Blog 67. Caveator relying on forged document pays indemnity costs.

Iceland Properties Pty Ltd v Palta & Anor [2022] VSC 734, McDonald J. (28 November 2022).

The facts were –

  • The plaintiff (Iceland) was registered proprietor of a property. Its sole director was Mr Gill. The first defendant (Palta) alleged that on 2 July 2018 he entered a loan agreement with Iceland and Gill, clause 8 of which gave him a charge and the right to caveat.  He relied on a particular document with a signature page, which he produced, being a photocopy (the copy) of the alleged original (the original) which he did not produce.
  • In 2019 Palta caveated on the basis of that alleged charge.
  • In 2020 Palta commenced County Court proceedings to enforce this agreement. However, from October 2020 Gill alleged that he had not signed this document and that it was forged.  He pleaded that it appeared that his signature had been taken from another document and superimposed.  Palta’s solicitors responded that this plea was denied and scandalous.
  • In 2022 Iceland applied under the Transfer of Land Act s. 90(3) for removal of the caveat.
  • Palta deposed that on or about 27 or 28 July 2018 he and Gill had signed the original in the presence of a Mr Handa in the Epping Plaza Shopping Centre carpark, and that Gill had retained it and a few days later given him (Palta) a photocopy, which he exhibited to his affidavit. He further deposed concerning the background of this alleged signing.
  • Handa, whose signature appeared three times as a witness on the copy, deposed: to this meeting at the Epping Plaza carpark; how he came to be there; that Palta asked him to witness the signing of some documents; to events at the time of signing; that he watched Gill and Palta sign a document the front page of which said “loan agreement”, and that he then signed the signing page as a witness three times. He deposed that the front page and the signing pages on the copy exhibited to his affidavit was the same as in the document he witnessed.
  • On the second day the matter was before the court, 18 November 2022, McDonald J. raised with counsel for Palta that it appeared that the two signatures of Gill on the copy were identical, whereas, in contrast, there were slight differences in the signature of Handa, and that the identical signatures of Gill, allegedly made in a carpark, and the manner of their presentation, constituted prima facie evidence of forgery.
  • The proceeding was adjourned to 25 November. In the interim an expert report was filed on behalf of Iceland concluding that Gill’s signature from a lease was placed onto the copy (twice) through a cut and paste manipulation, and so it was extremely likely that no original existed.
  • At the adjourned hearing counsel for Palta conceded that, based on the expert’s report, Gill’s signature on the copy was forged. However, he submitted that Palta had still discharged the onus of establishing a probability, on the evidence before the Court, of being found at trial to have an interest in the property pursuant to the 2 July 2018 loan agreement.  He submitted that the copy was a copy of an original which was in fact signed by Gill.  He submitted that on the evidence currently before the Court, there was a probability that at trial Palta would establish that: (1) Gill signed the original in the presence of Palta and Handa at Epping Plaza in late July 2018; (2) he took the original away; (3) he then photoshopped his own signature over his genuine signature, so as to afford grounds for subsequently contending that the agreement was unenforceable; (4) in or around mid-August 2018 he provided the copy to Palta.

Gill acknowledged that before July 2018 Palta had advanced funds to Iceland or him on particular terms.   In August 2022, Iceland, Gill and others entered into a deed of settlement of litigation requiring Gill to pay $6.5 m. by 1 December 2022.   He had paid a 10% deposit and contended that the caveat was impeding his ability to raise finance to pay the balance.

McDonald J. ordered removal of the caveat with indemnity costs, holding –

  1. There was not a probability that at trial Palta would establish that he had an interest as a chargee of the property. The matters raised by his counsel were a very tenuous basis for the asserted caveatable interest and any probability was insufficient to justify the practical effect of the caveat on the ability of Iceland to deal with its property. [24]-[35]
  2. If it had been necessary to consider it, the balance of convenience would also have favoured removal of the caveat, particularly relevant being that a prima facie case, if any, was weak and that the caveat was a significant impediment to Gill obtaining finance. The lower risk of injustice was to order removal of the caveat, notwithstanding that it was common ground that Palta had advanced funds to Gill, the circumstances of the present case being quite unusual.  There was accordingly very significant risk of injustice if the caveat remained. [36]-[40]
  3. The caveator would be ordered to pay indemnity costs.  On the first two court days the caveator had resisted the removal of the caveat on the basis of an agreement which he now conceded was forged, having notice of this contention for over two years without taking steps to establish the authenticity of the agreement, then accepting that the agreement was forged but nonetheless asserting on a very tenuous basis that Gill was the perpetrator.  It should have been readily apparent to the caveator before the first day of hearing that the agreement on which he relied was forged. [41]-[44]

       Philip H. Barton

          Owen Dixon Chambers West

        Tuesday, March 7, 2023

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