Longworth v Pirovich HC Auckland CP 202-Sw01

[2001] NZHC 480

IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY CP 202-SW01

BETWEEN ROCHELLE EDNA LONGWORTH and KENNETH BRIAN YALLOP
First Plaintiffs

AND ERICA MARIE CURRIE and ALANNA ROCHELLE CURRIE
Second Plaintiffs

AND MICHAEL JOHN PIROVICH
First Defendant

AND LABIA HOLDINGS LIMITED
Second Defendant

AND PISTOIA LIMITED
Third Defendant

MERCERIA HOLDINGS LIMITED
Fourth Defendant

AND RAUARUHE LIMITED
Fifth Defendant

AND VECCHIO HOLDINGS LIMITED
Sixth Defendant

AND OLTRARNO LIMITED
Seventh Defendant

AND TORCELLO HOLDINGS LIMITED
Eighth Defendant

AND WAINUIOTOTO BAY PROPERTY CO LIMITED
Ninth Defendant

Hearing: 7 June 2001

Counsel: J Holland for Plaintiffs
R Wallis for Defendants

Judgment: 11 June 2001

RESERVED JUDGMENT OF O’REGAN J

[1] This case involves interlocutory applications for interim injunctions by the plaintiffs in the following terms:

[a] The first defendant execute a registrable share transfer of 75 of the 100 shares held in his name in each of the third, fifth, seventh and ninth defendants in favour of the first named plaintiffs and second defendant in the case of the Wairua Trust, fourth defendant in the case of the Tahaki Trust, sixth defendant in the case of the Matapuna Trust and eighth defendant in the case of the Akonga Trust within 24 hours of the making of this order.

[b] An order restraining the first defendant, or by his servants or agents from entering into any obligation, agreeing to any obligation. undertaking any commitment, negotiating any agreement, obligation or undertaking, executing any document or continuing to do so in relation to the affairs of the defendant, without first obtaining the written authorisation of the first named plaintiff.

[c] An order appointing Ian Duff of Auckland, chartered accountant to:

[i] Inspect and make copies of any documents in the possession of the first defendant relating to the affairs of the remaining defendants; and to

[ii] Audit the accounts of the second to ninth defendants.

at a time to be specified by the Court (the inspection and audit) and requiring Mr Duff to file and serve on the parties a report detailing his findings arising from the inspection and audit and directing the plaintiffs to pay the costs of and incidental to the report or as the Court sees fit.

History

[2] The notice of interlocutory application for interim injunction was filed on 7 May 2001. It followed the filing of a statement of claim and notice of proceeding on 2 April 2001 and was filed because of concern on the part of the plaintiffs that action was being taken by the first defendant, Mr Pirovich, to sell the property at the centre of the dispute.

[3] The interlocutory application was heard by Nicholson J as Duty Judge on 7 May 2001 at which time he granted an interim injunction in terms of paragraph [b] of the notice of interlocutory application as a holding order and also made timetable orders. This included provision for a settlement conference which took place but which apparently did not lead to resolution, though there was evidence before me as to the offer which had been made by the plaintiffs to Mr Pirovich following the settlement conference in an endeavour to settle the litigation. Mr Pirovich did not respond to that offer.

[4] The matter came before me on Thursday 7 June 2001. Unfortunately the second affidavit of Ms Longworth had been filed only the day before and Ms Longworth had also changed counsel which meant there was not any continuity from the earlier proceedings. Counsel himself was not fully briefed.

[5] Mr Wallis, counsel for the defendants, tabled a number of documents in Court during the course of the hearing, particularly documentation relating to the proposed sale of the properties; property law notices served on the third, fifth, seventh and ninth defendants by National Mortgage Nominee Company Limited (National Mortgage) and notices served by National Mortgage on Mr Pirovich’s guarantor of the loans made by National Mortgage. Mr Wallis also put forward other information from the bar in response to Ms Longworth’s second affidavit which had been filed on 7 June and Ms Longworth’s third affidavit, exhibiting a further valuation of the property.

