550 MARION ROAD PTY LTD v SALEH CORPORATIONS PTY LTD [2024] SADC 142

Applicant: 550 MARION ROAD PTY LTD Counsel: MR M MURPHY - Solicitor: VISINTIN LEGAL & ADVISORY First Respondent: SALEH CORPORATIONS PTY LTD Counsel: MR J MARSH - Solicitor: ILES SELLEY LAWYERS Second Respondent: BRIGITTE MICHELLE ZONTA No Attendance Hearing Date/s: 28/08/2024 File No/s: CIV-24-007478 B DISTRICT COURT OF SOUTH AUSTRALIA (Civil) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment. The onus remains on any person using material in the judgment 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 in which it was generated. 550 MARION ROAD PTY LTD v SALEH CORPORATIONS & ANOR [2024] SADC 142 Decision of her Honour Judge Deuter 4 November 2024 EQUITY - EQUITABLE REMEDIES - INJUNCTIONS - INTERLOCUTORY INJUNCTIONS - INJUNCTIONS TO PRESERVE STATUS QUO OR PROPERTY PENDING DETERMINATION OF RIGHTS The applicant sought an injunction to prevent the first respondent from taking steps to enforce a vendor finance mortgage over a commercial property (the property) purchased by the applicant from the first respondent on 23 October 2023. The mortgage was for $900,000, over a term of six months. The applicant’s decision to purchase the property was based upon information provided by the first respondent regarding the property’s tenancies and the rents paid. The applicant claims that the information provided was not correct and that the first respondent engaged in misleading and deceptive conduct in contravention of the Australian Consumer Law, and also unconscionable conduct, in relation to changes in the lease of the majority tenant, a fitness centre. A breach of the Land and Business (Sale and Conveyancing) Act 1991 (SA) is also pleaded. The applicant claims that they were not advised of changes to the lease over the fitness centre, those changes meaning that less income was to be produced by the property. The issue for determination is whether the applicant is entitled to obtain the injunction and whether they had established that there was a serious question to be tried and that the balance of convenience lay in favour of granting an injunction and that damages would not be an adequate remedy. HELD: that given the knowledge of the applicant’s conveyancer/solicitor regarding the new lease, before settlement, there was not a prima facie case in favour of the applicant. The balance of convenience does not lay in favour of the applicant. The applicant is not entitled to an injunction against the first respondent. -- 1 of 27 -- Australian Consumer Law ss 18 & 21; Land and Business (Sale and Conveyancing) Act 1994 (SA); Competition and Consumer Act 2010 (Cth); Misuse of Drugs Act 1981 (WA) s 32A(1); Criminal Property Confiscation Act 2000 (WA); Land and Business (Sale and Conveyancing) Act 1994 (SA); Uniform Civil Rules 2020 (SA); District Court Act 1991 (SA), referred to. Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 189; Seeley International Pty Ltd v Millenium Electronics Pty Ltd [2020] SASC 205; Brentwood Village Ltd (in liq) v Terrigal Grosvenor Lodge Pty Ltd [2014] FCA 1203; Acmnet Pty Ltd v Ai Tel Pty Ltd 2007] SASC 9; Inglis v Commonwealth Trading Bank of Australia [1972] 126 CLR 161; Sargent v ASL Developments Ltd (1974) 131 CLR 634; Astill v South Esplanade Developments Pty Ltd [2007] SASC 231; Glandore Pty Ltd & Ors v Elders Finance & Investment Co Ltd (1984) 57 ALR 186, considered. -- 2 of 27 -- 550 MARION ROAD PTY LTD v SALEH CORPORATIONS & ANOR [2024] SADC 142 Introduction 1 This judgment concerns an interlocutory application whereby the applicant seeks a restraining order against the first respondent, Saleh Corporations Pty Ltd (Saleh).1 The order is sought to restrain Saleh from taking any steps to enforce its mortgage in respect of a mixed-use commercial property at 546-550 Marion Road, Plympton Park, being the whole of the land in Certificate of Title Volume 6133 Folio 144 (the property). This includes dealing with the property in any manner. 2 The factual basis of the interactions between the parties regarding the property is in dispute and will need to be determined at trial. This primarily concerns the rental agreement related to approximately 80% of the space in the property. This tenancy is operated as a fitness centre. During negotiations to purchase the property, and before settlement, the lessee of the fitness centre changed from Cecil Hills Investment Pty Ltd (Cecil Hills) to 24 Power Fit Pty Ltd (24 Power Fit). The consequences of this change, and what was known by the parties prior to, and during the period of the sale of the property, is in dispute. Conclusion 3 I dismiss the application in FDN3, whereby the applicant seeks a restraining order preventing the respondent from taking steps to give effect to, or enforce, its mortgage in respect of the property. 4 My reasons follow. Background 5 The substantive proceedings concern a claim by the applicant, 550 Marion Road Pty Ltd as Trustee of 550 Marion Road Unit Trust (550 Marion Road), for damages resulting from its purchase of the property on 23 October 2023.2 6 The applicant relies on causes of action in equity; misleading and deceptive conduct in contravention of s 18 of the Australian Consumer Law3 (ACL); unconscionable conduct in contravention of s 21 of the ACL; and breach of the Land and Business (Sale and Conveyancing) Act 1994 (SA) (Land and Business Act). 7 The two directors, and joint shareholders of 550 Marion Road are Mr Sun Ping Liew (Mr Liew) and Mr Han Dol Kim (Mr Kim). Only Mr Liew has filed affidavit evidence.4 1 FDN 2 and 3. 2 Claim (FDN 1). 3 Comprising Schedule 2 of the Competition and Consumer Act 2010 (Cth). 4 FDN 4 (the First Liew Affidavit) and FDN 9 (the Second Liew Affidavit). -- 3 of 27 -- [2024] SADC 142 2 8 The proceedings are brought against Saleh, the first respondent, as vendor of the property, and against Brigitte Zonta (Ms Zonta) as the second respondent. The sole director and shareholder of Saleh is Mr Mohammad Mick Hijazi (Mr Hijazi), previously known as Mick Saleh.5 Ms Zonta, Mr Hijazi’s former, now estranged partner, was his Power of Attorney for the purpose of facilitating the sale of the property. She is also the sole director and shareholder of Cecil Hills, the entity that had held the lease over the fitness centre. Mr Hijazi’s circumstances 9 On 12 October 2023 both Mr Hijazi and Saleh became the subject of a Freezing Order (the Freezing Order) in the Supreme Court of Western Australia relative to Mr Hijazi having been charged with an offence that could lead to him being declared a drug trafficker if convicted (pursuant to s.32A(1) of the Misuse of Drugs Act 1981 (WA)). The Freezing Order was made pursuant to the Criminal Property Confiscation Act 2000 (WA) and, except for some exempted funds, was to apply to all property owned or effectively controlled by Mr Hijazi. This included the property. Rental payments from the property were excluded.6 10 Saleh was appointed as the entity to control and manage the property. Authority was provided to Saleh to sell the property, for not less than a reserve price agreed by the Director of Public Prosecutions of Western Australia (DPP). The proceeds from the sale of the property, after all outgoings, and the mortgage held by Westpac were paid, (the Surplus funds) were to be paid to the Public Trustee in Western Australia (the Public Trustee) to be held in an interest-bearing account in Saleh’s name. A term of the Freezing Order was that Ms Zonta was to be paid any share of the Surplus funds agreed between the parties, and approved by the Court.7 11 The Freezing Order was varied on 7 March 2024,8 3 July 2024,9 and 18 July 2024.10 The Freezing Order was first varied to allow the Surplus funds to be used to pay legal costs and disbursements incurred by Mr Hijazi in his criminal proceedings in WA; in the confiscation proceedings in WA; and in proceedings in the Federal Court brought by the Australian Tax Office. It was ordered that in making such payments the Surplus funds were not to drop below $1,293,206.15, without the written agreement of Ms Zonta. 12 The Third Order of 3 July 2024 allowed payment of legal fees related to these legal proceedings; legal proceedings between Mr Hijazi and Ms Zonta in relation to Mr Hijazi’s claimed interest in property registered in Ms Zonta’s name11; and any Family Court proceedings commenced between Ms Zonta and Mr Hijazi. 5 Affidavit of Nicholas James Iles (the Iles Affidavit) (FDN 8) at [4] – [5] and exhibit NJI-2. 6 Page 145-148 of the Iles Affidavit, being part of Exhibit NJI-19 (the First order). 