Taha she again became elusive and difficult to contact. Mr Agostino said in par 47 of his affidavit that on 15 May 2018 he had a telephone conversation with Ms Taha directed at protecting Mr Agostino and Ms Pearce from the fact that the effect of the registration of the mortgage to the ANZ bank against the title to the Marulan property was that there was no equity left for Mr Agostino and Ms Pearce. According to Mr Agostino, the conversation included the following: … Me: “If the title search is right, there’s no equity in Marulan”. Lora: “Well, [the Parramatta Property] is in my name solely now, there is miles of equity in that property, you can have a charge over that, if it makes you feel comfortable”. Me: “What does that mean?”. Lora: “That means as well as the security you already have, I’m giving you security over my house at Parramatta for whatever the difference is that I owe you when we sit down and work it all out”. Me: “Lora I really need to sort this out and I am not comfortable the way Marulan sits”. Lora: “Don’t worry about it, it will be ok. As I’ve said you can have security over [the Parramatta Property] as well”. Me: “If you had just contacted me earlier so I knew where we were I wouldn’t be as worked up as I am. All right I understand you’ve got stuff to deal with over there, but if you’re saying that I’ve got security over Parramatta, I can rest a bit easier. We need to get together when you get back”. In her 1 July 2022 affidavit, Ms Taha responded to this evidence by denying that she had said to Mr Agostino that he could have a charge over the Parramatta Property . In cross-examination at T 90.14, Ms Taha stated that she owed Westpac $1.49 million secured by a mortgage over the Parramatta Property. She also said that a company called Pro Lend Solutions had lodged a caveat against the title to the Parramatta Property to protect an alleged charge that secured a debt of $360,000: see T 90.35. A bundle of documents tendered by the plaintiffs, Exhibit P2, includes a land title search for the Parramatta Property confirming the lodgement of the caveat by Pro Lend Solutions. Ms Taha denied at T 90.45 that the Parramatta Property had a value of $2.4 million. No documents were produced by Ms Taha to substantiate any of these claims. The Court was informed that a caveat was lodged by one or more of the plaintiffs against the title to the Parramatta Property to secure the debts owed by the defendants to the plaintiffs. The caveat appears in Exhibit P2, and names the first plaintiff as the caveator. It was lodged on 26 November 2019, by Law a gents , acting under the direction of VL Macri. The caveat claims a “ charge ” by virtue of “ agreement ” dated 18 July 2012 (being the date of the Deed of Loan in relation to the Wallerawang Properties) . It further states “ d etails s upporting t his c laim: a greement on 15 May 2018 to secure above obligations with subject property, t ransfer dated 20/11/2013 ” . The transfer referred to is the contract of sale for the Marulan Property. In cross-examination, it appeared to emerge that the defendants' former solicitor had caused the caveat to be withdrawn by lodging an application with the Registrar General that had not been authorised by the plaintiffs, and that the solicitor's practising certificate had been suspended: see T 74. This is supported by an email from VL Macri to NSW Land Registry Service (NSWLRS) on 16 September 2022 , which also forms part of Exhibi t P2, and which states: We act for…[the first plaintiff] Upon obtaining an updated title search of [the Parramatta Property] yesterday afternoon, we became aware that [the caveat] which we arranged to be lodged…on 26 November 2019, was not noted on the title. After conducting further searches, we became aware that the Caveat had been withdrawn by [dealing number] on 9 September 2021. … [ Dealing number] appears to have been lodged via PEXA by [the defendants’ former solicitor]. That person and that Firm never acted for, nor had the authority to act for the caveator. In fact, that person and that firm acted for Lora Taha, the registered proprietor of the subject property in [these proceedings]. On 14 October 2022 , an eConveyancing Manager at NSWLRS responded to VL Macri ’ s email as follows: Thank you for your email…a note has been placed on the title for all lodgements to be referred to the fraud team for investigation. We have also requested an audit for the Withdrawal of Caveat and where non-compliance is found the party will be referred to the Office of the Registrar General for further action. Whether or not the defendants ’ former solicitor had the requisite authority to lodge the removal of the caveat was not strictly proved and it is not clear to the Court what occurred. It is clear that if there was any agreement between Mr Agostino and Ms Taha to the effect that Ms Taha would charge her interest in the Parramatta Property to secure debts owed by the defendants to the plaintiffs, the agreement was entirely oral . Section 23C of the Conveyancing Act has the effect that no interest in land can be created except by writing by the person creating the interest. The defendants filed by the defendants does not, however, plead that any oral charge over the Parramatta Property that the plaintiffs might succeed in proving on the evidence was void. Although there may be cases in which the circumstances in which parties agree that one of them may lodge a caveat against the title to property owned by the other as security for repayment of a debt owed by that other party , so that the lodgement of a caveat is sufficient to evidence the creation of an enforceable charge, I do not accept that the evidence before the Court is sufficient here. I am not satisfied by the evidence, in any case, that Ms Taha specifically agreed orally to grant a charge over her interest in the Parramatta Property. There may have been some discussion to the effect that Ms Taha had equity in the Parramatta Property that would assist her to satisfy any obligation that she had to the plaintiffs, and it may also have been said that she could satisfy the