KHI Accounting (SSW) Pty Ltd v KHI Marketing Pty Ltd

[2024] NSWSC 1098

Supreme Court

New South Wales

Medium Neutral Citation:	KHI Accounting (SSW) Pty Ltd v KHI Marketing Pty Ltd [2024] NSWSC 1098
Hearing dates:	27 August 2024
Decision date:	27 August 2024
Jurisdiction:	Equity - Duty List
Before:	Hammerschlag CJ in Eq
Decision:	The application for interlocutory relief is dismissed.
Catchwords:	EQUITY — Equitable remedies — Mandatory injunction — Where plaintiff’s director’s professional profile has been removed from website — Where plaintiff seeks interlocutory mandatory injunction to restore its director’s profile on website — Where the director’s relationship with the other business owners has broken down — Where the absence of the director’s profile on the website may cause a loss of potential clients and work — HELD — The balance of convenience does not favour the granting of the injunction — Interim restoration of the director’s profile would not assuage any reputational damage caused by its removal and is unnecessary where plaintiff’s separation from the business is imminent
Category:	Principal judgment
Parties:	KHI Accounting (SSW) Pty Ltd (Plaintiff) KHI Marketing Pty Ltd (First Defendant) ACN 632 026 432 Pty Ltd as trustee for KHI Unit Trust (Second Defendant)
Representation:	Counsel: J Raftery (Plaintiff) N Mirzai (First and Second Defendants) Solicitors: Mitry Lawyers (Plaintiff) Meehans Solicitors (First and Second Defendants)
File Number(s):	2024/002682126
Publication restriction:	Nil

EX TEMPORE JUDGMENT (REVISED)

1. The plaintiff is a company owned and controlled by Mr Jeremy Iannuzzelli, a practising accountant. For some years, he has practised in association with a number of individuals who, through their corporate entities, have all practised under the banner ‘KHI Partners’.

2. KHI is an acronym for the initials of Khan, Hau and Iannuzzelli. Messrs Khan and Hau are two of the aforementioned individuals.

3. The first defendant is a company owned in equal shares by Khan, Hau and Iannuzzelli, who are its directors. The second defendant is the trustee of a unit trust of which they are equal unitholders.

4. The first defendant operates and has operated the website for KHI Partners.

5. The personal relationship between the plaintiff and the other stakeholders in KHI Partners has broken down. The nature of the legal relationship is in dispute and, on the materials before me, not entirely clear.

6. The plaintiff does not assert that there is any partnership relationship. The defendants (who I infer are now being guided by the other individuals) and, I am told from the bar table, the other individuals say that they are (or were) in a partnership.

7. The plaintiff says that he has an agreement with the first defendant which entitles him to have his profile on the KHI Partners website. He says that, for some years, he has paid a license fee to the first defendant. This appears to be correct.

8. The first defendant has removed Mr Iannuzzelli’s profile from the website. He moves for an interlocutory mandatory injunction requiring the first defendant to restore the publication of his professional profile on the website in the manner in which it existed in May 2024 (when it was removed), together with an injunction restraining the first defendant from removing it.

9. By way of final relief, his summons seeks a declaration as to the existence of an agreement that he is entitled, whilst an employee of the plaintiff, to have his profile displayed on the website.

10. I am satisfied that there is a serious issue to be tried that the agreement he asserts was entered into.

11. The plaintiff maintains that the absence of his profile on the website means a significant loss of potential clients and work. He is concerned that potential clients and referrers will sense that he is having difficulties with the KHI brand, that this could have a lasting reputational impact, and new clients will be unable to locate his contact details and will not contact him.

12. For the following reasons however, I am not satisfied that the balance of convenience favours the grant of the injunction:

1. the personal relationship between Mr Iannuzzelli and the other members of the association has broken down and it is inevitable that he and the KHI brand will separate;

2. in one of the affidavits relied on in the application, he agrees that his business interests will need to separate from the businesses associated with Mr Khan. He is a guarantor for loans from the bank and for leases at Parramatta and Sydney CBD, but he does not intend on separating his interests until his guarantees have been released and he has received payouts for his shareholdings. His position rather smacks of a negotiating one. The other members of the association plainly do not wish to be associated with him;

3. the defendants (and the other individuals) through counsel, informed the Court that they wish to buy him out as soon as possible and are prepared to negotiate towards that outcome now;

4. the plaintiff learnt about the fact that his profile had been removed from the website at the beginning of June. Although he had personal domestic reasons which may have inhibited him, it took him 3 months to bring this application; and

5. the fact of the matter is that the plaintiff is having difficulties with the KHI brand and, inevitably, whatever reputational damage is being caused now will not be assuaged by his profile being restored on the website for a short time until the parties conclude their negotiations to buy him out of his interest.

13. I observe that the individuals are concerned about reputational and professional risk stemming from Mr Iannuzzelli’s promotion of certain services now that he has left the “partnership”. This concern has not played any role in my conclusion.

14. The application for interlocutory relief is dismissed.

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Decision last updated: 28 August 2024