7 Paragraphs [8] – [15] of the First Order. 8 Pages 149 to 150 of NJI-19 (the Second Order). 9 Pages 151 to 152 of NJI-19 (the Third Order). 10 Pages 153 to 154 of NJI-19 (the Fourth Order). 11 CIV-24-002162 (in the Supreme Court of South Australia). -- 4 of 27 -- [2024] SADC 142 3 However, no further payment was to be made if the Surplus funds dropped below $1,293,206.15. 13 The Fourth Order amended the Freezing Order to allow a payment by the Public Trustee of $406,165.44 to meet an obligation to the Australian Tax Office. No further payments were to be made from the Surplus funds if they dropped below $929,189.35. 14 Mr Liew was not aware of Mr Hijaz’s incarceration and the freezing order before finalising the purchase of the property; before signing the Deeds of assignment regarding the property’s tenancies; or before vendor finance was finalised.12 Factual basis of the claim 15 The applicant’s claim is brought on the following factual basis: 1. In November 2022 the property was advertised for sale via a sales agent, LJ Hooker Commercial Adelaide (LJ Hooker). 2. Mr Kim requested information regarding the property, and on 18 April 2023 was provided with a LJ Hooker Information Memorandum (the Memorandum).13 This included a floor plan and tenancy schedule for the property. Cecil Hills was noted as the lessee of the fitness centre. The Memorandum set out the outgoings collected from each tenancy.14 3. The front sheet of the Memorandum displayed a photo of the fitness centre with the name ‘Revive Fitness’ clearly visible on two sides of the property. 4. Mr Liew inspected the property twice between 26 and 28 April 2023, and thereafter confirmed interest in the property. 5. On 28 April 2023, Mr Liew sent an offer to purchase the property for $4 million. 6. On 1 May 2023, after negotiation, Mr Liew executed a contract of sale and purchase for the property in the sum of $4.1 million (the Sale Contract).15 At this time, Mr Liew had not seen a Form 1 for the property. The Sale Contract was subject to finance. 7. On 2 May 2023, the offer was accepted, and the Sale Contract was signed by Ms Zonta on behalf of Saleh. 12 The First Liew Affidavit at [22] – [24] and the Second Liew Affidavit at [15]-[16]. 13 Exhibit PL-1A to the First Liew Affidavit. 14 Ibid at pages 11 and 12. 15 Exhibit PL-4 to the First Liew Affidavit. -- 5 of 27 -- [2024] SADC 142 4 8. A Form 1, prepared pursuant to the Land and Business (Sale and Conveyancing) Act 1994 (SA) (Land and Business Act), and dated 31 January 2023, was produced and signed by both Mr Liew and Ms Zonta on 5 May 2023.16 9. Attached to the Form 1 was a copy of the lease for the fitness centre held by Cecil Hills (the Cecil Hills lease).17 16 The applicant pleads that it agreed to purchase the property relying upon the information and representations contained in the Memorandum and the Form 1. This included the stated outgoings collected from each tenancy, excluding GST, and that Cecil Hills was the lessee of the Fitness Centre, operating a business known as Revive Fitness Adelaide. The lease of the fitness centre 17 The applicant relies upon the following facts in relation to the property’s tenancies prior to May 2023: 1. all leases required the lessees to pay their portion of the property’s outgoings; 2. except for the laundromat, which lease included outgoings, the outgoings to be paid were calculated on a net basis relative to the tenant’s lettable area; 3. the fitness centre was leased pursuant to the Cecil Hills lease and covered a tenancy area of 3,405 sqm; 4. the Cecil Hills lease was for an initial period of 5 years commencing from 9 September 2022, with two further terms of 5 years. Pursuant to the lease: (a) the annual rent was $120,000 plus outgoings and GST; (b) there was to be an annual increase of rent of 3%; (c) the total lettable area was 81.6% of the property; (d) the outgoings included council rates, SA water rates, electricity costs, insurance, maintenance and other expenses as incurred. 18 The applicant alleges that at the time they signed the Form 1 on 5 May 2023, it was represented that the Cecil Hills lease was still in place, and Saleh was bound to its terms. The Form 1 represented the terms and conditions upon which the fitness centre was leased. 16 Extracts from the Form 1 are exhibit PL-5 to the First Liew Affidavit (FDN 4). 17 Exhibit PL-1 to the First Liew Affidavit (FDN 4). -- 6 of 27 -- [2024] SADC 142 5 19 It is the applicant’s case that the Form 1, and in particular the Cecil Hills lease, was relied upon by Jones Lang LaSalle (JLL) in valuing the property. The JLL valuation dated 18 July 2023 was prepared for the ANZ Bank (ANZ) and was stated to be for First Mortgage purposes only.18 The applicant had sought finance from ANZ to purchase the property. 20 The JLL valuation was based upon information sourced from Saleh, including copies of lease agreements and other financial information.19 The JLL valuation confirmed that Tenancy 1 was held in the name of Cecil Hills operating as Revive Fitness Centre, and covered an area of 3,405 square metres.20 The detail contained in the Cecil Hills lease was set out, including the net yearly rent, and responsibility for the proportional share of the outgoings.21 21 JLL determined that the property, for the purpose of First Mortgage security, had an ‘as is’ value of $4.1 million. An ‘as if complete’ valuation of $4.910 million was assessed upon the basis that a signage lease to commence on 1 September 2023 proceeded. 22 On 25 August 2023 Mr Liew was contacted by an ANZ representative with concerns raised by an Advertiser article involving the fitness centre. The centre was being criticised for closing for renovations only days after signing up new members (the Advertiser article).22 The ANZ required confirmation that the fitness centre rent would continue to be received. 23 Mr Liew immediately contacted Saleh’s managing agent for the property, Lease Corp. He was advised that the fitness centre rent was continuing to be paid. The entity paying the rent was not disclosed, nor the amount of rent being paid. Finalisation of the contract and settlement 24 A final addendum to the sale contract was signed by Mr Liew on 15 September 2023 and by Ms Zonta on 28 September 2023.23: 1. the applicant had satisfied the subject to finance clause, and the sale contract was now unconditional; 2. the respondent was to provide vendor finance to a maximum of $900,000.00, for a maximum period of six months, at an interest rate of 10% per annum, payable at maturity or settlement (vendor finance Mortgage); 3. a settlement date of 16 October 2023 was set. 18 Exhibit PL-6 to the First Liew affidavit. 19 Ibid at paragraph 1.3. 20 Ibid at pages 223-226. 21 Ibid at pages 227 and 268. 22 Exhibit PL-7 to the First Liew Affidavit. 23 Exhibit PL-9 to the First Liew Affidavit. -- 7 of 27 -- [2024] SADC 142 6 25 Mr Kim was present when the addendum was signed. He witnessed Mr Liew’s signature. The vendor finance Mortgage was signed on 12 October 2023, although not registered over the property until 23 February 2024.24 26 Ching Cao (Ms Cao) of QMR Conveyancing was engaged by the applicant to complete the purchase of the property. On 12 October 2023 conveyancers engaged by Saleh, Psarros and Allen, emailed the tenancy schedule for the property to Ms Cao (the tenancy schedule). This was the same day mortgage documents were signed with ANZ, and for the vendor finance. 27 Ms Cao prepared an Assignment of Lease of the property’s leases on 13 October 2023 (Deed of assignment). This was prepared using the tenancy schedule, and was signed by Mr Hijazi on behalf of Saleh, and by both Mr Kim and Mr Liew on 20 October 2023.25 The detail of the assignment of the lease for the fitness centre was described in Annexure C to the Deed of Assignment as follows:26 • 24 Power Fit was the tenant trading name; • Cecil Hills was the tenant entity and address; • The lease to be assigned, between 24 Power Fit and Saleh, was dated 12 September 2022. 28 This date of the 24 Power Fit lease is wrong. The Cecil Hills lease with Saleh was dated 12 September 2022.27 Ms Cao in preparing the Deed of Assignment has incorrectly set out the date of 24 Power Fit lease. 29 Settlement of the sale of the property was completed on 23 October 2023, and ownership was transferred to the applicant. Misleading and Unconscionable Conduct 30 The applicant alleges that at an unknown time before April 2023, Ms Zonta began negotiations to sell the gym business being operated by Cecil Hills, to 24 Power Fit. It is further alleged that Ms Zonta, on behalf of Saleh, entered into a lease agreement with 24 Power Fit on 1 May 2023 to operate the gym business. The new lease was to commence on 8 May 2023 (the 24 Power Fit lease).28 24 Power Fit then took possession of the fitness centre. 