Supreme Court New South Wales Medium Neutral Citation: Coleman v Hart-Hughes [2017] NSWSC 656 Hearing dates: 17 May 2017 Date of orders: 26 May 2017 Decision date: 26 May 2017 Jurisdiction: Equity Before: Darke J Decision: Declaration made as to existence of an equitable charge. Catchwords: REAL PROPERTY – mortgages and charges – equitable charges and liens – where joint venture deed acknowledges that plaintiff has caveatable interest – whether terms of deed support implication of grant of equitable charge – whether deed frustrated or vitiated by illegality – declaration of equitable charge made EQUITY – equitable remedies – injunctions – where plaintiff seeks injunction restraining registration of plan of sub-division without written agreement – whether terms of injunction would be inconsistent with operation of deed – grant of injunction not appropriate Cases Cited: Aged Care Services Pty Ltd v Kanning Services Pty Ltd (2013) 86 NSWLR 174; [2013] NSWCA 393 Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 Bellissimo v JCL Investments Pty Ltd [2009] NSWSC 1260 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Coleman v Bone (1996) 9 BPR 16,235 Complex Scaffolding Solutions Pty Ltd v Doueihi (2014) 17 BPR 32,753; [2014] NSWSC 230 Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696 Industrial Equity Ltd v Lyons (Supreme Court of New South Wales, Cohen J, 15 October 1991, unrep) Muschinski v Dodds (1985) 160 CLR 583 Nudd v Official Trustee in Bankruptcy (2002) 11 BPR 20,163; [2002] NSWSC 399 Taleb v National Australia Bank Ltd (2011) 82 NSWLR 489; [2011] NSWSC 1562 Troncone v Aliperti (1994) 6 BPR 13,291 Category: Principal judgment Parties: James Robert Coleman (Plaintiff) Gai Hart-Hughes (First Defendant) First Mortgage Managed Investments Pty Ltd (Second Defendant) First Mortgage Investments Pty Ltd (Third Defendant) VMC Consulting Pty Ltd (Fourth Defendant) Representation: Counsel: Mr A Ogborne (Plaintiff) In person (First Defendant) Mr R Lewin (solicitor) (Second and Third Defendants) Solicitors: Bruce and Stewart Lawyers (Plaintiff) Gadens Lawyers (Second and Third Defendants) File Number(s): 2016/122345 Publication restriction: None Judgment Introduction 1. By an Amended Summons filed on 9 November 2016 the plaintiff, Mr Coleman, seeks declaratory relief to the effect that the first defendant, Ms Hart-Hughes, granted a valid equitable charge to the plaintiff over certain property she owns at Bangalow, being Lot 2 in Deposited Plan 1086364. The charge is said to arise from the terms of a deed dated 4 July 2012 entered into by the plaintiff, the first defendant and others ("the Deed"). The Deed records the terms of a joint venture for the development and sale of the property. The plaintiff also seeks an injunction against the first defendant to restrain her from registering any varied plan of sub-division of the property without obtaining the written agreement of the plaintiff. That claim is also based upon the terms of the Deed, in particular cl 4. The plaintiff's claims are opposed by the first defendant. 2. The second, third and fourth defendants are registered mortgagees of the property. The plaintiff does not seek any relief which challenges the priority enjoyed by those mortgagees. The second and third defendants do not oppose the relief sought upon the basis that it does not operate to displace the priority the second and third defendants have over the interests of the plaintiff. The fourth defendant was served with the Summons and various affidavits in November 2016 but has not made any appearance. 3. The property was sub-divided in July 2016 into three lots, being Lots 1, 2 and 3 in Deposited Plan 1220608. There are houses upon Lots 1 and 2. Those lots were placed on the market for sale in about August 2016. The plaintiff provided withdrawal of caveat forms to facilitate the sales. Lot 1 was sold for $730,000. Lot 2 was sold for $835,500. Lot 3, which is a larger, undeveloped block, remains in the ownership of the first defendant. 4. The first defendant does not have legal representation. She has, however, sworn two affidavits and provided written submissions. The affidavits themselves contain a considerable amount of material in the nature of submissions. It is apparent that the first defendant contends that the Deed is not valid and enforceable. She submits that it is tainted by illegality, in that it fails to provide for any joint venture losses to be shared equally by the parties. She further submits that even if the Deed was legally binding from the outset, it has been terminated by subsequent events of frustration such that the parties are discharged from their future obligations under the Deed. The circumstances which are alleged to give rise to frustration of the Deed are primarily delays in the project said to be attributable to the actions of the local Council, and a shortage of funds resulting in a need to borrow further money and the second defendant mortgagee in possession itself having to make substantial contributions to the development from 2014. 