Kazi v Alom

[2023] NSWSC 1321

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Kazi v Alom & Ors [2023] NSWSC 1321

Hearing dates:

19 and 27 October 2023

Date of orders:

27 October 2023

Decision date:

27 October 2023

Jurisdiction:

Equity - Duty List

Before:

Henry J

Decision:

Application for interlocutory injunction refused on terms.

Catchwords:

EQUITY — Equitable remedies — Interlocutory injunction — Where plaintiff seeks to restrain the defendants from dealing with, disposing of or further encumbering a property — Where defendants accept serious question to be tried — Whether balance of convenience and discretionary factors favour the grant of an injunction

Cases Cited:

Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; (2001) 185 ALR 1; [2001] HCA 63

Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; (2006) 229 ALR 457; 2006 HCA 46

Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; [1968] ALR 469

Frigo v Culhaci [1998] NSWCA 88

Singtel Optus Pty Ltd v Vodafone Pty Ltd (No 2) 2011 FCA 260

Westpoint Finance Pty Ltd v Chocolate Factory Apartments Ltd (2002) 12 BPR 22,969; [2002] NSWCA 287

Category:

Principal judgment

Parties:

Syed Rezaul Hossain Kazi (Plaintiff)
Md Zahangir Alom (First Defendant)
The Trustee for Alom Family Trust (Second Defendant)
Homeington Land Developments Pty Ltd (Third Defendant)

Representation:

Counsel:
R Lahoud (Plaintiff)
R M Higgins (Defendants)

Solicitors:
BNS Lawyers (Plaintiff)
Goldman Law (Defendants)

File Number(s):

2023/00092614

Publication restriction:

Nil

JUDGMENT – Ex Tempore (Revised)

1. This is an application by the plaintiff, Syed Rezaul Hossain Kazi, for an interlocutory injunction restraining the defendants from dealing with, disposing of or further encumbering a property located at XXX Peck Road, Officer, Victoria, 3809 (Peck Road Property). The third defendant is the registered proprietor of the Peck Road Property.

2. The application is made by notice of motion, which the plaintiff was granted leave to file in Court on an ex parte basis on 16 October 2023, in proceedings that were commenced by statement of claim filed on 21 March 2023.

3. The plaintiff’s application for an interlocutory injunction was listed before me, as the Equity Duty Judge, on 19 October 2023.

4. At the hearing on 19 October, the defendants were represented by counsel. The parties read evidence and made some submissions before the matter was adjourned. This was in the context where the defendants, through their counsel, had proffered an undertaking to pay into Court the sale proceeds of four lots of the Peck Road Property which are the subject of contracts for sale to third parties and security under the loan agreement (which is the basis of the plaintiff’s claim in these proceedings) pending determination of the proceedings. The parties wanted time to discuss the terms of the undertakings and orders that would resolve the application, which were to include the plaintiff’s undertaking as to damages and a notice regime in relation to completion dates. The parties indicated that they expected that consent orders would be provided to Chambers later that day or the following day.

5. As events transpired, the parties were unable to reach agreement. Directions were made to file and serve competing proposed orders and any short written submissions, and the matter was re-listed before me at 9.30am today, Friday, 27 October 2023. The parties complied with the directions by filing further written submissions and the defendants have filed and rely on an additional affidavit from the first defendant.

6. The defendants have also proposed orders that include undertakings in relation to the payment of the net sale proceeds into Court and the provision of reports relating to the Peck Road Property subdivision project completion date.

7. The plaintiff does not accept the orders proposed by the defendants and asks the Court to grant the interlocutory injunction. As was put at the hearing, the plaintiff is concerned that the undertakings do not provide sufficient certainty about the date by which the sale proceeds will be paid into Court and that the first defendant may become bankrupt.

8. The general principles governing the grant of an interlocutory injunction are well-established and were not in dispute at the hearing.

9. The purpose of an interlocutory injunction is to preserve the status quo until the rights of the parties can be determined at a final hearing: Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; (2001) 185 ALR 1; [2001] HCA 63 (ABC v Lenah Game Meats).

10. The plaintiff, in applying for an interlocutory injunction, must establish that his claim for final relief raises a serious question to be tried in the sense that, if the evidence remains as it is, there is a probability that at the trial of the action the plaintiff will be entitled to the relief claimed. He must also satisfy the Court that, if the interlocutory injunction is not granted, the plaintiff will suffer irreparable harm for which damages will not be an adequate remedy and that the balance of convenience favours the grant of the interlocutory injunction: ABC v Lenah Game Meats at [13]; Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; (2006) 229 ALR 457; 2006 HCA 46 at [19] and [65]; and Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; [1968] ALR 469.

