Supreme Court New South Wales Medium Neutral Citation: Oxford (NSW) Pty Ltd v KR Properties Global Pty Ltd [2024] NSWSC 613 Hearing dates: 21 May 2024 Date of orders: 22 May 2024 Decision date: 22 May 2024 Jurisdiction: Equity - Duty List Before: Williams J Decision: Freezing orders discharged. Catchwords: FREEZING ORDERS – no question of principle Legislation Cited: Civil Procedure Act 2005 (NSW) s 56 Design and Building Practitioners Act 2020 (NSW) s 37 Uniform Civil Procedure Rules 2005 (NSW) rr 25.11, 25.14(1)(a)(i) and (4)(b)(i) Cases Cited: Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18 Finn v Carelli [2007] NSWSC 261 Frigo v Culhaci [1998] NSWCA 88 Oxford (NSW) Pty Ltd v KR Properties Global Pty Ltd trading as AK Properties Group ABN 62 971 068 965 [2023] NSWSC 343 Oxford (NSW) Pty Ltd v KR Properties Global Pty Ltd trading as AK Properties Group ABN 62 971 068 965 (No 2) [2023] NSWSC 680 Oxford (NSW) Pty Ltd v KR Properties Global Pty Ltd trading as AK Properties Group ABN 62 971 068 965 (No 3) [2023] NSWSC 881 Samimi v Seyedabadi [2013] NSWCA 279 Singtel Optus Pty Ltd v Almad Pty Ltd [2011] NSWSC 492 Tagget v Sexton (2009) 255 ALR 522; [2009] NSWCA 91 Texts Cited: N/A Category: Procedural rulings Parties: Oxford (NSW) Pty Ltd (Plaintiff/First Cross Defendant) KR Properties Global Pty Ltd trading as AK Properties Group ABN 62 971 068 965 (First Defendant/First Cross Claimant/First Applicant) AS Coaching Pty Ltd atf Calm Properties Unit Trust ABN 19 756 796 114 trading as AK Properties Group ABN 62 971 068 965 (Second Defendant/Second Cross Claimant/Second Applicant) Elankeeren Eswaran (Third Defendant/Third Cross Claimant) Ashay Sharma (Fourth Defendant/Fourth Cross Claimant) Pierre Kazzi (Second Cross Defendant/Respondent) Representation: Counsel: Mr Jacob Horowitz (First and Second Applicants) Ms S Scott (Respondent) Solicitors: Horowitz & Bilinsky (First and Second Applicants) Fortis Law (Respondent) File Number(s): 2020/00007703 Publication restriction: N/A Judgment 1. These reasons for judgment concern an application made by the first and second defendants, who are also the cross-claimants, in these proceedings by notice of motion filed on 14 May 2024 for a freezing order against the second cross-defendant. 2. Freezing orders were made by Richmond J as Duty Judge at an ex parte hearing on 14 May 2024 on the basis that the matter was re-listed before me as Duty Judge on 21 May 2024 after the service of the motion and supporting affidavits on the second cross-defendant. 3. At the hearing before me, the first and second defendants/cross-claimants read an affidavit of Liam Carney sworn on 14 May 2024, together with the documents exhibited to that affidavit and certain other documents that were tendered. In opposing the continuation of the freezing orders, the second cross-defendant read an affidavit of Mr Petar Jakimov sworn on 21 May 2024. Mr Carney and Mr Jakimov are solicitors employed by the solicitors on the record for the first and second defendants/cross-claimants and the second cross-defendant respectively. The second cross-defendant also read his own affidavit sworn on 21 May 2024 pursuant to disclosure orders that were made on 14 May 2024 ancillary to the freezing order made on that occasion. 4. The following account of the facts relevant to the application for the freezing orders to be continued is drawn from the affidavits and other evidence referred to immediately above. 5. The plaintiff in these proceedings is a builder who contracted with the first and second defendants/cross-claimants to construct a six-unit apartment building on land in Gerringong owned by the first and second defendants/cross-claimants. It is convenient to refer to the plaintiff as the Builder and the first and second defendants/cross-claimants as the Owners. 6. The Builder commenced the proceedings in 2020 to recover amounts said to be owing by the Owners in respect of unpaid invoices issued by the Builder under the building contract. 7. The Owners cross-claimed against the Builder and certain other parties, including Mr Pierre Kazzi, who is the sole director and shareholder of the Builder. The Owners' cross-claim against the Builder concerned allegedly incomplete works and allegedly defective works. The Owners' cross-claim against Mr Kazzi concerned the same allegedly defective works, and was framed as a claim under s 37 of the Design and Building Practitioners Act 2020 (NSW). 