First Plaintiff v Defendants

2 In this application the plaintiffs seek interlocutory orders restraining any further dealing with two properties of the Company and one property of the second plaintiff ('Mohamad') which are the subject of security interests in favour of MAG.

3 They do so in circumstances where the real issue in this proceeding is the amount of the debts that are subject to those security interests. MAG and the Receivers allege that the debts of the Company secured under the relevant agreements total approximately $8 million and include debts assigned to MAG of approximately $3.6 million in June 2018 (the '20 June debts'). Many of the 20 June debts were assigned to MAG by Mekkya or his company. The plaintiffs accepts that the debts of the Company which are due, payable and secured total approximately $4.4 million, but do not accept that the 20 June debts are secured or that they are due and payable.

4 Further, on 20 July 2018, MAG sold the substantial asset of the Company for $4.5 million to a company related to Mekkya. MAG and the Receivers will continue, unless restrained, to sell the other two properties.

5 I heard argument on 7 August 2018. I granted the substance of the relief sought by the plaintiffs for a period of approximately 4 weeks. These are my reasons for doing so.

6 It is necessary to set out in summary the factual background to this application.

7 The Company owns various properties including the property at 65-67 Arden Street North Melbourne (the 'North Melbourne property') on which is being constructed a development consisting of 25 apartments and two commercial units. The Company entered into a building contract with New Concept Homes Pty Ltd (the 'Builder') on 19 April 2015 to develop the North Melbourne property (the 'Building Contract'). The contract price was $4.4 million. The works did not progress in accordance with the Building Contract. On 5 April 2018, the Company wrote to the Builder terminating the Building Contract.

8 On 28 October 2018, the Company entered into a series of agreements with Balanced Securities Pty Ltd ('Balanced Securities') in relation to an advance of up to $6.2 million to develop the North Melbourne property. These included a Facility Agreement and a General Security Deed ('GSD'). Each of the plaintiffs, Wael El-Saafin ('Wael') and Lobna El-Saafin ('Lobna') were guarantors under the Facility Agreement. The Company granted a mortgage over the North Melbourne property which was registered. A second ranking mortgage was also granted over the property at 3 Ball Court, Bundoora (the 'Bundoora property') which is the family home of Mohamad.

9 On 18 April 2018, Balanced Securities as assignor entered into a Deed of Assignment with Franek or his nominee assigning all its right, title and interest under the Facility Agreement, the GSD and the mortgages (the 'Balanced Securities assignment'). It recorded that the amount owing under the Facility Agreement as at 18 May 2018 was $2,999,649.30 (the 'Balanced Securities loan'). Subsequently, Franek nominated MAG (which was incorporated on 26 April 2018) as the assignee.

10 On 9 April 2018, Franek purported to appoint the second and third defendants as the receivers of the Company pursuant to the terms of a separate General Security Agreement dated 18 May 2017 between Wael, Bayda El Saafin and Franek in relation to an advance from Franek to Wael of $311,000 in January 2016 (the 'Franek loan' and the 'Franek GSA'). The Company granted a mortgage over the property at 2 Lynwood Crescent Lower Plenty in support of the Franek loan (the 'Lower Plenty property' and the 'Lower Plenty mortgage'). The Lower Plenty property is the former family home of the plaintiffs and where they grew up but has since been rented out.

11 The plaintiffs challenged the basis upon which the Receivers were appointed under the Franek GSA and raised these issues with both Franek and the Receivers. On 3 May 2018, Franek assigned all his right, title and interest in the Franek GSA (including the Lower Plenty mortgage) to MAG. On 4 May 2018, Franek and/or MAG instructed the Receivers to resign. On 7 May 2018, the Receivers did so. However, on that day, they were re-appointed by MAG as the receivers of the Company under the GSD.

12 From 9 May 2018, the plaintiffs sought details of the payout figure of the Balanced Securities loan to terminate the Receivers' appointment under the GSD both from the Receivers and from Franek and MAG. Those details were not provided until 25 June 2018. There has been no explanation as to why the details could not be provided, particularly in light of the figure contained in the Balanced Securities assignment.

