Supreme Court New South Wales Medium Neutral Citation: Lake Macquarie Conveyancing Pty Ltd v Foxbrentin Pty Ltd [2022] NSWSC 790 Hearing dates: 8, 9 and 14 June 2022 Date of orders: 16 June 2022 Decision date: 16 June 2022 Jurisdiction: Equity - Duty List Before: Williams J Decision: See paragraph [80] Catchwords: INTERIM INJUNCTIONS – whether serious question to be tried – balance of convenience – no question of principle Cases Cited: Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2001] HCA 63 Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105 Papas v Grave [2013] NSWCA 308 Category: Procedural rulings Parties: Lake Macquarie Conveyancing (First Plaintiff) Lorraine Berry (Second Plaintiff) Foxbrentin Pty Ltd (First Defendant) Mal Turquoise Pty Ltd (Second Defendant) Adriana Brentin (Third Defendant) Nathaniel Whitehall (Fourth Defendant) Beech Capital Pty Ltd (Fifth Defendant) Registrar General of New South Wales (Sixth Defendant) Representation: Counsel: E Vuu (Plaintiffs) N Whitehall (Litigant in Person, Second and Fourth Defendants) A Brentin (Litigant in Person, Third Defendant) A Kuklik (Interested Party – Receivers for First Defendant) No appearance (First, Fifth and Sixth Defendants) Solicitors: McGirr & Associates (Plaintiffs) File Number(s): 2022/77128 Publication restriction: N/A Judgment Introduction 1. This judgment relates to an application by the plaintiffs to continue interim injunctions against the first to fourth defendants. 2. The first plaintiff, Lake Macquarie Conveyancing Pty Ltd ACN 602 663 856 (LMC), operates a conveyancing practice in the Lake Macquarie area in New South Wales (the Practice). The Practice is conducted out of premises at Suites 2 and 3, 365 Pacific Highway, Belmont in New South Wales, being folio identifier 23/SP79789 (the Property). 3. The second plaintiff, Ms Lorraine Berry, is a licensed conveyancer and is recorded in the register maintained by the Australian Securities and Investments Commission as the sole director, secretary and sole shareholder of LMC. 4. Ms Berry was the registered proprietor of the Property until about 24 December 2021. On that date, the Property was transferred to the first defendant, Foxbrentin Pty Ltd (Foxbrentin), allegedly without Ms Berry's knowledge or consent. 5. The third defendant, Ms Adriana Brentin, is the sole director, secretary and shareholder of Foxbrentin. 6. The Second defendant, Mal Turquoise Pty Ltd (MTPL), claims to be the "equitable holder" of the shares in LMC and to be entitled to have those shares transferred to it. The directors of MTPL are Ms Brentin and the fourth defendant, Mr Nathaniel Whitehall. Ms Brentin and Mr Whitehall are in a de facto relationship. 7. The proceedings were commenced by summons filed on 17 March 2022. Directions were made for the matter to proceed by way of pleadings and for the plaintiffs to file and serve a statement of claim by 31 May 2022. A statement of claim was belatedly served by the plaintiffs on the first to fourth defendants on 12 June 2022 and filed on 15 June 2022. 8. The statement of claim names two defendants that had not been named as defendants in the summons. The named fifth defendant is Beech Capital Pty Ltd (Beech Capital), which is the mortgagee under a mortgage registered against the title to the Property on or about 24 December 2021 immediately after the registration of the allegedly unauthorised transfer of the Property to Foxbrentin. The Registrar General of New South Wales is named as the sixth defendant. Neither Beech Capital nor the Registrar General have been served at this stage. The plaintiffs do not presently seek interim relief against either of the fifth or sixth defendants. References to "the defendants" in these reasons are references to the first to fourth defendants unless expressly stated otherwise. 9. The plaintiffs plead several causes of action and claims for relief in their statement of claim. It suffices for present purposes to record that the proceedings include disputes between the plaintiffs and the defendants about: 1. whether Ms Berry remains the true owner of the Property or whether (as the defendants contend) Foxbrentin was entitled to have the title to the Property transferred to it on 24 December 2021 without paying the purchase price in full to Ms Berry on that date (the Property dispute); and 2. whether Ms Berry is the owner of all of the shares in LMC or whether (as the defendants contend) MTPL became entitled on 9 December 2021 to have Ms Berry's shares in LMC transferred to it and is therefore entitled to operate the Practice and to receive the revenue and profits of the Practice (through Ms Brentin and Mr Whitehall) (the LMC dispute). 1. There is evidence to the effect that Mr Whitehall and Ms Brentin had been working in the Practice, for some period of time until shortly before the commencement of the proceedings, and had been alternate directors for part of that time. It is not necessary for present purposes to address the differences between the parties concerning the period of time for which, and the capacity in which, they had been working in or involved in the business of LMC. Nor is it necessary to recount all of the history of their discussions with Ms Berry concerning the defendants' purchase or potential purchase of LMC and/or the Property. Much of that history is disputed. 2. In relation to the Property dispute, the final relief sought in the statement claim includes: 1. a declaration that the title to the Property is held by Ms Berry; 2. an order requiring Foxbrentin to transfer the title to Ms Berry or, alternatively, a direction that the Registrar General transfer the title to Ms Berry; and 3. declarations that Ms Berry has avoided or validly terminated a contract entered into in or about November 2021 for the sale of the Property to Foxbrentin, or orders under the Contracts Review Act 1980 (NSW) setting aside that contract. 1. I note that the plaintiffs also seek an order setting aside the mortgage in favour of Beech Capital. 2. In relation to the LMC dispute, the relief sought in the statement of claim includes: 1. a declaration that Ms Berry is the owner of all of the shares in LMC; and 2. a declaration that Ms Berry has avoided a share sale agreement entered into in or about February 2020. 