Alamin v Islam & Ors

WHITE JA: This is an application for leave to appeal from costs orders made in the Equity Division following the dismissal of the applicant’s application for mandatory interlocutory injunctive relief (Alamin v Islam [2023] NSWSC 701 (Slattery J)). The primary judge ordered that the applicant pay the respondent’s costs of the application on an indemnity basis and that the costs be assessed and be paid forthwith (at [72], orders (3) and (4)).

As the primary judge observed (at [3]), the claim for interlocutory relief sought by the applicant strongly resembled a claim for final relief. The applicant had sought an order requiring the respondent to discharge a charge held by the respondent over shares in one of the applicant’s companies to enable a first ranking charge to be given over those shares to a financier as part of the security required by the financier for finance to enable the company to complete the purchase of certain land in Leppington known as 11 Woolgen.

The applicant contends that the primary judge erred in his approach to the application for mandatory relief. The result of the refusal of the injunction was that finance to enable completion of the contract for the purchase of the land was unavailable. The purchase was not completed on the due date. The vendor terminated the contract and the land was resold on the following day. The applicant’s solicitor deposes that she understands that the quantum of the costs that will be claimed pursuant to the costs orders exceed $100,000.

The primary judge did not give ex tempore reasons for refusing the injunction but indicated that such reasons would be provided later if sought. It may be accepted that there was no realistic opportunity for the applicant to seek and obtain leave to appeal from the primary judge’s orders before the property was resold. This is not a case where the challenge to the primary judge’s exercise of the costs discretion should be rejected merely on the ground that the substantive order is not challenged (compare Robert Whitton as Trustee in Bankruptcy Estate of Steven Leonard Watton v Watton [2018] NSWCA 277 at [34]).

The applicant must establish that there is an issue of principle, a question of public importance, or a reasonably clear injustice going beyond something that is merely arguable (BE Financial Pty Ltd v Das [2012] NSWCA 164 at [32]-[38]).

To establish a ground for appellate intervention, if leave were granted, it would not be sufficient for the applicant to point to some error or errors in the primary judge’s reasoning. He would need to satisfy the court that the primary judge erred in making the costs orders he did. To do that he would need to show that the judge’s discretion miscarried. In a practical sense he would need to show that the primary judge ought to have granted the mandatory relief sought, or, so far as the challenge to the award of costs on the indemnity basis is concerned, that he misconstrued the relevant provision of the agreement that was the subject of the suit.

That agreement was called a Deed of Settlement and Release. It was entered into between the parties and their associated companies on 22 November 2022 in settlement of then existing proceedings in the Equity Division in which the respondent asserted that the applicant and companies associated with him had misused funds in relation to proposed property developments in Leppington in which the parties had jointly engaged. In the deed the “Amin Parties” was defined as including the applicant and nominated companies he controlled including a company known as MA Signature Homes Pty Ltd (“Signature Homes”). By clause 4 the Amin Parties agreed to pay the respondent $3.25 million in settlement of proceedings the respondent had brought. That amount was payable in three instalments: the first of $350,000 by 31 December 2022, the second of $1,000,000 by 30 June 2023, and the third of $1,900,000 by 28 February 2024, with time to be of the essence in respect of each payment. Clause 5 provided if there were default in payment of any of the instalments that was not remedied within 14 days of notice to remedy the breach having been given, then the balance of the settlement sum not then paid should be immediately due and payable.

Clause 7 of the Deed provided that:

The primary judge summarised the applicant’s claim for final relief (on the assumption that an apparent mistake would be corrected) as orders for rectification of cl 7 of the Deed (apparently by the deletion of paragraph 7(b)) and in the alternative a claim that it be declared that that clause is void ab initio by reason of common mistake and could be severed from the Deed (at [29]).

By way of interlocutory relief the summons sought the following relief:

In fact the summons sought by way of final relief:

In the course of submissions before the primary judge, counsel for the applicant said:

The affidavits relied on below were not included in the White Book. We were referred to no evidence that would support a claim for rectification of cl 4.The apparent grounds for the final relief sought were summarised by the primary judge as follows:

Given the apparently exiguous nature of these claims as a justification for rectification by deletion of cl 7(b), it is somewhat surprising that the primary judge proceeded on the basis that there was a serious question to be tried. Counsel for the applicant was asked to assume that that question would be decided in the applicant’s favour and to deal merely with issues of the balance of convenience (at [46]). But the primary judge observed that there were “several obvious weaknesses in Mr Alamin’s rectification case”.

One was the absence of any evidence of an anterior agreement (or negotiations) from which an understanding contrary to the settlement deed could be inferred (at [48]). On the face of it, the parties clearly did intend that the respondent would be entitled to a charge over the shares in accordance with cl 7(b). Nor does the judge’s description of the argument suggest that this was in contest. Rather it was suggested that the parties’ intention was vitiated by mistake, in that, so it was said, neither party realised that the grant of the charge would be a breach of existing financing agreements that could put developments in which both parties were involved pursuant to some form of joint endeavour at serious risk. It may be doubted that that would be the kind of mistake, even if commonly shared, that could found rectification (Commissioner of Stamp Duties (NSW) v Carlenka Pty Ltd (1995) 41 NSWLR 329 at 345).