13 On 25 June 2018, the solicitor for Franek and MAG, Mark Halse ('Halse'), advised the plaintiffs that the payout figure was $8,259,990.83. The reason for the enormous difference between this amount and the Balanced Securities loan (i.e. $2,999,649.30) referred to in the Balanced Securities assignment was threefold. First, the Balanced Securities loan, including interest and costs, had grown to 3,265,742.82. Second, the amount claimed included the Franek loan plus interest, then totalling approximately $1,140,000. Third, it included the 20 June debts of $3,579,105.03. On 20 June 2018, MAG entered into assignments in respect of these debts allegedly owing by the Company.

(1) a debt allegedly owed to Mekkya in his personal capacity of $982,848.22;

(2) a debt allegedly owed to Mekkya trading as 'New Concept Designs' of $174,907.59;

(3) a debt allegedly owed to the Builder of $521,349.22; and

(4) a debt allegedly owed to George Sacca of $1,900,000.

15 On 27 June 2018, the plaintiffs offered to pay out the Balanced Securities loan claimed by MAG on the basis that the North Melbourne mortgage be discharged. MAG and the Receivers maintained that the Balanced Securities loan, the Franek loan and the 20 June debts were all the subject of the security.

16 On 27 June 2018, on the application by the plaintiffs, I made interim orders restraining the Receivers and Franek (including in his capacity as a director of MAG) from taking steps to realise, sell or otherwise dispose of the 'Securities' as that term is defined in the Facility Agreement. At that time, the Receivers were threatening to sell the Lower Plenty property.

17 The interlocutory application came on for hearing before Kennedy J on 3 July 2018. Her Honour dissolved the interim orders but the Receivers gave an undertaking not to sell the 'Securities' as that term is defined in the Facility Agreement until the determination of the interlocutory application.

18 The interlocutory application came on for hearing again on 17 July 2018 before Kennedy J. On that day, the Receivers gave an undertaking in a similar form until the determination of the interlocutory application which was then fixed for 7 August 2018.

19 One of the issues before her Honour on 17 July 2018 was whether the Receivers were purporting to exercise powers as mortgagee to sell the assets of the Company. This was because the defendants contended no injunction should be granted unless the plaintiffs tendered the full amount which MAG asserted was secured (including the 20 June debts) based upon Inglis v Commonwealth Trading Bank of Australia[1] ('Inglis'). Her Honour made orders for Franek and MAG to provide a memorandum setting out the precise basis upon which the Receivers were entitled to sell the North Melbourne property and the Lower Plenty property. Her Honour also made orders for the filing of material and submissions for the interlocutory application to be heard on 7 August 2018.

20 At the hearing on 17 July 2018, Kennedy J was not informed that, on 9 July 2018, MAG had entered into a contract with AAGG Developments Pty Ltd ('AAGG') to sell the North Melbourne property for $4,500,000 with settlement to take place on 20 July 2018. AAGG was registered on 5 July 2018. Mekkya is the sole director of AAGG. The shareholders of AAGG are Mekkya and Sacca. As noted above, Mekkya controls the Builder, and the Builder, Mekkya and Sacca assigned debts alleged owed by the Company to MAG on 20 June 2018 (i.e. the 20 June debts). The circumstances of the sale to AAGG and the relationship between Franek, MAG, AAGG, Mekkya and Sacca have not been explained. I note that counsel for the plaintiffs submitted that "MAG" in fact represents the initial of the first name of each of Franek, Mekkya and Sacca.

21 On 19 July 2018, Halse filed a memorandum pursuant to the orders of Kennedy J to the effect that the Receivers were in possession of the North Melbourne property and the Lower Plenty property under the terms of the GSD and not under the terms of the mortgages granted pursuant to the GSD. It is now plain that MAG had exercised powers as mortgagee of the North Melbourne property by entering into the contract of sale on 9 July 2018. It has not been explained why MAG and Franek did not inform the court of the contract to sell the North Melbourne property either at the hearing on 17 July 2018 or in the 19 July memorandum. It may be that the court would have had a very different view about the adequacy of the undertakings of the Receivers if it had been informed of these matters.

22 Settlement of the sale of the North Melbourne property took place on 20 July 2018 when the purchase price was paid. Halse acted as solicitor for both MAG as vendor and AAGG as purchaser. This is evident from the transfer of land signed by Halse for both MAG and AAGG. That transfer is in fact dated 22 June 2018. Mr Halse has deposed this date was 'human error' and that the transfer was not prepared until 20 July 2018.