5. The first defendant raises various other arguments in opposition to the relief sought, including: 1. that the plaintiff has committed breaches of the Deed; 2. that the relief sought inappropriately amounts to orders for specific performance; 3. that the injunction against the first defendant would in any case be ineffective due to the control exercised by the second defendant as mortgagee in possession; and 4. that the plaintiff has not come to Court with "clean hands" having regard to certain conduct in the course of the proceedings. 1. In the plaintiff's case, affidavits sworn by the plaintiff (19 August 2016 and 4 November 2016) and by Alexander Bentancor, solicitor (2 December 2016 and 16 December 2016) were read. The first defendant read her affidavits sworn on 30 August 2016 and 15 November 2016. There was no cross-examination. Summary of salient facts 1. In about late 2011 the first defendant had discussions with the plaintiff, and others (including the plaintiff's son Jonathan Coleman), about investing in her proposed development of the property. It seems that the property had recently been re-zoned by the Council. According to the first defendant, the re-zoning had been delayed by many years due to the incompetence of the Council. At any rate, the first defendant says that she was in serious financial difficulty at the time, as shown by the fact that the second defendant had made an unsuccessful attempt to sell the property. There is evidence that the second defendant went into possession of the property in about March 2011. There is a dispute about what information the plaintiff was given about this situation, but it is not necessary to resolve that issue, or indeed various other conflicts in the evidence. 2. On 17 February 2012 a company associated with the plaintiff, Bangalow 8 Pty Ltd, entered into a Joint Venture Agreement for Land Development with the first defendant and a company associated with her, Hartington Pty Ltd. The recitals to the Agreement included the following: B GHH and Hartington have an agreement with James Coleman and Jonathan Coleman to fund initial development of the property to a value of $366,000, later revised to $396,000, and, in the absence of funding from Bangalow 8, to jointly fund and develop the project as a 50/50 joint venture. C It is the intention of the above agreement that this Agreement between Bangalow 8 and Hartington and GHH will replace the agreement between GHH/Hartington and James and Jonathan Coleman as soon as the required project funding has been provided by Bangalow 8 and $396,000 initial investment repaid to James Coleman. D Bangalow 8 and Hartington have agreed to develop and sell the Land as a joint venture subject to C above. E Bangalow 8 and Hartington have agreed to share all of the expenses and costs involved in the development and sale of the Land. F Bangalow 8 and Hartington have agreed to share all of the net profits from the sale of the Land (or the developed or undeveloped lots created by the sub-division of the Land) by distributing 50% of the net profits to Bangalow 8 or its nominees and 50% of the net profits to Hartington or its nominees. 1. The agreement provided in cl 2 that Bangalow 8 Pty Ltd would be entitled to lodge a first mortgage over the property. It must have been contemplated (at least by the first defendant) that the second defendant's mortgage would be discharged. The terms of the agreement do not make it clear how that would happen. 2. In any event, the Deed which is at the centre of these proceedings was entered into on 4 July 2012. The parties are the first defendant (referred to as "GHH"), Hartington Pty Ltd, the plaintiff (referred to as "JRC"), and the plaintiff's son (referred to as "JCC"). Clause 1 provides that the Deed supersedes any previous agreement between the parties or any of them. The recitals to the Deed state: A GHH is the registered owner of the land known as 17 Ballina Road, Bangalow in the State of New South Wales, being Lot 2 in Deposited Plan 1086364 ("the Land"). Hartington is the beneficial owner of the Land. B GHH is a consultant to Hartington. C GHH/Hartington wish to develop the Land and requires funding for the development. D JRC has already provided some funding to assist Hartington with the development pursuant to an agreement to share in the net profits of the development and has agreed to provide further funding as set out in this agreement. E JCC is a consultant to JRC in relation to the development. F The parties have agreed to form a Joint Venture:- to obtain the necessary finance to fund the completion of the development and to complete and sell the developed land; and to share the net profits as set out in this agreement. G GHH/Hartington have agreed to make the Land available at no cost to the Joint Venture and for the benefit of the Joint Venture. 