1. On 16 May 2022, the Court made interim orders: 1. restraining the defendants from selling or dealing with the Property, including creating any new legal or equitable interest in the Property, without the prior written consent of the plaintiffs or leave of the Court (although the orders included a notation that the parties acknowledge that the Property may be the subject of a mortgagee sale); 2. restraining the defendants from selling or dealing with the Practice; 3. restraining the plaintiffs and the defendants from drawing on a loan referred to as the Shift Loan Facility; 4. restraining the defendants from disparaging the plaintiffs, and also restraining the plaintiffs from disparaging the defendants; 5. requiring the parties to take all steps reasonably necessary to novate from MTPL to LMC certain telecommunications porting arrangements, which I understand to relate to telephone numbers for the Practice; and 6. requiring the plaintiffs to pay the monthly rent of $1,650 payable by LMC in respect of its occupation of the Property into Court. 1. Those orders applied until 5pm on 9 June 2022 and were made upon the plaintiffs giving the usual undertaking as to damages. 2. The matter was listed before me as Equity Duty Judge on 8 June 2022 for hearing of the plaintiffs' application for interim orders in substantially the same terms as those made by the Court on 16 May 2022 for a further period of approximately two weeks. 3. It became clear at the outset of that hearing that the plaintiffs' application was opposed by MTPL, Ms Brentin and Mr Whitehall. Ms Brentin and Mr Whitehall were representing themselves and Mr Whitehall was granted leave to appear for MTPL. There was no appearance by Foxbrentin and no application by any person for leave to appear for Foxbrentin. Solicitors previously acting for Foxbrentin, MTPL and Ms Brentin had filed a notice of intention of ceasing to act on 19 May 2022 and a notice of ceasing to act on 30 May 2022. 4. Receivers appointed to Foxbrentin by Beech Capital were granted leave to appear at the hearing of the plaintiffs' application. The receivers have not (at least at this stage) taken over responsibility for the conduct of Foxbrentin's defence of the proceedings, and counsel for the receivers ultimately made no submissions in relation to the plaintiffs' application. 5. The hearing of the plaintiffs' application that commenced on 8 June 2022 was beset by difficulties on several fronts, which ultimately resulted in the hearing continuing into 9 June and 14 June 2022 and the interim orders made on 16 May 2022 being extended until 5pm on 16 June 2022 to allow time for the hearing to be concluded and for the application to be determined. 6. One of the difficulties was the imprecise manner in which the plaintiffs' submissions framed the serious questions to be tried, in circumstances where the plaintiffs were in default of the Court's orders for filing and service of their Statement of Claim until 13 June 2022. 7. Another difficulty was the second to fourth defendants' failure to file, and inability to provide for filing in Court, the affidavits on which they wished to rely, duly sworn or affirmed and with the annexures referred to in those affidavits properly identified. I adjourned the hearing on 9 June 2022 to permit the second to fourth defendants time to seek the assistance of the Duty Registrar to address those problems before the hearing resumed on 14 June 2022. 8. By the close of the hearing on 14 June 2022, the terms of the interim orders sought by the plaintiffs, as amended during the course of the hearing, were as follows: "1. The Court orders, upon the Plaintiffs giving the usual undertaking as to damages pursuant to s 66 of the Supreme Court Act 1970 (NSW), and r 25.2(1)(c) of the Uniform Civil Procedure Rules 2005 (NSW), until further order, that: a. The First through Fourth Defendants are restrained from approaching, soliciting, contacting or otherwise dealing with clients of the First Plaintiff. b. The First through Fourth Defendants are restrained from holding out to third parties, including but not limited to the clients of the First Plaintiff, that the ownership of the Practice has been transferred to any of the named Defendants, and that the business of the Practice is being carried on by the Third and Fourth Defendants. c. The First through Fourth Defendants are restrained from disparaging the First Plaintiff and Second Plaintiff and/or otherwise damaging the goodwill inherent in the business of the First Plaintiff. d. The First through Fourth Defendants without admission are restrained from selling, transferring, assigning, disposing, leasing, encumbering or otherwise dealing with the Property (as defined in the Summons) or creating any new legal or equitable interest in the Property (without the prior written consent of the Plaintiffs or leave of the Court) noting however, that the parties acknowledge that the Property may be the subject of a mortgagee sale. e. The First through Fourth Defendants are restrained from selling, transferring, assigning, disposing, licensing, encumbering or otherwise dealing with the Practice (as defined in the Summons) or creating any new legal or equitable interest in the Practice. 2. The Court orders that the plaintiffs are restrained until further order from disparaging the First through Fourth Defendants. 3. The orders that are made do not prevent the Third Defendant from accessing the Property, under the supervision of the Second Plaintiff, to retrieve items personal to herself or any child of hers or the Fourth Defendant. … 7. Costs reserved." 1. The plaintiffs, through their counsel, gave to the Court the usual undertaking for damages. 2. As I have already mentioned, those orders were opposed by MTPL, Ms Brentin and Mr Whitehall, and there was no appearance for Foxbrentin. 3. The plaintiffs read the following affidavits in support of their application: 1. the affidavit of Ms Berry sworn on 17 March 2022; 2. the affidavit of Ms Berry sworn on 24 March 2022; 3. the affidavit of Ms Berry sworn on 5 April 2022; and 4. the affidavit of the plaintiffs' solicitor, Mr Justin Drew, sworn on 10 June 2022. 