23 In any event, neither the sale nor the settlement of the sale of the North Melbourne property was known to the plaintiffs. On 19 July 2018, the solicitors for the plaintiffs wrote to Halse stating the plaintiffs were ready, willing and able to settle the Franek loan, the Balance Securities loan and associated costs at 3pm on 25 July 2018 in return for a release of the North Melbourne mortgage. Halse did not reply to that letter until 25 July 2018 when he advised the plaintiffs that MAG had exercised its power of sale over the North Melbourne property for $4,500,000.

24 As noted above, on 27 July 2018, Franek resigned as a director of MAG and transferred his shares in MAG to Mekkya and Mekkya became the sole director of MAG. The reason for this has not been explained.

25 On 3 August 2018, MAG appointed administrators to the Company under s 436C of the Corporations Act 2001 (Cth) (the 'Act').

26 It is in these circumstances that the plaintiffs seek an interlocutory injunction seeking to restrain until the determination of the proceeding at trial:

(1) Franek, MAG and the Receivers from taking any steps to realise, sell or otherwise dispose of the 'Securities' as that term is defined in the GSD; and

(2) AAGG from taking any steps to develop, realise, sell or otherwise dispose of the North Melbourne property.

27 The principal issue raised by the plaintiffs in their statement of claim is that:

(1) the 20 June debts do not fall within the definition of Secured Moneys under the GSD or the definition of 'moneys hereby secured' in the memorandum of common provisions of the relevant mortgages; and

(2) in any event, none of the 20 June debts are due and payable.

28 The plaintiffs allege that they have tendered, or are ready, willing and able to tender the current amount of the Franek loan of $1,141,000 and the Balance Securities loan of $3,265,742, which are not in dispute, and associated costs, which are in dispute.

29 In support of this application, the plaintiffs sought leave to file a further amended statement of claim to raise claims based on the sale of the North Melbourne property and to join AAGG to the proceeding for that purpose. In summary, the plaintiffs seek to allege that:

(1) the notices under s 76 of the Transfer of Land Act 1958 served on 26 June 2018 by MAG, pursuant to which the sale to AAGG was exercised, were invalid in light of the purported transfer dated 22 June 2018; and

(2) in breach of duty, MAG sold the North Melbourne property in bad faith, to the knowledge of AAGG, as the sale was not truly an independent bargain given the relationship between the vendor and the purchaser, and the property was not sold at public auction and for undervalue. As a result, the transfer should be set aside, alternatively AAGG holds the property as constructive trustee for the Company.

30 In light of issues raised about the standing of the plaintiffs to bring and continue with this proceeding (which I address further below) and the appointment of administrators on 3 August 2018, I did not consider it appropriate to join AAGG to the proceeding or give leave to amend the statement of claim at this time. However, the argument at the hearing of the interlocutory injunction proceeded on the basis that the plaintiffs wished to pursue their claims in relation the sale of the North Melbourne property.

31 The principles relevant to the grant of an interlocutory injunction are clear. The plaintiff needs to establish that:

(1) there is a serious question to be tried (i.e. the plaintiff has made out a prima facie case in the sense that there is a sufficient likelihood of success at trial to justify, in the circumstances, the preservation of the status quo);

(2) the plaintiff will suffer irreparable injury, for which damages will not be adequate compensation, unless the injunction is granted; and

(3) the balance of convenience or justice favours the granting of an injunction.[2]

32 The purpose of an interlocutory injunction is to maintain the status quo pending the determination of the parties' rights at trial. As the Court of Appeal noted in Bradto Pty Ltd v State of Victoria:

In our view, the flexibility and adaptability of the remedy of injunction as an instrument of justice will be best served by the adoption of the Hoffmann approach. That is, whether the relief sought is prohibitory or mandatory, 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 who fails to establish his right at the trial, or in failing to grant an injunction to a party who succeeds at trial. [3]

33 The organising principles are not entirely separate and must be examined together. Further, if a case seems particularly strong, this may affect the balance of convenience.[4]

34 Senior counsel for Franek and MAG conceded for the purpose for this application that there are serious questions to be tried whether:

(1) the 20 June debts are validly the subject of MAG's security interests (i.e. whether they fall within the definition of Secured Moneys in the Facility Agreement and the 'moneys hereby secured' in the common provisions of the relevant mortgages); and

(2) the sale and transfer of the North Melbourne property to AAGG should be set aside in light of the circumstances in which they were entered into.