8. On 3 September 2021, Mr Kazzi, without admissions and upon the Owners giving the usual undertaking as to damages, gave an undertaking to the Court that he would not remove from Australia, dispose of, deal with or diminish the value of any of his Australian assets up to the value of $1,250,000, without providing at least 14 days' prior written notice to the Owners' solicitor. The terms of the undertaking expressly provided that it did not prohibit Mr Kazzi from paying his ordinary living expenses, paying his legal expenses, dealing with or disposing of any of his assets in the ordinary and proper course of his business, including paying business expenses bona fide and properly incurred, or dealing with or disposing of any of his assets in discharging his obligations bona fide and properly incurred under a contract entered into before he gave the undertaking to the Court. Thus, the undertaking does not require Mr Kazzi to give prior notice to the Owners' solicitors in respect of any transaction that falls within those express exceptions. 9. At the time that he gave that undertaking to the Court, Mr Kazzi was the registered proprietor of land at Gerringong, which is adjacent to the land on which the Builder was contracted to construct the six-unit apartment building. Mr Kazzi was constructing a five-unit apartment building on that land. He had entered into contracts to sell four of those five units off the plan. Mr Kazzi subsequently transferred those four units to the purchasers, as he was entitled to do under the terms of the undertaking. Mr Kazzi remained the registered proprietor of the fifth unit, which is known as Unit 2. 10. The proceedings were heard before Stevenson J in February 2023. 11. While judgment was reserved, the Court made orders on 17 March 2023 on the application of the Owners requiring Mr Kazzi to serve on the Owners an affidavit setting out all of his assets and their value, and setting out how the proceeds of sale of the four units had been applied. 12. Mr Kazzi swore an affidavit on 24 March 2023, which was served on the Owners that day. Mr Kazzi deposed that he owned Unit 2 in the five-unit development to which I have referred above, which he estimated had a value of $1,125,000 subject to a mortgage in favour of Perpetual Corporate Trust Limited securing an indebtedness of $807,820. Mr Kazzi also deposed that he owned shares in fourteen companies, including the Builder, with a "nominal value" of $1,101,099 based on the paid up share capital of each company. Mr Kazzi deposed that the Builder had a paid up share capital of $1,100,001. Mr Kazzi deposed that he believed that his share portfolio had a value exceeding the "nominal value" because "a number of those companies are trading and have business activity in them". Mr Kazzi did not give any further evidence that identified which of the fourteen companies he was referring to as "trading" and having "business activity" as at 24 March 2023. Nor did the affidavit disclose any basis for Mr Kazzi's assessment that any such trading or business activity had resulted in any of those fourteen companies having a value in excess of its paid up share capital. Between nine and twelve months after Mr Kazzi swore that affidavit, two of the fourteen companies were deregistered and the Builder was placed into liquidation on 8 March 2024. The liquidator issued a report to creditors on 28 March 2024 which recorded that Mr Kazzi had advised him that the Builder had ceased trading approximately one year prior to liquidation – that is, in about March 2023. 13. Mr Kazzi annexed to his 24 March 2023 affidavit copies of the statements of adjustment between the vendor and purchaser for each of the four units that he had sold in the five-unit development, and the payment directions issued to each purchaser. 14. Between 27 March 2023 and 29 March 2023, the Owners' solicitors corresponded with Mr Kazzi's solicitors seeking certain further information that they contended had not been disclosed in Mr Kazzi's 24 March 2023 affidavit and was required by the orders made on 17 March 2023. Some of that information was forthcoming, and Mr Kazzi declined to provide the balance of the material requested by the Owners. The Owners took no further action after 29 March 2023 in relation to their complaints about the adequacy of Mr Kazzi's disclosure to comply with the orders made on 17 March 2023. The Owners' solicitors did not raise any continuing or additional complaints with Mr Kazzi's solicitors, and the Owners did not seek to have the matter relisted before the Court. 