1. Clause 4 of the Deed provides: 4. The Project is the subdivision and sale of the Land and development and sale of houses on the Land in four stages as indicated on the plan of subdivision and development application annexed hereto and marked with the letter "A" and which has been lodged with Byron Council. The parties may agree to vary the subdivision and development but any such variation must be agreed in writing and signed by all parties to this agreement. 1. It seems likely that no plan of sub-division and development application was in fact annexed to the Deed at the time of its execution. However, a Determination of Development Application made by Byron Shire Council on 30 August 2012, the notice of which refers to certain sub-division plans dated 29 June 2012, suggests that a development application based on such plans had been lodged with the Council by about 4 July 2012. I infer that those plans were intended by the parties to be annexed to the Deed and were intended to form part of the description of the Project for the purposes of cl 4 of the Deed. The Deed further provided: 6. A committee comprising GHH, JRC and JCC to be known as the Joint Venture Committee ("JVC") will be appointed at the date of this Agreement. Any decision of the JVC will require the approval of GHH and either JRC or JCC. In the event that GHH dies prior to the termination of this Agreement then her daughter, Julie Ingall, or some other person nominated by her Estate will take the place and assume the role of GHH on the JVC. 7. GHH will act as the Project Manager on terms and conditions approved by the JVC. GHH will report weekly to the JVC. GHH will consult with and be assisted by JCC in the role of Project Manager. In the event of the death of GHH the JVC will appoint a new Project Manager in her place. 8. GHH agrees to use her best endeavours to commence and complete the Project in accordance with the Schedule and Budget prepared by GHH and approved by the JVC which is attached hereto and marked with the letter "B". 9. Each of the parties shall at all times act in good faith with each other and in the best interests of the Joint Venture and the Project. GHH will devote her time to the Project in priority to any other interests she may have. … 15. GHH/Hartington acknowledges that JRC has a caveatable interest in the Land and will consent to the registration of a caveat on the title to the Land by JRC. … 25. GHH acknowledges having received the sum of five hundred twenty-five thousand four hundred and thirty-three dollars ($666,258) [handwritten amendment] from JRC and warrants that these funds have been applied towards the cost of the development as part of the Project. 26. JRC agrees to provide the further sum of two hundred fifty-nine thousand and three hundred dollars ($118,475) [handwritten amendment] towards the cost of the development as agreed between the parties and in accordance with the Budget. 27. The parties agree to work together to obtain the funding required to complete the development. 28. The parties agree that:- (a) The Project shall be conducted as a commercial venture and in accordance with good commercial practice; (b) The relationship between the parties is that of joint venturers and limited to carrying out the Project so that nothing contained in this agreement constitutes any of them as agent or partner of any other of them, or creates any agency or partnership for any purposes whatsoever. … 33. GHH and Hartington give the warranties set out in this agreement and in Schedule 1 hereto and acknowledges that JRC and JCC enter into this agreement in reliance on the warranties. 34. The parties agree that:- (a) The net profit from the Project shall be divided in the following manner:- i GHH/Hartington Pty Limited 50% ii JRC 50% (b) The revenue received in relation to the Project shall be applied in the following order:- i Budgeted costs approved by the JVC; ii Discharge of encumbrances on the Land; iii Repayment of monies paid by JRC in relation to this agreement or any previous agreement; iv Distribution to the parties in the proportions set out above. 