1. The second to fourth defendants relied on the following affidavits and evidence in opposing the plaintiffs' application: 1. an affidavit of Ms Brentin affirmed on 15 May 2022 and filed on 10 June 2022; 2. a bundle of documents purportedly annexed to Ms Brentin's 15 May 2022 affidavit, which was tendered and marked as Exhibit AB-1; 3. an affidavit of Mr Whitehall affirmed on 5 June 2022 (but dated 8 June 2022 on the cover page) that was filed in Court on 8 June 2022; 4. a bundle of documents purportedly annexed to Mr Whitehall's 8 June 2022 affidavit, which was tendered and marked as Exhibit NW-1; 5. an affidavit of Ms Brentin bearing the date 29 April 2022 on the front page, affirmed on an unspecified date and filed on 10 June 2022. Notwithstanding the uncertainty of the date on which this affidavit was affirmed, I will refer to it as Ms Brentin's 29 April 2022 affidavit; and 6. a bundle of documents purportedly annexed to Ms Brentin's 29 April 2022 affidavit, which was tendered and marked as Exhibit AB-2. 1. For the reasons that follow, I have determined that interim orders to the effect sought by the plaintiffs should be made to preserve the status quo pending final determination of these proceedings. Applicable legal principles 1. The general principles governing the grant of interim injunctions are well established: see Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2001] HCA 63, especially at [8]-[13], [18] (Gleeson CJ), [91] (Gummow and Hayne JJ, Gaudron JJ agreeing); Papas v Grave [2013] NSWCA 308 at [83] (Emmett JA, Sackville AJA agreeing). 2. The purpose of an interim injunction is to preserve the status quo until the rights of the parties can be determined at a final hearing or, to adopt the language of Gleeson CJ in Australian Broadcasting Corporation v Lenah Game Meats, supra, to "prevent the practical destruction" of the right in respect of which the plaintiff claims final relief "before there has been an opportunity to have its existence finally established". [1] 3. A plaintiff must establish that: 1. its 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 relief; 2. if the interim injunction is not granted, the plaintiff will suffer irreparable harm for which damages will not be an adequate remedy; and 3. the balance of convenience favours the grant of the interim injunction. 1. As Newnes JA said in Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105 at [87] (McLure P and Corboy J agreeing), the first requirement: "… does not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed. It is sufficient that the plaintiff show a sufficient likelihood of success to justify, in the circumstances, the preservation of the status quo pending the trial. How strong the probability needs to be depends upon the nature of the rights the plaintiff asserts and the practical consequences likely to flow from the orders the plaintiff seeks." 1. The inadequacy of a remedy in damages is often stated as a separate factor to be considered, but it is more accurately assessed as one aspect of the balance of convenience. The Court must determine whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted: Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 622-623. Consideration and determination 1. The evidence adduced by the parties on the hearing of the plaintiffs' interim application, particularly the evidence adduced by the second to fourth defendants, was voluminous. Given the need to determine the application promptly, I have focussed primarily on the salient evidence identified in the parties' respective submissions in determining the application in accordance with the principles set out above. Mr Whitehall made submissions on behalf of himself and MTPL. Ms Brentin, who appeared for herself, adopted the submissions of Mr Whitehall. References to Mr Whitehall's submissions should therefore be understood as references to the submissions of Mr Whitehall, MTPL and Ms Brentin. Serious question to be tried in relation to the Property dispute 1. For the following reasons, the plaintiffs have established a serious question to be tried in the sense referred to at [30]-[31] above in respect of their claims for relief against Foxbrentin in relation to the Property referred to at [10] above. 2. It is common ground that Ms Berry entered into a contract on or about 21 October 2021 to sell the Property to Foxbrentin for $975,000. It is also common ground that the Property had been valued at $660,000 and that the contract included a special condition to the effect that the price payable by Foxbrentin was reduced to $660,000 in certain circumstances. There is a dispute about what those circumstances were. Curiously, although there were two different versions of the contract in evidence, neither version included any special condition reducing the price to $660,000. 3. The version of the contract annexed to Ms Berry's affidavit sworn on 17 March 2022 comprises: 1. the completed and executed cover page and two further pages from the Law Society of New South Wales and Real Estate Institute of New South Wales contract for sale and purchase of land 2019 edition document; 2. an execution page bearing the signatures of Ms Berry and Ms Brentin as the sole director of Foxbrentin; 3. three pages of special conditions in closely typed text with small font (being clauses 32 to 52); and 4. various other attachments including title searches and strata plans. 1. The version of the contract included in Exhibit AB-2 [2] comprises the same completed and executed cover page and two further pages of the 2019 edition contract and the same execution page bearing the signatures of Ms Berry and Ms Brentin as the sole director of Foxbrentin. The version of the contract in Exhibit AB-2 contains only one page of special conditions (being clauses 32 to 39) followed immediately by one page in very different style and font to the special conditions page. That page, which is not included in the version of the contract annexed to Ms Berry's affidavit, relevantly states (my emphasis): "1. Vendor finance a. The vendor has agreed to assist the purchaser in completion of this sale by lending to the purchaser the sum of no more than $475,000.00 on terms that are described in a loan agreement between the Parties which is dated 21 October 2021. b. The Purchaser has agreed to grant the Vendor an equitable interest in the land, in exchange for the funds described at Paragraph 1(a). c. The Purchaser has secured the Vendor's interest in the land by delivering to it, at a time no later than completion of this contract, a registrable mortgage over the