Blog 101. Application to amend caveat fails.

Gold Road No 9 v Karakulahian [2026] VSC 152, Barrett AsJ 

The facts were –

• The first defendant (Karakulahian) and his son (the Karakulahians) were the registered proprietors of land in Glen Iris (Property).
• Mr Elliott was the director of the plaintiff (Gold Road). John Haddad was a friend of Karakulahian and of Elliott.
• Karakulahian deposed that:
  • in about mid-2022 he said to Haddad that Haddad could use the Property or its proceeds of sale to assist him (Haddad) in purchasing land in Tullamarine;
  • after several weeks Haddad said that he had found a buyer of the Property, Elliott, and that Haddad and Elliott then negotiated its sale, without his involvement, he giving no instructions related to preparation of the contractual documents;
• Elliott deposed that Haddad did need finance, that he had no involvement in arrangements between Haddad and Karakulahian, and that he said to Karakulahian that Gold Road would:
  • purchase the Property by paying $500,000 to the Karakulahians and issue to Karakulahian certain units in a unit trust (the said units);
  • on-sell the property; and
  • then pay Karakulahian $500,000 if this was available after payment of: Gold Road’s liabilities to the first mortgagee and its liabilities in respect of the agreement with the vendors; normal costs of sale; and holding costs pending on-sale (‘the deductions’).

and that Karakulahian said that this arrangement was acceptable to him.

• Gold Road tendered a document titled ‘Glen Iris Offer to Purchase and Profit Share’. The offered price was $1 m. with a first payment of $500,000 and a second payment of $500,000 ‘at settlement of the resale of the store to a third party’. The document provided:
  • that that the ‘Developer’ would establish a unit trust in which it held a controlling class of unit, and with a separate class of unit for vendor equity and vendor profit share, and the trust deed would document the rights, obligations and priorities of each party;
  • the vendor would contribute the balance of the second and final settlement payment as vendor equity;
  • all rights related to payment of vendor’s equity or the vendor profit share would depend on the terms of the final class of units;
  • the Developer would restructure and secure the debt at its sole and absolute unfettered discretion.

The Karakulahians signed this document.

• On 20 December 2022 the contract of sale of the Property to Gold Road was executed.  This inter alia recorded the price as $1 m. with a deposit of $10 and the balance payable at settlement with the handwritten note ‘refer to Special Condition 18’.   This Special Condition in substance provided that at settlement the vendors (not just Karakulahian) would receive the said units and that $499,990 would be transferred to a bank account nominated by them.
• Karakulahian deposed that:
  • the Karakulahians signed the contract at the request of Haddad, who he trusted, without him reading it beforehand or receiving explanation of it, he thinking that the price was $1 m. and not being told about any additional special conditions; and ‘John explained this to me, and I took his word for it’;
  • neither vendor received any money at settlement, but that he had been told by Haddad that $500,000 was paid directly to him by Elliott.
• However, evidence was led showing that on 20 December Karakulahian directed solicitors at settlement to transfer the full amount to the Elias Haddad account, and that a solicitor told Karakulahian and Haddad that the settlement funds would be used for settlement of the Tullamarine land.
• The sale to the plaintiff was completed on 4 January 2023. Karakulahian provided to Gold Road a ‘Certificate of Waiver of Independent Legal, Financial and Taxation Advice’, which he deposed not to recall signing.
• Gold Road was registered as proprietor of the Property subject to a mortgage to another company. Karakulahian deposed that he did not know the terms of the mortgage.
• Haddad died in 2023.
• In 2024 Karakulahian caveated claiming an interest as chargee.

In 2025 Gold Road applied for removal of the caveat under the Transfer of Land Act s. 90(3).  Elliott deposed that the expected sale price of the Property would not cover all the deductions, and that payment of mortgage interest and holding costs were eroding its equity in the Property.

Counsel for Karakulahian sought leave to amend the caveat to claim a freehold estate based on an implied, resulting or constructive trust.   Karakulahian relied in part on unconscionability based on Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 in support of his caveatable interest alleging, or at least suggesting, that Elliott and Haddad acted unconscionably in the sale.

During the hearing counsel proposed an alternative amendment to claim a freehold interest over a moiety of the title.

 Barrett AsJ declined to permit the amendment to the caveat and ordered that it be removed, holding –

1. 1. The caveator did not have an interest in the Property as a chargee. [27], [43]
   2. The court had a discretion to permit amendment of the caveat. Four factors relevant to exercise of the discretion and their application in this case were:
      1. Whether the amendment was to the interest claimed, or just to the grounds. As to the former the authorities were in conflict, holding that amendment was either impossible or possible but only in special or exceptional circumstances. [26(a)]
         The proposed amendment was to the interest claimed, and so the Court would be less inclined to permit it than otherwise and would likely allow it only in special circumstances.   This weighed heavily against the amendment application having regard to the other discretionary factors. [28], [38]
      2. The circumstances in which the error was made. [26(b)]
         Although a lawyer had drafted the caveat, there was no evidence of the instructions given to the lawyer, and so no evidence whether: the drafter made an egregious error in describing the interest as chargee, or; the caveator’s instructions were consistent with the existence of a charge, or; another explanation existed.  This weighed against the Court’s discretion to permit the amendment, on which the caveator bore the burden of proof. [39]
      3. Courts should not readily act in a way which might encourage the belief that caveats can be imprecisely formulated and ‘fixed up later’. [26(c)]
         This factor weighed against permitting the amendment. [40]
      4. The overall merits of the claim for a caveatable interest. [26(d)]
         The merits of the claimed interest were not so strong as to support amendment.  It was unclear precisely how a caveatable interest was said to arise from Amadio-type unconscionable conduct, or what special disability the caveator suffered from, and there was inadequate explanation of Gold Road’s knowledge of, and taking advantage of, any such special disability. [41]

1. 3. Accordingly the application to amend the caveat failed. [37], [42]

Philip H. Barton

Owen Dixon Chambers West

Thursday, April 30, 2026