Birchip Holdings Pty Ltd v Arrowsmith Rd Pty Ltd [2023] VSC 681

1. In support of its summons the Plaintiff relied on:

(a) an affidavit of Mr Grant John Walker, solicitor for the Plaintiff, sworn 20 November 2023 (the 'Walker Affidavit'); and

(b) an affidavit of Mr Shankar Kumar Agrawal ('Mr Agrawal'), the sole director of Birchip, sworn 20 November 2023 (the 'Agrawal Affidavit').

1. The Defendants resisted the application and submitted that the summons should be dismissed. The Defendants did not file any affidavit material.
2. After hearing oral argument I reserved judgment. As settlement of the sale of the Property was scheduled to occur at 4.00pm on 20 November 2023, and upon the Plaintiff, by its solicitor, giving the usual undertaking as to damages,[1] I ordered that the First and Third Defendants be restrained from proceeding with the settlement of the sale of the Property until further order of the Court.
3. The conclusions reached in this judgment are for the purposes of this interlocutory application only, and do not express a concluded view as to the issues, factual findings or applicable legal principles to be determined at any subsequent trial.

1. Birchip is incorporated in the State of Victoria.[2]
2. Birchip is the owner of 60 of the 120 shares on issue in the First Defendant, Arrowsmith Rd Pty Ltd (ACN 651 451 124) ('Arrowsmith'). The Second Defendant, Mr Denis Sadik ('Mr Sadik'), is the sole director and company secretary of Arrowsmith. The remaining 60 issued shares in Arrowsmith are owned by Windrock Construction Group Pty Ltd (ACN 611 703 336) ('Windrock'), which is a related entity of Mr Sadik.[3]
3. Arrowsmith is incorporated in the State of Victoria.[4] Arrowsmith is a special purpose vehicle which was incorporated in June 2021 to acquire and hold the Property, which it acquired in June 2021 for $1,850,000. The Property is vacant land that is likely to be a future residential subdivision, and comprises 19 certificates of title.
4. Shortly after the incorporation of Arrowsmith, between 8 July 2021 and 8 September 2021, Mr Agrawal caused Birchip to inject $600,000 of capital into Arrowsmith.[5]
5. In relation to the development of the Property, Mr Agrawal said:[6]

Significant progress has been made in relation to the development of the property. Draft plans have been completed with preliminary advice received from council, we have also completed the survey of land. We also have completed a Best Use assessment report for commercial development of the land. The site has been identified as one of the best for childcare, medical, and residential. There is also a great demand for a Motel in the area, which the zoning allows. We have also already completed a traffic report along with highest and best use report and have preliminary costings done for civil works. We are in the process of organising final drawings to lodge with council for planning permits which will include child care, medical, 4 QSR restaurants, and approximately 16 residential dwellings.

1. Mr Agrawal's statement that "significant progress has been made in relation to the development of the property" appears to contradict his earlier statement that "no substantial progress has been made on the development of the Property".[7]
2. On 22 September 2023, Arrowsmith, as vendor, executed a contract of sale of the Property (the 'Contract') with the Third Defendant, Desmond Shirley Hopwood ('Mr Hopwood'), as purchaser. Mr Hopwood executed the Contract on 19 September 2023.[8] The particulars of sale record the purchase price as $3,350,000, with a deposit of $335,000 to be paid by 26 September 2023, and the balance of $3,015,000 payable at settlement on 20 November 2023.[9]
3. On 14 November 2023, Ali Abbass of Bowery Capital emailed a copy of the Contract to Mr Agrawal.[10] Bowery Capital is the first mortgagee in respect of the Property and is owed approximately $2,200,000 by Arrowsmith. Mr Agrawal claims that prior to receipt of the email that day, he was not aware that Arrowsmith had entered into a contract to sell the Property.
4. Earlier this year, after Arrowsmith's finance facility with Bowery Capital in respect of the Property had expired, Mr Agrawal arranged for a valuation to be obtained. [11] On 28 March 2023, Egan National Valuers ('Egan') produced a valuation of the Property (the 'Egan Report') which valued the Property at $5,170,000.[12]
5. In around August 2023, Mr Sadik informed Mr Agrawal that he wanted to sell the Property, primarily as a result of "internal family reasons".[13] The email correspondence exhibited shows that on 8 August 2023, Mr Sadik emailed Mr Agrawal in the following terms:[14]

Shankar,

I hope this message finds you doing well.

I am writing in regard to the site mentioned above. I regret to inform you that we have made an internal decision to discontinue the project. Due to personal reasons, we are unable to continue holding or developing the site any further.

As a solution, I would like to propose selling the site and settling all debts associated with it. Thank you for your understanding.

Regards,

Denis Sadik

1. In reply that same day, Mr Agrawal said:[15]

Thank you Denis. Hope you are well.

Understand.

Let's sell the site.

1. Mr Agrawal states that, although he and Mr Sadik had had previous business dealings, there had been an internal falling out between the parties and that further work on the Property was "untenable".[16] Following this communication from Mr Sadik, he and Mr Agrawal exchanged the following emails relating to the sale of the Property and a potential purchase by Mr Agrawal (or the Plaintiff) of the Property or Windrock's shares in Arrowsmith:[17]

11 August 2023

2:05pm

Mr Agrawal to Mr Sadik:

Denis - Whats the price expectation, i have a agent going this weekend to bring us an offer.

Let's move quick.

regards,

Shankar Agrawal

2:22pm

Mr Sadik to Mr Agrawal:

Shankar,

For the whole site, I'd say close to $5m

that's taking into consideration the PAO. However, buyers are checking/asking if they are entitled to the PAO which makes it tricky.

If only for the NDA I'd say $3-$3.4m which is about $2m/ha.

Thoughts?

Denis Sadik

Project Director.

2:26pm

Mr Agrawal to Mr Sadik:

Ok thanks. Leave it to me.

23 August 2023

5:16pm

Mr Sadik to Mr Agrawal:

Shankar,

FYI - I've been in discussion with different agents re Arrowsmith and what we can get for it. At the moment a potential buyer is offering $3.2m.

They're asking about the PAO reimbursement as that will determine if they can offer more or not.

I am pushing for more however haven't heard back from them. Was there anything from your lawyer that can assure the PAO can be reimbursed?

Thanks.

Denis Sadik

Project Director

24 August 2023

8:55am

Mr Agrawal to Mr Sadik:

Thank you Denis.

What settlement and deposit terms are they offering ?

regards,

Shankar Agrawal

25 August 2023

8:45am

Mr Sadik to Mr Agrawal:

60 days with 10% deposit.

Do you have any correspondence from council that I can share with this buyer?

Regards,

Denis Sadik

Project Director

11 September 2023

5:18pm

Mr Agrawal to Mr Sadik and Mudit Agrawal:

Hi Denis

Apologies, finally got a copy of the letter (Mudit will send thru this evening)

Are you ok with offer of $3.2m ?

Then we can move swiftly on this and close this out either way.

regards,

Shankar Agrawal

6:21pm

Mudit Agrawal to Mr Sadik and Mr Agrawal:

Hi Denis

Please see the attached letter as requested.[18]

Regards,

Mudit

12 September 2023

11:56am

Mr Sadik to Mudit Agrawal and Mr Agrawal:

Thanks Mudit.

Shankar, all good. I am trying to push for more to at least cover expenses.

Do you have anything from your lawyer regarding the PAO? As you know at the

moment it says only the original owner prior to the PSP can claim the

reimbursement.

Regards,

Denis Sadik

Project Director

13 September 2023

10:35am

Mr Agrawal to Mr Sadik:

Thank you Denis.