property. d. Notwithstanding the Vendors right to register a mortgage protecting its interest in the land, arising pursuant to paragraph 1(c), the Vendors may, at its absolute unfettered discretion, protect its interest in the land by lodging a caveat describing its interest at the Land Registry Services. …" 1. The starkly different text and font of that page, the fact that it does not continue the numbering of either special conditions 32 to 52 in the version of the contract annexed to Ms Berry's 17 March 2022 affidavit or special conditions 32 to 39 in the version of the contract in Exhibit AB-2, and the fact that the page does not bear a heading identifying it is an additional special condition of the contract gives rise to some doubt about whether the page formed part of the contract executed by the vendor and purchaser on or about 21 October 2021. Further doubt arises from the use of the past tense in paragraph 1(c) of the page to describe something that could only occur on completion of the contract for sale of land at a time after it was executed on 21 October 2021. 2. I was not referred to any evidence of the existence of a loan agreement dated 21 October 2021, as described in paragraph 1(a) of the "Vendor finance" page. 3. In her 29 April 2022 affidavit, Ms Brentin deposed Foxbrentin financed its purchase of the Property with a loan from Beech Capital and a loan of $515,000 from Ms Berry, which exceeds the maximum amount of $475,000 referred to in paragraph 1(a) of the "Vendor finance" page. Ms Brentin also deposed that the loan from Ms Berry of $515,000 was advanced to Foxbrentin pursuant to a written loan agreement dated 17 December 2021, being a different date to that identified in paragraph 1(a) of the "Vendor finance" page as the date of the "loan agreement between the Parties". 4. Exhibit AB-2 includes an eight page document entitled "Mortgage Linked Loan Agreement". [3] The document is incomplete. It does not name the mortgagor, mortgagee or guarantor and merely states addresses for each of those un-named parties. The summary schedule on the second page of the document refers to a loan for a term of two years commencing on 17 December 2021 and identifies the Property as the mortgaged property. The summary schedule does not identify the amount of the loan. In the section of the summary schedule entitled "Principal", which is clearly intended to identify the principal amount of the loan, the name and ACN of Foxbrentin has been inserted. The execution page does not name the persons or entities required to execute the document, with the exception of Ms Brentin, whose name has been typed under the words "Sole director" in the middle execution block on the page. Although the words "Sole director" appear on the execution page, no company name appears. The execution page bears no signatures. A photocopied execution page in the same format and bearing a signature appearing or purporting to be Ms Berry's signature, together with two signatures of Ms Brentin, has been included as part of the document in Exhibit AB-2 immediately following the blank execution page. The name and ACN of Foxbrentin has been inserted by hand next to one of Ms Brentin's signatures and the handwritten words "as guarantor" have been inserted near her other signature on that page. The first page of the "Mortgage Linked Loan Agreement" bears the date 21 November 2022, being a future date. Some doubts as to the authenticity of this document arise from the fact that it does not identify the parties or the principal amount and from its future date. 5. For completeness, I note that Ms Brentin's 15 May 2022 affidavit refers to a "Master Deed" or "Master Agreement" that she describes as being dated on or about 18 October 2021. Ms Brentin deposed that the defendants and Ms Berry agreed be bound by the terms of that document in relation to certain matters, including the purchase of the Property. As I understand Mr Whitehall's submissions, the document to which Ms Brentin intended to refer is at pages 117-128 of Exhibit AB-1. The document contains no reference to the Property or any sale of the Property. It will be necessary to say something further about the document in connection with the LMC dispute later in these reasons. 6. Ms Berry has given evidence that Mr Whitehall used LMC's PEXA account to settle the sale of the Property from Ms Berry to Foxbrentin on or about 24 December 2021, without Ms Berry's knowledge or consent. 7. The settlement sheet, which Ms Berry says that Mr Whitehall did not provide to her but which she subsequently obtained, records: "Statement of Settlement Purchase Price $975,000.00 Less Deposit Paid $515,819.19 Balance of Purchase Price $459,180.61 Plus Adjustments $205.20 Plus GST $0.00 Amount due on Settlement $459,386.01 Payment Directions Vendor's Funds LAKE MACQUARIE CONVEYANCING $381,259.86 Loan Payout CBA BUSINESS BANK $78,008.23 PEXA Fees LAKE MACQUARIE CONVEYANCING $117.92 $459,386.01" 1. Ms Berry has given evidence that she received the payment of $381,259.86, and that she understood at the time that this (together with a payment of $146,250 that she had received on 9 December 2021, as referred to later in these reasons) was a payment of part of the purchase price for the Property. Ms Berry has also acknowledged that the $78,008.23 sum referred to in the settlement sheet discharged her existing mortgage over the Property. The payments of $381,259.86 and $78,008.23 were funded by a loan of $565,574 made by Beech Capital to Foxbrentin on or about 24 December 2021 and secured by a mortgage that was registered over the Property immediately after it was transferred to Foxbrentin as part of the settlement allegedly effected by Mr Whitehall without Ms Berry's knowledge or consent. 2. Contrary to Mr Whitehall's submissions, the evidence to which I was referred during the hearing does not establish that, prior to the commencement of these proceedings, Ms Berry denied receiving the monies referred to above. 