IN THE SUPREME COURT OF VICTORIA 
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST	Not Restricted	

S ECI 2018 01219

ELIANA CONSTRUCTION AND DEVELOPING GROUP PTY LTD (in liquidation) 	Plaintiff	
		
v		
		
NAZIM NICK RAMANI and MYNEVER RAMANI 	Defendants	

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JUDGE:	Mukhtar AsJ	
WHERE HELD:	Melbourne	
DATE OF HEARING:	20 June 2019	
DATE OF JUDGMENT:	13 March 2020	
CASE MAY BE CITED AS:	Eliana Construction v Ramani	
MEDIUM NEUTRAL CITATION:	[2020] VSC 115	

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COURTS AND TRIBUNALS ― Jurisdiction of VCAT to resolve domestic building dispute under Domestic Building Contracts Act 1995 (Vic) ― Initial relationship of builder and proprietor under a domestic building contract ― Performance of works ― Rendering of progress claims and invoices for work and labour ― Accrual of debts owing by owner to builder — Acknowledgment of fixed debt by owner in separate written ‘loan’ agreement creating new obligation to pay debt and give security over land for obligation to pay — Default by owner in payment of ‘debt’ ― Action by owner for enforcement of ‘loan‘ agreement and security — Court obliged by statute to stay action ‘arising wholly or predominantly from a domestic building dispute’ — Application by owner to stay Supreme Court action — Characterisation of ‘loan agreement’ —  Creation of new and different legal relationship — Predominant issue whether loan agreement vitiable in equity as an unconscionable or catching bargain — Meaning of ‘domestic building contract’ and ‘domestic building dispute’ ― Meaning of ‘in relation to’ — Stay application refused — Domestic Building Contracts Act 1995 (Vic) ss 53, 54, 57

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APPEARANCES:
	Counsel	Solicitors	
For the Plaintiff	 M McNamara	White Cleland Pty Ltd	
			
For the First and Second Defendants	 P Duggan 	De Marco Lawyers	

HIS HONOUR:
1	One of the stated objects of the Domestic Building Contracts Act 1995  (‘the Act’) is ‘to enable disputes involving domestic building work to be resolved as quickly, as efficiently and as cheaply as possible in a way that is fair to both builders and building owners’.  One of the main purposes of the Act is ‘to provide for the resolution of domestic building disputes and other matters by the Victorian Civil and Administrative Tribunal’.  As for remedies, s 53(1) of the Act says that ‘VCAT may make any order it considers fair to resolve a domestic building dispute’.  That is stated to include the power to make orders for the payment of money, and to make non-monetary orders to vary any term of a domestic building contract and to ‘declare void any unjust term of a domestic building contract, or otherwise vary a domestic building contract to avoid injustice’.
2	The Tribunal is not a court of law but its role as the chief forum in domestic building disputes is given strong practical recognition in s 57 which compels a stay of any court action brought over a domestic building dispute.  It states: 
(1)	This section applies if a person starts any action arising wholly or predominantly from a domestic building dispute in the Supreme Court, the County Court or the Magistrates’ Court.  
(2)	The Court must stay any such action on the application of a party to the action if – 
(a)	the action could be heard by VCAT under this Sub-division; and
(b)	the Court has not heard any oral evidence concerning the dispute itself.
3	There is more to this than just a stay.  Section 57(5) says that if an action is stayed ‘any party to the action may apply to VCAT for an order with respect to the dispute on which the action was based’.  The consequence for the party that brought the court action is that upon notification that such a VCAT application has been made, ‘the Court must dismiss the action’.
4	The defendants have applied for a stay of this proceeding under s 57.  The alleged facts of this case are peculiar, and the pleadings need careful exposure.  There is also an exercise in statutory construction of the Act. 
5	For the reasons that follow, I think the application for a stay ought to be refused.  In essence, my reasons are:
(a)	As pleaded, there are several disputes, a few of which are conceded by the builder to come under the Act.   But I think the validity or enforceability of the so-called loan agreement is the predominant dispute.  Indeed, it appears to me to be the cardinal dispute.  The issue as squarely created by the owners is whether the loan agreement ought to be set aside as having been procured by undue influence or was an unconscionable transaction of the Amadio variety, that is, exploitation of elderly and vulnerable parents by their adult son to the knowledge of the builder. 
(b)	The loan agreement is certainly not a ‘domestic building contract’ within the meaning of s 3 of the Act.  That is because it is per se not a contract to carry out or to arrange or manage the carrying out of domestic building works. 
(c)	Nor is the loan agreement a variation or an adjunct to the HIA Building Contract initially made by the parties.  As best as the Court can determine it (in the notable absence of evidence from either party, but on an analysis of the pleadings) the subsequent loan agreement, by evident intention, superseded the parties’ initial building contract and redefined the parties’ legal relationship so as to create a debtor-creditor relationship with new rights and obligations that were independently actionable from the building contract. 