[6] Receiving this information from the bar this was obviously unsatisfactory and it was agreed that the appropriate course was for me to accept the non-contentious matters tabled by Mr Wallis (the agreements and the property law notices), and to provide an opportunity for Mr Pirovich to file another affidavit containing other information which he wished to put before the Court. I adjourned the hearing for that purpose and accepted an affidavit filed in unsworn form after the extended lunch adjournment.

[7] At the commencement of the hearing before me Mr Wallis on behalf of the defendants conceded that there was a serious question to be tried so that the hearing before me could deal with the key practical issue, namely the issue as to where the balance of convenience lies. I was grateful for this concession which, having read the voluminous affidavit material before the commencement of the hearing, I believe was properly made. The fact that this concession was made also obviates the need to recite in detail the factual position in this judgment which has been prepared under conditions of urgency because of the need to resolve the matter before 16 June 2001. In terms of the test in American Cyanamid Co. v Ethicon Ltd [1975] AC 396, this leaves the assessment of the balance of convenience as the live issue in the case.

Facts

[8] The key facts can be summarised as set out below. The summarising may lead to some oversimplification or inaccuracy but in view of the concession already referred to that is not a significant practical concern in the context of this judgment. It must be emphasised that many of the facts are subject to dispute and at this interlocutory stage of the proceedings it is not possible to resolve those disputes.

[9] The key facts are:

[a] The arrangements which have led to this litigation started with discussions between the husband of Ms Longworth, Clive Currie, who is a bankrupt, and Mr Pirovich the first defendant, - it is not clear who initiated these discussions;

[b] The proposals which were discussed involved a large coastal property in the Coromandel Peninsula called Te Pungapunga Station. A company called Whangapoua Properties Limited (Whangapoua) had a contract to buy this property with provision for it to nominate another purchaser.

[c] It was proposed that four companies Pistoia Limited (the third defendant), Rauaruhe Limited (the fifth defendant), Oltrarno Limited (the seventh defendant) and Wainuiototo Bay Property Co. Limited (the ninth defendant) (these four companies will be referred to as the Property Companies) would be nominated by Whangapoua to buy the property in return for a payment to Whangapoua. It seems that this arrangement was subsequently modified and Whangapoua purchased and then on-sold the property to the Property Companies but in any event the property is now owned by the Property Companies, each of which owns one portion of it. The small homestead lot known as The Penguins was separately sold to Mr Pirovich’s wife.

[d] Four Trusts were established pursuant to deeds of trust under which Ms Longworth and her children (the second plaintiffs) were beneficiaries and Ms Longworth as “the parent” under those deeds had a right of appointment of trustees. These Trusts were called the Wairua Trust, the Tahaki Trust, the Matapuna Trust and the Akonga Trust.

[e] Four companies were also established as trustees of the four Trusts referred to above. These were Labia Holdings Limited (the second defendant) in respect of the Wairua Trust, Merceria Holdings Limited (the fourth defendant) in respect of the Tahaki Trust. Vecchio Holdings Limited (the sixth defendant) in respect of the Matapuna Trust and Torcello Holdings Limited (the eighth defendant) in respect of the Akonga Trust. Mr Pirovich is sole Director of the four Trustee companies (which I call the Corporate Trustees).

[f] The plaintiffs claim that the Corporate Trustees are entitled to 75 out of the 100 shares in the Property Companies under arrangements involving share transfers and declarations of trust which were not perfected so that the transfers were not registered. The plaintiffs’ contention is that Labia as trustee of the Wairua Trust is entitled to 75 of the 100 shares in Pistoia, Merceria as the trustee of the Tahaki Trust is entitled to 75 of the 100 shares in Rauaruhe, Vecchio a trustee of the Matapua Trust is entitled to 75 of the 100 shares in Oltrarno and Torcello as trustee of the Akonga Trust is entitled to 75 of the 100 shares in Wainuiototo. The plaintiffs acknowledge that the other 25 shares in each of the Property Companies are intended to be held by entities beneficially owned by and controlled by Mr Pirovich or interests associated with him.