15. Stevenson J published reasons for judgment on 6 April 2023: [2023] NSWSC 343. Those reasons indicated that the Owners' cross-claim against Mr Kazzi had failed. However, his Honour delivered further reasons for judgment on 21 June 2023 and 28 July 2023 addressing contentions by the Owners that his Honour had omitted to address certain issues raised at trial: [2023] NSWSC 680; [2023] NSWSC 881. For the reasons explained in those judgments, the Owners' cross-claim against Mr Kazzi succeeded, albeit for less than the full amount claimed. His Honour made final orders on 15 August 2023 dismissing the Builder's statement of claim, entering judgment for the Owners on their cross-claim against the Builder in the sum of $1,308,056 and entering judgment for the Owners on their cross-claim against Mr Kazzi in the sum of $277,579. His Honour also made orders in relation to the costs of the proceedings, including an order requiring Mr Kazzi to pay the Owners' costs of their cross-claim against him. 16. No order was made expressly addressing the undertaking that Mr Kazzi had given on 3 September 2021. As counsel for Mr Kazzi submitted at the hearing of the present application before me, it is doubtful that the undertaking subsisted following the final determination of the proceedings. At the ex parte hearing before Richmond J on 14 May 2024, counsel for the Owners very properly drew his Honour's attention to the availability of a reasonable argument that the undertaking was interlocutory in nature and did not continue to apply once the final judgments and costs orders had been entered on 15 August 2023. At the hearing before me, counsel for the Owners did not seek to persuade me that the undertaking continued to apply after 15 August 2023. Nor did the Owners seek to establish on the balance of probabilities that Mr Kazzi had breached that undertaking, before or after 15 August 2023. 17. In any event, the Owners knew when the judgment and costs order were entered against Mr Kazzi on 15 August 2023 that Mr Kazzi had sold four of the units in his five-unit development, and that his title to the remaining Unit 2 was subject to a mortgage securing an indebtedness of approximately $807,000. In other words, the Owners knew that Mr Kazzi had approximately $400,000 equity in Unit 2, in addition to whatever might be the value of his shares in the fourteen companies disclosed in his 24 March 2023 affidavit. The Owners had no reasonable basis for believing that those shares were of any material value. No reasonable person in the Owners position would have attached any weight to Mr Kazzi's belief that his shares in those companies were worth more than the paid up share capital, in the absence of any evidence of the basis of that belief and in circumstances where Stevenson J had entered judgment in the sum of $1,308,056 against one of those companies – the Builder. The Owners took no steps to clarify whether Mr Kazzi's 3 September 2021 undertaking continued to bind him pending the execution of the judgment and costs order against him. Nor did the Owners make any application to Stevenson J for a freezing order pending execution of that judgment and enforcement of the costs order. 18. At that time, the Owners were in possession of bank statements provided by Mr Kazzi's solicitors to the Owners' solicitors between 27 and 29 March 2023 for an account held by Mr Kazzi with National Australia Bank. Those statements recorded a payment of $470,218 into Mr Kazzi's account on 1 March 2022, and the payment out of almost the whole of that sum in a series of transactions between 1 March and 21 March 2023, leaving the account with a balance of approximately $2,000. At the hearing before me on 21 May 2024, counsel for the Owners asked me to infer that the $470,218 represents the net proceeds of a refinancing of Mr Kazzi's Gerringong property to discharge the mortgage over the whole of the property to facilitate completion of Mr Kazzi's sale of four of the units, and the registration of the new mortgage over Unit 2 to secure the debt of $807,000 disclosed in Mr Kazzi's 24 March 2023 affidavit. Counsel for the Owners also invited me to infer that the transactions by which the $470,218 sum was paid out of Mr Kazzi's account were predominantly payments to PK Roofing and Building Services Pty Ltd – a company of which Mr Kazzi is a director, in which he owns shares through another entity – and that those transactions were not bona fide payments made in the ordinary and proper course of business. I do not consider that the evidence before me provides a sufficient basis to draw the second inference on the balance of probabilities. Any such inference would be speculative. In any event, as I have already noted, the Owners did not make any freezing order or other application relying on those bank statements at the time. 19. The Owners did change solicitors, and began taking steps to enforce the judgment entered on 15 August 2023 against Mr Kazzi in the sum of $277,579. 20. George Germanos of Domain Legal, who had been the solicitor on the record for the Owners from the commencement of the proceedings, ceased acting on 1 September 2023 and Horowitz & Bilinsky commenced acting for the Owners from that date. Fortis Law have been acting for Mr Kazzi at all relevant times, and continue to act for Mr Kazzi. Fortis Law also act for the Builder. 