We do not have anything from lawyer re PAO on written format.

I can get one done if needed.

regards,

Shankar Agrawal

10:53am

Mr Sadik to Mr Agrawal:

If he can have it in writing that reimbursement can be claimed by the new owner it will help.

Thanks.

11:55am

Mr Agrawal to Mr Sadik:

Thank you Denis.

Let me get onto this and have it for you asap.

regards,

Shankar Agrawal

15 September 2023

10:40am

Mr Sadik to Mr Agrawal:

Good morning Shankar,

Will you be okay with accepting an offer for $3.3m and 45-day settlement?

Regards,

Denis Sadik

Project Director

11:06am, Mr Agrawal to Mr Sadik:

I am not but if you are, I can work around it.

Let me know asap.

17 September 2023

5:41pm, Mr Sadik to Mr Agrawal:

Hi Shankar,

The purchaser is offering $3.35m on a 60 day settlement and 10% deposit.

I am happy to proceed and move this on.

Please confirm so I can update the buyer.

Regards,

Denis

18 September 2023

8:39am

Mr Agrawal to Mr Sadik:

Morning Denis

Is this offer via a agent or directly one of your contacts ?

If agent what fees are they charging ?

regards,

Shankar Agrawal

11:57am

Mr Sadik to Mr Agrawal:

Hi Shankar,

The purchaser is through one of our contacts.

There are no fees charged to us for this transaction.

Regards,

Denis Sadik

Project Director

12:44pm, Mr Agrawal to Mr Sadik:

Thank you Denis.

Noted. We will come back to you latest Wednesday and we have similar situation and may give you an exit.

regards,

Shankar Agrawal

20 September 2023

2:06pm

Mr Sadik to Mr Agrawal:

Hi Shankar,

Do you have any further updates?

I'd like to provide a response to the buyer by today.

Regards,

Denis Sadik

Project Director

2:08pm

Mr Agrawal to Mr Sadik:

Thank you Denis.

I am working on a position to buy your shares out.

Call me if you need further details around this.

i should be able to put something together soon.

regards,

Shankar Agrawal

2:15pm

Mr Sadik to Mr Agrawal:

Thanks Shankar.

Any idea when you can get back to me? And what figure are you currently considering?

Thanks.

Denis Sadik

Project Director

2:49pm

Mr Agrawal to Mr Sadik:

Thank you Denis.

Aren't you happy to exit as per email trail ?

Apologies can you rephrase your question ?

Sk

2:54pm

Mr Sadik to Mr Agrawal:

You've mentioned you're looking to buy my shares, so based on that what are you looking to offer?

Thanks.

21 September 2023

2:39pm

Mr Sadik to Mr Agrawal:

Shankar,

As discussed, please send your offer to buy out my shares by no later than Friday 22nd September 2023 at 3pm.

Thanks.

Denis Sadik

Project Director

3:19pm

Mr Agrawal to Mr Sadik:

Dear Denis

Exactly the price you offered to sell the site at as discussed on call.

Please kindly follow email trail

Let's close and move on.

SK

3:26pm

Mr Sadik to Mr Agrawal:

Shankar,

No, please put a formal offer in writing including terms so I can be advised by the right person on how to proceed.

Thanks.

3:28pm

Mr Agrawal to Mr Sadik:

Please read email trail Denis.

Do you want your lawyer to draft it ?

3:37pm

Mr Agrawal to Mr Sadik:

Can you explain exactly and clearly why you are happy to sell to your buyer for 3.35m but not to others ?

3:55pm

Mr Sadik to Mr Agrawal:

Shankar,

At this stage I have only received the following offer:

- $3.35m

- 10% deposit

- 60 day settlement

Further note, please send your formal offer to my accountant Sam Pavano and all further correspondence going forward. Details below:

sam@pavano.net

Thanks.

3:57pm

Mr Agrawal to Mr Sadik:

Hi Denis

Making it clear - I will not correspond with third party.

If you insist then I would get third party involved.

I leave it to you

All the best

5:54pm

Mr Sadik to Mr Agrawal:

Hi Shakar,

I take it your silence in this matter means you're not interested and I'll pursue a sale of the property.

Thanks.

Denis

1. The correspondence between Mr Agrawal and Mr Sadik suggests that it was initially common ground between the two that the Property would be sold to a third party - on 11 August 2023, Mr Agrawal said "I have a [sic] agent going this weekend to bring us an offer". Thereafter the correspondence appears to largely concern Mr Sadik's endeavours to procure offers for the Property. It is not until 20 September 2023, more than six weeks after Mr Sadik informed Mr Agrawal that the Property would be sold, and after extensive discussions regarding a proposed sale to a third party, that Mr Agrawal raised with Mr Sadik that he would like to make an offer to buy Windrock's shares in Arrowsmith.
2. Mr Agrawal claims that in response to the final email on 21 September 2023, at 6:52pm, he said: "This is oppressive, you are on notice. You have to act in the best interests of shareholders".[19] Further, he stated:[20]

At the outset of the discussions to sell the Property, I expected that it would be sold on the open market to a third party. When it became clear that Sadik had an offer at around $3.2 million, I decided that I would instead try to buy him out because I thought that the Property was worth substantially more than that.

On 20 September 2023 I began to work on arranging funding to buy him out. The next day, he brought an end to discussions. I told him that I considered his conduct, oppressive and contrary to the interest [sic] of shareholders. Now that I am in receipt of the Contract I can see that he purportedly signed the Contract the very next day, being 22 September 2023, and moreover deliberately omitted to tell me that he had done so.

1. As noted above, Mr Agrawal claims that he first became aware on 14 November 2023 that Arrowsmith had entered into the Contract to sell the Property to Mr Hopwood. In submissions, counsel for the Plaintiff stated that, although "nothing in particular" had happened from Mr Agrawal's perspective since his email of 21 September 2023, Mr Agrawal was entitled to assume that Mr Sadik had ceased plans to sell the Property given his warning that the sale would constitute oppressive conduct.[21]
2. On 15 November 2023, Mr Grant Walker of Turks Lawyers, acting for the Plaintiff, wrote to Mr Sadik seeking an undertaking that he would not, on behalf of Arrowsmith, finalise settlement of the Contract pending the issue of legal proceedings. The letter was copied to Mr Sadik's solicitors, the conveyancer acting for Arrowsmith, and the purchaser's (ie Mr Hopwood's) solicitors. It stated as follows:[22]

Dear Mr Sadik

Our client: Birchip Holdings Pty Ltd ("Birchip")

RE: Contract of sale of land between Arrowsmith Rd Pty Ltd ("Vendor") and Desmond Shirley Hopwood ("Purchaser") for the land located at 62 Arrowsmith Street, Beveridge VIC 3753 ("Property")

We act for Birchip, who owns 60 of 120 shares on issue in the Vendor.

Background

Our client has very recently come to be in receipt of a contract of sale for the Property, which has been provided to us. The Vendor is said to have executed the contract of sale on 22 September 2023, and the Purchaser on 19 November 2023. The contract of sale stipulates a purchase price of $3,350,000. The deposit of $335,000 is to be paid by 26 September 2023, and settlement is due to take place on 20 November 2023.

There are a number of matters that call into question the bona fides of the proposed sale and purchase of the Property, including the fact that the contract of sale has been executed by the Vendor approximately two months prior to it being executed by the Purchaser, and that the Purchaser purports to execute the contract of sale on a future date. There is also only a one day period between the contract date and the due date for settlement.

Additionally, we are instructed that:

• prima facie the Purchaser is a person known to you; and

• there was no marketing of the Property or sale campaign of any nature at all undertaken on the open market.