3. Ms Berry's evidence does not explain why she believed that Foxbrentin had paid instalments of the purchase price for the Property well in advance of the completion date specified in the contract. Both versions of the contract referred to at [36] - [37] above were dated 21 October 2021 and provided for completion 183 days after the date of the contract. Ms Berry has deposed in her affidavits sworn on 17 March 2022 and 24 March 2022 that she did not consent to the transfer of the Property to Foxbrentin without the agreed purchase price, which she understood to be $660,000, having been paid to her in full. 4. It is Ms Berry's evidence that Foxbrentin has not made any further payments to her in respect of the Property after 24 December 2021. The total of the three amounts paid to her that she attributes to the contract for sale of the Property is $605,517.86 (including the sum of $78,008.23 paid to discharge her existing mortgage), being less than the purchase price of $660,000. Moreover, amounts totalling $48,358 have been deducted from LMC's bank account during the period from 9 December 2021 to 3 March 2022 as repayments to Beech Capital in respect of its loan to Foxbrentin and the loan from Lumi Finance Pty Ltd that funded the payment of $146,250 made on 9 December 2021 and referred to later in these reasons. 5. Ms Berry has paid into Court the sum of $527,508.86 (being the total of the $381,259.86 and $146,250 amounts referred to above). Her solicitor has deposed that she is prepared to pay the further sum of $78,008.23 into Court within 14 days. 6. In her 29 April 2022 affidavit, Ms Brentin denies that the Property was transferred to Foxbrentin without Ms Berry's knowledge or consent and says that a Ms McLeish had carriage of the matter within LMC's office and was acting on the instructions of Ms Berry. No evidence was adduced from Ms McLeish at the hearing of the plaintiffs' application on 8, 9 and 14 June 2022. 7. In my opinion, Ms Berry's evidence referred to at [36], [43]-[45], [47] and [48] above establishes that there is a serious question to be tried as to whether Foxbrentin was entitled to be registered as the proprietor of the Property on or about 24 December 2021. The contrary evidence referred to at [37], [38], [40]-[42], [46] and [50] above does not warrant the conclusion that there is no serious question to be tried, having regard to: 1. the features of the "Vendor finance" page referred to above; 2. the inconsistencies between the amount and date of the alleged vendor finance loan referred to in paragraph 1(a) of the "Vendor finance" page on the one hand and in Ms Brentin's 29 April 2022 affidavit on the other hand; and 3. the features of the "Mortgage linked loan agreement" document referred to above. Serious question to be tried in relation to the LMC dispute 1. The plaintiffs have also established a serious question to be tried in the sense referred to at [30]-[31] above in respect of their claims for relief concerning LMC referred to at [13] above. 2. Ms Berry's evidence and pleaded case is to the effect that she entered into a share sale agreement in February 2020 for the sale of all of her shares in LMC to MTPL for $530,000, which was contingent upon MTPL obtaining finance. Despite the time for completion of the agreement being extended, MTPL did not raise the finance and did not proceed with the purchase of the shares. As referred to at [13] above, Ms Berry seeks a declaration that she has avoided that share sale agreement. 3. Ms Berry disputes the authenticity of a share sale agreement dated 8 November 2021, signed only by Ms Brentin (as director of MTPL) and Mr Whitehall, that also provides for the sale of her shares in LMC to MTPL for $530,000. Ms Brentin, Mr Whitehall and MTPL also dispute the authenticity of this document. Each camp explicitly or implicitly alleges that this document was created fraudulently by the other. 4. Mr Whitehall submitted that MTPL does not rely on the February 2020 share sale agreement referred to in Ms Berry's evidence and in the statement of claim. In his submission, that share sale agreement has been frustrated and is no longer binding on anyone. 5. Mr Whitehall's submissions identified the following evidence on which MTPL relies in support of its contention that it is entitled to have all of the shares in LMC immediately transferred to it and its contention that the plaintiffs' claims in relation to the LMC dispute do not raise a serious question to be tried: 1. the "Master Deed" or "Master Agreement" referred to at [42] above; [4] 2. an email from Ms Brentin's email address to Ms Berry sent at 8.31am on 18 October 2021 stating "Draft Deed attached. WILL FINISH THE ANNEXURES TOMORROW" and Ms Berry's reply to Ms Brentin and Mr Whitehall at 8.07am that same day stating: "Nate the deed is great, I think that you have covered all we spoke about"; [5] 3. the undisputed evidence that an amount of $146,250 was paid to Ms Berry on or about 9 December 2021. This payment represented the proceeds of a loan made by Lumi Finance Pty Ltd (Lumi) to LMC pursuant to a loan facility agreement dated 24 November 2021 that named LMC as the borrower and Ms Berry and Ms Brentin as the guarantors. MTPL characterises this as part of its payment for the shares in LMC, notwithstanding that LMC (not MTPL) was the borrower liable to repay the loan and Ms Berry (the alleged vendor of the shares) was named as the guarantor of the loan; and 4. a further payment of approximately $22,000 allegedly paid to Ms Berry prior to March 2022 from the proceeds of a $50,000 loan made pursuant to a facility agreement dated 24 November 2021 between ACN 601 158 507 Pty Ltd trading as Shift Financial (Shift) as lender and LMC as borrower. Ms Berry was named in that facility agreement as guarantor, although it is Ms Brentin's electronic signature that has been affixed to the facility document above Ms Berry's printed name. MTPL characterises this as a further part payment for the shares in LMC, notwithstanding that LMC (not MTPL) was the borrower liable to repay the loan and Ms Berry was named as guarantor. 1. The "Master Deed" or "Master Agreement" names the parties as Ms Berry, Ms Brentin, Mr Whitehall and "TBA Pty Ltd". It is not executed and bears the date "October 2022". Recital A set out in the document states that Ms Brentin, Mr Whitehall and "TBA Pty Ltd" have purchased "all the existing class A shares in Lake Macquarie Conveyancing Pty Ltd … pursuant to a sale of shares agreement completed the October 2021". I note that the ASIC extracts for LMC that are in evidence on this application indicate that LMC's share structure did not include any "class A shares". 