31 The applicant pleads that it was never made aware of any surrender of the Cecil Hills lease, nor of the differences contained in the 24 Power Fit lease. 24 Exhibit PL-11 to the First Liew Affidavit. 25 Exhibit PL-12 to the First Liew affidavit. 26 Ibid at p10. 27 This lease is exhibit PL-1 to the First Liew Affidavit. 28 Exhibit PL-3 to the First Liew Affidavit. -- 8 of 27 -- [2024] SADC 142 7 No updated Form 1 was served upon the applicant by Saleh to clarify the changes of tenancy and its terms. 32 The applicant relies upon terms of the 24 Power Fit lease that include: 1. a commencement date of 8 May 2023; 2. an initial term of 10 years with right of renewal of a further 10 years; 3. annual rent of $143,000 plus GST including all outgoings; 4. no ‘make-good’ or ‘redevelopment’ clause; 5. annual rent increases of 2% during the first term and 3% during the second term. 33 The applicant alleges that it was misled by Saleh and Ms Zonta by their actions in not advising of the surrender of the Cecil Hills lease, nor advising of the 24 Power Fit lease and its terms. The applicant claims that it first learned of the 24 Power Fit lease when, as landlord, after settlement on purchase of the property, Mr Kim forwarded an invoice for rent to Cecil Hills on 10 November 2023. A response was received from 24 Power Fit stating that the invoice was not consistent with the terms of its lease with Saleh. It is alleged that Mr Kim was then, for the first time, provided with the 24 Power Fit lease. 34 The applicant’s case is that Saleh and Ms Zonta made false representations and engaged in misleading, deceptive and unconscionable conduct by: 1. not advising them of the negotiations to sell the gym business prior to April 2023; 2. not advising them that Cecil Hills had entered into an agreement to sell the gym business to 24 Power Fit; 3. not advising them that a new lease agreement, with different terms to the Cecil Hills lease, had been entered into with 24 Power Fit in relation to the area occupied by the fitness centre of the property, to commence on 8 May 2023; 4. not advising them that the Cecil Hills lease had been surrendered, but in any event, that by 8 May 2023, possession of the fitness centre had been granted to 24 Power Fit; 5. not advising them that the terms of the 24 Power Fit lease were materially different to the terms of the Cecil Hills lease; 6. not providing an updated Form 1 setting out the detail of the new 24 Power Fit lease; -- 9 of 27 -- [2024] SADC 142 8 7. not advising them at any time during the negotiations regarding the contract and its addendum, or the vendor finance, of the surrender of the Cecil Hills lease; the cessation of possession of the fitness centre by Cecil Hills; and the entry into the 24 Power Fit Lease with its different terms to the Cecil Hills lease. 35 The applicant claims that, as a result of Saleh’s conduct in entering into the 24 Power Fit lease, and failing to advise them of the assignment of the lease over the fitness centre upon different terms, they have suffered loss and damage. As the property owner, they must now bear the outgoings for the fitness centre, estimated at $225,561 per year.29 36 It is alleged that Saleh engaged in misleading and unconscionable conduct in breach of s 18 of the ACL, by its assignment of the Cecil Hills lease, and in making representations in the Form 1 regarding the payment of outgoings related to the lease of the fitness Centre. 37 In this regard, the applicant alleges that Ms Zonta engaged in misleading and deceptive conduct on behalf of Saleh in executing the Form 1 when she knew that the 24 Power Fit lease had been executed in relation to the fitness centre; and that the Cecil Hills lease would, or had, come to an end by 7 May 2023. It is alleged that both Saleh and Ms Zonta, by preparing a Form 1 that was materially defective, misleading, and false breached their obligations under the Land and Business Act. 38 It is also claimed by the applicant that Saleh and Ms Zonta have breached their fiduciary duties not to engage in conduct, or deal with the property in such a manner that its value would be reduced, between the time that the contract for sale was executed and the date of the settlement. In this regard the applicant alleges that, as a result of the change in the terms of the lease over the fitness centre, the annual revenue from the property’s lessees has decreased by at least $202,713.75 per annum. This is compounded by the option in the 24 Power Fit Lease, for an additional 10 year term. It is claimed that this significantly reduces the capital value of the property. 39 The applicant seeks damages for equitable compensation based upon: 1. loss of rental revenue; 2. increased cost of outgoings that are unrecoverable from tenants; and 3. reduction in the capital value of the property. 40 The applicant also seeks: 29 As assessed by Con Kavooris, Commercial Property Specialist (paragraph 61 of FDN 1). -- 10 of 27 -- [2024] SADC 142 9 1. an injunction pursuant to s 232 of the ACL permanently restraining Saleh from seeking to rely upon, or give effect to, the security provided under the terms of the vendor finance Mortgage; 2. a declaration pursuant to s 237 of the ACL that the vendor finance Mortgage is void ab initio; 3. recission of the purchase contract for the property pursuant to s 15 of the Land and Business Act, with ancillary orders to return the parties to the same position they would have been in had the purchase contract not been given effect to; 4. an order permanently restraining Saleh from relying upon, or giving effect to, the security provided under the terms of the vendor finance Mortgage. Application for an Interlocutory Injunction Procedural History of the Application 41 The application for a restraining order was filed on 13 August 2024, a day after the substantive proceedings were filed.30 An order is sought restraining Saleh from taking any steps to enforce the vendor finance Mortgage. These include seeking to take possession of the property, requiring rent to be paid, or otherwise seeking to deal with the property. 42 The application is opposed, and argument proceeded on 28 August 2024. The applicant relied upon the extensive affidavit evidence of Mr Liew. Saleh and Ms Zonta rely upon the written evidence set out in the Iles Affidavit. Both parties filed written submissions.31 43 I was advised that Ms Zonta was separately represented, and that she had no interest in the interlocutory application.32 Her counsel did not attend the argument. Relevant Legal Principles 44 The applicant relies upon the Court’s power to make interlocutory restraining orders, and ancillary orders pursuant to Rule 111.1 of the Uniform Civil Rules 2020 (SA) (UCR). 45 Section 30 of the District Court Act 1991 (SA) confers upon the Court the power to grant an interim injunction. By section 31 power is conferred to make orders preventing, or restricting, any dealing with property of a respondent if: (a) the action appears to have been brought on reasonable grounds; and 30 FDN 2 and FDN 3. 31 FDN 10 and FDN 12. 32 Transcript of Hearing on 14 August 2024 at T1-T9. -- 11 of 27 -- [2024] SADC 142 10 (b) the property may be required to satisfy a judgment that has been, or may be, given in the action; and (c) there is a substantial risk that the defendant will dispose of the property before judgment is given, or before it can be enforced. 46 The Court otherwise has inherent jurisdiction over and above s 30 of the District Court Act 1991 (SA) to grant injunctive relief where it is necessary to protect the integrity of the Court’s processes and prevent their frustration. 