(d)	Nor is the dispute over the validity or enforceability of the so‑called loan agreement a ‘domestic building dispute’ within the meaning of the Act.  On a proper construction of s 54 of the Act, that dispute is not ‘in relation to a domestic building contract’ or ‘in relation to the carrying out of domestic work’.  The meaning of the expression ‘in relation to’ turns on its context, and I think the owners are giving it far too wide a meaning.
(e)	It may be seriously doubted whether the Tribunal’s power under s 53 of the Act to ‘make any order it considers fair’ means it has the power to give at least one of the principal remedies sought by the plaintiff, that is, judicial sale ‘by a court’ of charged property under s 91 of the Property Law Act, or any remedy sought by the owners for the removal of the builder’s caveats under s 90(3) of the Transfer of Land Act.  That means under s 57, this action (meaning the whole proceeding) could not be heard by VCAT.
(f)	I do not see anything colourable in the plaintiff invoking this Court’s jurisdiction.  To the contrary, as the pleadings presently stand the defendants have not, beyond a vague allegation, pleaded anything against the builder to show a dispute about the adequacy or quality or completeness of the building works as one would expect in a typical building dispute. 
The facts 
6	The defendants are persons for whom substantial domestic building work was done on their land by the plaintiff building company which is now in liquidation.  The uncontroversial fact is that on 1 May 2013 the defendants as owners made a contract with the builder in the form of an ‘HIA Victorian New Homes Contract’ to construct a building on their land at 167 Darebin Road in Thornbury.  A third party to that contract (the ‘building contract’) was ‘the trustee for Ramani Bakehouse trust’.  Judging by the signatures on the contract, the first defendant Mr Ramani was the trustee or was authorised to sign on behalf of that trustee.
7	The project was to build ten apartments, a coffee shop, and a car park.  The time for completion of the works was 365 days.  The contract price was $2.4 million payable by progress payments at various stages of the development.  The contract price excluded the cost of certain steps and requirements of the building works payable to third parties such as utilities, municipal permits and reports.  The builder says that between March 2014 to December 2015 it carried out works and paid for other works and services done by others for the development all for the benefit of the owners.   
8	The builder lodged caveats on six of the owners’ properties including four of the built apartments.  That was done on the ground that the builder held an equitable charge over that land as security for payment of money owing.  The writ in this proceeding was filed in response to a notice given by the Registrar of Titles to the builder on 10 August 2018 at the instigation of the owners under the out-of-court procedure in s 89A of the Transfer of Land Act which causes the caveat to lapse unless the builder notified the Registrar within a certain time limit (not less than 30 days) that proceedings had been commenced ‘in a court or VCAT’ to substantiate the caveatable interest.   
9	The builder filed a writ in this Court on 7 September 2018. The statement of claim claimed money owed, as a debt.  The amount claimed was put by alternatives as $333,714 or $408,917 or $464,626.  The builder also sought declarations of its proprietary interest in identified land as equitable chargee and an order for judicial sale of that charged land under s 91 of the Property Law Act. 
10	I now come to the peculiar feature of this case.  The first statement of claim made no reference at all to the building contract or any rights and obligations under it.  There was no reference to the performance of works or the payment of moneys due under the building contract.  Rather, the  claim was predicated wholly on an alleged written agreement dated 1 September 2015 (which is two years and four months after the building contract was made) which is pleaded as being ‘made between the plaintiff as lender and the defendants and the trustee for Ramani Bakehouse Trust as borrowers and mortgagors’ and under which ‘the defendants agreed to repay the sum of $408,917.17 (‘the Loan’) to the plaintiff on 31 October 2015’.  
11	The first statement of claim pleads the express terms of what I will call ‘the loan agreement’. The terms resemble the contents of a typical (non-banking) loan agreements in trade and commerce as seen commonly in loan recovery claims in courts.  The pleaded terms include: 
(a)	‘Lender’ means the plaintiff.
(b)	‘Borrower’ means the defendants and the Trustee for Ramani Bakehouse Trust.
(c)	The Loan amount is $408,917.17.
(d)	16 per cent interest per annum is to be charged after the expiry date if the loan is not repaid in full.
(e)	The expiry date is 60 days from the date of the Agreement.
(f)	‘Secured Money’ includes the Loan and all other money which the Borrower agrees, or becomes obliged, to pay under any provision of the Agreement including interest.
(g)	The Borrower must repay the Loan on the expiry date, namely 31 October 2015.
(h)	If the Loan is not repaid in full on the expiry date, the interest rate of 16 per cent per annum will apply.
(i)	The Borrower must pay to the plaintiff any money which the plaintiff may see fit to pay to remedy any default of the Borrower, including, without limitation, legal costs and expenses on a full indemnity basis.
