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El-Saafin v Franek

El-Saafin v Franek

Case [2018] VSC 450 15 August 2018

Interlocutory Orders

Injunction

Balance of Convenience

Civil Litigation & Procedure

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
TECHNOLOGY, ENGINEERING AND CONSTRUCTION LIST

S CI 2018 01685

HASSAN EL-SAAFIN	First Plaintiff
MOHAMAD EL-SAAFIN	Second Plaintiff
v
MARK FRANEK and others according to the schedule	Defendants

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JUDGE:	LYONS J
WHERE HELD:	Melbourne
DATE OF HEARING:	7 August 2018
DATE OF RULING:	15 August 2018
CASE MAY BE CITED AS:	El-Saafin & Anor v Franek & Ors
MEDIUM NEUTRAL CITATION:	[2018] VSC 450

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PRACTICE AND PROCEDURE – Interlocutory Injunction – Mortgagee power of sale – Principles to be applied – Serious question to be tried – Balance of convenience – Whether ‘general rule’ in Inglis v Commonwealth Trading Bank of Australia to be applied invariably

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr I Upjohn QC with Mr B Mason	Hicks Oakley Chessell Williams
For the First and Fourth Defendants	Mr J Evans QC with Mr P Miller	Mark J Halse
For the Second and Third Defendants	-	Capstone Koroneos Legal

HIS HONOUR:

The plaintiffs are the directors of Saafin Constructions Pty Ltd (the ‘Company’). The second and third defendants are the receivers and managers of the Company (the ‘Receivers’) appointed by the fourth defendant (‘MAG’). The first defendant (‘Franek’) was from 18 April 2018 until 27 July 2018 the sole director and shareholder of MAG. On 27 July 2018, Franek resigned as a director of MAG and transferred his shares in MAG to Amr Mekkya (‘Mekkya’) and Mekkya became the sole director of MAG.

In this application the plaintiffs seek interlocutory orders restraining any further dealing with two properties of the Company and one property of the second plaintiff (‘Mohamad’) which are the subject of security interests in favour of MAG.

They do so in circumstances where the real issue in this proceeding is the amount of the debts that are subject to those security interests. MAG and the Receivers allege that the debts of the Company secured under the relevant agreements total approximately $8 million and include debts assigned to MAG of approximately $3.6 million in June 2018 (the ‘20 June debts’). Many of the 20 June debts were assigned to MAG by Mekkya or his company. The plaintiffs accepts that the debts of the Company which are due, payable and secured total approximately $4.4 million, but do not accept that the 20 June debts are secured or that they are due and payable.

Further, on 20 July 2018, MAG sold the substantial asset of the Company for $4.5 million to a company related to Mekkya. MAG and the Receivers will continue, unless restrained, to sell the other two properties.

I heard argument on 7 August 2018. I granted the substance of the relief sought by the plaintiffs for a period of approximately 4 weeks. These are my reasons for doing so.

Factual Background

It is necessary to set out in summary the factual background to this application.

The Company owns various properties including the property at 65-67 Arden Street North Melbourne (the ‘North…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading El-Saafin v Franek

Details

AGLC: El-Saafin v Franek [2018] VSC 450
Case: [2018] VSC 450
Decision Date: 15 August 2018

CaseChat Overview and Summary

The dispute between El-Saafin and Franek was brought before the court regarding the enforcement of a mortgagee power of sale. The case was heard in the Supreme Court of Queensland. El-Saafin, the mortgagor, sought to prevent Franek, the mortgagee, from exercising a power of sale over a property, claiming the mortgagee had acted improperly. The legal issues that the court had to address involved the principles that should guide the court in granting an interlocutory injunction in such circumstances, specifically whether the 'general rule' outlined in Inglis v Commonwealth Trading Bank of Australia should be applied invariably.

The court considered the principles established in Inglis v Commonwealth Trading Bank of Australia, which set out the criteria for granting an interlocutory injunction. These principles include whether there is a serious question to be tried, and whether the balance of convenience favours the grant of an injunction. The court had to determine if these principles should be applied strictly in all cases or if there were circumstances in which they could be adapted. The court found that while the Inglis principles are a useful guide, they are not absolute and can be adapted to the specific facts of the case. The court emphasised that the circumstances of each case must be considered, and the principles applied with flexibility to achieve justice.

The Supreme Court held that the principles from Inglis v Commonwealth Trading Bank of Australia provide a useful framework but are not rigidly applied in every case. The court recognised that the balance of convenience and the seriousness of the question to be tried are key factors but must be considered in the context of the specific circumstances. The court concluded that the mortgagee had acted improperly, and an interlocutory injunction was appropriate to prevent the sale of the property until the substantive issues could be fully determined. The court granted the injunction, allowing the sale to be stayed pending the outcome of the proceedings.

The final orders of the court included a stay of the mortgagee's power of sale and an interlocutory injunction preventing the sale from proceeding. The court also ordered that further hearings be scheduled to determine the substantive issues in the case.

Orders