2. The document is poorly drafted, including because it uses several capitalised terms that are not defined within the document and appears to use those terms inconsistently. Relevantly for present purposes, Recital B states that the "Share Owners" (presumably, Ms Brentin, Mr Whitehall and "TBA Pty Ltd") have financed the purchase of the shares by pledging the assets and income of LMC to "the Lender". The document does not identify "the Lender". I note that Recital B is not an accurate description of the loan facility agreement referred to above between LMC as borrower and Lumi as lender. 3. Recital C states that the Vendor (presumably, Ms Berry, although she is defined in the document as "the Grantor") will retain the role of licensee in charge of LMC and is obliged to hold office as a director of LMC. 4. Recital D states that finance facilities offered to "the Shareholders" (presumably, Ms Brentin, Mr Whitehall and "TBA Pty Ltd") require all officeholders of "the company" to provide guarantees in respect of the funds borrowed by "the Registered Share Holders" (noting that Ms Brentin, Mr Whitehall and "TBA Pty Ltd" are defined jointly and severally as "The Grantee" or "The Registered Share Owner"). Recital D further states that: "Director of LMC, was obliged to guarantee the purchasers performance in respect of a loan, or a series of loan agreements between the Purchasers and their Finance facilitators." As referred to above, "the Purchasers" were not the borrowers under the Lumi loan facility or the Shift loan facility. The named borrower was LMC. 5. Recital E states: "The Vendor has agreed to provide her guarantee to the Finance Facilitator(s), subject to the Purchasers performance of the obligations described by the provisions of this Deed." 6. Clause 2(a) of the "Master Deed" or "Master Agreement" provides: "The Grantor will guarantee the performance of a series of loan facilities advanced to the Grantee's by the Lenders who are listed at Schedule A to this Deed …". There is no Schedule A attached to the document. Again, LMC (not MTPL, Ms Brentin or Mr Whitehall) was named as the borrower under the Lumi loan facility and the Shift loan facility. 7. Ms Brentin's 29 April 2022 affidavit refers to the "Master Deed" or "Master Agreement" as one of a "Series of Agreements of October 18th 2021" pursuant to which she says that Ms Berry agreed to transfer her 10 ordinary shares in LMC to MTPL in consideration for $530,000 payable in two instalments, with the transfer to occur on payment of the first instalment. The other documents said to comprise the "Series of Agreements" are described in only the most vague terms in paragraph 17 of Ms Brentin's 29 April 2022 affidavit and Mr Whitehall's submissions did not identify those documents. The "Master Deed" does not contain any operative provision requiring Ms Berry to transfer any of her shares in LMC to Ms Brentin, Mr Whitehall or "TBA Pty Limited". Nor does it make provision for any payment of $530,000 to Ms Berry, in instalments or otherwise. Mr Whitehall's submissions relied solely on Recital A of the "Master Deed" as evidence supporting MTPL's contention that Ms Berry's shares in LMC had already been transferred to it prior to the date of the "Master Deed". Noting that the defendants contend that they agreed with Ms Berry to be bound by the "Master Deed" on or about 18 October 2021, that submission is inconsistent with their contention that MTPL became entitled to have the LMC shares transferred to it upon payment of the $146,250 to Ms Berry on 9 December 2021. 8. As I have already mentioned, the "Master Deed" or "Master Agreement" is not executed. MTPL, Mr Whitehall and Ms Brentin rely on the 18 October 2021 email exchange referred to at [56] above as evidencing that Ms Berry was bound by the terms of the "Master Deed" or "Master Agreement". The draft deed attached to those emails was not in evidence. The emails refer to the attachment as a draft. As I have already noted, the "Master Deed" or "Master Agreement" contains no operative provision for the transfer of the LMC shares to Ms Brentin, Mr Whitehall of "TBA Pty Limited" or to MTPL (which is not even named as a party to the document). 9. As I have referred to earlier in these reasons, Ms Berry acknowledges receiving the payment of $146,250 on or about 9 December 2021. She has deposed that, at the time, she believed this was part of the purchase price payable by Foxbrentin for the Property. Ms Berry has given evidence that she did not sign or authorise her electronic signature to be used to sign the loan agreement between Lumi and LMC or the guarantee and she did not know that the Lumi loan was a loan to LMC with a personal guarantee from her. Ms Berry has also deposed that she did not establish and did not use the email account through which correspondence was conducted concerning the establishment of the Lumi loan facility and the electronic signing of the loan facility documents. It is Ms Berry's evidence that she discovered the existence of that email account for the first time on 4 April 2022. 10. The Shift loan facility agreement, a copy of which was annexed to Ms Berry's affidavit sworn on 17 March 2022, names LMC as borrower and Ms Berry as guarantor. The facility agreement contains execution clauses for Ms Berry to sign as director of LMC and as guarantor. However, Ms Brentin's electronic "docusign" signature appears in both of those places above Ms Berry's typed name. Ms Brentin's electronic "docusign" signature also appears on a direct debit request form attached to the facility agreement requesting and authorising Shift to debit LMC's bank account with any amounts that Shift deems payable by LMC. Ms Berry denies having caused LMC to enter into the Shift loan facility agreement and denies having done so herself as guarantor. Ms Berry also denies having had any knowledge prior to 9 March 2022 that the borrower and guarantor under the Shift loan facility were LMC and herself. 