Further, you have caused the Vendor to enter into a contract at a price far below what you know the Property is worth. To that end you are in receipt of a report prepared by a reputable external valuer, Egan Australasia, stating that the market value of the Property as at 31 March 2023 was $5,170,000. We are instructed that there are no factors that justify a significant reduction in price between 31 March 2023 and the present.

Given the above, it is abundantly clear that the proposed sale of the Property is not being undertaken at arms' length. It is further apparent that your conduct amounts to significant breaches of your duties as a director of the Vendor. That you are the sole director of the Vendor does not amount to an implicit authority to divest the company of a significant asset. That is particularly so where you have sought to do so at a contract price significantly undervalue and in circumstances where our client a 50% shareholder offered to purchase the Property at the same or higher price.

The sale of the Property on the terms of the contract of sale will lead to a substantial reduction in the value of our client's shares in the Vendor, and damages may not be an adequate remedy for that reduction. Accordingly, our client has no choice but to seek urgent relief from the Supreme Court to injunct the settlement of the contract of sale.

Request for response

You are on notice that we hold instructions to make an urgent application. We have made enquiries to the Court as to its capacity to hear the matter this Friday 17 November 2023. We invite you to take steps to alleviate that urgency so that a hearing in relation to the matter can progress in a more orderly fashion.

We invite you provide an undertaking to our client that you will not, on behalf of the Vendor, seek to settle the contract of sale prior to 1 December 2023. Notwithstanding we consider the contract has been entered into in a manner that is not arms-length, any prejudice the purchaser may complain of is a matter for you and we suggest that you seek their consent to delay settlement. For the record, the preceding is not to be taken as our client's acknowledgment of the validity of the contract.

You are on notice that should you proceed to settle the Property prior to our client filing any application to the Court, our client will prosecute their rights to the fullest extent and will rely upon this correspondence on the question of costs, which will be sought on the indemnity basis.

We require you to provide the undertaking sought above by no later than 10:30am Thursday 16 November 2023, after that time we will approach the Court to confirm our request to have the matter heard on Friday.

All of our clients rights are reserved.

Yours faithfully

Grant Walker

Partner

1. On 16 November 2023, Arrowsmith's solicitors responded in the following terms:[23]

Dear Mr Walker

Sale of land located at 62 Arrowsmith Street, Beveridge VIC from Arrowsmith Rd Pty Ltd to Desmond Shirley Hopwood

We have been instructed by Arrowsmith Rd Pty Ltd ('the Company') to respond to your letter to the Company's director of 7.50pm on 15 November 2023.

First, it is highly inappropriate to send a letter to a lay person after business hours demanding a response by 10.30am the next day. This is especially true in circumstances where your client has known about the sale of 62 Arrowsmith Street, Beveridge ('the Property') since the end of September and your office would likely have received confirmation from the Court about the availability of having an injunction application heard on Friday 17 November 2023 hours prior to you sending your letter to the Company's director.

That aside, we are instructed to respond to your letter as follows:

1. The Purchaser executed the contract of sale for the Property on 19 September 2023 and not 19 November 2023. The reference to November is a typographical error.
2. The purchaser is not known to the Company's director, who has only come to know of the purchaser through a mutual contact.
3. The Property was not listed through a real estate agent. Rather, the Company's director sent 'feelers' through his various contacts to locate a purchaser for the Property.
4. Any claim that the sale, and not the proposed sale, of the Property is not being undertaken at arms' length is expressly denied and without basis.
5. The contract price is a fair price given the 60 day settlement terms. The Company's director absolutely was not in possession of a valuation report by Egan Australasia prior to the contract of sale being executed, nor has a copy of this supposed ever been provided to the Company's director.
6. Notwithstanding the contents of the report by Egan Australasia, no purchaser would have been located for the Property for the sale price of $5,170,000 with a 60 day settlement.
7. The company could not afford to continue to meet the expenses associated with the Property and could not afford to have a two year settlement for the sale of the Property, which would have been required to obtain a sale price close to $5,170,000.

8, Your client has never made any offer to purchase the Property from the Company.

1. Whilst your offer suggested that he would be willing to purchase the Company's director's shares in the Company, your client never made a formal offer and never stipulated any payment terms that could be considered by the Company's director.
2. The enclosed email thread between the Company's director and your client's director evidences that your client:

a. agreed to the sale of the Property;

1. was advised that various real estate agents advised the Company director about the value of the Property and that the initial offer from the purchaser was $3,200,000;
2. advised on 15 September 2023, that he can 'work around' accepting an offer of $3,300,000 with a 45 day settlement;
3. was made aware of the offer by the purchaser to purchase the Property and the terms of that offer, including the purchase price of $3,350,000;
4. was asked to make a formal offer by no later than 2.00pm on 22 September 2023 to purchase the Company's director's shares in the Company;
5. failed or refused to make a formal offer to purchase the Company's director's shares in the Company or any formal offer to purchase the Property; and
6. was advised that the Company would proceed with the sale of the Property by reason of your client's failure to make a formal offer to purchase all shares in the Company.
   1. By reason of the aforementioned, the Company's director has at all times acted in the best interests of the Company with particular regard to the Company's financial position.
   2. The Company's director has also acted with complete fairness to your client and gave your client the opportunity to purchase all shares in the Company prior to the contract of sale of the Property being executed.
   3. The settlement of the sale of the Property must proceed as scheduled and there is no basis for any delay in the settlement. Any application by your client to delay the settlement or set aside the Contract will be vigorously defended and this correspondence will be relied upon in support of an application for costs on an indemnity basis.
   4. Your client's director is required to sign the enclosed discharge of mortgage request form as a matter of urgency. If the form is not signed and returned to either our office or the office of Pioneer Conveyancing by 3.00pm today, we will seek instructions to apply for an urgent injunction to compel the signing of the form or to seek orders that another person be permitted to sign the form on behalf of your client's director. Should such an application be required, this correspondence will be relied upon in support of an application for costs on an indemnity basis.

We look forward to receipt of your reply as a matter of urgency

Yours faithfully

Joseph Tohme

1. On 16 November 2023, solicitors acting for Mr Hopwood, the purchaser, responded to the Plaintiff's solicitors by email, stating that they would not delay settlement of the sale of the Property:[24]

Grant

We refer to your letter of 15 November 2023.

Whilst we have not had the opportunity to seek fulsome instructions, my preliminary instructions are that settlement of the property must proceed as per contract.

For the avoidance of doubt, the contract of sale was executed by my client on 19 September 2023, and the reference to '19 November 2023' was an error at the time of signing.

Should your client proceed with the threatened injunctive relief application, then please ensure that my client is named as a defendant to those proceeding, and in that regard, my office has instructions to accept service.

Kind regards,

1. On 17 November 2023, the Plaintiff's solicitors responded to Arrowsmith's solicitors in the following terms:[25]

Dear Mr Tohme

Sale of land 62 Arrowsmith Street Beveridge VIC

Arrowsmith Rd Pty Ltd to Desmond Shirley Hopwood

We refer to your correspondence dated 16 November 2023.

We are instructed to respond as follows.

Firstly, your assertion that our client has known about the sale since the end of September, is wrong. Our client was not made aware of the executed contract of sale until a copy of it was provided to our client's director, by the mortgagee, merely a few days ago.

It is inexplicable that your client did not provide our client with a copy of the executed contract of sale, let alone advise our client that it had been entered into. Hence your client has created the urgency around this matter by failing to advise our client - which in itself is plainly oppressive conduct and plainly in breach of his director's duties.

