In Nokshee Pty Ltd v MATC Property Group Pty Ltd [2026] VSC 181, Goulden AsJ held that the parties entered into a conventional interest bearing loan agreement, and not a "Mudaraba style" profit and loss sharing financial structure, ordering that Nokshee repay the principal balance, less amounts repaid, plus interest at 25% pa.
Case background
Chowdhury is a property developer and director of MATC. In 2018 he sought investment from Nokshee's director, Alam, for MATC's "Brookfield Living" property development project. Alam agreed to invest $1m but required payback in 6 months. Chowdhury sent a "Mudaraba-Style Investment Agreement". Alam queried how "Mudaraba" would apply to the 6 month term and replied with a different "riba" based "Heads of Agreement". An amended version of the HoA was subsequently signed and Nokshee transferred MATC $1m after execution. In May 2018 the parties agreed to "restructure" the first agreement and a second HoA split the $1m from Nokshee and another entity, MH. Between June 2018 and September 2022, further HoAs and "agreements" were subsequently executed and additional funds were advanced and repaid. Nokshee subsequently commenced proceedings to recover from MATC debts allegedly due. MATC denied liability on the basis that the incorporated terms transform the underlying transactions from conventional interest bearing loans to Mudaraba a profit and loss sharing financing structure.
Mudaraba v Conventional Investment Agreement
It was not in dispute that the HoA and the Mudaraba style investment agreement contain terms that are fundamentally inconsistent. The Court's task was the identify the contractual terms that control the bargain between the parties. The legal principles to be applied when construing commercial contracts, in accordance with the objective theory of contract, were also not in dispute. MATC sought to invoke the principles of construction of separate contracts executed contemporaneously as part of the same transaction - in which case instruments may be read together and each in aid of construction of the other - even though the parties are not the same - provided the instruments were known to the other parties and were executed contemporaneously to accomplish a common purpose. However this submission was at odds with other submissions from MATC that there was not a separate contract at all.
Regardless, it was not clear how the principles would apply given the documents were fundamentally incompatible with each other and not capable of reconciliation. Her Honour also held that the Mudaraba style Investment Agreement was not incorporated into the HoA - having regard to the little authority regarding construction of words of incorporation. It was never signed and the terms relied upon were not capable of giving rise to incorporation. Accordingly, construction on the face of the HoA unambiguous terms supported the primary debt claim which was upheld.