[g] The reason for the complexity of these arrangements is not in evidence before me but counsel for Mr Pirovich indicated that Mr Currie, despite his bankruptcy, is really in control of these entities and is a sort of shadow behind the arrangements. I have no evidence before me that allows me to make any finding in that regard.

[h] It appears that Mr Pirovich has arranged for all of the shares in the Property Companies to be transferred to entities associated with him so that he controls 100% of the capital in the Property Companies rather than the 25% which the plaintiffs say he should control beneficially. Mr Pirovich disputes this but has conceded that there is a serious issue to be tried in that regard.

[i] The first plaintiffs have been appointed as additional trustees of the four Trusts by Ms Longworth in the exercise of her power of appointment under the deeds of trust so that they are now effectively co-trustees with the relevant Corporate Trustees.

[j] The proposed subdivision of Te Pungapunga Station has encountered a number of difficulties. In particular significant work has been undertaken to construct a farm track across the property from the nearest road to the section which is most distant from the public road. This work has been managed by a company associated with Mr Currie. There was some evidence that it involves a degree of subterfuge in that the intention is that the farm track will be built to a standard suitable for roading and then application will be made for resource consent to subdivide on the basis that the farm tracks can constitute a road. The difficulties have led to enforcement action being taken by the relevant local government authority, Environment Waikato. There is an allegation that the work which was undertaken on the farm tracks involved the failure to comply with the resource consents which had been obtained for the work. Mr Pirovich has issued a trespass notice against Mr Currie who has been involved in managing the work, so Mr Currie is now prohibited from going onto the Te Pungapunga Station property.

[k] A GST refund had been obtained and there is a dispute about the nature of this amount and whether it is required to be repaid. In particular. Mr Pirovich claims he was assured that no repayment was required and that the fact that this has turned out to be incorrect justifies his actions in assuming 100% ownership of the Property Companies, - the plaintiffs deny this.

[l] Considerable borrowings were entered into, in particular loans of $3.3 million and $1.288 million from National Mortgage. The loan of $3.3 million from National Mortgage was due for repayment on 12 May 2001 and has not been repaid and Property Law Act notices have been issued. The $1.8 million loan will fall due in three months or so. Interest on the overdue National Mortgage loan is running at a very high penalty rate which means it is costing in the vicinity of $70,000 a month in interest payments.

[m] Under the arrangements Mr Pirovich guarantees the National Mortgage loans and has received a guarantor Property Law Act notice in respect of the overdue loan. He also guarantees the $1.8 million loan.

[n] After these proceedings were issued but before the hearing before Nicholson J Mr Pirovich entered into an agreement to sell the whole property to a company called Waikare Limited or its nominee by a separate agreement. The Penguins block owned by Mr Pirovich’s wife is also to be sold so that the whole of Te Pungapunga Station will be sold as one property. It was this sale that led to the injunction proceedings and was the focus of the hearing before me. I will give further details about it later.

The Proposed Sale

[10] Under the agreement for sale and purchase relating to the proposed sale to Waikare, the Property Companies would sell their respective interests in Te Pungapunga Station for $6,750,000 including GST to Waikare. Notable terms in the agreement are:

[a] Clause 21 that says that the agreement will be void ab initio if an interlocutory order is made in this Court against Mr Pirovich or one or more of the Property Companies restraining them from selling or disposing of the land subject to the agreement and/or causing the Property Companies or any one of them to sell or otherwise dispose of any part of the land which is the subject of the agreement. The 30 day period referred to in clause 21 ends on 16 June 2001, which is the reason for the urgency, in completing this judgment.