Also, it might be thought that the applicant’s claim was not to rectify the instrument recording the parties’ agreement or common intention but to rectify the parties’ agreement by amending it to accord with what the applicant contends they would have agreed had the matter that was overlooked been brought to their notice. As Sir William James VC said in Mackenzie v Coulson (1869) LR 8 Eq 368 at 375: “Courts of Equity do not rectify contracts; they may and do rectify instruments purporting to have been made in pursuance of the terms of contracts”. The claim would appear to go well beyond the principles of rectification as they are understood in this country (Pukallus v Cameron (1982) 180 CLR 447 at 449, 450, 453, 457; [1982] HCA 63; The Club Cape Schanck Resort Co Ltd v Cape Country Club Pty Ltd (2001) 3 VR 526; [2001] VSCA 2 at [14] (Tadgell JA) and [44] (Chernov JA)).

It might also be doubted that the kind of mistake alleged could justify a declaration that the deed was void.

The primary judge recorded that the applicant defaulted in paying the first instalment of the settlement amount and notice had been given so that the full $3.25 million settlement amount was payable (at [15]). The primary judge recorded that the applicant also contended that the parties to the settlement deed understood and intended that the settlement amount of $3.25 million would be paid from the sales of the Woolgen property. His Honour rightly observed the settlement deed made no such connection. Indeed, it expressly provided for the payment of the settlement amount on a date before MH Signature would complete its purchase of the property. The property was undeveloped land. Neither party could have anticipated that the sales of that land once developed would be the source of the funding for the settlement amount due under the settlement deed (at [51]).

The applicant submitted that counsel’s submissions, quoted at [12] above, foreshadowed a claim for rectification of cl 4. That was not expressly stated. In any event, neither the primary judge nor this Court was referred to any evidence that the parties’ common intention was that the sum of $3.25 million would not be paid as clause 4 provided, but would be paid from the profits of developing the land yet to be acquired. Given that both parties were legally represented when the deed was prepared, it is hard to conceive how cl 4 could have been drafted and agreed to if that were the parties’ intention.

In Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533, McLelland CJ in Eq said that, where a decision to grant or refuse an interlocutory injunction will, in a practical sense, determine the substance of the matter in issue, it will usually be desirable for the Court to evaluate the strength of the plaintiff’s case for final relief.

There is no inflexible rule as to when it is or is not appropriate at the interlocutory stage to examine the apparent strength of the plaintiff’s claim to final relief (Australian Broadcasting Commission v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at 219, [18]; [2001] HCA 63). In the present case the balance of convenience and apparent strength of the plaintiff’s case were not to be considered in isolation, in deciding where the lower risk of injustice lay, whether the injunction was granted or refused.

The primary judge considered other issues going to the balance of convenience, in particular that the applicant was in default in making payments under the settlement deed (at [53]); that he had provided no compelling evidence that he had no other source of funds to meet his obligations under the settlement deed (at [54]); that requiring the respondent to remove the registration of his charge over the shares would significantly disadvantage the respondent; that his Honour would be disinclined to grant the mandatory relief sought unless the applicant paid $3.25 million into court to neutralise the effect of his existing default (at [55]) (no such offer had been made); that the applicant offered only an unsecured undertaking as to damages; that the respondent’s charges were valuable and to lift them would disadvantage him (at [61]); that the applicant’s claim for final relief was not compelling and was not so obvious as to weigh in his favour in the grant of interlocutory relief (at [62]); and that if the charges granted by the settlement deed were in breach of the existing facility agreements, the lender did not seem to be concerned about the breach (at [64]).

Other issues that would arise if leave to appeal were granted and this Court were considering for itself whether a mandatory interlocutory injunction should have been granted, would be the delay in making the application for that relief. The financier, Centuria Bass, by its solicitors, advised the applicant on 3 March 2023 that it required a first ranking security registered on the PPSR over the shares in MA Signature held by the applicant. It was not until some time after 21 April 2023 that the applicant by its solicitors corresponded with the respondent about the removal of the charge. On 4 May 2023 the respondent by its solicitor advised that it did not agree to the removal of the charge. Proceedings in the Equity Division were not commenced until 11 May 2023 when orders for short service were made by the Duty Judge. The proceedings were returnable on 15 May 2023. They were heard and determined by the primary judge in the duty list on 24 May 2023.

Ground 2 of the proposed draft notice of appeal contends that the primary judge erred in failing to grant interlocutory relief in that:

The applicant submitted that the primary judge erred in not following the approach to the granting or withholding of interlocutory injunctive relief stated by Mason ACJ in Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 at 153:

The applicant challenges the primary judge’s approach to the grant of interlocutory injunctive relief. His Honour stated (at [39]) that the plaintiff must prove a serious, not speculative, case which has a real possibility of ultimate success and that property or interests might be jeopardised if interlocutory relief were not granted. At [40] his Honour said that the matter required analysis of the balance of convenience and issues of hardship.