35 In my view, it was proper for senior counsel to make these concessions. It is clear that there are serious questions to be tried about these claims.

36 Senior counsel for Franek and MAG submitted that I should not be satisfied that either of these serious question gave rise to a strong claim and in any event both claims were properly claims by the Company, not the plaintiffs. I will deal with each of these submissions in turn.

37 First, in relation to the strength of the plaintiffs' claims, I consider that there appears to be a reasonably strong case the 20 June debts do not fall within the definition of 'Secured Moneys' as that term is defined in the Facility Agreement and/or the GSD or the 'moneys hereby secured' in the memorandum of common provisions of the relevant mortgages. For example, 'Secured Moneys' is defined in clause 1.1 of the Facility Agreement as follows:

means all money which the Borrower (whether alone or not) is or at any time may become actually or contingently liable to pay to or for the account of the Lender for any reason whatever;

It includes the payment of purchase price and money by way of principal, interest, fees, costs, indemnities, charges, duties or expenses or payment of liquidated or unliquidated damages, or as a result of a breach of or default under or in connection with this Agreement or any Security;

It also includes money that the Borrower would have been liable to pay but for the occurrence of an Insolvency Event, or some other reason.

38 While the words used are broad, they must be read in the context of the agreements between the Company as Borrower and Balanced Securities as Lender pursuant to which funding for the development of the North Melbourne property was provided. I cannot discern from these words an objective intention of the parties, in the context of the agreements as a whole and the nature of the commercial transaction, that Balanced Securities, let alone an assignee of its rights, could subsequently receive an assignment of a debt from another which might itself then form part of the Secured Moneys.[5] I say this notwithstanding that the parties contemplated that Balanced Securities could assign its rights under the Facility Agreement: see clause 17.

39 In this regard, I note the comments of Brooking J in Re Clark's Refrigerated Transport Pty Ltd (in liq):

In the first place, considering the matter generally and without regard to the detailed provisions of the particular instruments here in question, I cannot help thinking that when a person gives an "all obligations" mortgage or debenture he does not ordinarily contemplate that the property the subject of the security will secure not only his present and future obligations to the mortgagee or debenture holder but also any debt or liability of his which may be assigned by a third person to the secured creditor. It does seem strange that a man may lock up his counting-house and go home for the night, in the comfortable knowledge that his only secured creditor is his banker, to whom he owes a trifling sum secured by the usual boundless bank instrument, and unlock the door in the morning to find that, by virtue of assignments of the large but unsecured debts owed to him to his fellow merchants, and indeed to the butcher, the baker and the candlestick maker, all his unsecured debts have gone to feed his banker's insatiable security, so that every one of his debts is now secured. [6]

40 I note that this appears what MAG has sought to achieve by the assignment of the 20 June debts to it. This is in a period when the plaintiff was seeking to ascertain from 9 May 2018 the amount of the secured debts in order to repay that money.

41 I am not now able to form any view about the strength of the claim in relation the transfer of the North Melbourne property to AAGG. However, I consider that the circumstances in which the 20 June debts were assigned, the North Melbourne property was sold, and Mekkya became the director and shareholder of MAG raise on their face serious issues about the conduct of Franek, MAG, Mekkya and Sacca. I do note however that MAG and Franek produced a valuation for the North Melbourne property that was consistent with the sale price.

42 Second, as noted above, senior counsel for Franek and MAG submitted that the claims giving rise to serious questions to be tried were properly claims brought by the Company and that the plaintiffs did not have standing to bring these claims. Senior counsel argued that, in any event, the appointment of the administrator by his client meant that this proceeding could not be maintained.

43 In my view, the Company has the most material interest in this proceeding. It entered into relevant agreements and was the owner of the North Melbourne property and the Lower Plenty property. I note however that the plaintiffs are guarantors of the Company under the Facility Agreement and Mohamad is the owner of the Bundoora property.