47 The general principles relating to the grant of an interlocutory injunction are well-established and not in contention. The applicant must first establish a prima facie case. 48 They must satisfy the Court that if the evidence remains the same at trial there is a probability that they will be entitled to relief.33 This does not mean that the applicant must demonstrate that it is more probable than not that they will succeed at trial. It is enough if they can show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending trial.34 How strong the probability needs to be, depends upon the nature of the rights the applicant is asserting, and the practical consequences likely to flow from the orders that are sought.35 49 However, it has more recently been determined that, if the evidence remains the same, the threshold for demonstrating a good arguable case is low. All that is required is something which “is more than barely capable of serious argument and not yet necessarily one the judge believed to have a better than 50% chance of success”.36 50 Secondly, the applicant must establish that the balance of convenience favours the granting of the injunction. This means the inconvenience or injury that the applicant would be likely to suffer if an injunction is refused, outweighs the injury or inconvenience the respondent would suffer if an injunction is granted.37 51 Thirdly, the applicant must demonstrate that damages are not an adequate remedy should the injunction not be granted.38 52 It was said in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (Aust Broadcasting Corp):39 33 Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [65]. 34 Ibid. 35 Ibid. 36 Seeley International Pty Ltd v Millenium Electronics Pty Ltd [2020] SASC 205 (Seeley) per Livesey J (as he then was) at [8] citing Brentwood Village Ltd (in liq) v Terrigal Grosvenor Lodge Pty Ltd [2014] FCA 1203 at [24]. 37 Acmnet Pty Ltd v Ai Tel Pty Ltd [2007] SASC 96 at [19]. 38 Ibid at [20]. 39 (2001) 208 CLR 189. -- 12 of 27 -- [2024] SADC 142 11 Indeed, it may well be that the interlocutory injunction is properly to be seen as the paradigm example of an order made to protect a court's processes, the interlocutory injunction being, originally, the means by which a court of equity ensured that it was not disabled from granting final injunctive relief in the event that an entitlement to that relief were to be established.40 53 The onus lies on the applicant to satisfy the court of each of these matters. 54 A further legal principle applies in this matter, where the applicant seeks to restrain Saleh from exercising their rights pursuant to a mortgage over real estate. A set of rules were set out for such an injunction in Inglis v Commonwealth Trading Bank of Australia (Inglis).41 These are summarised at page 164: A general rule has long been established, in relation to applications to restrain the exercise by a mortgagee of powers given by a mortgage and in particular the exercise of a power of sale, that such an injunction will not be granted unless the amount of the mortgage debt, if this be not in dispute, be paid or unless, if the amount be disputed, the amount claimed by the mortgagee be paid into court. … The benefit of having a security for a debt would be greatly diminished if the fact that a debtor has raised claims for damages against the mortgagee were allowed to prevent any enforcement of the security until after the litigation of those claims had been completed. In my opinion the fact that such claims have been brought provides no valid reason for the granting of an injunction to restrain, until they have been determined, the exercise by a mortgagee of the remedies given to him by the mortgage. 55 There are several exceptions to these rules, however a claim, in damages is not sufficient. No challenge to the validity or enforceability of the vendor finance Mortgage is made in this matter. The Applicant’s submissions (a) Prima Facie Case 56 The applicant relies upon the causes of action, and the facts pleaded in its Statement of Claim to establish a prima facie case. In summary, the applicant argues that it was misled and deceived as to a material particular in relation to the purchase of the property, namely the terms and conditions of the lease of the primary tenant. Having procured security over the property from the applicant via the vendor finance Mortgage by their misleading conduct, it would be unconscionable for Saleh to now seek to enforce that security. 57 The applicant argues that Saleh breached the Land and Business Act in that the Form 1 provided to them was defective and no further Form 1 has been provided. Pursuant to the Land and Business Act, the applicant seeks damages and/or recission of the contract. It was submitted that once the Sale Contract was 40 Ibid per Gaudron J at [62]. 41 [1972] 126 CLR 161. -- 13 of 27 -- [2024] SADC 142 12 entered into, Saleh held the property on trust for the applicant. As a result, Saleh owed fiduciary duties to them not to deal with the property in a way to impact the value or nature of the property before settlement. Saleh however dealt with the property without the knowledge or consent of the applicant, by giving effect to a new lease in respect of the primary tenancy, on materially different terms. 58 The applicant notes Saleh’s position that they should have been aware of the new lease with 24 Power Fit as it was forwarded to their conveyancer on 19 October 2023. However, the applicant says this was provided four days, and only two business days, before settlement of the purchase of the property. 59 Saleh however argues that the applicant was aware, before settlement of the sale contract, of the new lease for the fitness centre. This is denied by the applicant. They argue that Ms Cao was not their agent for the purpose of the disclosure of the new lease arrangements. However, even if she was, the applicant contends that the context of the disclosure is important, in particular that Saleh never corrected the impression that the 24 Power Fit tenancy was still subject to the same terms of the existing Cecil Mills lease. 60 The applicant submits that the first reference to 24 Power Fit now operating the fitness centre was in a letter from Leasecorp of 25 August 2023 stating that: (1) they were the current property managers for the property; (2) the tenancy for the fitness centre was still operating as normal as 24 Power Fit; (3) rental payments were continuing to be made as per the lease agreement.42 61 The applicant says that this was the first acknowledgement that the fitness centre was being operated by 24 Power Fit. However, and importantly, the letter did not advise that a new lease had been entered into; nor that the Cecil Hills lease no longer existed; nor that a different corporate entity applied in relation to the lease, (i.e., that 24 Power Fit was not just a trading name). 62 It is argued that this correspondence leads to an inferred understanding that when reference is made to 24 Power Fit regarding the fitness centre area, that they were operating under the Cecil Hills lease. The applicant was not advised otherwise, and there was never any reference to a new lease. 63 The Deed of Assignment was signed on 13 October 2023, prior to settlement, by both Mr Liew and Mr Kim.43 The schedule at Annexure C, contained a list of 42 Exhibit PL-8 to the First Liew Affidavit. 43 Exhibit PL-12 to the First Liew Affidavit, at pp 303-315. -- 14 of 27 -- [2024] SADC 142 13 the leases.44 In relation to the fitness centre lease, it was set out that the tenant’s name was 24 Power Fit; however, the tenant entity was still Cecil Hills. 64 The applicant argues that the terms of the Deed of Assignment, in the context of earlier documentation provided by Saleh, leads to a strong inference that it was the Cecil Hills lease that was being assigned to them, not a new lease in materially different terms. Whilst the Deed was prepared by Ms Cao, it was signed by Mr Hijazi on behalf of Saleh. 65 There was no further communication between the parties until a copy of the new lease signed in the name of 24 Power Fit was provided to Ms Cao on 19 October 2023. This was not forwarded by Ms Cao to the applicant. It was submitted that this was because the Deed of Assignment had been prepared referencing the Cecil Hills lease, inferring that the lease was just with a new entity. No new terms of the lease were ever referenced. It was argued that the Deed of Assignment, not referencing the name of the new lessee as the Tenant Entity, confounded later representations, or statements, between the conveyancers as to what was actually happening. 66 The applicant submits that the first time they or their conveyancer could have become aware of the actual change in the fitness centre tenancy was when Saleh’s conveyancer sent a tenancy schedule for the property to Ms Cao on 17 October 2023 where 24 Power Fit Pty Ltd was listed as the tenant of the fitness centre, as opposed to just a trading name.45 This was still prior to settlement. 67 It was argued that the change in the tenancy was never highlighted as being a new entity, and therefore in the context of it being provided as part of the settlement adjustment statement, there was no reason for the applicant’s conveyancer to understand that there was a new tenancy, and more importantly a new lease with different terms. 