As to your paragraph 1. Noting that it appears the parties have executed electronically and noting the 'typographical error' in date, so that we can be satisfied as to the veracity of the dates stated, please urgently provide us with the original emails which conclusively show the date and time executed contracts were exchanged. Please also provide evidence of payment of the deposit and bank statement showing that it is held by the Company.

As to your paragraph 2. Please urgently provide the details of the 'mutual contact' who introduced the Company director to the purchaser.

Please also provide the particulars of when the Company director was introduced and provide all correspondence in relation to that introduction as well as any and all subsequent correspondence that has been exchanged, including all emails and text messages passing between the purchaser and or their agents and the Company director and or their agent.

As to your paragraph 3. The Company director sending out 'feelers' for a purchaser, is not the same undertaking an appropriate marketing campaign. Any suggestion that this method of sale is likely or capable of attracting the best price and offer for the Property, is entirely disingenuous.

As to your paragraph 4. Our client does not accept on the evidence available to date, that the transaction has been undertaken at arms-length.

As to your paragraph 5-7. Your assertion that 'the contract is a fair price given the 60 day settlement terms', is entirely without foundation or basis and is merely a self-serving comment of no worth.

Whilst you state the Company director was not in possession of the Egan Australasia valuation, it is telling that your client does not contend the Company director was unaware of its contents.

The company director was on our instructions, well aware of the valuation had been undertaken by Egan Australasia and had been discussed between he and our client on numerous occasions. As such he was entirely aware that the Property had a true value of close to $5.2 million dollars. At the time the parties were seeking to refinance and the Company obtained a Letter of Offer from another financier, KOA Capital, which provided for a facility limit of $3.1 million dollars at an LVR of 60% - effectively valuing the property at $5.17 million dollars. The Company director received a copy of that offer.

Similarly, you contend that your Company could not afford to continue to 'meet the expenses associated with the Property', yet you have provided no basis whatsoever for this contention. On our instructions any ongoing expenses associated with the property are minimal. We are instructed that the loan secured by the Property had paid up capitalised interest until 30 March 2024, any urgency around the need for a sale is entirely confected.

As to your paragraph 8. The suggestion that our client never made an offer to purchase the Property from the Company, is simply untrue. Our client advised the Company director on multiple occasions that it was prepared to acquire the Property. He made it clear that he was prepared to do so 'on exactly the same terms' as had been put forward by the prospective purchaser.

The Company director and our client had a conversation on or about 12.16pm on 21 September 2023. During that conversation our client made it clear to the Company director that if he (the Company director) wanted out of the project, he (our client) would buy the Property or the Company director's shares. Our client invited the Company director to have a contract drawn up and sent to him. In the same call, the Company director indicated that he would refuse the sell the Property to our client at the same price as was being proposed.

The Company director's refusal to sell to our client on the same terms as the prospective purchaser, legitimately gives rise to an inference that the Company director is not acting at arms-length.

The email chain, provided undercover of your letter, sets out the exchange that occurred subsequent to that phone call.

At 2.39pm on 21 September 2023, the Company director requests that our client send through his offer to 'buy out my shares'.

At 3.19pm on 21 September 2023, our client responds by confirming he will buy them, 'at exactly the price you offered to sell the site as discussed on call'.

The Company director responds minutes later at 3.26pm and inexplicably, asks for a formal offer in writing, notwithstanding our client has made it abundantly clear he is willing to purchase the Company director's shares and or the Property, on 'exactly the same terms'.

At this point, it is worthy of note that the Company director does not and did not have the authority to sell the Property and had been explicitly warned against doing so, by a 50% shareholder of the Company, who has also contributed significant capital to the Company.

Irrespective of whether the Company director 'accepted' our client's offer as being 'formally made', the Company director has on any objective basis, engaged in oppressive conduct and breached his directors duties. Whether or not the sale of the Property is to go ahead, it is abundantly clear that our client has substantial and very strong claims against the Company director - which claims will be pursued vigorously.

It is also noteworthy, that the email chain provided, conveniently omits the last email sent from our client to the Company director, at 6.52pm on 21 September 2023, which reads as follows:

This is oppressive, you are on notice.

You have to act in the best interest of shareholders.

Have a good night

Notwithstanding this, the Company director, then purports to have executed the contract of sale the next day on 22 September 2023.

As to your paragraph 9. As previously stated, contrary to your contention, payment terms specified by our client, when he stated the terms were to be, 'exactly the same terms' (as proposed by the prospective purchaser). Notwithstanding this, there was no urgency or requirement for the Company director to enter into the contract of sale as quickly as he did. Particularly when our client has made his intention of buying the shares or Property, extremely clear and put the Company director on notice that he must not enter into a contract at that price. Our client made his intention to acquire the property clear, any other purported interruption is disingenuous.

The Company director was not entitled and did have authority to put such an arbitrary and constrained deadline on our client.

As to your paragraph 11 and 12. He had a duty to act in the best interest of all shareholders and plainly failed to do so. To suggest he acted with 'complete fairness' to our client, is an absurd proposition in light of the facts.

As to your paragraph 14. Our client's director will not accede to executing the discharge in circumstances as have been set out above. Your client must provide the information sought as a matter of urgency, that being:

• Emails which conclusively show the date and time executed contracts were exchanged.

• Evidence of deposit paid and account statement showing where held.

• Details of the 'mutual contact' who introduced the Company director to the purchaser.

• Particulars of when the Company director was introduced to the purchaser and all correspondence in relation to the introduction.

• Any and all subsequent correspondence, including all emails and text messages passing between the purchaser and or their agents and the Company director and or their agent.

Once the documents and information requested has been provided, our client will consider their position in respect of providing the discharge. Should the provision of that information satisfy them the transaction has been conducted at arms-length, the discharge will be provided.

Noting that your client was clearly aware the Property has considerably greater value than the contract price and that they were clearly put on notice that our client wanted to purchase the shares/Property, entering into the contract is an egregious and wilful breach of their obligations. That breach clearly gives rise to substantial claims our client can and will be pursuing against them. As such, we invite your client to seek to negotiate an end to the contract with purchaser (at his cost) in order to mitigate that loss.

Please provide the requested documents as a matter of urgency and by no later than 11.00am Monday, 20 November 2023.

Our client's rights otherwise remain fully reserved, including the right to bring an urgent application without further notice, should that be necessary.

Yours faithfully

Grant Walker

1. Subsequent to that letter, the parties exchanged the following further correspondence:

(a) at 4:35pm on 17 November 2023, the Plaintiff's solicitors emailed the respective solicitors for Arrowsmith and the purchaser advising that they held instructions to make an application to the Court restraining settlement from occurring on Monday 20 November 2023, and seeking confirmation that Arrowsmith and the purchaser would not attempt to settle until the matter had been heard before the Court;[26]

(b) at 11:44pm on 19 November 2023, the Plaintiff's solicitors again emailed the respective solicitors for Arrowsmith and the purchaser advising that their instructions remained to file the application seeking to restrain settlement of the Property, and requesting that Arrowsmith and the purchaser agree to postpone settlement to allow the Plaintiff's application to be heard later in the week commencing 20 November 2023;[27]

(c) at 8:54am on 20 November 2023, Arrowsmith's solicitors sent a letter by email to the solicitors for the Plaintiff refuting the claims made against Arrowsmith, stating their intention to oppose the Plaintiff's application for an injunction, and that "settlement will proceed as scheduled". They also stated that they had no objection to the conveyancer or the purchaser providing to the Plaintiff's solicitors copies of the emails exchanging the Contract or evidence of payment of the deposit;[28]