[b] A deposit totalling $675,000 is payable and I was provided with a letter from the solicitors for Waikare indicating that it had been paid and was being held in trust.

[c] The agreement is inclusive of GST so that if GST is payable the actual amount received and retained by the property owning companies will be $6 million. However, Mr Wallis indicated to me from the bar that Mr Pirovich believes that the GST liability can be reduced to approximately $240,000 because of the nature of the transactions at the time of the purchase of the Te Pungapunga Station by the Property Companies. The affidavit of Mr Pirovich filed during the hearing confirms that that is his view. However, there was no expert evidence as to the correctness of this available to the Court.

[d] The letter from the solicitors for Waikare which was tabled during the hearing indicates that Waikare is an overseas company formed in the British Virgin Islands and registered as an overseas company in New Zealand. It was apparently formed by a Mr John Grace and his family to acquire a property in Hawkes Bay (which it did purchase) and the reason for the provision in the contract allowing Waikare to nominate another purchaser is to allow for the possible use of another company which would be associated with Mr Grace. Mr Grace is described as a man of substance who lives with his family in New York. The letter indicated that there was no back to back arrangement between Waikare and Mr Pirovich.

[11] It was notable that the details of the transaction to sell the property were tabled during the hearing before me. Notwithstanding that Mr Pirovich now acknowledges through his counsel that there is a serious question to be tried as to whether the underlying beneficial ownership of 75% of the Property Companies is actually held by the plaintiffs, Ms Longworth’s evidence was that Mr Pirovich has completely refused to discuss with her any transactions involving the property or the proposed sale and this had led her to a concern that the sale was to the parties associated with Mr Pirovich intended to move the property out of the orbit of the Trusts.

[12] The affidavit filed during the course of the hearing by Mr Pirovich gives the same details about Waikare and indicates that Waikare was the underbidder when the property was purchased by the parties involved in this litigation in 1998 and that Mr Grace’s interest in the property is as an end user rather than as a subdivision proposition, - the significance of this is that it means that he has no concern about the farm track/roading issues and the Resource Management Act implications and this removes a degree of risk and conditionality which would apply if the property were to be sold to a person who wished to develop it in the same way as the parties to this litigation intend (or intended) to do.

The Valuations and the Proceeds of Sale

[13] I was provided with considerable conflicting evidence about the value of the property and, particularly, whether the proposed sale of the property to Waikare for $6,675,000 including GST is a sale at an undervalue or a prudent sale reflecting its real value in an unsubdivided form. There was also considerable conflicting evidence about the liabilities of the Property Companies and the likely outcome for unsecured creditors and shareholders if the sale to Waikare were permitted to proceed.

[14] A new, updated, valuation from Ms Longworth’s valuer, Mr Glenn, was filed as an exhibit to the affidavit of Ms Longworth which was filed at the outset of the hearing, - of necessity therefore the analysis of the valuations and other details was undertaken during the hearing in conditions where there was a degree of confusion among all parties.

[15] Mr Wallis provided a helpful schedule comparing the valuation by Mr Jordan, Mr Pirovich’s valuer dated May 2001 and a valuation by Mr Glenn (for National Mortgage) dated July 2000. Mr Jordan’s valuation was $8,617,500 including GST (which is equal to $7,660,000 excluding GST). However Mr Wallis suggested that this needed to be reduced by the amounts allocated by Mr Jordan for legal and selling costs of $306,000 (Mr Wallis correctly conceded that selling costs would apply to all valuations and this figure should therefore be ignored), $1 million for “profit and risk” (essentially the risks involved in obtaining the necessary resource consents and undertaking the necessary work to complete and form legal and physical rights of way to the more remote areas of the property to allow for subdivision as contemplated to proceed, particularly in view of the difficulties with Environment Waikato), $300,000 development costs (the actual costs of building the right of way) and holdings costs of $220,000 (essentially being interest for the period during which the subdivision works take place). These adjustments (not including legal and selling costs) reduce the value by $1,520,000. Thus if the GST exclusive valuation of $7,660,000 is reduced by $1,520,000 this yields a figure of $6,140,000 exclusive of GST which equates with a GST inclusive figure of $6,907,500.