35. This agreement shall continue until the Project has been completed and the proceeds paid to the Project Account have been paid out in full unless sooner terminated by mutual agreement or pursuant to this agreement. … 49. Unless otherwise agreed in writing between the parties, it is intended that this new clause take precedence over Clause 34(b). The revenue received in relation to the Project shall be applied in the following order:- Budgeted costs approved by the JVC; from the settlement of each of Houses 1 to 4:- $100,000 to $300,000 of the monies paid by JRC in relation to this agreement or any previous agreement is to be repaid to JRC, such that the cumulative total repaid equals the total loan funds provided by JRC; The balance of the sale proceeds will be applied to the discharge of encumbrances on the Land. Distribution to the parties in the proportions set out in Paragraph 34(a), namely:- GHH/Hartington Pty Limited 50% JRC 50% 1. Schedule 1 to the Deed (which is referred to in cl 33) contains various warranties given by the first defendant and Hartington Pty Ltd including the following: GHH is the registered legal owner and GHH is the beneficial owner of the Land. The Land is encumbered to support borrowings of $1.9 million made up as follows: (a) $1,650,000.00 to First Mortgagee; and (b) $190,000.00 to Second Mortgagee and Caveator. They will not increase or vary the current level of borrowings without the written approval of JRC and JCC. They will not sell the Land or dispose of any interest in the Land without the written approval of JRC and JCC. No mortgagee or chargee has taken, attempted or indicated an intention to exercise its rights under any security of which either of them is the mortgagor or chargor. There are no agreements, arrangements or undertakings in force (other than the encumbrances referred to above) requiring any part of the Land to be sold to, disposed of, or otherwise dealt with, or shared with or made available to any person other than pursuant to this Agreement. 1. It seems that the Schedule and Budget referred to in cl 8 of the Deed were not annexed to it. 2. The plaintiff adduced evidence, which was not challenged, that in the period from about January 2012 to March 2013 he provided (via his son) funds totalling $781,233.90 by way of investment into the development of the property. Of that amount, $578,000.90 was provided up to the date of the Deed and $203,233.00 was provided after the date of the Deed. The total amount differs slightly from the figures presented in cll 25 and 26 of the Deed. There is a greater divergence from those clauses in respect of the timing of the payments. I note that one of the earliest payments made was $130,000 which was paid directly to the second defendant towards outstanding interest. 3. On 25 June 2013 the plaintiff and the first defendant (and others) entered into an agreement concerning a retail venture in Lennox Head known as La Chinoiserie. Under its terms the plaintiff agreed to lend $100,000 (interest free) to the first defendant for the purposes of the business. It was provided that if the loan was not able to be repaid within two years the plaintiff would have the right to sell the stock of the business to cover the debt, and any balance of the loan still outstanding would be treated as a loan to "the Bangalow housing project" detailed in the Joint Venture Agreement dated 4 July 2012. That is evidently a reference to the Deed. 4. There is evidence (again not challenged) that the plaintiff in fact advanced a total of $158,202 for the La Chinoiserie business in the period from about May 2013 to December 2013. The agreement noted, reasonably accurately, that $25,000 had already been advanced and that a further $50,000 was imminent. $50,000 was in fact paid on the date of the agreement. 5. The La Chinoiserie business appears to have failed. It had ceased operating by no later than the end of 2015. La Chinoiserie Pty Ltd, which was incorporated in May 2013 and which I infer was the entity through which the business was conducted, was de-registered in December 2015. There is also evidence that the plaintiff's son went to the business premises in January 2016 and found a gymnasium there instead. 6. The plaintiff lodged a caveat on the title to the property in February 2016. The interest claimed was described as a right to repayment of monies advanced and to share in net profits of the development, sub-division and sale of the land, by virtue of the Deed, in particular cl 34 thereof. 7. By that time, a plan of sub-division was being advanced by the second defendant, seemingly with the support of the first defendant and the plaintiff's son. This sub-division differed from the plans the subject of the development consent issued in August 2012. The consent (DA 10.2012.173) was for a seven lot sub-division in two stages, the first of which involved the creation of three smaller lots and one larger lot. The new plan involved the creation of two smaller lots and one larger lot. 8. On 8 March 2016 solicitors for the second defendant sent an email to the plaintiff's solicitors seeking the plaintiff's consent as caveator to the registration of the proposed sub-division. A lapsing notice was foreshadowed. The email was followed up with a further email on 23 March 2016. The plaintiff's solicitors responded on 24 March 2016, seeking a copy of the "precise plan of sub-division", and undertaking to obtain instructions about consent. The plans were sent to the plaintiff's solicitors later that day. 9. The second defendant's solicitors sent a letter to the plaintiff's solicitors on 5 April 2016 enclosing a lapsing notice. The letter was received on 8 April 2016. Also on 8 April 2016 the plaintiff's solicitors sent an email to the second defendant's solicitors attaching a letter in which it was stated that the plaintiff was inclined to give his consent to the sub-division subject to being provided with certain information concerning the amounts owing under the first and second registered mortgages over the property. 