(j)	If an event of default occurs or is deemed to have occurred, then at the plaintiff’s option, without any demand or notice, all of the Secured Money immediately becomes payable and the plaintiff may exercise its rights under Clause 4.2.
(k)	Under Clause 4.2, if payment is not made within seven days of a plaintiff’s notice demanding the payment, the Borrower charges all property, both equitable and legal, of the Borrower in respect of any monies that may thereinafter be owing to the plaintiff and thereby authorise the plaintiff or its solicitors to execute any consent form as its attorney for the purpose of registering a caveat over any real properties owned by the Borrower at any time.
(l)	An event of default occurs if, amongst other things, the Borrower fails to pay any of the Secured Money when due.
12	Thus, the cause of action pleaded is an ordinary one, in debt, for repayment of a secured loan and enforcement of a security over land. 
13	This first statement of claim arouses curiosity.  It does not allege an agreement to lend money.  It does not allege an advance of money by way of loan.  It alleges only an obligation by the owners to repay money labelled a ‘loan’.  It alleges the owners ‘have not repaid the loan’ and ‘remain indebted to the plaintiff for the loan’.  The relief sought is for repayment of the loan plus interest.  There is no extrinsic objective evidence before the Court about the circumstances known to both parties explaining the creation of the alleged loan agreement so as to enable the Court to understand the factual context in which the alleged loan was made, given the parties’ pre-existing legal relationship under the building contract. 
14	In the first statement of claim, the builder alleges that in breach of the loan agreement, the owners failed to repay the loan on 31 October 2015 or at all, thereby committing an event of default under the agreement.  Demands were made for payment of the loan plus interest in February 2016, March 2016, February 2017, September 2017 and 10 November 2017.  The demands were not met.  The builder then alleges and seeks a declaration that as equitable chargee, it has a security interest in Units 3, 8 and 11 of 89 Harold Street; and the land in certificate of title volume 9664 folio 332 for the amounts due under the agreement.  It also alleges that it held an interest as equitable chargee in Units 1 and 6.  
15	The statement of claim alleges that Unit 1 was sold in April 2018 for $494,000, and on completion of that sale, the net proceeds of $262,191 for the sale was by agreement deposited in a bank account held by the builder’s solicitor as trustee.  Likewise, Unit 6 was sold in July 2018 for $453,000.  By agreement between the parties’ solicitors, the net proceeds of $138,112.60 were also deposited into the bank account on trust.  The parties have agreed that money in trust cannot be released without the written consent of each other party or by a Court order.  
16	The claim was for payment of the debt, plus interest; declarations that the builder had an interest in the units over which an equitable charge had been granted; an order for payment out of the funds held in the trust accounts; and an order for judicial sale under s 91 of the Property Law Act or Order 55 of the rules of this court.  Section 91 of the Property Law Act is the well‑known provision by which an equitable chargee may apply to ‘the Court’ for sale of the charged property.  The Court is defined to mean the County Court (within its jurisdictional limit) or, in any other case, the Supreme Court.  
17	In their ‘holding defence’ the owners say that they have ‘no recollection of signing any version’ of the loan agreement.  Then in more direct language they say: ‘there was never any agreement’ and no loan was ever advanced to them.  But Mr and Mrs Ramani say that if they did sign such an agreement, it was an unconscionable transaction or catching bargain.  That is, a known species of equitable fraud in which a creditor is shown to have exploited a debtor’s special disability (such as ignorance or disadvantage or vulnerability or physical or mental infirmity) to obtain unconscientiously the benefit of an improvident transaction in circumstances deserving equitable intervention to set aside the transaction, or fashion some other just and equitable relief to redress the injustice of the situation.   
18	Mr and Mrs Ramani have an adult son, Zaim Ramani.  It is said he was the building site manager or traffic controller for the project.  They plead that at the relevant time Mr Ramani was: elderly; of limited education and ability in the English language; inexperienced in building and business; sight impaired; gravely unwell with diabetes and an amputated leg; heavily medicated; under the undue influence of their son who was procured by the builder to obtain his father’s  signature to the loan agreement on a hospital visit.  It is pleaded that Mrs Ramani was: likewise elderly and inexperienced; preoccupied with the daily care of Mr Ramani; heavily reliant on her son; and led to sign the agreement under her son’s undue influence. 
19	These special disadvantages (as they are known in this area of the law) are alleged to have been known to a director of the plaintiff who, it is alleged, procured the son to obtain his parents’ signature to an ‘extraordinarily improvident’ agreement as no loan was ever advanced.  On those grounds, the defendants say the caveats are ‘improper’.  They do not make a counterclaim seeking to set aside the loan agreement in equity.  If the loan agreement is not vitiated, then it governs the owners’ financial obligation to the builder.  
20	If the enforceability of a loan agreement was all there was to this case then this action is a fact intensive case in equity of undue influence or an unconscionable transaction, properly brought in this court and not involving, metaphorically speaking, a single nut or bolt or a  building specification.  As I have said, the loan agreement, if it stands alone, is manifestly not a domestic building contract.  