68 It was also submitted that this tenancy schedule was provided after an earlier tenancy schedule had been sent to Ms Cao on 12 October 2023 advising that the then property manager would not be retaining management of the property as a whole.46 This schedule included 24 Power Fit as a tenant. The terms of the new 24 Power Fit lease were set out. They included that outgoings were payable on a gross basis, and that the total rental was $143,000 per annum. These were different terms but appear to have been overlooked. 69 The applicant’s counsel argued that whilst this schedule did contain a new entity that appeared to be leasing the fitness centre, that change was not explained, in the context of the document being part of a schedule provided for the purpose of enabling Ms Cao to prepare an adjustment statement for settlement. It was not 44 Ibid at p 315. 45 Exhibit PL-12 to the Second Liew Affidavit at page 101. 46 Exhibit PL-10 to the First Liew Affidavit. -- 15 of 27 -- [2024] SADC 142 14 provided to correct the previous information provided regarding the terms of the lease for the fitness centre. 70 The applicant submits that without the respondents, or either of them, advising them of the new lease, then the correspondence with Ms Cao simply muddied the waters. Nowhere was the applicant ever advised that the Cecil Hills lease was no longer applicable, and that a new lease had been negotiated with another entity. It was submitted that what occurred was that the applicant was drip- fed small amounts of information over several documents regarding the lease, without ever being told that the Cecil Hills lease, and its terms, no longer applied. 71 This issue regarding what the actual knowledge of the applicant was at completion of the contract for sale, is argued to be a matter for trial. However, none of the material provided by Saleh or their agents expressly set out the changes in the lease arrangements for the fitness centre. 72 It was argued that the fact that the applicant was not aware, by inference or otherwise, of the change of the lease and its terms, is evidenced by the fact that after settlement Mr Kim forwarded an invoice to 24 Power Fit seeking payment of rent based upon the terms of the Cecil Hills lease. That would not have been done if the detail of the new tenancy for the fitness centre had been provided to them. 73 The applicant submits that they would not have proceeded with purchase of the property if they were aware of the new lease for the fitness centre. The value of the property is determined to a significant degree by the income stream that can be obtained from the rentals. The change in the lease means that the amount of outgoings over 80% of the property is greater than the rent to be paid. There is therefore a loss and damage case based upon misleading and deceptive conduct and unconscionability under the Land and Business Act. A prima facie case under the Act. 74 The applicant also submits that there is a prima facie case for breach of trust upon the basis that Saleh dealt with the property against their interest, after a contract for purchase had been signed. They argue that Saleh dealt with the property in a manner that was materially detrimental to them, and as a result Saleh must account to them for their losses by damages in trust and equity. (b) Balance of convenience 75 Saleh is intent upon enforcing its purported rights under the mortgage, including selling the property to recover the monies owing to them pursuant to the vendor finance Mortgage. The applicant argues that if the property is sold, then they will be deprived of the property, whatever the outcome of these proceedings. This means that they cannot be effectively compensated by damages alone, including any relief for unconscionable conduct. They lose the property and it will be sold. -- 16 of 27 -- [2024] SADC 142 15 76 The applicant argues that there are therefore strong grounds for the Court to intervene to ensure that the proceedings are not determined at the interlocutory stage. This is a significant issue which swings the balance of convenience in their favour. This is compared to Saleh’s situation, where they are simply held out from enforcing its mortgage until trial and determination. It was submitted that the respondents will not suffer permanent damage, but rather will only have payments delayed pending final determination. 77 Another important factor in relation to the balance of convenience is said to be Mr Hijazi’s current situation in Western Australia. The applicant submits that if Saleh is able to repossess the property, as a result of no mortgage payments having been paid, and re-sells the property, then pursuant to the terms of the Freezing Orders, any monies available after all obligations are satisfied would be paid to the Public Trustee. Neither Salah or Mr Hijazi could then use the funds generated by a sale of the property. It was submitted that there was no prejudice to them in a grant of injunctive relief. There is no true delay, as Saleh will not be able to use the funds until Mr Hijazi’s criminal proceedings have been finalised. 78 The funds could also be dissipated, or reduced to a level that they do not satisfy a judgment, depending upon any further amendment to the Freezing Order. It was noted that the Surplus funds held by the Public Trustee have been gradually reduced as the Court has allowed Mr Hijazi to use them to pay his living expenses, legal fees over several legal matters, and tax obligations. His need to pay legal fees will likely continue for some time into the future across multiple legal proceedings. In addition, any remaining Surplus funds were at risk of being confiscated pursuant to the Criminal Property Confiscation Act 2000 (WA). If the property was re-sold, and the funds dissipated by the Public Trustee for various reasons, or confiscated, before any judgment in favour of the applicant in the substantive proceedings, then there would be significant prejudice to the applicant. That prejudice could not be remedied. (c) Damages are not an adequate remedy 79 The applicant’s case is linked to the submissions on balance of convenience, and the Freezing Orders made in Western Australia. It was submitted that it was highly likely that the Surplus funds, plus any further funds from the mortgagee sale of the property will be reduced, or completely dissipated, as further orders allow for payment of Mr Hijazi’s legal expenses and on general living expenses. 80 It was argued that once the funds go to the Public Trustee there is no guarantee that they will ever be returned to Saleh. This would result in the trial in the applicant’s proceedings being meaningless. It is a possible scenario that all the funds, and the property will be gone, and that the respondent would not be in a position to meet any judgment in the applicant’s favour. -- 17 of 27 -- [2024] SADC 142 16 The Respondent’s submissions 81 Saleh, for the purposes of the interlocutory application does not dispute that the applicant was initially provided with incorrect information regarding the lease of the fitness centre. However, they argue that this was corrected on six different occasions before settlement. As a result, they submit that the applicant has failed to establish a prima face case, as they were aware of the 24 Power Fit lease and its terms. 82 The six corrections regarding the lease, said to have been received by the applicant are: 1. The Advertiser article of 25 August 2023. In addition to reporting on client concerns, it was clearly stated in the article that the name of the gym was 24 Power Fit.47 It was also reported that: ‘The gym which was formerly Revive Fitness Centre changed hands in early June’. (emphasis added). This is argued to be a clear statement that ownership of the gym business operating out of the fitness centre had changed. 2. The tenancy schedule for the property sent by email to Ms Cao on 12 October 2023. This set out that the tenancy for the fitness centre was with 24 Power Fit.48 The terms of the tenancy, as set out in the email were different to the Cecil Hills tenancy. Ms Cao forwarded this email to the applicant (by its directors) at 12:29 on 12 October 2023. 