10. On 21 April 2016 the plaintiff's solicitors sent a further letter to the second defendant's solicitors. The letter stated that the plaintiff would consent to the registration of the plan of sub-division (without prejudice to the plaintiff's rights under the Deed in respect of any future sub-division). The letter further stated that in circumstances where the information requested in the letter of 8 April 2016 had not been provided, and it was not shown that there was no utility in the plaintiff continuing to protect his claimed interest in the property, the plaintiff would be approaching the Court to obtain an order extending the operation of his caveat. 11. Later on 21 April 2016 the plaintiff obtained orders ex parte for short service of his Summons, which was made returnable on 27 April 2016. On that occasion, an order was made (with the consent of the first defendant and the second defendant, who were then the only defendants) extending the operation of the caveat until withdrawn by the plaintiff or until further order of the Court. The plaintiff also provided the second defendant with a letter of consent to the registration of the plan of sub-division. 12. The sub-division, which is referred to in the Introduction to these reasons, was registered on 11 July 2016. It seems that a modification of DA 10.2012.173 was made to facilitate the new plan. 13. In the meantime, on 5 May 2016 a further development application (DA 2016/273) for the property was lodged with the Council. The application was for 20 dwellings in five separate double-storey buildings. The first defendant was advised by her town planners (Ardill Payne) in August 2016 that if the Council consented to the application there would be the option of proceeding with either the 20 dwelling plan (under DA 2016/273) or the existing approved sub-division (under DA 10.2012.173). There is no evidence before the Court concerning the fate of DA 2016/273. However, the first defendant informed the Court that the application had recently been approved by the Council. Determination 1. I will deal first with the first defendant's challenges to the validity and enforceability of the Deed. 2. The first defendant submitted, as I understood it, that the Deed was affected by illegality because it was a joint venture agreement yet it failed to provide for the equal sharing of losses as well as profits, which is "innate to a joint venture agreement unless expressly stipulated otherwise". Reference was made to Muschinski v Dodds (1985) 160 CLR 583 and to the unreported decision of Cohen J in Industrial Equity Ltd v Lyons (Supreme Court of New South Wales, 15 October 1991). The first defendant submitted that the plaintiff, in enforcing the Deed, was "seeking to avoid any ongoing contribution to losses". 3. I do not see any illegality in relation to the Deed. It is not said that the contract embodied in the Deed is expressly or impliedly prohibited by any statute, whether in its formation or in its performance. Neither is it said that the contract is rendered void by statute. The argument seemingly rests upon considerations of public policy. However, the contract is not one for the commission of any legal wrong, or any immoral act, and is not associated with or in furtherance of any illegal purpose. In my opinion there is no reason based on public policy why the parties, who freely entered into the Deed, should not be able to enforce it in accordance with its terms. Those terms provided for the parties to make various contributions to the Project. The absence of a specific provision dealing with losses does not offend public policy. Nothing said in the cases referred to supports that conclusion. The first defendant's submission must be rejected. 4. I am also unable to accept the first defendant's submission that the contract has been terminated by frustration. Frustration of a contract occurs by operation of law when an unexpected event occurs which renders performance of the contract radically different from that which was undertaken under the contract (see Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696 at 729; Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 357, 376-7 and 408). 