21	It is not said that the loan agreement contained within it an express clause preserving the operation and effect of the building contract, or that it was impliedly so.  But in their defence, the owners try to bring in the building contract in two ways.  They say if they are liable under the subsequent loan agreement they seek to set-off any debt owing under that agreement ‘by reason of the plaintiff’s various breaches of the Domestic Building Contract’.  No particulars are given of those breaches.  If those breaches concern defective works, then nothing in their defence or the exiguous affidavit sworn by their solicitor gives the Court any idea of the nature or magnitude of any defective or incomplete works of the nature and type that Courts and Tribunal are accustomed to seeing in building cases.  An affidavit of the defendants’ solicitor Mr Michael Tourkakes says only this: ‘The adequacy of the plaintiff’s Building Works is controversial.  The defendants contend there was defective and incomplete works by the plaintiff … I am not currently able to quantify the defendants’ set off claim.’  That is unsatisfactory.  I might have thought if there was a predominant typical building dispute, the owners would be in a position already to particularise the defective works.   
22	Secondly, the defence pleads, in the alternative, that if the owners have any legal or financial obligation to the builder, then such an obligation arises ‘in relation the carrying out of domestic building work’ and that the builder’s claim against them is accordingly a ‘domestic building dispute’ within the meaning of s 54(1) of the Act which then attracts the mandatory stay under s 57.  
23	After filing their defence, the owners made a request for particulars of how, when, by whom, and to whom an advance of money was made by way of the alleged loan.  To answer that, the builder consensually filed an amended statement of claim on 8 March 2019.  The amendments to the statement of claim make for a more informative pleading to which I will come to next.  The owners have not filed a defence to the amended statement of claim.  Instead they move for a stay of the proceeding under s 57 of the Act.  That means the Court is to judge this application according to the amended statement of claim and the pre-existing defence. 
The amended statement of claim
24	Paragraph 3C of the amended pleading is important because it provides context to the claim under the loan agreement.  It alleges without any reference to the building contract (and with my underlining):
During the period of about March 2014 to December 2015, as referred to in this amended statement of claim, the plaintiff carried out building works at the Property and carried out and arranged further work and services and made payments for the benefit of the defendants, giving rise to debts payable by the defendants to the plaintiff as referred to in this statement of claim.  
25	That is followed by paragraph 4 which pleads the loan agreement and the owners’ obligation to ‘repay’ the loan.  Particulars are given of what makes up ‘the Loan, insofar as the plaintiff is able to presently particularise it’.  In those detailed particulars, the loan is shown to be made up of: the balance outstanding in respect of progress claims up to and including progress claim number 12; invoices from the plaintiff to the defendants; and cheque payments made by the builder for works and services provided by others for the project for which reimbursement was due. Additional particulars are given under paragraph 5A of the variations to the loan agreement also by reference to invoices and progress claims.   
26	The first claim is a money claim in debt predicated on the loan agreement.  This is submitted by the builder to be the predominant claim, and, a claim involving relief by way of judicial sale which is beyond the power of VCAT.  The debt claimed is $333,714 plus interest of 16 per cent.  Alternatively, there is a debt claim for $408,917.17 plus interest of 16 per cent under a variation of the loan agreement.  There are permutations of the debt owing, all of which are sought in the alternative in a case in which it seems the figures are not certain.  But, the terms of the loan agreement remain unamended.  The relief sought is 
L.	A declaration that the plaintiff has an interest in Unit 3, Unit 8, Unit 11, 89 Harold Street, and Volume 9664 Folio 332 as equitable chargee securing the amounts due to the plaintiff under the Agreement.  
M.	A declaration that the plaintiff held an interest in Unit 1 as equitable chargee at the time of settlement of the sale of Unit 1, securing the amounts due to the plaintiff under the Agreement. 
N.	A declaration that the plaintiff held an interest in Unit 6 as equitable chargee at the time of settlement of the sale of Unit 6, securing the amounts due to the plaintiff under the Agreement.
O.	An order for the payment of the funds held in the Trust Account to the plaintiff.
P.	An order pursuant to section 91 of the Property Law Act 1958 (Vic), further or alternatively rule 55.02 of the Supreme Court (General Civil Procedure) Rules 2015, that Unit 11 be sold.
Q.	An order pursuant to section 91 of the Property Law Act 1958 (Vic), further or alternatively rule 55.02 of the Supreme Court (General Civil Procedure) Rules 2015, that 89 Harold Street be sold. 
R.	Orders giving all necessary and proper directions, including pursuant to rule 55.04 of the Supreme Court (General Civil Procedure) Rules 2015, as to the terms of such sales.