[16] Mr Wallis argued that the July 2000 valuation by Mr Glenn should be also reduced by $1,520,000 because it assumes a completed subdivision, completed right of way and power and telephone, so that all of the risks allowed for by Mr Jordan need to be stripped out of the Glenn valuation.

[17] As Mr Glenn’s valuation has now been updated it is appropriate to undertake those calculations from the updated valuation. Unfortunately this valuation was somewhat confusing because it appeared to include some amounts on a GST exclusive basis and some amounts on a GST inclusive basis. As with the earlier valuation it made the assumptions about the completed subdivision which Mr Wallis argued required discounting in the manner suggested by Mr Jordan.

[18] The more recent Glenn valuation sets the value of the homestead block at $2,350,000 exclusive of GST (but indicates this could increase considerably if a subdivision to six lots was undertaken), a value for the New Chums block of $1,750,000 including GST, which equates to a GST exclusive figure of $1,556,000, a value for the Airstrip block of $2,850,000 excluding GST, values for the Airstrip back blocks of $560,000 and $415,000 exclusive of GST and values for the Quarry blocks of $343,000 and $185,000, making a combined value of $528,000 including GST which equates to a GST exclusive figure of $470,000. This means that the combined value on a GST exclusive basis is $8,201,000. When GST is added to this it gives a GST inclusive valuation of $9,225,000, compared to the sale price of $6,750,000 including GST. This is considerably higher than the July 2000 valuation Mr Glenn prepared for National Mortgage which was in a similar range to the Jordan valuation.

[19] If I adopt the approach suggested by Mr Wallis and deduct $1,520,000 from Mr Glenn’s more recent GST exclusive valuation of $8,201,000 to factor in the risk factors development costs and holding costs; as suggested by the Jordan valuation, this yields a GST exclusive figure of $6,681,000. When GST is added to this it gives a GST inclusive figure of $7,515,000 which is still considerably higher than the proposed sale price to Waikare.

[20] There was also considerable debate about how the proceeds of sale would be divided. Ms Longworth indicated in her second affidavit that there would be a shortfall for creditors and nothing for shareholders. This calculation involved taking the GST inclusive price of $6,750,000 and making a series of deductions, the first of these for the GST of $750,000. Mr Pirovich disputed this and said it would be only $242,000 because of the particular GST position of the companies. But without expert evidence establishing this I am unable to make a finding that anything other than the ordinary GST position of a payment to the Government of the GST levied would apply.

[21] Next Ms Longworth deducts sales commission of 3%, $168,750, - this did not appear to be contested. She then deducted from this the mortgages of $5,300,000 plus penalty interest for 90 days till settlement of $201,390.30. Mr Pirovich disputed this because he believed that the interest figure of approximately $200,000 was included in the $5,300,000 figure and on the evidence before me that seems correct, since the principal sums in relation to the mortgages were $3,300,000 and $1,800,000 respectively.

[22] Next Ms Longworth deducts $755,000 being a debt owed to Whangapoua Properties Limited which Mr Wallis said had been reduced by a payment of $160,000 by Mr Pirovich. However, he acknowledged that if this were the case there would still be a debt of $160,000 owing to Mr Pirovich so that the total figure would remain constant. However, Mr Wallis also argued that the figure of $750,000 should in fact be $700,000. Again, I am unable to make a firm finding on that from the evidence before me but I am prepared to treat it as $700,000 for the purposes of the calculation.

[23] Next Ms Longworth deducts $852,404 for amounts owed in respect of civil works. Mr Wallis disputed this on behalf of Mr Pirovich saying that only $300,000 was owned to external creditors and the rest was owed to Pungapunga, the company associated with Mr Currie, which had improperly undertaken the works relating to the rights of way/farm tracks and that this had led to the difficulties with Environment Waikato. Mr Wallis argued that therefore the amount payable to Pungapunga would be strongly disputed and I should therefore reduce this figure considerably.