(d) at 9:51am on 20 November 2023, the purchaser's solicitors sent a letter by email to the solicitors for the Plaintiff stating that the purchaser "is a bona fide purchaser of the property without any prior notice or knowledge of any existing claims", and that settlement of the Property "will proceed as scheduled under the contract, failing which our client will be prejudiced with respect to its future plans associated with the property". The purchaser's solicitors also stated that there was no basis for injunctive relief "in circumstances where damages appears to be the only adequate remedy available to your client";[29]

(e) at 10:12am on 20 November 2023, the Plaintiff's solicitors responded to the purchaser's solicitors (copying Arrowsmith's solicitors) repeating their request for the purchaser and Arrowsmith to agree to postpone settlement to allow the Plaintiff's application to be heard later in the week commencing 20 November 2023, and stating that, unless an agreement was forthcoming before 10:45am, they would request that the Court list the matter for that afternoon. They also repeated their request for information regarding the exchange of the Contract and payment of the deposit, as well as information as to how the purchaser and Mr Sadik were introduced;[30] and

(f) at 11:11am on 20 November 2023, the purchaser's solicitor sent a further email to the Plaintiff's solicitors enclosing email correspondence confirming the exchange of the Contract and payment of the deposit by the purchaser. The purchaser's solicitors also stated that the purchaser would be prejudiced by a delay in the settlement of the Property because of "commercial negotiations with third parties that cannot [be] finalised until we receive certainty, that is, once settlement has taken place".[31]

1. The Plaintiff then filed the originating motion and summons of 20 November 2023, along with the Agrawal Affidavit and Walker Affidavit in support.
2. As to the contract terms and purchase price, Mr Agrawal said:[32]

I believe that Sadik has caused Arrowsmith to enter into the Contract at a price well below the actual value of the Property. I believe that the actual value of the Property at least approximately $5,170,000, being the valuation given by Egan in March of this year. That is the most current evidence of the value of the Property. Further, I consider the true value of the Property to be significantly higher, based upon my years of experience in developing greenfield property sites, and due to now being significantly advanced in respect of the development of the site, including in respect of planning permits, drawings, preliminary advice from council, traffic reports etc.

I do not know of any factors that would justify a significant reduction in the value of the Property between March 2023 and present.

Accordingly, it is my belief that transaction the subject of the Contract may not have been undertaken at arms-length. In circumstances where Sadik entered into an unauthorised sale at substantial undervalue and failed to notify of the sale, I consider that it is appropriate and necessary that I have sufficient information so as to satisfy me of the veracity of the transaction. In the short time available to me since becoming aware of the Contract, my solicitors have made preliminary enquiries regarding the identity of the Purchaser and requested evidence of the dealings between Sadik and the Purchaser. No such material has been provided by Sadik as yet.

1. The Plaintiff's case in support of its application for an interlocutory injunction was "predominantly"[33] based upon the discrepancy between the value of the Property assessed by Egan as set out in the Egan Report (which valued the Property at $5,170,000) and the purchase price under the Contract of $3,350,000. This, it was said, suggests that the Contract was not negotiated on arm's length terms, and in any case raises "concerns" with respect to the sale.[34]
2. It was also submitted by the Plaintiff that the grant of an interlocutory injunction was supported by the refusal of Mr Sadik (as the sole director of Arrowsmith) to sell the Property to Mr Agrawal, despite Mr Agrawal's expressed intention to buy the Property or Windrock's shares in Arrowsmith.[35] The fact that Mr Agrawal had made clear to Mr Sadik that he would match any price offered by a third party is, it was said, indicative that the Contract was not negotiated at arm's length.
3. As noted above, Mr Sadik is the sole director of Arrowsmith. Mr Sadik and Arrowsmith by their counsel argued that the Contract was entered into with a third party, Mr Hopwood, on arm's length terms, and that the Plaintiff's application should be dismissed.[36]
4. Counsel for Mr Sadik and Arrowsmith also submitted that the Plaintiff had been on notice of the sale of the Property since September 2023 and that the Plaintiff had the opportunity to submit a formal offer to purchase the Property from Arrowsmith (or Windrock's shares in Arrowsmith) but "he never did".[37] Mr Sadik, after receiving no such offer, emailed Mr Agrawal on 21 September 2023 stating "I take it from your silence in this matter it means you're not interested and I'll pursue a sale of the property", and the next day proceeded to sell the Property to the Third Defendant, Mr Hopwood.[38]
5. In response, counsel for the Plaintiff pointed out that Mr Agrawal had in fact put Mr Sadik on notice that Mr Sadik's refusal to accept his offer was "oppressive",[39] and that notwithstanding this notice Mr Sadik proceeded to cause Arrowsmith to enter into the Contract with Mr Hopwood the next day.[40]
6. In the course of oral argument, counsel for Arrowsmith and Mr Sadik identified that many of the Plaintiff's complaints appeared to constitute allegations that Mr Sadik had acted in breach of his director's duties. It was submitted that the proper plaintiff in an action in respect of such a breach would be Arrowsmith itself, or potentially the Plaintiff by way of a derivative action, though no such application had been brought in the present case.[41] In any case, it was submitted that such an action would only result in a claim for damages, which would not support the case for an interlocutory injunction.[42]
7. In respect of the discrepancy between the valuation of the Property in the Egan Report and the purchase price under the Contract, counsel for Arrowsmith and Mr Sadik submitted that this was due to the 'Public Acquisition Overlay' ('PAO') which affected some parts of the Property. As counsel explained, the PAO appears to be for a future overpass interchange of the Hume Freeway, and the parts of the Property subject to the PAO cannot be developed.[43]
8. The relevance of the PAO is that it grants a potential right to compensation to the person or entity that held the property at the time that the overlay was created. It was submitted that the value of this compensation was erroneously included in the Egan Report, even though that value could only be enjoyed in the hands of Arrowsmith. It was submitted that once the value of this compensation was (correctly, in Arrowsmith and Mr Sadik's submission) excluded, there was in truth no discrepancy at all, and the price agreed under the Contract represents the market value for the Property.[44] In any case, the solicitors for Arrowsmith claimed that Mr Sadik was not in possession of the Egan Report prior to signing the Contract, and had not been provided with a copy of the Egan Report as at 16 November 2023.[45]
9. Counsel for Mr Hopwood submitted that the fact that Mr Agrawal was a stranger to the Contract, had been aware of a sale of the Property for some significant time, and had waited until the last minute to intervene to restrain the settlement of the Contract was "sufficient to dispose of [the] application".[46] He argued that there was no serious question to be tried, and that in any case damages would be an adequate remedy. Counsel further submitted that that Mr Agrawal was "fishing for a cause of action against the purchaser".[47]
10. When asked, counsel for Mr Hopwood was unable to point to any substantial prejudice that would arise from a short injunction restraining his purchase of the Property.[48]
11. In reply, counsel for the Plaintiff submitted that damages may not be an adequate remedy, on the basis that Arrowsmith had only one significant asset (being the Property) which was about to be sold, and that therefore any claim in damages against the company was likely to be unfulfilled (particularly once the mortgage to Bowery Capital was discharged).[49] There was no evidence or submissions put as to the financial resources of any of the Defendants.

C. PRINCIPLES - INTERLOCUTORY INJUNCTIONS

1. Whether to grant interlocutory injunctive relief is a matter of discretion. In the exercise of that discretion, the Court needs to be satisfied:

(1) first, that there is a serious question to be tried. This involves consideration as to whether the Plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the proceeding the Plaintiff will be held entitled to relief; and

(2) secondly, that the balance of convenience favours granting the injunction. This involves consideration as to whether the inconvenience or injury which the Plaintiff would likely suffer if an injunction were refused would outweigh or is outweighed by the inconvenience or injury which the relevant Defendants would likely suffer if an injunction were granted.[50] As an additional (or integral) requirement, the Plaintiff must usually demonstrate that damages will not be an adequate remedy for the loss they will suffer if an interlocutory injunction is not granted.