11. Relevant discretionary factors in determining whether to grant an interlocutory injunction include: the possibility of alternative remedies; whether there has been any delay or laches; the strength of the grounds of any defence suggested by the defendants; and what, if any, undertakings the defendants are prepared to proffer.

12. In these proceedings, the plaintiff sues the defendants to recover monies payable under a loan agreement entered into between the plaintiff as lender, and the first defendant as borrower, dated 4 November 2019 (Loan Agreement).

13. As the defendants’ submissions note, the current statement of claim includes lengthy pleadings relating to early agreements between the plaintiff and the defendants, including four contracts of sale for land entered into during the period from January to May 2016 by the plaintiff, as purchaser, and the first defendant executing on behalf of the second defendant, as vendor. However, the final relief sought by the plaintiff, as relevant to this application and as currently pleaded, arises under the Loan Agreement.

14. The Loan Agreement relevantly provides that the plaintiff’s invested money of $1,490,000 in purchasing the land was transformed into a personal loan to the first defendant; the loan amount, being the principal amount of $1,490,000 and interest of $150,000, was to be paid by 30 June 2020; the loan was secured by four lots at the Peck Road Property, being VH131, VH132, VH141 and VH143 (Security Lots), with the intention being that those lots would be available to collect by way of money in the event of default; the defendants may sell the Security Lots to pay the loan with the written consent of the plaintiff; and the plaintiff had no entitlement to lodge a caveat over the Peck Road Property or any other activities.

15. In the statement of claim, the plaintiff seeks orders that the defendants pay the outstanding sum under the Loan Agreement of $1,440,000 plus interest to the plaintiff, that all earlier agreements between the plaintiff and defendants be set aside, that the plaintiff has an equitable interest in the Security Lots and that the defendants pay to the plaintiff equitable compensation. I was informed at the hearing that the latter two claims seeking equitable relief are no longer pursued.

16. Thus, the plaintiff’s claim is for the payment of money under the Loan Agreement. The defendants accept that the earlier agreements are no longer operative.

17. Based on the defence filed 26 June 2023 and the plaintiff’s reply filed 21 July 2023, the issues between the parties concern the amount of money owing to the plaintiff under the Loan Agreement and when that amount is due and payable.

18. The defendants contend that an amount of $250,000 was paid to the plaintiff in two instalments in December 2021 and May 2022; a contract of sale of other land was entered into between the plaintiff (as purchaser) and the third defendant (as vendor) on 25 March 2022; it was agreed that the sale price of that property would be deducted, and effectively set off, from the amounts owing under the Loan Agreement whereby the plaintiff purchased another property; and it was further agreed, or in the alternative, there was a common assumption between the plaintiff and the defendants, that the moneys payable under the Loan Agreement would not be payable to the plaintiff until the Security Lots were sold and the defendants were paid for those sales. The last two matters are disputed by the plaintiff.

19. The defendants accept that there is a serious question to be tried in relation to the plaintiff’s claim that the principal amount under the Loan Agreement and interest was due and payable on 30 June 2020, there has been default and the amount claimed is payable.

20. The issue on this application is whether, having regard to the balance of convenience and discretionary factors, the Court should grant the interlocutory relief the plaintiff seeks.

21. Having considered the parties’ submissions and the competing orders proposed, I am not satisfied that the plaintiff has made out his case for the interlocutory relief sought. This is for the following reasons.

22. First, it is a significant discretionary factor relevant to this application that the plaintiff has been on notice of the breaches of the Loan Agreement, on which he relies in support of his interlocutory relief and places emphasis in his written submissions, such as the failure by the first defendant to provide a copy of the certificate of title relating to the Peck Road Property to the plaintiff since November 2019 and the defendants’ failure to repay the principal amount and interest since mid-2020.

23. Further, cl 7 of the Loan Agreement contemplated that the Security Lots could be sold by the defendants (as borrower) with the written consent of the plaintiff to pay the loan amount. The evidence on this application may not amount to written consent by the plaintiff in accordance with that clause. However, there is evidence that the plaintiff was aware from February 2022 that the defendants had sold three of the Security Lots and was in the process of selling the fourth, and yet took no issue with it. To the contrary, when notified of these matters, the plaintiff’s email in response states “I completely agree with you”.