21. On 12 September 2023, the Owners obtained a garnishee order in respect of the rent collected from Unit 2 to the value of the judgment sum of $277,579 plus interest. 22. On 13 September 2023, the Owners obtained a writ that was registered against the title to Unit 2. At the hearing before me on 21 May 2024, counsel for the Owners informed the Court that the writ was issued in respect of the substantive judgment entered in their favour against Mr Kazzi in the sum of $277,579. 23. On 15 November 2023, Mr Kazzi filed an appeal against the judgment and costs order against him in favour of the Owners. 24. On 29 November 2023, the Owners filed a cross-appeal seeking an order setting aside the judgment entered in their favour against Mr Kazzi in the sum of $277,579, and entering in lieu thereof judgment against Mr Kazzi in their favour in the sum of $918,545. 25. On 16 February 2024, Mr Pierre Safi of Fortis Law informed Mr Carney of Horowitz & Bilinsky that Mr Kazzi had listed Unit 2 for sale. This gave rise to discussions between the solicitors about a potential settlement of all matters between the Owners on the one hand, and the Builder and Mr Kazzi on the other hand, including the judgments and costs orders entered against the Builder and Mr Kazzi on 15 August 2023, the appeal and cross-appeal, and the winding up proceedings that the Owners had commenced against the Builder on 20 December 2023. 26. In the course of those discussions, the Owners made an offer to Mr Kazzi on 21 February 2024 that they would agree not to issue him with a bankruptcy notice pending determination of the appeal if: (1) Mr Kazzi confirmed by producing a current loan statement that the current amount secured by the registered mortgage on Unit 2 was not more than $800,000; (2) Mr Kazzi granted the Owners a second mortgage over Unit 2 to secure monies owing under the judgment and costs order entered against Mr Kazzi on 15 August 2023; (3) Mr Kazzi acknowledged that the Owners may lodge a caveat over Unit 2 to secure that second mortgage; (4) Mr Kazzi (or the borrower under the loan secured by the registered first mortgage) would not be permitted to redraw or increase the principal amount owing to the first mortgagee; (5) Mr Kazzi would pay all interest and other fees accruing on or charged in respect of the loan secured by the first mortgage; and (6) Mr Kazzi and/or the borrower under that loan would provide an irrevocable authority to the first mortgagee for the Owners to obtain financial information from the first mortgage in relation to the loan and mortgage over Unit 2. 27. On 22 February 2024, Mr Kazzi's solicitors advised the Owners' solicitors that Mr Kazzi was prepared to accept terms (1) to (5) of their offer, but rejected (6). 28. No agreement was concluded and, on 26 February 2024, the Owners served a bankruptcy notice on Mr Kazzi for the judgment sum of $277,579, less the amount of rent paid to the Owners pursuant to the garnishee order up to the date of the bankruptcy notice. 29. On 12 March 2024, Mr Kazzi filed an application in the Federal Court of Australia for an extension of time for compliance with the bankruptcy notice. An affidavit sworn by Mr Jakimov in support of Mr Kazzi's application confirmed that Mr Kazzi had caused Unit 2 to be listed for sale, and the mortgage registered against the title to Unit 2. According to Mr Jakimov's affidavit, the amount of the debt then secured by that mortgage was $813,299. 30. On 28 March 2024, Judicial Registrar Birchall made orders extending the time for Mr Kazzi to comply with the bankruptcy notice to the date that is 7 days following the date of judgment of the Court of Appeal in the appeal proceedings, on the condition that Mr Kazzi deposit or cause to be deposited into Horowitz & Bilinsky's trust account the sum of $278,023 to be held by those solicitors pending the outcome of the appeal proceedings and to abide further order of the Federal Court. As I understand it, the sum of $278,023 represents the judgment sum entered in favour of the Owners against Mr Kazzi in the proceedings in this Court on 15 August 2023, plus interest to date, less the total sum paid to the Owners pursuant to the garnishee order to which I have referred above. The amount does not take into account Mr Kazzi's liability in respect of the costs order entered against him on 15 August 2023. No steps have been taken to assess those costs in circumstances where appeal proceedings are on foot. 31. On 9 April 2024, Mr Kazzi complied with the condition of the extension of time for compliance with the bankruptcy notice by paying the specified sum into Horowitz & Bilinsky's trust account. At the hearing before me on 21 May 2024, the Owners conceded that this payment means that there is no danger that they will be unable to enforce the substantive judgment entered against Mr Kazzi in their favour on 15 August 2023, and they can no longer enforce the writ registered against the title to Unit 2. 