5. The first defendant was unable to clearly identify the unexpected event (or events) that brought about the frustration of the Deed. In her submissions, the first defendant referred in general terms to delays in the project caused by the Council, but the nature of the delays, and when they occurred, was not spelt out. In any case, the first defendant seemed to contend that the contract was frustrated in 2014 when the second defendant contributed funds towards the development. This was said to have occurred because the parties to the Deed were not themselves capable of providing further funds. 6. I do not regard those matters as sufficient to frustrate the contract. In my view they do not render performance radically different from that which was promised under the Deed. It remained open to the parties to perform their unperformed obligations in respect of the Project, notwithstanding the involvement of the second defendant and its contribution of funds. The second defendant was a mortgagee in possession when the Deed was entered into. It was always the case that the development of the property might be impinged upon by the second defendant which had its own interests to consider. After 2014, the development has in fact proceeded, albeit slowly. The altered plan of sub-division (supported by the second defendant) was registered in July 2016, and two lots were subsequently sold. In the meantime, a further development application was lodged to allow the construction of twenty dwellings on the property. The Court was informed that the development application was recently approved by the Council. This is a matter for the parties to consider when deciding how best to proceed in accordance with the Deed and their obligations under it, including the duties they owe to each other pursuant to cl 9. 7. The first defendant's challenges to the validity and enforceability of the Deed have not been made out. 8. I turn now to the question whether the first defendant, by entering into the Deed, granted a charge over the property in favour of the plaintiff. 9. The terms of the Deed do not expressly provide for any charge in favour of the plaintiff. The plaintiff submitted, however, that on a proper construction of the Deed as a whole, it should be implied that the first defendant granted an equitable charge over the property to secure payment to the plaintiff of the monies payable to him under the Deed. In that regard, the plaintiff referred to: 1. clause 15 by which the first defendant (and Hartington Pty Ltd) acknowledged that the plaintiff has a caveatable interest in the property, and consented to registration of a caveat on the title; 2. clause 34, read with cl 49, whereby it was agreed that the monies advanced by the plaintiff for the Project would be repaid out of the revenue of the Project including from the sale proceeds of Houses 1 to 4; and 3. the warranties given by the first defendant (and Hartington) pursuant to cl 33 which included warranties not to increase or vary the current level of borrowings and not to sell the property or dispose of any interest in it, without the written approval of the plaintiff and his son. 1. The plaintiff submitted that the provisions of the Deed indicated that the plaintiff was to have more than a mere right to lodge a caveat. He was to have a caveatable interest which was in the nature of a charge given that the plaintiff was given rights of repayment out of the revenue of the project, being the proceeds of sale of the property. 2. The plaintiff referred to Troncone v Aliperti (1994) 6 BPR 13,291, Coleman v Bone (1996) 9 BPR 16,235, and Nudd v Official Trustee in Banruptcy (2002) 11 BPR 20,163; [2002] NSWSC 399. 3. The first defendant did not address this issue in her submissions. 4. Troncone v Aliperti (supra) is a decision of the Court of Appeal. It was considered by McLelland CJ in Eq in Coleman v Bone (supra). His Honour there said (at 16,239): So far as the "caveat" is concerned, it has been held by the Court of Appeal (in Troncone v Aliperti (1994) 6 BPR 13,291) that if in a contract between A and B, A grants B authority to lodge a caveat in respect of property of A, that grant carries with it by implication such estate or interest in the property as is necessary to enable that authority to be exercised. Where the authority to lodge a caveat is given in connection with an obligation by A to pay money to B, and there is no sufficient indication to the contrary, the implication is that the estate or interest granted is an equitable charge to secure payment to B of that money (Troncone at BPR 13,293-4 per Meagher JA). 