The applicant submitted that, by adopting a “multifactorial analysis”, the primary judge diminished to the point of inconsequence the hardship or irremediable prejudice to the applicant from refusal of the injunction. He submitted that the primary judge committed an error similar to what he contended was an error committed by the Full Court of the Federal Court in Samsung Electronics Company Ltd v Apple Inc & Anor (2011) 217 FCR 238; [2011] FCAFC 156 at [62] where the Court said:

The applicant submitted that the proper approach involves the sequential analysis formulated by Mason ACJ in Castlemaine Tooheys Ltd v South Australia at 153 and applied by Gleeson CJ in Australian Broadcasting Corporation v Lenah Game Meats, quoted above at [25].

The applicant submitted that the primary judge erred by only addressing the question whether the applicant would suffer irreparable injury if the injunction were refused as part of his consideration of the balance of convenience.

This submission does not raise a matter of principle warranting the grant of leave to appeal. In Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; [2006] HCA 46, Gummow and Hayne JJ at [65] approved the principle as formulated by Kitto, Taylor, Menzies and Owen JJ in Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 622-623 that there were two main inquiries:

This is another way of asking where the balance of convenience lies. That phrase can be a shorthand for asking whether, assuming a serious question to be tried, the risk of injustice to the plaintiff if an interlocutory injunction is refused but a final injunction is granted, or would be granted at trial (if there were a trial), outweighs the risk of injustice to a defendant or third parties if an interlocutory injunction is granted, but a final injunction is refused at trial (or would be refused if there were a trial) (Films Rover International Ltd v Cannon Film Sales [1986] 3 All ER 772 at 780-781 (Hoffman J)).

I do not think there is a seriously arguable issue of principle as to the sequence in which the issues are addressed. There is no seriously arguable issue as to the correctness of the approach of the Full Court of the Federal Court in Samsung Electronics Company Ltd v Apple Inc & Anor at [62]. The important question is whether (having found there was a serious question to be tried) the primary judge addressed the issue as to whether the applicant might suffer irreparable harm if the interlocutory injunction sought were not granted.

The applicant has not provided this Court with the evidence below.

It can be inferred that it was at the forefront of the applicant’s case that the purchase of the 11 Woolgen land would be lost unless the security required by Centuria Bass could be granted and this required removal of the respondent’s charge.

The primary judge recorded (at [21]) that the applicant sought to raise finance from Centuria Bass so that MA Signature could complete the acquisition, but Centuria Bass would not advance funds unless the respondent’s charges were removed.

The primary judge said that the applicant’s evidence that the charge was an obstacle to his obtaining funding and he could not obtain funding elsewhere was at a high level of generality (at [26]). His Honour added:

The draft notice of appeal does not challenge these findings.

Thus proposed ground 2(a) would have little or no prospect of success.

The same is true of ground 2(b). As indicated above, the primary judge addressed a number of matters under the rubric of the balance of convenience that would be sufficient to justify the refusal of mandatory interlocutory relief if hardship or irreparable injury were established. Not the least of these is the prima facie weakness of the plaintiff’s claim.

The same is also true of ground 2(c)(i). Although the applicant asserts that his obligation to pay $3.25 million was disputed, it was plainly provided for by the deed of settlement. The summons did not specifically seek rectification of clause 4(b). We were referred to no evidence which would support such a claim. Where the deed was entered into in settlement of existing litigation in which both parties were legally represented, the proposition that there was a common intention that the settlement amount would only be paid from the completion of sales of land yet to be purchased and developed would need more than usually convincing proof. The primary judge was not required to proceed on the basis that a contrary assertion was plausible.

It is also true of ground 2(c)(ii). There was no error in the judge taking into account that the undertaking as to damages was not secured. Speculation as to what might happen if the respondent were required to discharge his charge over the shares was not a substitute for security.

For the reasons above, ground 2(c)(iii) is without substance.

As there is no ground for leave to appeal from the merits of the primary judge’s refusal of the claim for an injunction, there can be no ground for challenging his Honour’s discretionary decision that the applicant should pay the respondent’s costs of the application.

Ground 1 of the draft notice of appeal raises a different issue. It challenges the primary judge’s order that the applicant pay the respondent’s costs of the application on an indemnity basis. The applicant complains that the primary judge did not give reasons for that order.

It is true that the primary judge did not give reasons for that order in his reasons published some weeks after the orders were made. But he gave reasons when he made the order.

Clauses 9 and 10 of the deed of settlement provided:

The primary judge said:

The construction that appealed to the primary judge is arguably erroneous. There are plausible arguments both ways. But the applicant needs to show more than that the claim is merely arguable.

The question whether costs should be assessed on the ordinary or indemnity basis may be assumed to have some financial consequence, but to what extent is not clear. The costs of an appeal on that issue may well exceed the costs inherent in the issue (Carolan v AMR Bowling Pty Ltd [1995] NSWCA 69).

Leave to appeal on that issue should not be granted.

For these reasons I propose that the summons seeking leave to appeal be dismissed with costs.

SIMPSON AJA: I agree with White JA.