32. Mr Kazzi's appeal, and the Owners' cross-appeal, were heard on 24 April 2024. The Court of Appeal has reserved judgment. 33. On 10 May 2024, the Owners' solicitors discovered through a notice on realestate.com.au that Mr Kazzi appears to have sold Unit 2 on 1 May 2024. At the hearing before me, counsel for the Owners informed the Court that Mr Kazzi's solicitors have advised the Owners' solicitors that the sale is due to complete on 6 June 2024. 34. On 14 May 2024, the Owners filed a notice of motion in these proceedings seeking freezing orders against Mr Kazzi requiring him to pay the net proceeds of sale of Unit 2 into Horowitz & Bilinsky's trust account immediately upon completion of the sale, to be held in that account pending further order. On the basis of Mr Kazzi's affidavit sworn on 21 May 2024, the sale price or value of Unit 2 is $1,375,000. On the basis of the evidence to which I have referred above concerning the amount secured by the mortgage registered against the title to Unit 2, the net sale proceeds, after allowing for adjustments on settlement and the costs of the sale, are likely to be in the order of between about $500,000 and $550,000. Mr Kazzi's affidavit sworn on 21 May 2024 does not disclose any assets other than his equity in Unit 2, funds of $201 in an account with the National Australia Bank, and shares in eleven companies with a total paid up share capital of approximately $997. 35. As I have already mentioned, the Duty Judge made the freezing orders at an ex parte hearing on 14 May 2024, and listed the application for further hearing on 21 May 2024. The matter came before me as Duty Judge in those circumstances. It is for the Owners to persuade the Court that the freezing orders should be continued. Mr Kazzi opposes the continuation of the orders. 36. Counsel for the Owners submitted that the freezing orders should be continued on the basis that there is otherwise a risk that: 1. the costs order entered against Mr Kazzi on 15 August 2023 will be wholly or partly unsatisfied; and/or 2. a prospective judgment in favour of the Owners on their cross-appeal against Mr Kazzi – in respect of which the Owners submitted that they have a good arguable case – will be wholly or partly unsatisfied, by Mr Kazzi disposing of or dealing with or otherwise diminishing the value of his assets. 1. For the reasons I have already explained, the Owners do not contend that there is a risk that the judgment entered in their favour on 15 August 2023 in the sum of $277,579 will be wholly or partly unsatisfied. 2. I will address the application insofar as it concerns the costs order entered on 15 August 2023, before turning to the application insofar as it concerns a prospective judgment in the appeal proceedings in respect of which the Court of Appeal has reserved judgment. 3. The Owners must establish by evidence, rather than by assertion, that there is a danger that the costs order will be wholly or partly unsatisfied by Mr Kazzi disposing of or dealing with or otherwise diminishing the value of his assets. The evidence may take a number of forms, including direct evidence that Mr Kazzi has previously acted in a way which shows that his probity is not to be relied on. However, it is not necessary for the Owners to show that Mr Kazzi has a positive intention of evading a judgment. It would be sufficient for the Owners to prove conduct or proposed conduct of Mr Kazzi that is, objectively speaking, calculated to have the effect of frustrating the enforcement of the costs order: Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 25.11, r 25.14(1)(a)(i) and (4)(b)(i); Samimi v Seyedabadi [2013] NSWCA 279 at [64] and [72]-[74] per McColl JA, citing Frigo v Culhaci [1998] NSWCA 88 at pages 6 and 8 per Mason P, Sheller JA, Sheppard AJA and Finn v Carelli [2007] NSWSC 261 at [4] per Brereton J (as his Honour then was). 4. Assuming that the requisite danger is established, discretionary considerations must also be taken into account, including whether the Owners have proceeded diligently and expeditiously in applying for the freezing order: Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18 at [53] per Gaudron, McHugh, Gummow and Callinan JJ. 5. As the Court of Appeal said in Frigo v Culhaci [1998] NSWCA 88 at page 6 per Mason P, Sheller JA, Sheppard AJA, in a passage subsequently approved in Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18 at [51] per Gaudron, McHugh, Gummow and Callinan JJ, a freezing order: "… is a drastic remedy which should not be granted lightly ... if granted, [it] imposes a severe restriction upon a defendant's right to deal with his or her