3. An email sent to Ms Cao on 17 October 2023 from Saleh’s conveyancers. This attached the tenancy ledgers for each tenant of the property, including 24 Power Fit, together with a Settlement Adjustment Statement which noted that the 24 Power Fit rental was in gross terms. The respondent also relies upon an email from Ms Cao to their conveyancer sent at 8:18pm on 18 October 2023 after receiving the Adjustment Statement, where she noted the difference between the tenancy ledger and the draft Settlement Statement, in respect of the rent being paid by 24 Power Fit.49 4. An email from the respondent’s conveyancer to Ms Cao at 9:53pm on 18 October 2023, in response to her query, stating:50 We do not have any documents for the transfer of lease between Cecil Hills and 24 Power Fit. We understand there was a transfer or sale of business of some sort, however are not privy to that information nor do we have any documents to evidence this. We will enquire with the property manager and advise you of the outcome. 47 PL-7 to the First Liew Affidavit. 48 PL-10 to the First Liew Affidavit. 49 Page 72 of the Iles Affidavit, being part of Exhibit NJI-13. 50 Ibid at page 71. -- 18 of 27 -- [2024] SADC 142 17 (emphasis added) 5. The email correspondence that continued over 19 October 2023.51 At 11:55am, Saleh’s conveyancer advised Ms Cao that their client had appeared to have organised their own new lease for the gym, and forwarded a copy of the 24 Power Fit Lease to her. Ms Cao responded at 12:00pm, stating: Assuming this means that the previous lease (Cecil) was surrendered? At 12:02pm Saleh’s conveyancer responded with: I assume so. The previous lease was between the husband and the wife and was a related parties lease. I am not privy to any further information unfortunately. Do you accept that position or not? Ms Cao did not respond directly but at 1:49pm forwarded an email indicating that the applicant was ready to proceed to settlement.52 6. The sixth correction is alleged to have occurred at 2:47pm on 19 October when Saleh’s conveyancer forwarded a revised Adjustment Statement to Ms Cao. This set out that 24 Power Fit was a tenant of the property, paying a monthly rent of $11,916.67 plus GST.53 83 The respondent argues that Ms Cao, who identifies herself as a solicitor and conveyancer, was acting as the applicant’s agent in relation to the purchase of the property. They rely upon the High Court decision in Sargent v ASL Developments Ltd54 to submit that the legal position is clear that a solicitor/conveyancer in a conveyancing transaction is understood to have complete authority unless the other party is told otherwise. The knowledge of the solicitor/conveyancer is imputed to their client: 84 The respondent argues that there is no pleading, or evidence contained in Mr Liew’s two affidavits, to suggest that Ms Cao’s authority was limited in any way. It is thus submitted, that Ms Cao’s knowledge regarding the 24 Power Fit lease over the fitness centre, binds the applicant. As a result, there is no serious question to be tried. 85 Counsel also submitted that there was evidence before the court that Ms Cao had considered the 24 Power Fit lease. In email correspondence of 19 October 2023, she made an assumption that the Cecil Hills lease had been surrendered, after having received a copy of the 24 Power Fit lease. Saleh’s conveyancer noted that they were not sure, and asked if settlement was to proceed. Two hours later, it was 51 Ibid at pages 104 to 106. 52 Ibid at page 69. 53 Ibid at pages 68, 69, 99 and 101-103. 54 (1974) 131 CLR 634. -- 19 of 27 -- [2024] SADC 142 18 confirmed by Ms Cao that it was to proceed. The inference is that this was after instructions were obtained from the applicant. 86 The respondent’s case is therefore that they gave complete disclosure to the applicant’s authorised agent, and corrected the position regarding the 24 Power Fit lease, and its tenancy before settlement. Whilst the initial tenancy schedule for the Deed of Assignment still referred to Cecil Hills, this was corrected in a clear manner on the second schedule. The correction was noted by Ms Cao and questions were asked and answered. 87 The respondent submits that if the position is different then, affidavit evidence from Ms Cao should have been presented to the Court. However, there is nothing from Ms Cao regarding her actions, or clarifying the situation from her perspective as at October 2023. Similarly, there is no evidence from Mr Kim regarding his knowledge of the lease arrangements for the property. The respondent argues that the absence of any evidence from Mr Kim is important, as there is no chain of causation alleged between any misleading or deceptive conduct, and the decision to proceed to settlement on 23 October 2023. 88 The respondent submits that nowhere in the Statement of Claim does the applicant (being the company), allege how the alleged misleading and deceptive conduct caused them to suffer loss. The only reference to, or reliance upon, information from the respondent was Mr Liew’s evidence that he continued to rely upon the Form 1 even after the provision of the second tenancy schedule. However, in a company with two equal directors and shareholders, and with Mr Kim providing no evidence, it cannot be found that the applicant relied upon any particular information. There is no evidence that Mr Kim acted on Mr Liew’s advice. He was actively engaged in the property venture, as evidenced by correspondence between Ms Cao and Mr Kim, and the fact that after settlement he sent correspondence to 24 Power Fit’s agent. 89 The respondent argues that there is no basis upon which to conclude that Mr Liew’s state of mind alone can be equated to the Applicant’s. As a result, there is a fatal gap in the applicant’s case pursuant to s 243 of the ACL. The respondent, more importantly, points to the fact that there is no evidence that Mr Liew took any step to clarify the differences in the leases for the fitness centre or what they meant, before proceeding to settlement. He could have asked Ms Cao about the differences as she had all the information. It is submitted in this regard that, the applicant has not pleaded any loss directly caused by misleading conduct, as there is no causal link. 90 The respondent says there can be no misleading conduct as the applicant was given detail of the new lease on six different occasions (as set out above). Mr Liew himself, in his first affidavit, says that when he received the tenancy schedule on 12 October 2023, he noted that the lease for the fitness centre was in a different name and on different terms re: the net/gross details. However, he simply -- 20 of 27 -- [2024] SADC 142 19 considered this to be a mistake and relied upon the detail in the Form 1, disregarding the new information.55 91 The respondent argues that the clear detail in the tenancy schedule regarding the lease being in gross terms could not have been confusing. The schedule sets out in clear terms the rent for each tenancy. Whether that is a gross or net figure, could not have been accepted by Mr Liew as just an error without clarifying the issue. The terms were clearly different from the Cecil Hills lease. 92 It was also argued that the information in the tenancy schedule was consistent with the Advertiser article that had clearly referenced: A gym which was formally Revive Fitness Centre changed hands in early June. 93 This information was consistent with a change of ownership and not Cecil Hills merely changing its name. It was submitted that Mr Liew could only have read the Tenancy Schedule, in the context of the fitness centre changing ownership. The respondent submits that the fact that he did not, is not relevant. On an objective basis, the respondent’s behaviour was not misleading or deceptive. 94 The respondent relies upon the decision in Astill v South Esplanade Developments Pty Ltd56 (Astill) to argue that any defect in the Form 1 cannot be relied upon in circumstances where, the applicant had acquired knowledge of the defect prior to settlement. It is argued that on six separate occasions there was written communications correcting minor detail in the Form 1. Again, this leads to a position where the applicant cannot establish that the respondent’s conduct was objectively likely to mislead. 95 It is submitted that as a result, there is simply no claim under the Land and Business Act. Any incorrect information in the Form 1 was corrected before settlement, and Mr Liew admits knowledge of the correction. The applicant settled on the purchase of the property with full knowledge of the 24 Power Fit lease. A copy of that lease was in the hands of their agent, Ms Cao. 96 In summary, the respondent submits that in relation to all claims, its conduct, when considered objectively, and in its entirety, could not convey a misleading impression that the tenant of the fitness centre was paying rent on a net basis. There was no misleading or deceptive conduct. 