1. That summary of Troncone v Aliperti (supra) was recently cited with apparent approval by Gleeson JA (with whom Meagher and Leeming JJA agreed) in Aged Care Services Pty Ltd v Kanning Services Pty Ltd (2013) 86 NSWLR 174; [2013] NSWCA 393 at [83]. Gleeson JA considered that the summary given by McLelland CJ in Eq illustrated the point that any implication of a grant of a charge must be derived from the facts of the particular case. Gleeson JA expressly agreed with the observation made by Bryson AJ in Taleb v National Australia Bank Ltd (2011) 82 NSWLR 489; [2011] NSWSC 1562 (at [60]) to the effect that Troncone v Aliperti (supra) did not establish any principle that the implication of an intention to create a charge must be drawn in all cases from an authority given to lodge a caveat in connection with an obligation to pay money. 2. It is thus necessary in any particular case to consider the terms of the relevant instrument as a whole in order to determine whether, on its true construction, a grant of a charge ought be implied. 3. Clause 15 of the Deed provides that the first defendant and Hartington Pty Ltd will consent to the registration by the plaintiff of a caveat on the title to the property. Inherent in that promise is the conferral of authority to lodge a caveat. However, the Deed does more than merely authorise the lodgement of a caveat over the property (cf Taleb v National Australia Bank Ltd (supra) at [61]; Complex Scaffolding Solutions Pty Ltd v Doueihi (2014) 17 BPR 32,753; [2014] NSWSC 230 at [30]). The Deed further contains an acknowledgment that the plaintiff has a "caveatable interest" in the property. Whilst that is not necessarily decisive (see, for example, Bellissimo v JCL Investments Pty Ltd [2009] NSWSC 1260 at [11]-[18]) I consider it to be an indication that the plaintiff was intended to have a proprietary interest in the land. In addition, cll 34 and 49 provide for repayment to the plaintiff out of the revenue of the Project in circumstances where such revenue was envisaged to consist of proceeds of sale of the land or parts of it (such as "Houses 1 to 4"). That is an indication that the plaintiff was to have an interest in the nature of a charge. 4. The warranties given by the first defendant impose restrictions wider than those that would arise from the existence of a caveat. They thus suggest that the plaintiff was to have more than a mere right to lodge and maintain a caveat. They do not, however, provide additional support for the implication of a charge. The warranties provide additional protection to the plaintiff as a lender or investor regardless of whether he has an equitable charge. The warranties are equivocal in this respect. 5. Overall, I consider that the terms of the Deed do support the implication of an intention that the plaintiff have an equitable charge over the property to secure repayment of the monies he advanced. The Deed does not seem to contain any indication to the contrary sufficient to overcome the implication. 6. I therefore conclude that, by entry into the Deed of 4 July 2012, the first defendant granted an equitable charge to the plaintiff over the property to secure repayment to the plaintiff of monies payable to him under the Deed. At present, those monies consist of the $781,233.90 the plaintiff invested into the Project, and the outstanding loan of $100,000 referred to in the agreement of 25 June 2013 concerning La Chinoiserie. That loan was not repaid within two years and no stock was sold to reduce the debt. The parties agreed that the outstanding balance of the loan would be treated as a loan under the Deed. I do not think that any further amounts lent by the plaintiff for the purposes of the business can, on the evidence before the Court, be treated in that way. 7. The Court will give declaratory relief to the effect that the plaintiff has an equitable charge over the property, and that the amount currently secured by the charge is $881,233.90. 8. The first defendant submitted that the declaratory relief sought should not be given because it amounted to an order for specific performance, and specific performance was not appropriate because the Deed required her to provide personal services. However, the declaratory relief is not in the nature of an order for specific performance. It does not itself command performance under the Deed. It does not itself compel the first defendant to provide personal services. Of course, as the Deed remains on foot, the parties to it remain bound to perform their obligations under it. 9. I understood the first defendant to also submit that the declaratory relief was inappropriate because it would produce no foreseeable consequences for the parties. She referred to Ainsworth v Criminal Justice Commission (1992) 175 CLR 564. There is no substance in the argument. The declaratory relief concerns real questions of controversy between the plaintiff and the first defendant, namely, whether the plaintiff has an equitable charge over the first defendant's property and, if so, the amount presently secured by the charge. The making of declarations to that effect plainly produces legal consequences for the parties (see Ainsworth v Criminal Justice Commission (supra) at 582 and 596). 