assets. It is granted at the suit of a plaintiff whose status as a creditor is in dispute … Its purpose is to preserve the status quo, not to change it in favour of the plaintiff. The function of the order is not to provide a plaintiff with security in advance for a judgment that he hopes to obtain and that he fears might not be satisfied…" 1. The Owners relied on the following matters, or some combination of them, as demonstrating past conduct of Mr Kazzi which shows that his probity is not to be relied on, and which establishes the requisite danger: 1. bank statements for the Builder's accounts which the Owners submitted disclose a "pattern" since about the time of the commencement of these proceedings in 2020 whereby any money paid into the account was promptly paid out of the account, with the result that the account did not maintain a credit balance; 2. certain building invoices that were in issue in the substantive proceedings, which the Owners submitted that Mr Kazzi had fabricated; 3. Mr Kazzi's conduct in causing his property at Gerringong to be refinanced just weeks after the conclusion of the hearing before Stevenson J, which resulted in the registration of the mortgage over Unit 2 to which I have referred above, securing a debt which the Owners submitted did not appear to have been incurred in the ordinary and proper course of business because part of the proceeds of the refinance were deposited in Mr Kazzi's account and then applied in a series of payments, many of which were made to PK Roofing and Building Services Pty Ltd, as I have referred to at [18] above; and 4. Mr Kazzi's conduct in deposing in his affidavit sworn on 24 March 2023 that he believed that his shares in the fourteen companies identified in that affidavit had a value in excess of their paid up share capital totalling $1,101,099, which the Owners submitted is shown to have been misleading because Mr Kazzi subsequently informed the liquidator of the Builder (being one of the fourteen companies) that the Builder had ceased trading in about March 2023. 1. I do not accept that those matters, considered individually or as a whole, support an inference that there is a danger that the costs order will be wholly or partly unsatisfied by Mr Kazzi disposing of or dealing with or otherwise diminishing the value of his assets. The evidence adduced at the hearing before me does not provide a sufficient basis for inferring that the transactions relied on by the Owners as demonstrating the "pattern" referred to at (1) above were not transactions made in the ordinary and proper course of the Builder's business. 2. As to (2) above, Stevenson J did not make any finding that Mr Kazzi had fabricated any invoices. The Owners did not adduce any evidence at the hearing before me that was capable of proving that serious allegation on the balance of probabilities. 3. As to (3) above, the Owners failed to articulate any reason why the refinancing reflected poorly on Mr Kazzi's probity. Mr Kazzi was constructing five units on his land. A refinancing to facilitate the sale of those units is the very kind of thing that one would expect to occur in the ordinary and proper course of the business of such a development. As counsel for Mr Kazzi submitted, there is no evidence that the payments made from Mr Kazzi's bank account in March 2023 were not payments made in the ordinary course of business, at a time when he was in the process of finalising the development and preparing to complete the contracts that he had entered into some years earlier for the sale of four of the units. 4. As to (4) above, the evidence adduced at the hearing before me does not address the financial position of ten out of the fourteen companies referred to in Mr Kazzi's 24 March 2023 affidavit. The evidence does not support an inference that Mr Kazzi did not genuinely hold the belief expressed in his 24 March 2023 affidavit about the value of his shareholdings at that time. 5. My conclusion that the four matters relied on by the Owners do not establish the requisite danger is strengthened by the fact that Mr Kazzi caused his solicitors to inform the Owners of his intention to sell Unit 2 even before he had entered into any contract for the sale of that property, and subsequently offered to provide a second mortgage over the property securing his liability to the Owners in respect of the judgment and costs order entered against him on 15 August 2023. That conduct points strongly to the conclusion that Mr Kazzi is selling Unit 2 in the proper and ordinary course of business, and that the sale of the property is not calculated to have the effect of frustrating the enforcement of the costs order. 