1. In determining whether there is a serious question to be tried, the need to make out a 'prima facie case' does not require the Plaintiff to show that it is more probable than not that it will succeed at trial. It is sufficient that the Plaintiff shows a 'sufficient likelihood of success' to justify in the circumstances the preservation of the status quo pending the trial.[51]
2. There is a relationship between the first and second enquiries. How strong the balance of probability needs to be depends upon the nature of the right that the Plaintiff asserts and the practical consequences likely to flow from the relief sought.[52] The Court will be more inclined to grant an interlocutory injunction that will have serious practical effects for the Defendants where the Plaintiff has demonstrated strong prospects of success. The Court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been 'wrong', in the sense of granting an injunction to a party which failed to establish its right at trial, or in failing to grant an injunction to a party who succeeded at trial.[53]
3. Further, where relief at an interlocutory level would effectively entitle the Plaintiff to the final relief it seeks in the proceedings, a higher onus rests on the Plaintiff and the Plaintiff must show more than a serious issue to be tried. In such cases, the Court may embark on an assessment of the merits and strength of the Plaintiff's case.[54]

D. SERIOUS QUESTION TO BE TRIED - PRIMA FACIE CASE

1. The Plaintiff has not demonstrated that it has any direct entitlement to, or proprietary interest in, the Property (such as may support a caveat), or any entitlement to have its offer to purchase the Property from Arrowsmith or Windrock's shares in Arrowsmith considered by Mr Sadik (such as in the nature of a right of first refusal).
2. As has been said on numerous occasions, a director of a company owes duties to the company as a whole, not to any particular shareholders.[55] Accordingly, it cannot be said by the Plaintiff that its own personal interests had to be taken into account by Mr Sadik in considering whether it was in Arrowsmith's interests to sell the Property, or that the fact that the Plaintiff was interested in purchasing the Property or Windrock's shares in Arrowsmith was relevant to Mr Sadik's exercise of his duties as a director.
3. As noted earlier, the Plaintiff's case in support of its application for an interlocutory injunction focussed on the alleged discrepancy between the market value set out in the Egan Report and the purchase price under the Contract. The Egan Report does suggest that the Contract undervalues the Property. Contrary to the submissions of counsel for Mr Sadik and Arrowsmith, I am not satisfied that the Egan Report erroneously attributes the 'value' of the PAOs to the Property. On the contrary, in section 9.1 of the Egan Report, Egan adopted a 'cash equivalent price per hectare net developable area' for the Property of $2 million, and then clearly applied a discount with respect to those parts of the Property that are subject to the PAO (or other factors that would also necessitate a discount) as follows:[56]

1. As set out in section 1.5 of the Egan Report, the valuation was based on the 'market value' of the property, being the "estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction, after property marketing and where the parties have each acted knowledgably, prudently and without compulsion".[57] It makes no reference to any compensation that it considers would be received by Arrowsmith or any purchaser in respect of the PAO.
2. The context in which the Egan Report was obtained also makes it highly improbable that the report would have ascribed value to the land affected by the PAOs that was not available to a third party purchaser. As set out in Mr Agrawal's Affidavit, he obtained the valuation from Egan in connection with the renewal of the finance facility in respect of the Property.[58] It seems implausible that the report would be of any benefit to a prospective lender if it did not represent the value that could be obtained on a sale of the Property to a third party in the event of a default by the borrower. Put another way, if the Egan Report only reflected the value that the Property had in the hands of Arrowsmith, it would not assist a lender considering the value that would be obtained on a sale of the Property to a third party.
3. There may also be some doubt that Arrowsmith is in fact entitled to any compensation under the Planning and Environment Act 1987 ('PAE Act') in connection with the PAO. Counsel for Mr Hopwood directed me to Halwood Corp Ltd v Roads Corp.[59] Although not necessary to consider in detail, that case provides that only the person who was the owner or occupier of land at the time of the imposition of a PAO is entitled to compensation, a requirement which is also made clear by section 108 of the PAE Act.[60] No evidence was produced as to when the PAO was imposed. If it was imposed prior to Arrowsmith's purchase of the Property, then Arrowsmith would not appear to be entitled to any compensation under the PAE Act.
4. Accordingly, I do not accept the submissions on behalf of Arrowsmith and Mr Sadik in connection with the nature of the value assessed for the Property under Egan Report. There does appear to be a discrepancy between the value of the Property set out in the Egan Report and the value agreed between Arrowsmith and Mr Hopwood under the Contract. This discrepancy appears to be significant, and no satisfactory explanation for it has been advanced by any of the Defendants. However, I also accept that there is no clear evidence that Mr Sadik was aware of the Egan Report's valuation of the Property prior to causing Arrowsmith to enter into the Contract, other than an initial supposition on 11 August 2023 that the Property may be worth "close to $5m" if the PAO is "taken into consideration" (and "$3-$3.4m" if only for the net developable area).
5. The difficulty for the Plaintiff, however, is that notwithstanding this discrepancy, I am not satisfied that the Plaintiff has made out a prima facie case supporting its application for an injunction, in the sense that, if the evidence remains as it is, there is a probability that at the trial of the proceeding the Plaintiff will be held entitled to relief that would include the right to set aside, or permanently restrain settlement of, the Contract.
6. A plaintiff seeking an interlocutory injunction must be able to show sufficient colour of right to the final relief, in aid of which interlocutory relief is sought.[61] Put another way, the Plaintiff must demonstrate that its claim, which has a sufficient likelihood of success, would, if proven, result in an order setting aside the Contract or otherwise permanently restraining the sale of the Property to Mr Hopwood. Otherwise, there would be "no justice in maintaining the status quo, because that depends upon restraining [the Defendants] from doing something which, by hypothesis, the [Plaintiff] has no right to prevent".[62]
7. Even if the Plaintiff can establish at trial that Mr Sadik caused Arrowsmith to enter into the Contract to sell the Property at a significant undervalue, it is difficult to see how that claim could result in the Contract being set aside, or settlement being permanently restrained, in the absence of evidence that Mr Hopwood was not a bona fide purchaser for value without notice of the Plaintiff's claims. The discrepancy in price between the Egan Report and the Contract is, alone, insufficient to support an inference that Mr Hopwood was a party to, or aware of, some wrongdoing on the part of Mr Sadik that would justify the Court granting an interlocutory injunction to restrain Mr Hopwood's entitlement to the enjoyment of his rights in the Property until final adjudication of the Plaintiff's claims.
8. The Plaintiff may well have a claim pursuant to Part 2F.1 of the Corporations Act 2001 (Cth) ('Corporations Act') on the basis that an actual or proposed act by or on behalf of Arrowsmith is contrary to the interests of the members as a whole or may seek leave to commence a derivative action pursuant to Part 2F.1A of the Corporations Act on behalf of Arrowsmith against the Second Defendant, Mr Sadik. However, those claims, if successful, would likely sound in damages, and the Plaintiff has not demonstrated that any of its claims would result in an order setting aside, or permanently restraining settlement of, the Contract. I therefore do not consider that the Plaintiff has demonstrated a 'sufficient likelihood of success' to justify in the circumstances the preservation of the status quo pending the trial.[63]

