Iscorp Investment Pty Ltd (ACN 100 517 708) v Yohana [2011] NSWSC 17

Supreme Court New South Wales

Medium Neutral Citation: Iscorp Investment Pty Ltd (ACN 100 517 708) v Yohana [2011] NSWSC 17 Hearing dates: 15 November 2010 Decision date: 04 February 2011 Jurisdiction: Equity Division Before: Hallen AsJ Decision: 1. Stand the proceedings over to a date suitable to the court and to the parties for the purpose of making orders reflecting reasons. Catchwords: Interlocutory injunction to restrain sale of property No question of principle Cases Cited: Australian Broadcasting Corporation v O'Neill [2006] HCA 46 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63 Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 Texts Cited: R Meagher, J Heydon, M Leeming, Meagher, Gummow and Lehane's Equity Doctrines and Remedies, 4th ed (2002), Butterworths Lexis Nexis Category: Principal judgment Parties: Iscorp Investment Pty Limited (Plaintiff) Youbert Yohana (Defendant) Representation: Counsel: Mr E Demir (Sol) (Plaintiff) Mr R Newton (Defendant) Solicitors: Demir Legal (Plaintiff) David Legal (Defendant) File Number(s): 2009/289992

Judgment 1HIS HONOUR: In November 2010, an application was made by the Plaintiff, for an interlocutory injunction restraining the Defendant from selling a unit situated at The Horsely Drive, Wetherill Park. The claim for relief was sought in Paragraph 1 of a notice of motion dated 27 October 2010 and filed in Court, subject to the Plaintiff's solicitor paying the necessary filing fees, without objection, on 15 November 2010. Other relief was also sought in the notice of motion, but the only part proceeded with on that day was the application for the interlocutory injunction. 2The duty Judge, originally in September 2010, had referred the case to me, and I have had to deal with various issues that have arisen, on a number of different occasions, since then. A regime of interlocutory orders was put in place, by consent until the notice of motion could be heard and determined. 3I am satisfied that I may deal with the issue that has been raised in the present application. In any event, both parties requested that I should do so. 4In about October 2002, the Plaintiff became the registered proprietor of a unit at The Horsley Drive, Wetherill Park ("Lot 7"); it also came to have an interest in Lot 3, Lot 4 and Lot 8 in the same building. 5The Defendant operates a bridal business at Level 2 of the building. 6In about May 2008, the Plaintiff transferred the legal title of Lot 7 to the Defendant. 7The circumstances surrounding the transfer of the legal title of Lot 7 are the subject of substantial dispute between the parties. The Plaintiff asserts that, by a written agreement made on 26 March 2008, it agreed to transfer its legal, but not its beneficial, interest in Lot 7, to the Defendant, to enable the Defendant to discharge and refinance certain liabilities. The Defendant was to reconvey the legal title of Lot 7 to the Plaintiff within 12 months. That was not done, a request having been made by the Plaintiff in about November 2008. 8The Plaintiff seeks to have Lot 7 reconveyed to it and seeks to have the Defendant account to it for the rent received by him from the tenant of Lot 7. 9The Defendant asserts that the written agreement relating to Lot 7 formed part of a chain of transactions and events and that its proper construction and effect is to be determined in the context of those transactions and events. In broad terms, he says that the Plaintiff initially purchased Lot 7 from him, and borrowed moneys, at least in part, to pay the purchase price of Lot 7 ($400,000). 10The Defendant also asserts that the Plaintiff defaulted in respect of the repayment of the debt secured by mortgage registered over Lot 7 and that, as a surety of that debt, he was called upon to remedy the default. He states that following the inability of the Plaintiff to refinance the mortgage debt, the Plaintiff requested him "to take a temporary transfer of Lot 7 and the Plaintiff's half interest in Lot 4 and to use those properties as security to borrow sufficient moneys to discharge the Plaintiff's loan secured on Lot 7". He says that the Plaintiff was to be responsible for the loan repayments referable to Lot 7 and half the loan repayments referable to Lot 4. 11The Defendant asserts that in order to meet the Plaintiff's request, he borrowed $679,000 in about June 2008, and that the amount borrowed was applied to repay the debt owed by the Plaintiff secured on Lot 7, and also in connection with the costs and expenses of transferring Lot 7 and the Plaintiff's interest in Lot 4 to the Defendant. 