6. Even if I had been satisfied that the requisite danger existed, there is a further reason why I would have declined to continue the freezing orders in order to protect the integrity of the Court's processes for the enforcement of the costs order in all the circumstances of this case. 7. The evidence adduced by the Owners did not provide a sufficient basis for the Court to estimate the amount of costs for which Mr Kazzi is liable under the costs order made on 15 August 2023. 8. Mr Liam Carney, an employed solicitor of Horowitz & Bilinsky, gave evidence that he reviewed the invoices issued by Domain Legal to the Owners for the costs of the proceedings. The total amount invoiced to the Owners was $577,646, including solicitor costs, disbursements, counsel's fees and expert witness fees. Mr Carney also gave evidence that Mr Germanos of Domain Legal had informed him that "more than half" of those costs were incurred in relation to the Owners' cross-claim against Mr Kazzi. I infer that Mr Carney relied on Mr Germanos' assertion because he was either unable to form a view from his review of the invoices of the extent to which the total invoiced costs related to the cross-claim against Mr Kazzi, or he had not reviewed the invoices in sufficient detail to form any such view. 9. The parties have not reached any agreement about the amount of the costs that Mr Kazzi is liable to pay to the Owners pursuant to the order made against him on 15 August 2023. Understandably, the Owners have not taken any steps to have those costs assessed while the appeal proceedings remain on foot. However, as counsel for the Owners candidly accepted, there is no reason why the Owners could not have adduced evidence at the hearing before me of a detailed estimate of the amount of the total costs that were incurred in prosecuting the Owners' cross-claim against Mr Kazzi, and the likely extent to which those costs would be recovered on assessment. Having failed to adduce such evidence, the Owners asked the Court to accept Mr Germanos' bare assertion that half the amount of costs related to the cross-claim against Mr Kazzi on the basis that the assertion was (so the Owners submitted) consistent with the judgment of Stevenson J about the substantive issues in dispute, and to assume that almost all of those costs would be recovered on assessment. On that basis, counsel for the Owners submitted that the Court could be comfortably satisfied that Mr Kazzi's liability under the costs order is in an amount of between $250,000 to $300,000. 10. I reject that submission. Neither the reasons for judgment of Stevenson J, which reflect the manner in which the trial was conducted and the extent of time and attention devoted to the various disputed issues at trial, nor Mr Germanos' assertion, provide a sufficient basis for inferring that half the total costs invoiced to the Owners for the whole of the proceedings, including all work undertaken prior to the hearing, related to the Owners' cross-claim against Mr Kazzi. There is no basis to make any assumption or draw any inference about the likely percentage of such costs as may be attributable to the cross-claim against Mr Kazzi that would be recovered on assessment, particularly in circumstances where the proportion of the total costs attributable to counsel's fees (compared to solicitors' fees) is far higher than is typically the case in commercial litigation. The only inference I could safely draw is that any claim for costs to be assessed in an amount of between $250,000 and $300,000 would likely be very closely scrutinised by any costs assessor in circumstances where the judgment entered against Mr Kazzi in favour of the Owners was for a sum of $277,579. 11. Any attempt to estimate the amount for which Mr Kazzi is liable to the Owners under the costs order made on 15 August 2023 would be nothing more than a guess. Even if I had been satisfied that the Owners had established the requisite danger, thereby enlivening the Court's jurisdiction to continue the freezing order, I would not have been prepared to exercise the discretion to do so by intruding on Mr Kazzi's ability to deal with the net sale proceeds of Unit 2 up to an amount that I cannot be satisfied represents a reasonable estimate of his liability to the Owners under the costs order made on 15 August 2023. 12. I now turn to the application to continue the freezing orders insofar as they concern a prospective judgment in the appeal proceedings in respect of which the Court of Appeal has reserved judgment. 