44 Nevertheless, the claims made, and sought to be made, are brought by the plaintiffs as directors of the Company. Senior counsel for the plaintiffs contended the choice of party to bring this proceeding reflects the original nature of the proceeding to remove the Receivers purportedly appointed under the Franek GSA. That may have been correct at the time, but it is not so now. Further, it has been and remains open for the plaintiffs to apply to the Court under s 237 of the Act for leave to bring proceedings on behalf of the Company. To date, they have not done so.

45 Some of these issues have been overtaken by the appointment of the administrators. Under s 437A of the Act, while a company is under administration, the administrator has control of the company's business, property and affairs. Further, s 198G provides, in summary, that, while a company is under external administration, it is an offence for an officer to perform or exercise a function or power of that office without the written approval of the external administrator or the Court.

46 Finally, s 440D(1) of the Act relevantly provides that during the administration of a company, a proceeding in a court in relation to any of its property cannot be begun or proceeded with, except with the administrator's written consent or leave of the court and in accordance with such terms (if any) as the court imposes.

47 However, what is plain is that there is a serious question to be tried in relation to the true amount of money in fact secured. That issue lies at the heart of this proceeding. In addition, there is a serious question to be tried in relation to the circumstances of the sale and transfer of the North Melbourne property. Both of these claims materially affect the Company.

48 In my view, it is appropriate that the administrators be given the opportunity to consider and determine whether they wish to prosecute these claims and, if not, whether they consent to the plaintiffs pursuing them. If the administrators do not consent, the plaintiffs may need to consider whether to bring an application under s 237 of the Act.

49 In any event, in my view, the doubts raised about the standing of the plaintiffs ought not prevent, at this stage, orders being made so that the status quo is maintained until both the administrators and the plaintiffs are given the opportunity to do so.

50 Senior counsel for Franek and MAG contend that damages are an adequate remedy and that, in any event, the balance of convenience does not favour the grant of an injunction given the nature of a secured party's rights and based on the application of the 'general rule' in Inglis. I will deal with of these submissions in turn.

51 As to the damages issue, the Receivers and/or MAG are threating to sell the Lower Plenty property and the Bundoora property. The former was the family home of the plaintiffs and where they grew up, but has since been rented out; the latter is the family home of the Mohamad. In these circumstances, it is likely that damages will not be an adequate remedy.

52 Further, in relation to the North Melbourne property, counsel for Franek and MAG also submitted that damages would be an adequate remedy. In any event, he submitted that, as the plaintiffs had lodged a caveat over that property, their interests were adequately protected. I do not accept that submission.

53 The relief sought by the plaintiffs is that the transfer be set aside and that there be a re-conveyance of the North Melbourne property to the Company. I am concerned that any further dealings with that property by AAGG may prejudice the ability of the Court to subsequently make such orders. This is in circumstances where:

(1) counsel for Franek and MAG submitted that there was no proper basis for the caveat to be lodged by the plaintiffs; and

(2) the sale of the North Melbourne property and the relationship between Franek, MAG, AAGG, Mekkya and Sacca have not been explained.

54 In relation to the balance of convenience, senior counsel for Franek and MAG stressed that the 'general rule' in Inglis should apply, namely that the party seeking to restrain the exercise of a mortgagee's power of sale should tender the full amount claimed by the mortgagee as a condition of the injunction. In this case, he submitted that required the plaintiffs, in addition to the usual undertaking as to damages, to tender the full amount alleged by MAG to be secured (including the 20 June debts): if it was not tendered, no injunction should be granted.

55 I have carefully considered the 'general rule' in Inglis and whether it should be applied in this case.

56 The genesis of the requirement to tender the amount of a mortgage debt as a condition of obtaining an injunction is in equity and forms part of the maxim that 'he who seeks equity should do equity'.[7]

57 Inglis itself was a case where the mortgage debt was not in dispute but was alleged to be counterbalanced by other claims for breach of contract and defamation by way of set off. It was in that context that Barwick CJ (with whom Menzies and Gibbs JJ agreed) held that the case 'falls fairly, in my opinion, within the general rule applicable when it is sought to restrain the exercise by a mortgagee of his rights under the mortgage instrument'.[8]

58 The nature and application of the 'general rule' were the subject of discussion in Bayblu Holdings Pty Ltd v Capital Finance Australia Ltd[9] ('Bayblu'). Campbell JA (with whom Tobias and Macfarlan JJA agreed) stated:

It is not altogether clear what is meant by saying that there is a "general rule" of the type adverted to in Inglis. Does it mean that, as a matter of law, it is impossible to obtain an injunction to restrain the exercise of a power of sale without bringing the money into court - that the rule is "general" in the sense of universally applicable? Or does "general" have the force of "applying usually but not always"? (emphasis in original).[10]

59 Campbell JA did not consider it necessary to reach a concluded opinion on that issue in Bayblu. However, there have been a number of cases, both before and after Inglis, which emphasise that the 'general rule' applies 'usually but not always' depending upon the circumstances and justice of each case.[11]

60 In Bayblu, Campbell JA went on, in any event, to note a number of recognised exceptions to the 'general rule', including when there is doubt about whether the mortgagee's power of sale has arisen or where the amount claimed by the mortgagee is obviously or plainly wrong or excessive.[12] It appears that other exceptions have also developed.[13]

61 In Nicholas, Hedigan J of this Court considered Inglis in the context where a mortgagor was seeking to set-off an unliquidated damages claim against the mortgage debt. In refusing to grant an interlocutory injunction, his Honour considered that the 'general rule' in Inglis should apply. This was in circumstances where the amount of the secured debt was 'uncontradicted'.[14]

62 However, Hedigan J considered that the claim for unliquidated damages might be relevant in two other respects:

(1) to the amount that might be required to be brought into court (depending on the evaluation of the strength of the evidence and the estimation of the possible damages); and/or

(2) to the matters to be taken into account in weighing the balance of convenience.[15]

63 His Honour concluded that it was 'an impossible task' to evaluate the possible damages in the circumstances of that case. As a consequence, he concluded at 729:

In my view this is not a case in which equity ought permit departure from the rule nor require the moulding of relief of the kind sought in order to do justice to the case. I am of the opinion that the ordinary principle should apply and that, absent the giving of appropriate security into court, the injunction is refused.

64 Hedigan J's analysis is consistent with the comments of J Forrest J in Equity One where his Honour noted that '[t]he decision in Inglis is not a rigid or inflexible principle and at times must yield to in the interests of justice'.[16]

65 In my view, the circumstances of this case are such that the plaintiffs should not be required to tender or pay into court the amount claimed by MAG, which includes the 20 June debts. This is for a number of reasons.

66 First, the plaintiffs allege that the statutory power of sale was invalid because the notices under s 76 of the Transfer of Land Act 1958 were created and served after the date of the transfer of land, namely 22 June 2018. As a result, this allegation challenges whether the power of sale has arisen. As I have noted, Halse deposed that the date on the transfer was a 'human error' and that it was in fact signed on 20 July 2018. However that explanation has not been tested. In my view, it is not appropriate to form a concluded view about the issue until trial.

67 Second, it is the very amount alleged to be secured that is the real issue to be determined in this proceeding i.e. whether that amount includes the 20 June debts, which has the effect of almost doubling the amount alleged to be subject to the security interests. For the reasons set out above, I have formed the view that there is a reasonably strong case that the 20 June debts do not fall within the definition of Secured Moneys.

68 Third (and related to the second point), this is not a case where the mortgagor seeks to set-off a claim for unliquidated damages. Inglis was a case where the mortgage debt was not in dispute but was alleged to be counterbalanced by other claims. Nicholas was a case where the mortgagor sought to offset an unliquidated claim for damages against an uncontradicted mortgage debt. Neither are the case here. Here the issue is whether the 20 June debts are covered by the security: it is the key issue in the proceeding. It thus seems analogous to one of the recognised exceptions to the 'general rule', namely when the amount claimed is clearly or obviously wrong, or excessive.

69 Fourth, the plaintiffs, by letter dated 19 July 2018, sought to arrange for the tender of the amount of the Balanced Securities loan, the Franek loan and associated costs at 3 pm on 25 July 2018. The plaintiffs relied upon a letter of offer from Black Arrows dated 28 June 2018 as the source from which to obtain those funds. Counsel for Franek and MAG submitted that that letter of offer not did establish that the plaintiffs had available funds to in fact tender these sums.