11. In her 29 April 2022 affidavit, Ms Brentin denies that the Lumi loan facility and guarantee and the Shift loan facility were entered into without Ms Berry's knowledge and consent. Ms Brentin has deposed that "I have had hundreds of conversations with Berry in respect of all 3 of the loan facilities", referring to the Lumi loan facility, the Shift loan facility and a third loan facility which ultimately did not proceed. Mr Whitehall's submissions also emphasised what was described as hundreds of emails, text messages and communications that demonstrated that Ms Berry knew all about the Lumi and Shift loan facilities and had encouraged Ms Brentin and Mr Whitehall to proceed with them. The communications to which Mr Whitehall referred in his submissions do indicate that Ms Berry was aware that Ms Brentin and Mr Whitehall were in negotiations with financiers, including Lumi and Shift. However, none of those communications support the contention that Ms Berry knew that LMC was the borrower or that she was the borrower or guarantor under those loan facilities. As I have already mentioned, the "Master Deed" that the defendants say they sent to Ms Berry on 18 October 2021 described the purchasers of the LMC shares as the borrowers. 12. In summary, MTPL does not claim to be entitled to the LMC shares pursuant to the February 2020 share sale agreement. Recital A to the unexecuted "Master Deed" or "Master Agreement" relied on in Mr Whitehall's submissions does not refer to any transfer of LMC shares to MTPL and the document contains no operative provision for any such transfer. Mr Whitehall's submissions did not refer the Court to any evidence of any other document comprising or included in the "Series of Agreements" referred to in Ms Brentin's 29 April 2022 affidavit. The payments that the defendants characterise as instalments of the $530,000 purchase price for the LMC shares were not made by MTPL or by any defendant. Those payments were funds drawn down from loan facilities that named LMC as the borrower and Ms Berry as guarantor. For those reasons, the plaintiffs' claim for a declaration that Ms Berry is the owner of all of the shares in LMC raises a serious question to be tried. The evidence presently before the Court reveals a strong prima facie case for a declaration to that effect. Balance of convenience 1. On the basis of their contentions that Foxbrentin is the owner of the Property and MTPL is the equitable owner of the shares in LMC, Mr Whitehall and Ms Brentin took steps in March 2022 to occupy the Property and control the Practice, excluding Ms Berry. Ms Berry has given evidence that Mr Whitehall entered LMC's office after business hours on 12 March 2022 and wrote to her on 13 March 2022 advising that he had taken possession of the Property. On 14 March 2022, Ms Berry attended the LMC office and saw signs reading "mortgagee in possession" in the office windows. Ms Berry has also given evidence that Mr Whitehall caused LMC's telephone calls to be diverted to his mobile telephone from about 16 March 2022 and informed LMC clients that he (Mr Whitehall) was the new owner of the Practice and that Ms Berry was "a lying shonky bitch". In an email sent to Ms Berry on 17 March 2022, Mr Whitehall stated that: "As the Registered Proprietors of the land and as the equitable holders of the Class A shares in LMC", he and Ms Brentin had "found ourselves obliged to protect the value of our assets". 2. During the course of his submissions, Mr Whitehall freely admitted that he had disparaged Ms Berry to clients and prospective clients of LMC before the Court made interim orders restraining him from doing so. He complained that Ms Berry had also disparaged him and Ms Brentin. Ms Berry holds grave concerns about the damage that has been done and will continue to be done to LMC's business and reputation as a result of Mr Whitehall disparaging her and holding himself out as the proprietor of the Practice pending the final determination of these proceedings if the Court does not make the interim orders now sought by the plaintiffs. 3. Mr Whitehall's submissions and his affidavit affirmed on 8 June 2022 make it very clear that he and Ms Brentin intend to take steps to resume control of the Practice and use the revenue and profits of the Practice to repay the Lumi and Shift loans if they are not restrained from doing so. Indeed, their inability to reap the revenue from the Practice in order to repay these loans was central to his submission that the present interim orders that the plaintiffs essentially seek to continue are causing such hardship to him and to Ms Brentin and MTPL that the balance of convenience weighs against continuing that regime. In aid of that contention, Mr Whitehall submitted that it was "normal" for the purchaser of a business to "use" the revenue of the business being acquired in order to obtain finance for the purchase and repay the lender, and that Ms Berry had "taken" the money that the defendants had paid yet wanted to "keep" the Property and the LMC shares. 4. I reject those submissions. What Mr Whitehall refers to as the purchase of a business was structured in the present case as a proposed purchase by MTPL of the shares in LMC. I do not accept that it is "normal" for the purchaser of shares in a company to fund that purchase by loans taken out in the name of that company and guaranteed by the vendor of the shares. Moneys drawn from the Lumi loan facility and Shift loan facility and transferred to LMC or Ms Berry were not in truth paid by MTPL, Ms Brentin or Mr Whitehall. Ms Berry has not "taken" those moneys but has paid them into Court, as referred to at [49] above. 5. In circumstances where Foxbrentin did not appear at the hearing of the plaintiffs' application, no submissions were made in relation to inconvenience or injury to Foxbrentin if the Court makes the interim orders sought by the plaintiffs. I do note, however, that Beech Capital has appointed receivers to Foxbrentin. 6. As referred to at [49] above, the moneys that Ms Berry has paid into Court include the moneys paid to her out of the proceeds of the Beech Capital loan save for the sum of $78,008.23 which was paid to directly to her mortgagee. There is evidence that Ms Berry is prepared to pay that additional sum of $78,008.23 into Court within 14 days. Mr Whitehall's submissions complained that this had come about because he and Ms Brentin had been prevented from servicing the Beech Capital loan out of the revenue of LMC. 7. Ms Berry has given evidence to the effect Mr Whitehall and Ms Brentin informed her solicitor on or about 17 March 2022 that they intend to refinance or sell the Property as soon as possible. 