13. I accept the submission made by counsel for Mr Kazzi that the "court" on which r 25.11 of the UCPR confers power to make a freezing order in aid of enforcement of a prospective judgment of the "court" is the court in which the relevant proceedings are on foot: Tagget v Sexton (2009) 255 ALR 522; [2009] NSWCA 91 at [58] (Beazley JA, as Her Excellency then was). In the present case, that is the Court of Appeal. I reject the submission made by counsel for the Owners to the effect that, in the context of r 25.11, the reference to "court" encompasses the whole of the Supreme Court of New South Wales, including the Court of Appeal, so that a judge of the Court sitting at first instance has power to make a freezing order on the basis that the applicant for the order has a good arguable case in appeal proceedings that are on foot in the Court of Appeal. No authority was cited in support of that construction, which seems to me to be contrary to the object of r 25.11. 14. Even if I had been persuaded that I had power to continue the freezing orders insofar as they concern a prospective judgment in the appeal proceedings, I would not have been satisfied that the Owners had demonstrated a good arguable case in respect of their cross-appeal. The Owners did little more than to tender a copy of their written submissions in support of the cross-appeal and to assert that those submissions demonstrated a good, arguable case. Even if the Owners had done more to endeavour to make good their contention that they have a good arguable case on their cross-appeal, I would have declined to exercise the discretion to continue the freezing orders on the basis of any view that I might form about that question in circumstances where the Owners have not taken the opportunity to apply to the Court of Appeal for the freezing orders. I reject the submission made by counsel for the Owners that they were "entitled" to run the hearing of the appeal, and to form their own view of their prospects of success based on how they perceived that hearing unfolded, and then to apply to a judge of the Equity Division of the Court for freezing orders on the basis of their own assessment that they had a good arguable case. I also reject the submission that this course of conduct was somehow consistent with the overriding purpose in s 56 of the Civil Procedure Act 2005 (NSW). 15. For all of the foregoing reasons, the freezing orders made on 14 May 2024 following the ex parte hearing must be discharged with immediate effect. It is therefore not strictly necessary for me to address the submission made on behalf of Mr Kazzi that the freezing orders should be set aside on the independent basis that the Owners failed to disclose at the hearing before Richmond J that Mr Kazzi had made the offer referred to at [27] above in the context of the settlement discussions referred to at [25]-[27]. Had it been necessary to do so, I would have held that it was not open to the Owners to disclose the terms of the without prejudice discussions, but that it was open to them to disclose that Mr Kazzi through his legal representatives had proactively informed the Owners of his intention to list Unit 2 for sale, and that this had led to without prejudice discussions between the parties' respective solicitors which had explored terms on which all of the disputes between them might be resolved, or alternatively means by which the Owners might be provided with some comfort that the enforcement of the costs order in their favour would not be frustrated, and that Mr Kazzi had engaged in those discussions through his solicitors: Singtel Optus Pty Ltd v Almad Pty Ltd [2011] NSWSC 492 at [54]-[59] (Bergin CJ in Eq). In my opinion, those matters were material to Richmond J's consideration of the ex parte application for the freezing orders, which was premised on an alleged danger that Mr Kazzi's assets would be dissipated following completion of the sale of Unit 2. It was therefore incumbent on the Owners to disclose those matters to Richmond J. Mr Carney's affidavit read at the ex parte hearing and the submissions made on behalf of the Owners [1] conveyed the impression that the Owners had first learned about the listing of Unit 2 for sale when they read the affidavit sworn by Mr Kazzi's solicitor in support of his application for an extension of time to comply with the bankruptcy notice. That was misleading, and the Owners failed to refer to Mr Kazzi's engagement in the settlement discussions at all. 16. I am not aware of any reason why costs should not follow the event. Neither party foreshadowed that they would wish to be heard separately in relation to costs. 17. The orders of the Court are as follows: 1. Order that the freezing orders made in order 2 made on 14 May 2024 are discharged with immediate effect. 2. Order that the first and second defendants/cross-claimants (being the applicants for the freezing orders) are to pay the costs of the second cross-defendant (being the respondent to the application for the freezing orders) of the notice of motion filed on 14 May 2024. ********** Endnote 1. T3.40-45. 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: 22 May 2024