[24] Again, I do not have sufficient evidence before me to resolve that position but given the evidence about the difficulties with the roadway it may be that some of this amount will not be payable. For the purposes of the calculation I will take a figure of $500,000. If that calculation is made it yields a shortfall for unsecured creditors of around $670,000 and obviously nothing for shareholders. Mr Pirovich’s calculation shows $122,000 for shareholders and full payment for creditors. Ms Longworth’s calculation shows an even bigger loss for creditors. On the information available to me I conclude a significant shortfall to creditors and nothing for shareholders is the more likely outcome.

Major Transaction

[25] I indicated to Mr Wallis during the hearing that, as a matter of company law, a major transaction of this kind was one where s. 129 of the Companies Act 1993 vests the power of decision in the shareholders rather than the directors. His client has conceded that there is a serious question to be tried in relation to the plaintiffs’ contention that 75% of the shares in the Property Companies were beneficially owned by the Trusts. The evidence showed that the first plaintiffs were now the majority of the trustees of those Trusts and that the plaintiffs other than Mr Yellop were the beneficiaries of those Trusts. In those circumstances, I indicated that I thought there was an argument that it should be the view of the plaintiffs in relation to the proposed sale to Waikare that should prevail as they would be the effective holders of 75% of the shares in the Property Companies, rather than the view of Mr Pirovich who would be holder of 25°/o if the plaintiffs’ case succeeds).

[26] Mr Wallis provided me with evidence that Mr Pirovich had signed major transaction resolutions as sole shareholder in the Property Companies and suggested that even if it was established that the plaintiffs were beneficially entitled to 75% of the shares, Mr Pirovich still controlled the Corporate Trustees as their Director and was entitled to sign the major transaction resolutions. I have difficulty in accepting that in a situation where the beneficiaries and the two new trustees (the first plaintiffs) steadfastly oppose the sale.

Conflict of Interest

[27] This concern is heightened by the fact that Mr Pirovich has a clear conflict of interest because he is a guarantor of the mortgages and has a very significant concern about his personal financial position in respect of those guarantees. In effect the plaintiffs are arguing that Mr Pirovich is acting in a way which is designed to protect his personal position at their expense by selling the property too cheaply and depriving them of the opportunity of any upside from a completed development.

[28] Mr Wallis argued that Mr Pirovich was acting prudently not only as a guarantor but also in his capacity as a Director of the Property Companies. He indicated that these companies are insolvent and therefore unable to raise funds to continue the development. Mr Holland disputed this indicating that the two mortgages are over separate parts of the property and that the $1.8 million mortgage is not in default and the valuation of Mr Glenn indicates that more money can be borrowed on the sites currently securing the $3.3 million mortgage than the current $3.3 million figure. Such borrowings could fund future development expenses without the companies incurring expenses that they are unable to meet if the mortgage borrowings are on a term basis.

[29] Mr Holland pointed to the settlement offer made by the plaintiffs after the High Court settlement conference which would take out Mr Pirovich and, according to Mr Holland, allow for increased borrowings to fund future development costs. Mr Wallis disputed the ability of the plaintiffs to deliver on this settlement offer and argued that the reason that no response had been given to it was that Mr Pirovich was checking out with the proposed funder of the settlement offer the genuineness of the funding offer. However, he gave no indication that Mr Pirovich was prepared to accept it.

[30] Mr Wallis also argued that the initial documentation gave Mr Pirovich control of the corporate trustees in the Property Companies notwithstanding the beneficial entitlements of Ms Longworth and her children and that this included the right to decide to sell the properties even where this was contrary to what the beneficiaries perceived to be their best interests. I am unable to accept that submission. If Mr Pirovich is indeed in a fiduciary position he cannot act against the interests of the beneficiaries particularly where there appears to be a conflict of interest.

