Balout v Bella Ikea Cronulla Pty Ltd

In Balout v Bella Ikea Cronulla Pty Ltd, the plaintiffs sought an interlocutory injunction to restrain the mortgagee from selling three apartments separately, which would have circumvented the terms of consent orders that required the sale of the apartment building in one line to maximize the sale price. The defendant director alleged to have circumvented these orders through an arrangement with another developer and the mortgagee. The court was tasked with determining whether the plaintiffs were entitled to compensation for the higher payout figure resulting from the sale of the apartment building in one line and whether the defendants were to be held to their undertaking as to damages.

The court examined whether the defendants should be compelled to honour their undertaking where there had been no final determination of the merits. The defendants conceded that the injunction was properly granted, but argued that the court should exercise its discretion to enforce the undertaking. The court reviewed the principles and relevant case law, ultimately concluding that the mere discharge of the interlocutory injunction before trial did not establish that it ought not to have been ordered. The defendants failed to demonstrate circumstances warranting the exercise of the court’s discretion to enforce the undertaking.

The court dismissed the director’s claim for compensation of $980,000. The plaintiffs were ordered to pay $2 million into court as security under Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161, which was paid out to the mortgagee. The court held that the defendants were not required to compensate the director for the mortgagee’s higher payout figure.