1. Since I do not consider that the Plaintiff has made out a prima facie case in the relevant sense, it is not strictly necessary for me to consider the balance of convenience. Nonetheless, for the reasons that follow I do not consider that the balance of convenience weighs in favour of an interlocutory injunction.
2. As noted above, the Defendants have filed no evidence. Counsel for Mr Sadik and Arrowsmith and counsel for Mr Hopwood each made short submissions that damages would be an adequate remedy, given the nature of the Plaintiff's claims.[64] Counsel for Mr Hopwood referred to correspondence in which Mr Hopwood's solicitor had stated that if settlement of the Contract did not proceed "our client will be prejudiced with respect to its future plans associated with the property".[65]
3. The Plaintiffs submitted that, if the Property is sold under the Contract, there is a significant risk of the disbursal of the proceeds of the sale of Arrowsmith's most significant asset. After Bowery Capital's mortgage is discharged, it is said, there may be a real risk that Arrowsmith will have insufficient assets to meet a claim by the Plaintiff, given the quantum of the discrepancy in the value of the Property. The Plaintiff did not otherwise make submissions with respect to the balance of convenience, beyond identifying that the development opportunity represented by the Property is valuable, and that the significant work that had been committed to the development of the Property to date would go unrealised if Arrowsmith were to dispose of the Property in accordance with the Contract.[66]
4. The Plaintiff's submission that if the settlement goes ahead any claim against Arrowsmith will go unfulfilled as it will have disposed of its principal asset is difficult to understand, as any claim by the Plaintiff would appear to be directed against Mr Sadik rather than against Arrowsmith. Furthermore, as noted above, the Plaintiff has not provided any evidence as to the financial position of any of the Defendants in support of its submission.
5. I am not satisfied that the inconvenience or injury which the Plaintiff would likely suffer if an injunction were refused outweighs the inconvenience or injury which the Defendants would likely suffer if an injunction were granted. In particular, in the case of Mr Hopwood, he would be denied any enjoyment of his proprietary interest in the Property, which is he entitled to under the Contract.
6. I am also not satisfied that Mr Agrawal did, at all times, act in a manner that was totally forthright with Mr Sadik regarding his intentions vis-à-vis the Property and purchasing Windrock's shares in Arrowsmith.
7. Far from being unaware of Mr Sadik's undervaluation of the Property (and therefore, by the Plaintiff's submission, Mr Sadik's conduct constituting a breach of his directors duties), Mr Agrawal would have been immediately aware that Mr Sadik was proposing to sell the Property for significantly less than the market value, given that he had been in possession of the Egan Report since March 2023. Therefore, once Mr Sadik informed Mr Agrawal on 23 August 2023 that he had an offer of $3.2m for the Property, Mr Agrawal would have known that this undervalued the Property by almost $2m, and yet he stayed silent on this point, instead asking about the settlement and deposit terms proposed.
8. The explanation for Mr Agrawal's conduct that was advanced by counsel for the Plaintiff at the hearing was that Mr Agrawal was acting shrewdly at this stage, given that he was aware that Mr Sadik misapprehended the value of the Property to be significantly lower than its 'true' value, and that this might represent an opportunity for the Plaintiff to acquire Windrock's shares for a reduced price.[67]
9. For weeks, Mr Agrawal continued to correspond with Mr Sadik on the basis that the Property would be sold to a third party. He indicated he was going to have his own agent invite offers from potential buyers (on 11 August 2023), inquired with Mr Sadik about the terms of potential offers (on 24 August 2023), provided correspondence from the local council regarding the Property that could be shared with purchasers (on 11 September 2023), and offered to procure advice regarding potential third party buyers' entitlements to compensation for the PAO (on 13 September 2023). As noted above, it was six weeks after the initial email from Mr Sadik informing Mr Agrawal of his intention to sell the Property before Mr Agrawal first explicitly raised the possibility of purchasing Windrock's shares in Arrowsmith, at which point Mr Sadik appears to have been poised to sign the Contract with Mr Hopwood.
10. At no stage during their discussions did Mr Agrawal seek to correct Mr Sadik's apparent misapprehension regarding the value of the Property, or bring Mr Sadik's expectations as to price for the Property in line with the market value assessed by Egan under the Egan Report.
11. Furthermore, although it may be said that Mr Agrawal was entitled to assume that Mr Sadik would not pursue a sale of the Property after his email of 21 September 2023, he was aware that Mr Sadik would not be able to complete the development of the Property given the matters disclosed to him by Mr Sadik's email of 8 August 2023. Still, before causing his solicitors to send the letter of 15 November 2023 to Mr Sadik, Mr Agrawal made no enquiries of Mr Sadik as to any potential sale of the Property for any price, or regarding any progress as to the development of the Property, and did not attempt to pursue a purchase of Windrock's shares in Arrowsmith or a purchase of the Property himself at any stage in the interim.
12. These matters evidence some delay in the actions of Mr Agrawal, and colour some of his evidence with respect to the alleged 'oppressive' conduct of Mr Sadik. In particular, although Mr Agrawal claims that the fact that Mr Sadik was unwilling to negotiate an agreement to sell Windrock's shares in Arrowsmith is evidence of oppressive conduct, Mr Agrawal was offering no more for those shares than the equivalent price for the Property under the Contract with Mr Hopwood. From Mr Sadik's perspective, therefore, the two offers would have at the time appeared to be equivalent, or at a minimum would not have indicated to Mr Sadik (in his capacity as the sole director of Arrowsmith) that there would be a significant shortfall in value if Arrowsmith proceeded to sell the Property to Mr Hopwood in accordance with the Contract, and that therefore the Contract would not have been in the interests of Arrowsmith.
13. By contrast, aside from the disparity between the price for the Property under the Contract and the value assessed under the Egan Report, the evidence appears to disclose that Mr Sadik has consistently worked to sell the Property to a third party in accordance with his initial email of 8 August 2023. There is also no evidence that Mr Hopwood was aware of any of these exchanges between Mr Sadik and Mr Agrawal, the Egan Report, or Mr Agrawal's offer to purchase Windrock's shares in Arrowsmith.
14. As stated above, any claims brought by the Plaintiff, if successful, would likely sound in damages. In the circumstances, the Plaintiff has not demonstrated that damages will not be an adequate remedy for the loss it will suffer if an interlocutory injunction is not granted. I therefore consider that refusal of interlocutory injunctive relief carries the lower risk of injustice.
15. Finally, I note that although the Plaintiff's summons also sought orders pursuant to r 29.07 of the Rules requiring the discovery of various documents from the First and Third Defendants, this was not pressed during argument and I will not make any orders for discovery at this time. That said, the parties have an overarching and ongoing obligation pursuant to s 26 of the Civil Procedure Act 2010 to disclose the existence of documents that they consider, or ought reasonably consider, are critical to the resolution of the dispute.

(a) The Plaintiff's application for an interlocutory injunction is refused.

(b) The Plaintiff's summons filed 20 November 2023 is dismissed.

(c) The proceeding is listed for a directions hearing on 6 December 2023.

1. The usual rule when a plaintiff fails on an application for interlocutory relief is that costs follow the event, but there may be circumstances of which I am unaware that would displace the usual rule. I will deal with the question of costs and what further directions should be made in the proceeding at the directions hearing on 6 December 2023.

[1] Transcript of Proceedings on 20 November 2023 ('Transcript'), 25:9-13.

[2] Agrawal Affidavit, [4]; Exhibit SKA-1 to the Agrawal Affidavit, 8-9 (Current historical search of Birchip obtained from the Australian Securities and Investment Commission ('ASIC') on 15 November 2023).

[4] Agrawal Affidavit, [5]; Exhibit SKA-1 to the Agrawal Affidavit, 10-11 (Current historical search of Arrowsmith obtained from ASIC on 15 November 2023).