8. In my opinion, the balance of convenience strongly favours interim orders substantially in the terms sought by the plaintiffs as set out at [22] above. If the orders are not made, the first to fourth defendants will proceed to deal with the LMC shares, the Practice and the Property according to what they consider to be in their own best interests, including holding themselves out as the proprietors of the Practice, potentially selling or otherwise dealing with the Practice, and selling or further encumbering the Property. That will occur in circumstances where, taking the defendants' own evidence at its highest, they have not paid Ms Berry the whole of the purchase price that they agreed to pay for the Property, their ability to pay the balance (assuming that the contract remains on foot) is highly questionable having regard to their inability to raise finance for the whole of the $660,000 purchase price for the Property, and they (as opposed to LMC) have not made any payment to Ms Berry at all in respect of the LMC shares. It is most unlikely that damages would be an adequate remedy for the plaintiffs if their claims in these proceedings succeeded but the defendants had operated or purported to operate or dispose of the Practice and/or disposed of or dealt with the Property in the meantime. Continued disparagement of Ms Berry of the kind referred to above would adversely affect the value of the Practice and, indirectly, the value of the LMC shares in her hands if she is found to be the owner of those shares. The defendants who struggled to raise finance for the acquisitions they claim to have made are unlikely to have the capacity to pay damages. Thus, if the Court does not make interim orders of the kind sought by the plaintiffs, Ms Berry will effectively be deprived of the benefit of any success that she may ultimately achieve at final hearing. 9. I do not regard this injustice to the plaintiffs as being outweighed by any detriment to the first to fourth defendants that may flow from their inability to operate or purportedly operate the Practice and use the revenue thereby generated to service and repay the loans secured against the Property, the Lumi loan and the Shift loan in circumstances where they have not paid anything to acquire the Practice or the shares in LMC. 10. Having regard to the plaintiffs' delay in filing and serving their statement of claim prior to 15 June 2022, it is appropriate to record the undertaking given to the Court by the plaintiffs that they will take all reasonable steps to prosecute the proceedings expeditiously. That undertaking is relevant to the balance of convenience in that it ameliorates the risk of the proceedings being prolonged by any further unwarranted delay on the part of the plaintiffs. 11. The interim orders made on 16 May 2022 require Ms Berry and LMC to ensure that $1,650 per month is paid into Court in respect of rent for the Property. That order was made with the consent of the plaintiffs on 16 May 2022. At the hearing on 14 June 2022, counsel for the plaintiffs informed the Court (and the defendants) for the first time that they neither sought nor consented to a continuation of that order on the basis that there was no evidence of any current lease of the Property pursuant to which LMC was obliged to pay rent to the owner of the Property. However, there is evidence of payment of rent by LMC to Ms Berry in varying amounts over many years. If there is indeed no current written lease, the pattern suggests that LMC may be holding over following the expiry of the term of a previous lease. I consider that the balance of convenience requires the order to be continued. The order will contribute to the preservation of the status quo in that some rent will continue to be paid by LMC and money paid into Court will be available to the party ultimately found to be the owner of the Property. Conclusion and orders 1. For all of the foregoing reasons, the orders of the Court are as follows: 1. Upon the Plaintiffs giving the usual undertaking as to damages and further undertaking to take all reasonable steps to prosecute the proceedings expeditiously, the Court orders that, until further order, the first to fourth defendants are restrained from: 1. approaching, soliciting, contacting or otherwise dealing with clients of the first plaintiff; 2. holding out to third parties, including but not limited to clients of the first plaintiff, that the ownership of the conveyancing practice operated by the first plaintiff under a corporation conveyancing licence issued by the NSW Department of Fair Trading (the Practice) has been transferred to any of the first to fourth defendants or that the business of the Practice is being carried on by the third and/or fourth defendants; 3. disparaging the first plaintiff and/or second plaintiff and/or otherwise damaging the goodwill inherent in the business of the first plaintiff; 4. selling, transferring, assigning, disposing, leasing, encumbering or otherwise dealing with the property located at Suites 2 and 3, 635 Pacific Highway, Belmont, New South Wales, being the property in certificate of title folio identifier 23/SP79789 (the Property) or creating any new legal or equitable interest in the Property, without the prior written consent of the plaintiffs or leave of the Court (noting however, that the parties acknowledge that the Property may be the subject of a mortgagee sale); and 5. selling, transferring, assigning, disposing, licensing encumbering or otherwise dealing with the Practice or creating any new legal or equitable interest in the Practice. 1. The Court orders that the plaintiffs are restrained, until further order, from disparaging the first through fourth defendants. 2. The Court orders that, until further order, the plaintiffs must procure that the sum of $1,650 per month is paid into Court on the last Friday of each month in respect of the rent for the first plaintiff's occupation of the Property. 3. The Court notes that these orders do not prevent the third defendant from accessing the Property, under the supervision of the second plaintiff, to retrieve items personal to herself or any child of hers or the fourth defendant. 4. Costs reserved. ********** Endnotes 1. (2001) 208 CLR 199; [2001] HCA 63 at [12]. 2. Exhibit AB-2, pp 108-113. 3. Exhibit AB-2, pp 135-143. 4. Exhibit AB-2, pp 117-128. 5. Exhibit AB-1, p 131. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 June 2022