97 The respondent also argues that there is no claim in equity as set out in paragraphs 90 and 91 of the Statement of Claim. The basis of the equity claim is that the respondent held the property on trust for the applicant after the Sale contract was finalised. During that period, it entered into the lease with 24 Power Fit, and as a result diminished the value of the property. However, the respondent argues that this is not correct as the 24 Power Fit lease pre-dated any binding contract with the applicant. No equitable interest arose until that date, 55 FDN 4 at [48]-[50]. 56 [2007] SASC 231 at [92]. -- 21 of 27 -- [2024] SADC 142 20 which is the date of the execution of the Sale Contract. It is submitted that the 24 Power Fit lease was signed on 1 May 2023 and the contract of sale on 2 May 2023. 98 Finally, the respondent argues that an injunction is not the proper remedy, in the context of the applicant seeking the remedy in paragraph 90 of the Statement of Claim, namely recission of the Sale Contract under s 15 of the Land and Business Act, and ancillary orders to place the parties in the same position they would have been in had the Sale Contract not have been given effect to. It is argued that if that was to occur, the property would be sold by the respondent, and a financial adjustment made to take account of any proved losses of the applicant. However, the applicant opposes sale of the property and is seeking to retain the property and avoid the security aspect of the mortgage. Balance of Convenience 99 The respondent argues that the balance does not favour the applicant, in an application that is not seeking to preserve the status quo pending a decision whether the applicant should retain the property and also be paid damages for their losses. The respondent argues that the application is really for the grant of a freezing order, to maintain the status quo before a claim for damages is determined. 100 The respondent argues that allowing the property to be sold would determine its value and clarify the applicant’s position regarding its losses. It was submitted that the proceeds of sale could be restrained, with orders allowing some funds to be released to meet the costs of these legal proceedings. It was argued that restraining all funds would cause significant prejudice to the respondent. This is particularly as the evidence is that the applicant’s only asset is the property.57 On the applicant’s case, it has a deficit of assets over liabilities as a result of the significant lower rent being paid. The calculation is that the value of the property has dropped from $4,100,000 to $1,326,207.58 The applicant’s case is that it borrowed 70% of the purchase price, (approximately $2.8 million) leaving a significant deficit. 101 The respondent’s argument is that in the applicant’s circumstances it would be best for them to cut their losses and sell the property, rather than continue to lose money on the loan to ANZ Bank. The applicant does not run a business from the property, and is no more than a passive investor in an investment that is now losing money. 102 The ongoing debt on the property, includes the $900,000.00 owed to the respondent. None of that debt has been repaid, with interest accruing at $258.20 per day. The respondent has calculated, and it is not disputed, that as at the date of 57 The First Liew Affidavit at [41]. 58 The First Liew Affidavit at [76]. -- 22 of 27 -- [2024] SADC 142 21 argument, the amount owing on the mortgage was $976,758.20, plus enforcement costs and legal costs. 103 The respondent submits that sale of the property is the best solution for both parties. It is accepted that ANZ have first call on any sale funds and that a sale price of $2,840,000 would need be reached to satisfy that debt. A sum of $3,847,000 would see all of the applicant’s debt paid, including the daily interest to date. It is argued that by doing nothing, and with the ANZ debt increasing, there may be enforcement proceedings brought. 104 However, it is argued that the alternative position of allowing the applicant to remain in control of the property exposes the respondent to risk. In addition, the applicant has never provided detail of its true financial position. No material has been provided to the court to establish the income and expenses generated by the applicant, nor whether they can trade out of any losses. 105 In summary, the respondent argues that they should not be deprived of their rights in relation to the vendor finance mortgage until a trial is listed and determined. These are rights held by Mr Hijazi as sole director and shareholder of the respondent. He has personally been deprived of the $900,000 advanced as a result of the applicant’s default. It is also important that the applicant had to borrow those monies because it could not meet the full purchase price, and could not obtain those funds via a bank loan. It can be inferred from this that the applicant does not have the capacity to pay the debt owing to the respondent. 106 The respondent submits that the quantum of the applicant’s alleged losses are excessive as the calculations are flawed. It has all been based upon the outgoings for the fitness centre being $225,713.75 per annum. This is described as wildly overstated. The JLL valuation indicated the outgoings were $27,901.59 Applying that figure, the loss on the rental income leads to a total reduction in the valuation of the property of $67,056.44 (as opposed to the claim of $2,700,000). This calculation is set out in the respondent’s written submissions.60 107 The respondent argues that the applicant’s valuation of the losses in revenue are fanciful, and there is simply no basis for a reduction in value of the property in a period of 10 months after settlement on the purchase. It is argued that the alleged loss of value in the property, is a long way from the $900,000 owed by the applicant to Saleh, and weighs heavily against the grant of an injunction. However, if the court was mindful of granting the order for an injunction, then the respondent submits that the principle in Inglis should be applied, and an order made that the entire mortgage debt should be paid into court. This is now $976,758.20. 108 The respondent submits that the rule in Inglis should still apply, even where the applicant, the mortgagor, claims to be entitled to a set off in relation to the damages claimed. They rely upon the decision of Morling J in Glandore Pty Ltd 59 First Liew Affidavit at Exhibit PL-6 at pages 231 and 268. 60 FDN 12 at page 19. -- 23 of 27 -- [2024] SADC 142 22 & Ors v Elders Finance & Investment Co Ltd61 (Glandore P/L). Referencing Inlgis he remarked as follows: Before turning to consider the question of the balance of convenience, I should refer to the well settled principle that, as a general rule, an injunction will not be granted restraining a mortgagee from exercising powers conferred by a mortgage, and, in particular, a power of sale, unless the amount of the mortgage debt is paid into court … the general rule will not be departed from merely because the mortgagor claims to be entitled to set-off an amount of damages claimed against the mortgagee. 109 The respondent submits that despite concerns, the applicant was prepared to settle on the purchase of the property. At that stage, they had knowledge of the 24 Power Fit lease. Ms Cao as their agent had the full detail of the lease which she knew was not the Cecil Hills lease. In all the circumstances, it is argued that the applicant cannot retain the property and also refuse its obligations under the vendor finance Mortgage. The respondent notes that the applicant has not claimed the mortgage is not due and payable or that the amount said to be owing is incorrect. Determination 110 In determining whether the applicant has a prima facie case, I begin by noting that they have achieved purchase of the property pursuant to the Sale Contract. They have done this without meeting their contractual obligation to repay the $900,000 borrowed from the respondent within the contractual term of six months. It has not been clarified why the mortgage has not been repaid, or in fact any payments made. Apart from some of the outgoings not being paid by 24 Power Fit, I was not told that rent was not continuing to be paid and collected by the applicant. The change in the terms of the 24 Power Fit lease cannot account for an inability of the applicant to make any mortgage repayments. 