27	Despite these reference to progress claims and invoices and cheques there is still no reference to the building contract in the debt claim under the loan agreement.  This appears to be a studied omission, because the amended statement of claim gives recognition to the building contract in paragraph 23ff as an alternative claim.  Although unexpressed, this alternative claim is there to meet the implicit contingency of the Court setting aside the loan agreement.  Under this alternative claim the builder alleges that it performed building works at the property and rendered claims and invoices, including progress claims 1 to 15, and the defendants made certain payments.  The particulars under paragraph 25 are a table identifying progress claims, invoice numbers, invoice amounts, and amounts paid.  The balance due is $273,409.76 which is less than the various debt claims under the loan agreement.  From there, the builder’s claim is that the owners, in breach of the terms of the building contract, failed to pay that sum and are liable for interest on the unpaid amounts at 18 per cent per annum under the building contract.  Counsel for the builder concedes that this alternative claim based on the building contract in the action is a ‘domestic building dispute’, but emphasizes it is not the predominant claim for the purposes of s 57. 
28	There is a third foundation for the claim, also put in the alternative.  This concerns particular works (variations and extras) that are the subject of invoices forming part of the debt claim.  The claim here is made in restitution for a quantum meruit.  That is, during the course of the works, and at the request of the owner’s son Zaim Ramani (who the owners have said exercised undue influence over them) the builder performed works for the benefit of the owners.  The restitution claim is put as a claim of indebtedness in the sum of $208,873.51 which is alleged to constitute a reasonable remuneration for the carrying out of these further works.  Counsel for the builder concedes that this alternative claim arises from a ‘domestic building dispute’, based on the HIA building contract, is a ‘domestic building dispute’ but is an alternative to the predominant claim. 
29	There is a fourth alternative claim referable to the building contract.  The builder alleges that during the course of carrying out the building works, ‘it was agreed that the plaintiff would carry out, and arrange and pay for, certain works and services that were excluded from the Building contract’ and would also be reimbursed for certain payments made by the builder at the owners’ request and for their benefit.  These agreements are alleged to have been partly oral (in conversations with the owners’ son) and partly to be implied.  Under this head of the claim the builder says it carried out and arranged and paid for numerous works and services for which it rendered invoices in the sum of $191,217.06.  This claim was described as problematic in that it did not fall clearly inside or outside the building agreement.   
30	I have no explanatory evidence, but the contents of the statement of claim are sufficient to discern that there is no allegation of a loan in the sense of a cash advance.  Rather, the so called loan is a description given to the state of affairs where, as pleaded in paragraph 3C, work done by the builder gave rise to debts payable by the owners as referred to the progress claims and invoices particularised in the statement of claim.  Although the pleader has not said it, that work can only be referable to work and labour done under the building contract, which indeed is pleaded later as an alternative claim.  
31	The word ‘action’ in s 57 has been construed to mean ‘proceeding’ and not cause of action.  Consonant with that, the requirement under s 57(2) that ‘the action could be heard by VCAT’ has been construed to mean the entirety of the action and not to claims or parts of the action.  Otherwise, there could be the bad prospect of fragmented determination of a controversy in two different places.  The primary question here is whether the builder has started an action ‘arising wholly or predominantly from a domestic building dispute’ or is it an action that arises predominantly from a dispute about the enforceability of the loan agreement? 
32	The expression ‘domestic building dispute’ is defined in s 54(1) of the Act to mean amongst other things (with my underlining) ‘a dispute or claim arising between a building owner and a builder … in relation to a domestic building contract or the carrying out of domestic building work’.  Such a dispute includes ‘any dispute or claim in negligence, nuisance or trespass but does not include a dispute or claim related to a personal injury’. A ‘domestic building contract’ is defined in s 3 of the Act to mean where relevant ‘a contract to carry out, or to arrange or manage the carrying out of, domestic building work’.  The expression ‘domestic building work’ includes the demolition, construction, renovation, alteration, extension, improvement or repair of a home.  It also includes any work associated with the construction of a building on land zoned for residential purposes.  
33	There can be no doubt that the building contract is a domestic building contract.  Likewise, as was conceded by the owners’ counsel, there can be no doubt that the ‘loan agreement’ standing alone is not a domestic building contract.  But it was contended that the building contract and the subsequent loan agreement had to be read together as one because on no sensible reading of the amended statement of claim was it alleged that the owners owed the builder any payment independently of the building works under the building contract.  Therefore, so it was submitted, the loan agreement should be viewed legally as a variation or adjunct to the building contract, making the dispute under the loan agreement a dispute ‘in relation to a domestic building contract’ under s 54(1) of the Act.  Alternatively, it was submitted that under s 54(1) the action was a dispute ‘in relation to … the carrying out of domestic building work’.  In either case, it was submitted that s 57 of the Act applied. 