obligations of Property Options . Although Mr Agostino was a reasonably satis factory witness, I am not satisfied that the Court should accept that h is recollection of the conversation that he stated briefly in par 52 of his 23 December 2021 affidavit was precisely reliable. Mr Agostino does not depose as to when, exactly, he discovered that the Marulan Property had been mortgaged to ANZ to secure the alleged $695,000 advance , which is said to have been the catalyst for his phone call with Ms Taha which he claims resulted in the first plaintiff ’ s charge over the Parramatta Property . The conversation extracted at [ 81 ] above is said to have occurred on 15 May 2018, which is the date given for the “ agreement ” on the caveat. There is no evidence before the Court that explains the 18 month delay between the alleged agreement and the lodgement of the cavea t , The caveat was not lodged until approximately one month after these proceedings were commenced. I do not consider that Ms Taha was a satisfactory witness. That is primarily because she was unable to give responsive evidence to the questions that she was asked in cross-examination. I note also that, given that Ms Taha described her occupation as being that of a mortgage consultant, her claim at T 80.11 in cross-examination that she did not know what a deed of loan was could not be accepted as a credible response. The principal difficulty with the plaintiffs' case in support of their claim that Ms Taha agreed to give a charge over her interest in the Parramatta Property is that she was not cross-examined on the issue, or her denial of the version of the conversation given by Mr Agostino in his evidence. I do not accept that there was an oral agreement between Mr Agostino and Ms Taha that a charge be granted in favour of the plaintiffs over the Parramatta Property. The plaintiffs alleged in par 34 of their further amended statement of claim that Ms Taha charged the Parramatta Property in favour of Mr Agostino, not all of the plaintiffs. Nonetheless, it was alleged in par 39 that the charge was agreed to secure all monies payable under the Loan Agreement and the Mortgage that were created as part of the transaction concerning the Wallerawang Properties and under the agreement concerning the Marulan Property. The first plaintiff and Ms Pearce had rights under those agreements as well as Mr Agostino, but it was not alleged that they were parties to the agreement that created the charge. The plaintiffs alleged in par 36 that Ms Taha agreed that she would execute all necessary documentation to give effect to the charge agreement . However, the conversation upon which the plaintiffs rely, the operative part of which is set out at [81] above, does not support a finding that Ms Taha specifically agreed to execute a formal charge. Furthermore, the caveat was lodged after the commencement of these proceedings and about 18 months after the conversation between Mr Agostino and Ms Taha relied upon by the plaintiffs. The delay would naturally affect the reliability of Mr Agostino ’ s recollection of the precise words used by Ms Taha, and in the context of the alleged creation of an interest in land, considerable precision is required. Although the plaintiffs pleaded that Ms Taha agreed to charge the Parramatta Property to Mr Agostino, the first plaintiff is identified as the caveator in the caveat and the agreement relied upon is described as being between the first plaintiff and Ms Taha. Perhaps the Court would be justified in ignoring the fact that the caveat first stated that the charge arose by virtue of an agreement dated 18 July 2012, and then stated that the agreement was made on 15 May 2018. However, the inconsistencies between the oral evidence given by Mr Agostino concerning the agreement allegedly made on 15 May 2018, the details stated in the caveat, and the matters alleged in the further amended statement of claim, militate against the Court accepting that Ms Taha granted an effective charge over the Parramatta Property in the terms alleged in the plaintiffs ’ pleading. Result The result of this judgment is that the first plaintiff is entitled to judgment against Property Options as debtor and Ms Taha as guarantor for $173,343.32. Mr Agostino and Ms Pearce are in principle entitled to an order for specific performance against Property Options that it re-transfer the Marulan Property to them. That order for specific performance must be made subject to a condition that they repay to Property Options on the date of re-transfer a specific amount representing the payments made by the defendants to or for the benefit of Mr Agostino and Ms Pearce, which is an amount that must be quantified. However, there is at least a difficulty in determining whether an order for specific performance should be made, given the dearth of evidence concerning the significance of the registered mortgage over the Marulan Property. Mr Agostino and Ms Pearce are in principle entitled to an alternative remedy of damages against Property Options, but the quantum of the damages has not yet been established – in part because there is no evidence of the current value of the Marulan Property. The claim of the plaintiffs to the benefit of a charge over the Parramatta Property must be dismissed. Because of the matters that remain outstanding and the need for the plaintiffs to further consider their position and to provide appropriate further information to the Court, I will deliver these reasons for judgment and invite the plaintiffs to advise the defendants and the Court as to how they propose to proceed for the purpose of enabling the Court to make final orders to give effect to these reasons. In principle, the plaintiffs are entitled to an order that the defendants pay their costs of these proceedings. I will hear the parties if they wish to make any special application in relation to costs. The parties should inform my Associate within 14 days of their response to these reasons for judgment in accordance with the invitation that I have made above. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 August 2023