111 In this regard, I was not advised if the executed lease for signage to be erected for Car Swap Pty Ltd had proceeded. The JLL valuation sets out that this lease was to commence on settlement of the property with a commencing rental of $150,000 per annum.62 112 There is no information before me as to how the applicant ever intended to pay the outstanding mortgage within six months. 113 The purpose of a restraining order or injunction is to maintain the status quo before trial. However, it is not to provide relief in advance to one party, or security of the action. I am concerned that with this application the applicant is seeking to avoid a debt that there was never any ability to pay within the contracted time frame. 61 (1984) 57 ALR 186. 62 Exhibit PL-6 to the First Liew Affidavit at p206. -- 24 of 27 -- [2024] SADC 142 23 114 In any event, I find that there is no serious question to be tried. The evidence does not support a finding that the applicant did not know of the change of the lease over the fitness centre before settlement. 115 Ms Cao was engaged as the applicant’s conveyancer. She is a solicitor, and acted as the applicant’s agent for the purpose of completing the legal requirements for the applicant’s purchase of the property. As a result, I find that the principles espoused by the High Court in Sargent v ASL Developments Ltd (Sargent) apply:63 As against a third party the law imputes to a principal knowledge gained by his agent in the course of, and which is material to, a transaction in which the agent is employed on behalf of the principal, under such circumstances that it is the duty of the agent to communicate it to the principal. In the words of James L.J. in Vane v Vane64, “the actual knowledge of the agent through whom an estate is acquired is … equivalent to the actual personal knowledge of the principal”. In my view this principle applies to information acquired by a solicitor in the course of acting for his client in a conveyancing matter (Dixon v Winch65). The solicitor is to be regarded as the alter ego of the client and the rights of the other party to the contract cannot be made to depend upon the diligence or lack of diligence exhibited by the solicitor in his dealings with his client.66 116 In Sargent, it was found that a solicitor’s knowledge regarding a planning scheme and the requirements in relation thereto, were imputed knowledge of his client in relation to the purchase of that property. Stephen J stated: … where a vendor so arranges matters that his solicitor undertakes on his behalf the carrying out of a conveyancing transaction as a whole he thereby not only authorizes his solicitor to perform all necessary steps but also places the solicitor in the position of acquiring a first hand knowledge of relevant facts, at the same time depriving himself of the opportunity of acquiring such first hand knowledge. If any such steps taken by the solicitor happen to constitute acts of affirmation of the continued existence of the contract they will be binding upon the client.67 117 I do not accept that Ms Cao was not the applicant’s agent for disclosure of the new lease arrangements. She was clearly engaged in all aspects of the applicant’s dealing in the property. Applicable Facts 118 Ms Cao was appointed by the applicant to act as their conveyancer for the purchase of the property on 20 September 2023. This was after the Sale Contract, and the final addendum, had been signed, and after Mr Liew had signed the Form 1 on behalf of the applicant. 63 (1974) 131 CLR 634. 64 (1970) 92 W.N. (NSW) 518. 65 (1972) 128 CLR 529. 66 (1974) 131 CLR 634 at pp 658-659 per Mason J. 67 Ibid at p649 per Stephen J. -- 25 of 27 -- [2024] SADC 142 24 119 Ms Cao was first sent a tenancy schedule for the property on 12 October 2023. This recorded that 24 Power Fit was leasing the fitness centre pursuant to different terms to the Cecil Hills lease. This was forwarded to the applicants. The detail of the 24 Power Fit lease was further expanded upon in an email to Ms Cao of 17 October 2023. 120 Ms Cao noted the changes in the 24 Power Fit lease and contacted the respondent’s conveyancer the next day querying the differences. In a responding email, she was advised that the gymnasium business had been sold. On 19 October, a copy of the 24 Power Fit lease was forwarded to Ms Cao, who responded by assuming that the Cecil Hills lease had been surrendered. 121 The events to this point make it clear that Ms Cao was aware of the 24 Power Fit lease as early as 12 October 2023, and had a copy of the lease by 19 October. She then advised the respondent’s conveyancer that the applicant was ready to proceed to settlement. As part of that settlement, an adjustment statement was then forwarded to Ms Cao based upon the 24 Power Fit lease. 122 I have already noted that at this point, Mr Liew says that he received the tenancy schedule on 12 October, noted the changes to the fitness centre lease, but ignored them believing they were a mistake.68 It appears he did not discuss the issues with Ms Cao or ask her to clarify with the respondent. 123 I find that in these circumstances the applicant cannot argue that they were not advised of the changes in the fitness centre lease. They had the changes before them, but ignored them and did not seek further detail, or confirmation of the lease arrangements. 124 On this chronology of events, I agree with the respondent’s counsel that by the time settlement proceeded the applicant was aware of the new lease over the fitness centre. Ms Cao was alert to the differences in the lease, and her knowledge of those differences is imputed to the applicant. This is on the back of Mr Liew being aware of a change in gym business ownership in August 2023 after the Advertiser article; and Ms Cao identifying 24 Power Fit as the fitness centre tenant in Annexure C of the Deed of Assignment. 125 My review of the evidence is that Mr Liew on behalf of the applicant, and/or Ms Cao on the applicant’s behalf had full knowledge of the 24 Power Fit lease and its terms. With that knowledge, they proceeded to settlement on the purchase of the property. I have closely reviewed Mr Liew’s affidavits, and they do not change my assessment of the facts. 126 Whilst this is not a judgment after a trial, and I have not heard evidence on oath, I cannot find the applicant has a prima facie case that leads to the conclusion that they should not be attending to repayment of the vendor finance mortgage. 68 FDN4 at [48] – [50]. -- 26 of 27 -- [2024] SADC 142 25 Balance of Convenience 127 If I am wrong about there not being a prima facie case, I will address the balance of convenience. 128 The current circumstances are that the applicant borrowed $900,000.00 from Saleh to enable them to purchase the property. No repayments on that loan have been made since settlement on 23 October 2023, over 12 months ago. There is no evidence that the applicant, as a corporate entity with only one asset, has the resources to pay the amount owing under the mortgage, including interest. I find that there is no reason for the mortgage not to be satisfied. If the applicant is not in a position to do so, then the only reasonable step is for the property to be sold and the financial position of both parties to be determined. 129 In relation to the freezing orders in Western Australia, I take account of the fact that Mr Hijazi and Saleh first became subject of a freezing order on 12 October 2023 after Mr Hijazi was charged with criminal offending involving drug trafficking. This was before settlement on the sale of the property on 23 October. In those circumstances, I find that the possibility of any proceeds of the re-sale of the property being frozen is not relevant to the consideration of the balance of convenience. It is a matter of chronology, regarding which proceedings take priority. This is not a matter which is to be taken into account in determining balance of convenience. 130 I also take into account that the property in dispute is not one of special interest to the parties beyond its value as an investment. In determining whether to grant the order for injunction, it is only the monetary consequences that are relevant. Conclusion 131 Taking all matters into account, I am of the view that the applicant has not demonstrated that they have sufficient likelihood of success to justify the preservation of the status quo, by the granting of an injunction. This is both in relation to establishing a prima facie case or on the balance of convenience. The applicant has not shown that damages would not be an adequate remedy. -- 27 of 27 --