[8] Agrawal Affidavit, [8]-[9]; Exhibit SKA-1 to the Agrawal Affidavit, 12-147 (Contract). The date '19/11/2023' appears in handwriting next to Mr Hopwood's signature: Exhibit SKA-1 to the Agrawal Affidavit, 14. In an email to the Plaintiff's solicitor dated 16 November 2023, Mr Hopwood's solicitor stated that the reference to 19 November 2023 was an error and that the Contract was executed by Mr Hopwood on 19 September 2023: Exhibit SKA-1 to the Agrawal Affidavit, 282 (Email from RJ Legal dated 16 November 2023 to Turks Legal), as extracted below at [24]. See also the letter from Arrowsmith's solicitors extracted below at [23].

[9] Agrawal Affidavit, [8]-[9]; Exhibit SKA-1 to the Agrawal Affidavit, 12-147 (Contract).

[10] Agrawal Affidavit, [10]; Exhibit SKA-1 to the Agrawal Affidavit, 148-149 (Email from Mr Abbass dated 14 November 2023 to Mr Sadik).

[12] Agrawal Affidavit, [13]; Exhibit SKA-1 to the Agrawal Affidavit, 150-214 (Egan Report) at 153.

[14] Exhibit SKA-1 to the Agrawal Affidavit, 215-221 and 229-281 (Email chain with the title "RE: Arrowsmith Rd, Beveridge - Project Update" dated between 8 August 2023 and 21 September 2023 ('Email Chain')).

[17] Agrawal Affidavit, [17]-[19]; Email Chain, 215-221, 229-281. The expression 'PAO' in the emails is a reference to a 'Public Acquisition Overlay' which is discussed below at [35]-[36].

[18] This letter was not provided to the Court.

[19] Agrawal Affidavit, [17(n)]; Exhibit SKA-1 to the Agrawal Affidavit, 286 (Letter from Turks Legal dated 17 November 2023 to Thome Lawyers). The email was not exhibited in the Agrawal Affidavit, but was extracted in a letter from Agrawal's solicitor to Sadik's solicitors (see below at [25]) . The fact of the email being sent and its contents were not contested by the Defendants.

[22] Agrawal Affidavit, [20], Exhibit SKA-1 to the Agrawal Affidavit, 222-223 (Letter from Mr Agrawal's solicitors, Turks Legal, dated 16 November 2023 to Mr Sadik).

[23] Agrawal Affidavit, [21]; Exhibit SKA-1 to the Agrawal Affidavit, 224-281 (Letter from Thome Lawyers dated 16 November 2023 to Turks Legal).

[24] Agrawal Affidavit, [22]; Exhibit SKA-1 to the Agrawal Affidavit, 282-283 (Email from RJ Legal dated 16 November 2023 to Turks Legal).

[25] Agrawal Affidavit, [23]; Exhibit SKA-1 to the Agrawal Affidavit, 284-287 (Letter from Turks Legal dated 17 November to Thome Lawyers).

[26] Walker Affidavit, [4]; Exhibit GJW-1 to the Walker Affidavit, 5 (Email from Turks Legal dated 17 November 2023 to Thome Lawyers and RJ Legal). The Walker Affidavit records the time of the email as '4:36pm', but the exhibited email shows the time as '4:35pm'.

[27] Walker Affidavit, [4]; Exhibit GJW-1 to the Walker Affidavit, 8 (Email from Turks Legal dated 19 November 2023 to Thome Lawyers and RJ Legal). The Walker Affidavit records the time of the email as '11:45pm', but the exhibited email shows the time as '11:44pm'.

[28] Walker Affidavit, [5]; Exhibit GJW-1 to the Walker Affidavit, 17-18 (Letter from Thome Lawyers dated 20 November 2023 to Turks Legal).

[29] Walker Affidavit, [6]; Exhibit GJW-1 to the Walker Affidavit, 19 (Email from RJ Legal dated 20 November 2023 to Turks Legal).

[30] Walker Affidavit, [7]; Exhibit GJW-1 to the Walker Affidavit, 25 (Email from Turks Legal dated 20 November 2023 to RJ Legal).

[31] Walker Affidavit, [8]; Exhibit GJW-1 to the Walker Affidavit, 32 (Email from RJ Legal dated 20 November 2023 to Turks Legal). See also Exhibit GJW-1 to the Walker Affidavit, 40-43 (Email correspondence between Rebecca Villella, Conveyancing Director and RJ Legal) and Exhibit GJW-1 to the Walker Affidavit, 44 (Receipt for payment to Pioneer Property Conveyancing Trust dated 25 September 2023).

[36] Ibid, 14:2-8. See also the Email Chain extracted at [18] above.

[39] Agrawal Affidavit, [17(n)]; Exhibit SKA-1 to the Agrawal Affidavit, 286 (Letter from Turks Legal dated 17 November 2023 to Tohme Lawyers).

[45] Exhibit SKA-1 to the Agrawal Affidavit, 224 (Letter from Thome Lawyers dated 16 November 2023 to Turks Legal).

[49] Ibid, 23:6-15. See also ibid, 12:16-23.

[50] Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57 (Gleeson CJ, Gummow, Kirby, Hayne, Heydon & Crennan JJ) at 82 [65] ('O'Neill'); Wombat Forestcare Inc v VicForests [2023] VSC 582 (Richards J) at [19] ('Wombat Forestcare Inc').

[51] Transonic Travel Pty Ltd v Tilakee Nominees Pty Ltd [2021] VSC 413 (Nichols J) at [11] ('Transonic').

[52] O'Neill [2006] HCA 46; (2006) 227 CLR 57 at 82 [65].

[53] Wombat Forestcare Inc [2023] VSC 582 at [20]- [21]; Transonic [2021] VSC 413 at [11]; Bradto Pty Ltd v State of Victoria [2006] VSCA 89; (2006) 15 VR 65 (Maxwell P and Charles JA) at [35].

[54] Werribee Football Club v Tattersalls Gaming Pty Ltd [2005] VSC 144 (Kaye J) at [18]; Hartleys Limited v Martin [2002] VSC 301 (Gillard J) at [32]-[37]; Cayne v Global Natural Resources Pty Ltd [1984] 1 All ER 225 (Eveleigh, Kerr and May LJJ) at 236.

[55] See, for example, Pilmer v Duke Group Ltd (in liq) [2001] HCA 31; (2001) 207 CLR 165 (McHugh, Gummow, Hayne and Callinan JJ) at 178-179 [18].

[56] Exhibit SKA-1 to the Agrawal Affidavit, 180 (Egan Report).

[57] Exhibit SKA-1 to the Agrawal Affidavit, 156 (Egan Report).

[59] [1998] 2 VR 439 ('Halwood').

[60] Halwood [1998] 2 VR 439 (Brooking, Tadgell and Ormiston JJA) at 450. Halwood was recently considered by the Court of Appeal in Mason v Head, Transport for Victoria [2021] VSCA 19; (2021) 63 VR 175 (Beach, Emerton and Osborn JJA). In that case, the Court overturned certain aspects of the decision in Halwood, although they are not relevant in the context of this case.

[61] Australian Broadcasting Corp v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 (Gleeson CJ) at 216 [8].

[63] Transonic [2021] VSC 413 at [11].

[64] Transcript, 14:23-28, 18:3-13, 18:28-19:4, 19:30-20:2.

[65] Transcript, 19:5-24; Walker Affidavit, [6]; Exhibit GJW-1 to the Walker Affidavit, 19 (Email from RJ Legal dated 20 November 2023 to Turks Legal).