24. Secondly, the injunction in the terms sought by the plaintiff would restrain dealings by the defendants in relation to the entirety of the Peck Road Property. On any view, the plaintiff’s security under the Loan Agreement relates to four Security Lots only. To the extent that the interlocutory injunction is sought by reference to the plaintiff’s security under the Loan Agreement, in my view, it goes too far.

25. Thirdly, it appears that the plaintiff brought this application for an interlocutory injunction having identified that the defendants encumbered the Peck Road Property by way of mortgage on 21 June 2023 and having seen part of the property advertised for sale by way of expressions of interest.

26. It is common ground that the Peck Road Property is the subject of development by the defendants and the Security Lots form part of “Stage 1” of that development. The Security Lots are yet to be subdivided. The evidence on this application suggests that practical completion of Stage 1 is expected in March 2024 and that the advertisement related to Stage 2, another part of the Peck Road Property.

27. The evidence on this application also indicates that the defendants have funded that development by borrowing money secured against the Peck Road Property. There was an existing mortgage on the property, which funded the purchase price, and a refinance was undertaken on 21 June 2023 for further funds needed for construction and other works related to the subdivision, seemingly in the ordinary course of the defendants’ business and unrelated to the plaintiff’s claim. In other words, the evidence does not suggest that the defendants are seeking to dispose of, dissipate or encumber their assets in a way that could be said to be intended to defeat a prospective judgment in favour of the plaintiff: Frigo v Culhaci [1998] NSWCA 88 at 16.

28. Fourth, having regard to the matters referred, in my view, an order of the nature sought by the plaintiff could potentially prejudice the ongoing development of the Peck Road Property by limiting the defendants’ ability to obtain further funds and sell the lots that are not the subject of security under the plaintiff’s Loan Agreement.

29. Fifth, as a money claim, damages would also seem to be an adequate remedy for the plaintiff in this case.

30. When asked about harm to the plaintiff and how the balance of convenience favoured him, the plaintiff’s counsel submitted that the plaintiff feared that the first defendant would become bankrupt and referred to the plaintiff having suffered many “inconveniences” being out of his money for years.

31. Based on the material before the Court, there is some force to the plaintiff’s submission that he has been out of pocket in respect of money invested with the first defendant, or entities related to him, for some time. That said, the plaintiff’s current claim is a money claim pursuant to a Loan Agreement which he entered into in 2019 and seemingly took no action to enforce until earlier this year. The alleged inconvenience to the plaintiff being out of his money for some time is not, in my view, a factor that weighs heavily on the balance of convenience such as to warrant the grant of the injunction sought by the plaintiff in this case.

32. As to the fear of bankruptcy, there is insufficient evidence for me to form any view that bankruptcy is a likely prospect. I also note that there is some evidence to suggest that the defendants may have other property which may be available in the event judgment is given favouring the plaintiff.

33. Finally, the risk of injustice to the plaintiff by not granting the interlocutory injunction is, in my view, ameliorated by the terms of the undertakings proffered by the defendants, which provide for all the proceeds of sale of the Security Lots up to the amount claimed by the plaintiff to be deposited into Court upon settlement of the contracts of sale, details in respect of which (such as the purchase price and contract terms) have been provided to the plaintiff on this application.

34. It is also a relevant factor that a further undertaking has been proffered by the defendants during the course of the hearing, namely, that the deposits received pursuant to the contracts of sale will continue to be held in the trust account maintained on behalf of Koya & Co, the solicitors acting for the third defendant on those sales, pending final settlement of the contracts unless the deposits are released to the purchasers in accordance with the terms of the contracts of sale for the relevant lot.

35. The plaintiff is concerned that the defendants are not prepared to include in the undertakings a date by which the sale proceeds would be paid into Court and sought that the date of 31 October 2024 be included. I accept the defendants’ submission that they cannot guarantee a date by which settlement will occur having regard to the possibility of delay and uncertainty in relation to development projects more generally.

36. That said, the plaintiff should have some comfort from the evidence on this application, which identifies that practical completion of Stage 1 is currently estimated to be March 2024 and that completion of the sale contracts for the relevant lots is anticipated to occur by July 2024 after the Security Lots have been registered in accordance with the requirements of Council. The undertakings proffered to the Court also require the defendants to provide to the plaintiff reports in a form provided to the defendants’ financier regarding the expected date of practical completion of Stage 1 of the development of the Peck Road Property. The only change I would make to those undertakings is to require that the reports be provided more regularly and not on a quarterly basis, which would likely result in only one or two reports being provided between now and March 2024. In my view, requiring the defendants to provide more regular reports should not be a significant burden and should give the plaintiff more clarity as to how the Project is tracking against the expected completion dates.