70 However, by reason of the sale of the North Melbourne property on 20 July 2018 in the circumstances set out above, the plaintiffs were deprived of the opportunity to tender those sums. In any event, the amount received by MAG on the sale of the North Melbourne property was almost exactly equivalent to the amount that the plaintiffs advised they intended to tender on 25 July 2018. As a result, by the sale of the North Melbourne property, MAG received, in effect, the full amount alleged to be owed save for the 20 June debts. Further, if the plaintiffs tendered the amounts which they advised they wished to tender on 25 July 2018, that would have brought into question whether MAG's power of sale as mortgagee had arisen, which is itself another recognised exception to the 'general rule' in Inglis.

71 This is in a context where there has been no explanation of the conduct of Franek, MAG, AAGG, Mekkya and Sacca in relation to the assignment of the 20 June debts, the sale of the North Melbourne property and Mekkya becoming the sole director and shareholder of MAG within days of the sale. This is quite apart from the failure of MAG and/or Franek to disclose the sale of the North Melbourne property to the court at the hearing on 17 July 2018.

72 In all the circumstances, I am of the view that it would work an injustice if the plaintiffs, as the price for obtaining the interlocutory injunction sought, were required to tender or pay into court the full amount alleged by MAG to be the subject of the security interests.

73 As a result, in light of the views I have formed about the serious questions to be tried and the balance of convenience, I have determined to grant the substance of the interlocutory injunction sought by the plaintiffs for a period of approximately 4 weeks to preserve the status quo. In that time, the administrators can consider whether they wish to prosecute any or all of the claims in this proceeding or give their consent to the plaintiffs to do so. To that end, I also give leave for the plaintiffs to prosecute this proceeding until that time, pursuant to s 198G(3) and s 440D of the Act.

74 To the extent that AAGG may be affected by the orders made, there is the opportunity for any issues to be raised in the meantime pursuant to liberty to apply.

MAG FINANCIAL AND INVESTMENT VENTURES PTY LTD (ACN 625 790 623)

[2] ABC v O'Neill [2006] HCA 46; (2016) 227 CLR 57.

[3] [2006] VSCA 89; (2006) 15 VR 65, 73 [35].

[4] Optus Networks Pty Ltd v City of Booroondara [1997] 2 VR 318; K-Mart Australia Ltd v Stud Park Investments Pty Ltd (Unreported, Supreme Court of Victoria Appeal Division, Ormiston, McDonald and Hanson JJ, 14 October 1994) [15]-[16].

[5] See, eg, Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; (2017) 343 ALR 58, 63 [16]-[17] (Kiefel, Bell and Gordon JJ).

[6] [1982] VicRp 100; [1982] VR 989, 995-6.

[7] See J D Heydon, M J Leeming and P G Turner, Meahger, Gummow and Lehane's Equity Doctrines and Remedies (LexisNexis Butterworths, 5th ed, 2015) 74 [3-050] and following.

[9] [2011] NSWCA 39; (2011) 279 ALR 166.

[10] Bayblu [2011] NSWCA 39; (2011) 279 ALR 166, 177 [57].

[11] See, eg, Harvey v McWatters [1948] NSWStRp 58; (1948) 49 SR (NSW) 173; Clarke v Japan Machines (Australia) Pty Ltd (No. 2) [1982] 1 QdR 421; Graham v Commonwealth Bank of Australia (1988) ATPR 40-908 ('Graham'); Allfox Building Pty Ltd v Bank of Melbourne (1992) NSW ConvR 55-634; Nicholas John Holdings Pty Ltd v Australia & New Zealand Banking Group Ltd [1992] VicRp 98; [1992] 2 VR 715 ('Nicholas'); Andrew Garrett Wine Resorts Pty Ltd v National Australia Bank (2004) 206 ALR 69, 81-2 [49]-[50]; Equity One Mortgage Fund Ltd v Thompson [2009] VSC 408 ('Equity One').

[12] Bayblu [2011] NSWCA 39; (2011) 279 ALR 166, 177-8 [58].

[13] Welldog Pty Ltd v Prox Pty Ltd [2017] WASCA 62 [36]-[37].

[14] Nicholas [1992] VicRp 98; [1992] 2 VR 715, 728.

[15] Nicholas [1992] VicRp 98; [1992] 2 VR 715, 728.

[16] Mortgage Fund Ltd v Thompson [2009] VSC 408 [24].