34	In Commissioner of Taxation v Sara Lee Household & Bodycare (Australia) Pty Ltd the High Court of Australia said:    
When the parties to an existing contract enter into a further contract by which they vary the original contract, then, by hypothesis, they have made two contracts.  For one reason or another, it may be material to determine whether the effect of the second contract is to bring an end to the first contract and replace it with the second, or whether the effect is to leave the first contract standing, subject to the alterations.  For example, something may turn upon the place, or the time, or the form, of the contract, and it may therefore be necessary to decide whether the original contract subsists.  
35	That court also approved, as being in accordance with principle and with authority, the statement by Taylor J in Tallerman & Co Pty Ltd v Nathan’s Merchandise (Vic) Pty Ltd that:
It is firmly established by a long line of cases … that the parties to an agreement may vary some of its terms by a subsequent agreement.  That may, of course, rescind the earlier agreements altogether, and this may be done either expressly or by implication, but the determining factor must always be the intention of the parties as disclosed by the later agreement.  
36	The learned authors of Chesire & Fifoot, Law of Contract explain the state of authority in this way (with my underlining):
Two views have been taken of the effect of a variation.  One is that by varying a contract the parties necessarily terminate their existing contract, and replace it with a new contract.  On this view a variation always also involves a termination – of the prior contract.  The other view is that a variation alters the contract without affecting its existence.  As important legal consequences flow from the termination of a contract, it is preferable not to insist rigidly that a contract is inevitably terminated whenever it is varied.  Often this would fly in the face of the parties’ own understanding or expectation.  The High Court has therefore rejected the view that a variation of a contract necessarily involves its termination.  Whether it does or not depends on the expressed or inferred intention of the parties.  
37	For the builder, it was submitted that the absence of a cash advance did not matter because the Court looks to the substance of the agreement and not descriptions chosen by the parties such as ‘loan’ or ‘lender’ or ‘borrower’. Counsel submitted it was apparent from the so called loan agreement that works had been done and money had not been paid and was owing.  The substance of the loan agreement was apparently: an acknowledgement by the owners of money owing for works carried out; an isolation of that debt; a promise by the owners to pay that debt; and the giving of security for that obligation to pay.  So understood, the parties had ‘moved on’ from the building contract and agreed to replace it with a new regime based on a fixed debt. 
38	The phrase ‘loan agreement’ is a misdescription but one can discern the underlying intent.  Looking to the legal substance, the loan agreement appears to be in the nature of an agreement by which the owners acknowledged an aggregated debt that was due and payable to the builder for the carrying out of building works at the property.  The significance of the loan agreement lies in the fixed quantification of a debt; the assumption of an additional obligation to make payment of the debt by a fixed date; the installation of default clauses;  and the addition of security for performance of the payment obligation by way of equitable charge over some of the units and other property owned by the defendants.  I notice the building contract includes a deed of guarantee from the owners but does not contain any charging clauses over the owners’ land.  If the loan agreement is not set aside in equity as an unconscionable bargain, then it prevails to establish a debtor-creditor relationship, and it is the source of the legal obligation to pay the debt. 
39	If the determining factor must always be the intention of the parties as disclosed by the later agreement, then on this application the Court makes a judgment about the parties’ intention according to the loan agreement as pleaded.  There is no extrinsic evidence.  In my judgment even though the loan agreement does not contain any clauses preserving or ousting the building contract there is sufficient to infer that it was, by content and apparently by nature, a new agreement to isolate and hold the owners to a definite debt that was payable, to give commercial certainty.  I say ‘new agreement’ to mean an agreement that superseded the building agreement.  The intention, obviously, was not to make a new agreement to undertake or effect building works ― it was to supersede or rationalise the relationship under the building agreement and isolate a fixed monetary obligation.  So analysed, the origin of the debt does not matter, and there is no need to go behind the loan agreement because the obligation to pay is innate to the loan agreement. 
40	Thus, I think this cannot be analysed legally to be a dispute or claim ‘in relation to a domestic building contract’.  It is predominantly a dispute over the enforceability of the loan agreement under the law of unconscionable transactions or undue influence. 
41	The issue then becomes: is it a dispute or claim arising ‘in relation to carrying out of domestic building work’ under the definition of ‘domestic building dispute’ in s 54(1) of the Act.  If the origin of the debt under the loan agreement was for work and labour done under the building agreement, does that mean the dispute over the enforceability of the loan agreement is one arising ‘in relation to carrying out of domestic building work’.  I do not think it does.
42	The expression ‘in relation to’ is one of many that are used in legal drafting and legislation to denote a connection or relationship: see generally DC Pearce and RS Geddes, Statutory Interpretation in Australia. Those authors state:
There are a number of expressions that indicate a connection or relationship between one subject and another.  These expressions should not be regarded as ambiguous.  Rather they ‘have an ambulatory significance capable of a wide range of applications’; Minister for Immigration and Citizenship v Haneef [2007] FCAFC 203 … Such expressions take colour from their context but there are some subtleties of difference in meaning that the courts have recognised.  