10. I have not overlooked various other arguments raised by the first defendant in opposition to the giving of the relief sought by the plaintiff. In my opinion, none of those arguments warrant the withholding of relief. In particular, I reject the submissions made by the first defendant to the effect that the plaintiff has not come to Court with "clean hands". The defects in the service of the Summons and supporting material prior to the first return date has not been shown to be relevantly improper conduct, and it is in any case not sufficiently linked to the relief claimed. Further, I do not accept that the conduct of the plaintiff in relation to the adducing of evidence concerning the Deed and any attachments to it involved any attempt to mislead the Court. I do not accept that the plaintiff otherwise attempted to mislead the Court so as to obtain an order extending the operation of his caveat. Those serious allegations (which were not put to the plaintiff) are not supportable. 11. The first defendant also alleged that the plaintiff was guilty of breaches of the Deed, including delaying registration of the revised plan of sub-division. No breaches were established on the evidence. Even if the first defendant might have grounds to sue the plaintiff for breach of contract she has not done so, and the existence of breaches of contract would not in any event preclude or render inappropriate the giving of declaratory relief concerning the equitable charge. 12. The final issue to determine is the plaintiff's claim to an injunction restraining the first defendant from registering any varied plan of sub-division of the property without first obtaining the written agreement of the plaintiff. 13. This claim rests upon cl 4 of the Deed which provides that the parties may agree to vary the sub-division and development but any such variation "must be agreed in writing and signed by all parties to this agreement". Whilst the Deed remains in force, all parties, including the first defendant, remain bound by that obligation. Nevertheless, I do not think that it would be appropriate to grant the injunction sought by the plaintiff. 14. The obligation under cl 4 is not absolute. It must be read together with the other provisions of the Deed, including cl 9 which obliges the parties to at all times act in good faith towards one another in the best interests of the Joint Venture and the Project. It is thus not necessarily the case that the first defendant would be in breach of the Deed by proceeding to register a varied plan of sub-division without first obtaining the written agreement of the plaintiff. Whether that would be so, or whether the plaintiff would be entitled to prevent registration, would depend upon the circumstances existing at the time. For these reasons, even if grounds for an injunction were otherwise made out, it would not be appropriate to grant an injunction in the terms sought by the plaintiff. 15. I should add, in this context, that the plaintiffs' rights under the Deed, including the equitable charge as found by the Court provide a basis for a caveat over the property. To the extent that a caveat is maintained which would prevent the registration of a plan of sub-division, the plaintiff would thereby have some protection against a wrongful attempt to register a varied plan of sub-division. 16. The Court will make the following orders: 1. Declare that by Deed entered into on 4 July 2012 the first defendant granted an equitable charge to the plaintiff over Lot 2 in Deposited Plan 1086364 to secure repayment to the plaintiff of monies payable to him under the Deed; 2. Declare that pursuant to the said charge, and in the events that have happened, the land identified in Folio Identifier 3/1220608 presently stands charged to secure repayment to the plaintiff of $881,233.90; and 3. The Amended Summons is otherwise dismissed. 1. The following directions will be made to enable the question of costs (including as between the plaintiff and the second and third defendants) to be determined. Unless any party submits that a further oral hearing is necessary, the question of costs will be dealt with on the papers. Any further affidavit concerning costs must be served by 9 June 2017. Each party must serve and provide to my Associate a written submission concerning costs by 23 June 2017. The written submissions provided to my Associate must be accompanied by any affidavit sought to be relied upon, unless the affidavit has already been filed. ********** 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: 26 May 2017