12Since its transfer to the Defendant by the Plaintiff, Lot 7 has been tenanted. The Defendant asserts "the Defendant became entitled to receive and be exonerated out of the income of Lot 7 and the Plaintiff's beneficial share from Lot 4 in respect of liabilities incurred by him". However, he also asserts that the Plaintiff has collected, or diverted, some of those rentals. He asserts also, that the Plaintiff has, wrongfully, occupied part of Lot 4 for its own use. 13Pursuant to an agreement of the parties made in September 2010, the rental from Lot 7 has been used to make the instalments due under the mortgage now registered over Lot 7. 14The precise relief sought by the Plaintiff in respect of Lot 7 is its reconveyance to the Plaintiff and an accounting of all moneys received and disbursed by the Defendant in respect of the tenancy of Lot 7. 15In his statement of cross-claim, the Defendant seeks a declaration that he "is entitled to be exonerated and indemnified out of the half interest in Lot 4 ... formerly held by the Plaintiff and Lot 7... in respect of a loan secured over those properties and the costs and expenses incurred by the Defendant in holding those properties". He also seeks an order for an account to be taken, as between the parties, in respect of income and outgoings in respect of Lot 4 and Lot 7. 16The Defendant accepts that if the beneficial interest in Lot 7 is to be reconveyed to the Plaintiff, such an order would only be made "on terms of the Plaintiff doing equity by repaying the indebtedness presently secured over Lot 7, by indemnifying the Defendant in respect of all expenses and liabilities incurred in respect of Lot 7 and by fully accounting to the Defendant for all rentals and other benefits received by the Plaintiff or its officers". 17In relation to the Plaintiff's interest in Lot 4, the Defendant asserts that "he is entitled to retain title to Lot 4 until [he is repaid] half the debt secured on Lot 4 and otherwise be indemnified in respect of half the costs and expenses incurred by the Defendant in holding half the interest in Lot 4". He repeats that if the relevant beneficial interest in Lot 4 is to be reconveyed to the Plaintiff, such an order would only be made "on terms of the Plaintiff doing equity by repaying the indebtedness presently secured over Lot 4, by making a full and equal contribution to the expenses and liabilities incurred in respect of Lot 4 since it was agreed to be purchased by them both, and by fully accounting to the Defendant for all rentals and other benefits received by the Plaintiff or its officers". 18The parties have agreed upon the identity of an accountant, as a referee, to enquire and report in respect to various matters that have been identified (see, Order 9 dated 29 September 2010 and the Schedule to the Order). The report, when produced, may establish the amounts, if any, owed by one party to the other. 19At the date of the hearing of the interlocutory application, the referee's report was not available to the court and to the parties. 20There are other disputes of fact that involve Lot 3 and what are said to be agreements between the parties in respect thereof. 21The Plaintiff accepts that it has not been possible for it to refinance, or to repay its share of the mortgages that are secured over Lot 7 and over Lot 4. Various reasons, all involving the conduct of the Defendant, have been proffered for the Plaintiff's failure to do so. 22The Defendant states, and the Plaintiff does not dispute, that the total monthly mortgage for the loan secured on Lot 7 is approximately $5,000. Outgoings equate to $300 per month. 23The value of Lot 7, as at 31 August 2010, is estimated to be $424,000. 24The Defendant tendered a letter addressed to the Plaintiff's solicitors that states he has been approached by a real estate agent, who has indicated that he has a prospective purchaser for Lot 7, at a price of $500,000 plus commission. It was stated that the proposed purchase price was significantly more than the estimated value of Lot 7 and that the Defendant intended to enter into a contract to sell it. 25It was the threat by the Defendant to sell Lot 7 that prompted the Plaintiff's application for an interlocutory injunction. 26Undertakings have been given, and continued, by consent, which has enabled the status quo to continue pending the determination of the question whether an interlocutory injunction should be granted. One such undertaking has been the usual undertaking as to damages given by the Plaintiff and its director, Henrik Isaac, in respect of any damages arising out of, or caused by, any restrictions imposed upon the Defendant by reason of undertakings, including not to enter into a contract for the sale of Lot 7, which have been given by the Defendant. 27In addition, the parties have agreed that all rental income received in respect of Lot 7 and Lot 4 will be applied towards meeting the costs of servicing the mortgages over those Lots, and to the extent there is any surplus, to apply that surplus towards payment of council rates, water rates, strata levies (not including any special levies) referable to those Lots.