43	Courts have emphasised the importance of context and judgment in determining the connection to which the legislation is referring.  In Travelex Ltd v Commissioner of Taxation French CJ and Hayne J said:
It may readily be accepted that ‘in relation to’ is a phrase that can be used in a variety of contexts, in which the degree of connection that must be shown between the two subject matters joined by the expression may differ.  It may also be accepted that ‘the subject matter of the enquiry, the legislative history, and the facts of the case’ are all matters that will bear upon the judgment of what relationship must be shown in order to conclude that there is a supply ‘in relation to’ rights.  [citations omitted]
44	In a broad sense one could point to how the legal relationship started under the building agreement and extrapolate to say this action is descriptively ‘in relation to the carrying out of building work’.  But I think that is too broad an interpretation in the present context.  
45	The underlying rationale of s 57 of the Act is discernible.  Domestic building disputes, even on a smallish scale, are notorious for becoming fractious and getting a life of their own.  They are characteristically based on defective works or incomplete works or disputed variations in opposition to claims for money owing to a builder.  They are known to attract legal expenses that exceed the claims.  They can end up causing much personal and financial distress for owners, and lead to insolvency of builders, sometimes irrespective of result.  Proceedings in VCAT are thought to ameliorate this.  The Tribunal conducts proceedings informally, without technicality and on substantial merit.  The Tribunal can inform itself on any matter as it thinks fit.  The base rule is that each party is to pay their own costs, although the Tribunal has the discretion to order costs but ‘only if satisfied it is fair to do so‘.  
46	Despite those considerations, this Court has to ensure that if a person’s choice of bringing a dispute to this Court is going to be taken away, that should only occur assuredly in accordance with s 57.  Keeping steadily in mind that s 57 looks to the predominant dispute, the building works are of historical relevance, but not the subject of any dispute.  The predominant dispute here is the enforceability of the loan agreement the intent of which appears to have been the avoidance of wrangling over money payable for works under the building agreement, and the fixing of an agreed amount payable as a debt.  The dispute here is not in relation to the amount of the debt or the adequacy or of works done or their compliance with the building contract.  The predominant dispute here is about the validity of the loan agreement in equity.  That will not involve a determination of a debt of liability by reference to building works performed, or reduction of liability to pay because of defective or incomplete works.  The owners have had ample opportunity to plead defective works, but have not condescended to any particulars at all or adequate explanation for not doing so.    
47	Accordingly, in my view, s 57(1) does not apply.  This is not predominantly a domestic building dispute.  
The second issue 
48	The second question is under s 57(2) which provides that the Court must stay the action if the action could be heard by VCAT and if the Court has not heard any oral evidence concerning the dispute itself.  As this proceeding is stuck in the pleadings, the Court has not heard any evidence.
49	The builder submitted that even if this was a domestic building dispute and s 57(1) was engaged, the Court was not compelled to stay the action because under s 57(2) the action (that is, the whole proceeding) could not be heard by VCAT under Part 5, Subdivision 1 of the Act.  This submission was based on certain relief being sought by the builder which is not usually seen in domestic building disputes, but is directed here to enforcing the equitable charge given by the owners under the loan agreement as security for payment of the debt.  To that end the amended statement of claim seeks: (i) declarations that the builder held an interest in two units in the development as equitable chargee, and in another two units (Units 1 and 6) at the time of settlement of their sale; (ii) an order an order for payment of the funds held in trust from the sale of Units 1 and 6; and (iii) an order under s 91 of the Property Law Act or Order 55 of Chapter I of this Court’s rules of civil procedure for sale of the owner’s properties. 
50	Apart from statutory creations, a charge is a creature of equity and thus enforceable only in equity.  It arises out of agreement between the parties.  It is an example of a pure hypothecation, which does not give the chargee any special or general property in the subject of the security.  However, ‘it makes the charged property liable, or specially appropriated, to the discharge of the debt or other obligation, and confers on the charge a right of realisation by judicial process (by the appointment of a receiver or an order for sale)’.  Like any equitable remedy it is discretionary.  
51	The provisions of s 91 of the Property Law Act have been held to be wide enough to empower the sale of property subject to an equitable charge.  But, s 91 speaks of ‘the Court’ acting on the request of the mortgagee, and says the Court ‘may, if it thinks fit, direct a sale of the mortgaged property, on such terms as it thinks fit’.  Ancillary provisions empower ‘the Court’ to require security for costs, or give directions about the conduct of the sale, or not allow the sale without first determining the priorities of encumbrancers, and make vesting orders. As the Property Law Act defines ‘Court ‘ to mean County Court (within its jurisdictional limit ) or the Supreme Court, the builder submits that VCAT could not exercise that statutory power.  