37. [Discussion about progress payment reports and timing]

38. As reporting by the defendants is to be based on receipt of a progress payment, the undertakings should be updated to provide for reports to be provided within 14 days of receipt of the progress payment identifying the date for expected practical completion, rather than monthly.

39. [Parties address on costs]

40. As to costs, the defendants submit that the plaintiff should pay their costs as they have had success in contesting the interlocutory injunction sought by the plaintiff and they proffered undertakings on the last occasion, the substance of which have been accepted as appropriate by the Court.

41. The plaintiff contends that costs should be reserved until final determination of the proceedings as there was no doubt there was a serious question to be tried.

42. Applying the usual approach that costs follow the event on an interlocutory injunction application, an unsuccessful plaintiff should pay the costs of the application.

43. However, where a plaintiff has proven they have an arguable case and there is a serious question to be tried, but an injunction is declined on the balance of convenience, it may be appropriate that costs be awarded as costs in the cause: Westpoint Finance Pty Ltd v Chocolate Factory Apartments Ltd (2002) 12 BPR 22,969; [2002] NSWCA 287 at [66]–[68]; see also Singtel Optus Pty Ltd v Vodafone Pty Ltd (No 2) 2011 FCA 260.

44. In this case, the primary reasons for declining interlocutory relief were based on discretionary and balance of convenience reasons, including issues of delay, the undertaking proffered by the defendants and their willingness to proffer a further undertaking this morning in relation to the deposits.

45. Overall, and having regard to the focus of the contest at the hearing, it seems to me that the interlocutory hearing was one which should be considered to have been lost by the plaintiff. In those circumstances, I do not consider it fair for the plaintiff to recover his costs of this hearing if he succeeds at the final hearing. To my mind, the defendants should not be at risk of their costs in relation to this application.

46. In my view, the appropriate order in this case is for the defendants’ cost of the interlocutory application to be the defendants’ costs in the cause.

47. For these reasons I make the following orders:

1. Grant leave to the defendants to file in Court the affidavit of Md Zahangir Alom sworn 26 October 2023.

2. The Court notes that on the undertaking as to damages given by the plaintiff, all three defendants without admission undertake to the Court that, until further order:

1. within fourteen (14) working days of the payment of the balance of the settlement amounts due for the sale of the lots VH131, VH132, VH141 and VH143 situated at XXX Peck Road, Officer, VIC 3809 (the Project), the proceeds of the sale inclusive of the deposit and without any deductions (Proceeds of Sale) of each lot will be paid by the defendants into Court. If the Proceeds of Sale exceed the amount claimed by the plaintiff in the draft of the amended Statement of Claim served 19 October 2023, the Proceeds of Sale will be paid into Court up to the amount claimed therein;

1. the deposits received by the third defendant as vendor in relation to the contract of sale of each of the lots referred to at (a) above (Sales Contract) will continue to be held in the trust account maintained by Global X for and on behalf of the third defendant’s solicitor, Koya & Co, until settlement and payment into Court in accordance with (a) above, unless released to the purchaser in accordance with the terms of the Sale Contract for the relevant lot;

2. within fourteen (14) working days after the defendants’ financier receives a progress payment in relation to Stage 1 of the Project, the defendants will provide to the plaintiff’s solicitor an extract in the form of pages 21 to 22 of Exhibit B updating the plaintiff as to the expected date of practical completion of Stage 1 of the Project (Report);

3. the defendants will provide the first Report within fourteen (14) working days after receiving the next Progress Payment (No 3). Such Reports will be provided until the settlement of each of the lots mentioned in (a) above is completed; and

4. in giving these undertaking, the defendants make clear that the ‘Practical Completion Date’ as shown in the Report is not the same as the ‘settlement date’; and ‘Practical Completion Date’ will be assessed on an ongoing basis by the quantity surveyor and may vary with time.

3. The defendants’ costs of the plaintiff’s notice of motion dated 16 October 2023 (Notice of Motion) will be the defendants’ costs in the cause, with the plaintiff to pay their own costs.

4. The plaintiff’s Notice of Motion is otherwise dismissed.

5. Vacate the order made on 31 August 2023 for the service of the defendants’ evidence.

6. Note that the proceedings are listed before the Equity Registrar on 6 November 2023 for further directions.

7. These orders be entered forthwith.

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Amendments

08 November 2023 - Amendment to representation by solicitors; "first defendant" replaced with "third defendant" at [18]; and "plaintiff" replaced with "defendants" at [25].

Decision last updated: 08 November 2023