Prudence

[31] Mr Wallis argued that Mr Pirovich was also bound as a Director to act in a way which was prudent and that the companies are in a position where they are effectively insolvent and therefore obliged to sell the properties. He pointed in particular to the fact that the companies are now subject to Property Law Act notices in respect of the $3.3 million mortgage. He argued that it is prudent to sell the companies’ major assets in these circumstances in order to prevent the companies continuing to trade while insolvent. However, there is no particular reason why the companies need to continue trading, - of course interest is running (at penalty rates) on the $3.3 million mortgage but I was told from the bar that the other mortgage has pre-paid interest.

[32] Mr Holland indicated in submissions that the two mortgages are over separate blocks and therefore default under one does not necessarily affect the other and that the latest valuation from Mr Glenn (submitted at the beginning of the hearing) indicated that there was leeway to raise further funding which would enable development work to continue in circumstances where the company had term funding allowing it to continue to trade without breaching the reckless trading rules. Again, the evidence before me does not allow me to make a finding on that but the proposition does appear to be arguable.

[33] I am therefore left with the finely balanced question as to whether the current sale is a prudent sale or not. It may be, but the fact of the matter is that the parties who claim to have a 75% economic stake in the property believe that there is considerable extra worth in the property and that the sale is denying them their equity, effectively in order to permit Mr Pirovich to close out his guarantee position.

[34] In the circumstances I believe that equity demands that the injunction be issued to protect their position. I accept that this creates difficulties for Mr Pirovich as guarantor and that there may be risks for the unsecured creditors as well. I accept Mr Wallis’ submission, based on Finnegan v New Zealand Rugby Football Union [1985] 2 NZLR 181 that third party interests are a relevant consideration.

Balance of Convenience

[35] I am satisfied that damages would not be an adequate remedy for the plaintiffs given the considerable scope for debate about the upside of a continued development and the likely outcome if development does continue. On the other hand, I accept that Mr Pirovich has a difficult position to manage as Director of the companies and has considerable personal exposure under his guarantee which must be of genuine personal concern for him. However, there appears to be some leeway between the net proceeds of sale even at the current level and the amount owing on the mortgages for which he is guarantor. His conduct in asserting 100% beneficial ownership in circumstances where there is at the very least a significant basis for dispute about his entitlement to do it, followed by his complete refusal to interact in any way with Ms Longworth or parties advising her, notwithstanding that he now concedes there is a serious issue as to whether she and her children have a greater equity in the development than he does, does not entitle him to any particular sympathy from the Court.

[36] Overall I am satisfied that, by a small margin, the balance of convenience lies with the plaintiffs and that an injunction should issue to protect the status quo. Ms Longworth’s evidence is that she can honour her undertaking as to damages. Mr Pirovich disputes this. On the evidence before me I do not believe it would be correct to refuse any injunction because of Mr Pirovich’s concerns on that front without other evidence. Similarly. I am satisfied that the overall justice of the case requires the granting of the orders sought by the plaintiffs in their interlocutory application.

[37] The submissions at the hearing concentrated on paragraph [b] of the prayer for orders in the notice of interlocutory application for interim injunction, but there was no indication from the plaintiffs that their position had altered since the filing of the interlocutory application. Accordingly I grant an injunction in the form sought by the plaintiffs as set out in paragraphs [1][a] and[b] of this judgment and make the order sought in paragraph [1][c] of this judgment, but I give leave for either party to apply for modifications to the terms of the order if the position has altered since the time of the filing of the notice of interlocutory application for interim injunction.

[38] I did not hear from counsel on costs and believe that it is appropriate that costs be determined at the time of the substantive hearing. However, I also reserve leave for either party to apply for the costs position to be determined now. Any submissions about the terms of the orders or costs must be made within 21 days of the date of this judgment.