52	Counsel for owners looks to the apparent width of VCAT’s remedial powers under s 53 of the Act to ‘make any order it considers fair to resolve a domestic building dispute’.  Counsel for the owners submitted that the self-evident enormous width of that fairness power means VCAT can make any orders it thinks fair here including: (i) the lifting and enforcement of the caveats (even though the power to order a removal of a caveat under s 90(3) of the Transfer of Land Act can only be granted by a court of competent jurisdiction); (ii) the distribution between the parties of the jointly held trust money (which the parties agreed could only be varied by court order); and (iii) the exercise of power by ‘the Court’ under s 91 of the Property Law Act to order judicial sale of the charged properties.  Thus, it is posed: where lies the injustice of a stay if the builder’s claims can all be heard in VCAT?   The submissions was –
There is no basis in the DBC Act, the Property Law Act or in principle to read down that ‘any order’ jurisdiction to something less than its very plain meaning.  If Parliament had intended to narrow that ‘any order’ power in any sense potentially relevant to this application it would have been very easy indeed for s 53 to provide something to the effect of, say, 
“VCAT may make any order it considers fair to resolve a domestic dispute except where such order relates to monies held in trust by agreement between the parties and/or to caveats and/or to s 91 of the Property Law Act”
Parliament included no such carve outs.  (Indeed, why would it seek to bifurcate a specialist domestic building dispute jurisdiction or even to divert it entirely in some isolated cases to the non-specialist forums of the Courts?  It follows in the defendants’ submission that s 53(1) of the DBC Act plainly empowers VCAT to make such orders as it considers fair as to the parties’ respective rights and liabilities vis a vis each other including, inter alia, the distribution between the parties of the jointly-held trust money and the lifting and/or enforcement of caveats relevant to VCAT’s domestic building dispute resolution power.  
53	In the course of submissions, when pressed, counsel for the owner submitted that although s 91 states that a court can order a sale, it does not say only a court can order a sale.  I took that to mean that VCAT could order a sale of equitably charged land if it was fair to do so even though it was not a court, or, VCAT could order a sale independently of s 91 because it would be the fair thing to do.   
54	I cannot accept such a submission.  A body of authorities in this Court establishes  that the ‘fairness’ power is not a statutory licence for the Tribunal to decide the merits of a case according to idiosyncratic notions of justice and fairness.  When deciding the merits of a case the freedom to do what is fair does not absolve the Tribunal of the obligation to determine the matters before it according to established legal principles whether they are to be ascertained according to statute, the common law or equity.  As a concomitant, I would hold that VCAT may make any order it considers fair to resolve a domestic building dispute not only according to legal principle, but also, assuming it has the legal authority to do that which is done in the name of fairness.  The legal authority under s 91 is not given to VCAT.  
55	There are cognate problems.  To the extent that this case will involve validity of caveats lodged by the builder, s 89A(3) speaks of ‘proceedings being brought in a court or VCAT to substantiate the claim of the caveator’.  That has already occurred by the bringing of this proceeding.  But s 89A(3) that recognises that an originating application in VCAT can involve, in one way or another, a determination of a proprietary estate or interest that sustains a caveat.  But presumably the owners here will want a removal of the caveats.  Presently, the defence confines itself to saying the caveats were ‘improper’ without counterclaiming for a removal.  When it comes to a registered proprietor of land bringing an application to remove a caveat, s 90(3) Transfer of Land Act speaks of the bringing of ‘proceedings in a court against the caveator’ for the removal of a caveat.  I cannot see how VCAT could have jurisdiction to order a removal in the face of that provision on the faith of the fairness power.  
56	That leaves the third feature raised by the builder that the parties here have agreed that proceeds of sale of some of the charged properties held on trust can only be distributed by an order of the court.  That too would require the Tribunal under its fairness power to substitute itself as the court for that purpose or vary the terms of the trust.  
Conclusion
57	As I said at the outset, the facts of this case are peculiar.  The plaintiff has chosen this Court as the forum to bring its action.  It should not be deprived of that freedom without solid grounds being shown under s 57 of the Act.  Grounds have not been shown and for as long as the owners cannot particularise building defects I cannot see the utility of a stay, unless it is being sought for strategic purposes.  The adjudication whether the loan agreement was the product of unconscionable conduct is not a building dispute.  I see no injustice or procedural disadvantage to Mr and Mrs Ramani in having to defend such a claim in this Court.  In many ways, the nature of such an equity action is well suited to the procedures in this Court and the rigours of what will be a witness trial.  There could be real injustice to the owners if there is serious doubt about VCAT’s powers to make remedial orders that legislation has reserved to the Court. 
58	For those reasons, this application is not sustainable.  I propose making the following orders:
1.	The defendant’s application for a stay of this proceeding under s 57 of the Domestic Building Contracts Act is refused and accordingly the summons filed 13 May 2019 is dismissed. 
2.	The defendants’ shall pay the plaintiff’s costs on the ordinary basis.