GMDA Pty Ltd as trustee for the GMD Family Trust v Baladi

Representation: Counsel:
N Mirzai (Plaintiff)
N Kirby (First and second defendants)
S Scott (Third and fourth defendants)
Solicitors:
Miller Prince (Plaintiff)
Hamilton Law (First and second defendants)
Hamilton Locke (Third and fourth defendants)

File Number(s): 2024/00158003

Publication restriction: Nil

JUDGMENT

1. On 19 March 2025, I dismissed two motions filed by GMDA Pty Ltd as trustee for the GMD Family Trust (the plaintiff) after undertakings were given by the plaintiff and the first and second defendants, Abboud Joseph Baladi and Nour-Marie Baladi (the first and second defendants).

2. The first motion (the Auction Injunction Motion) was filed on 6 March 2025 and sought principally to restrain the third and fourth defendants (receivers) from selling the property known as 5 – 7 Church Street, Terrigal, NSW, 2260 (the Property). The plaintiff in this motion also sought a declaration that the plaintiff validly elected to terminate the Heads of Agreement (HOA) dated 21 June 2024 between the plaintiff and first and second defendants; an order that the third and fourth defendants’ appointment as receivers and managers be terminated; and declarations concerning the true construction of the HOA.

3. The second motion (the Mortgagee Injunction Motion) was filed ex parte on 7 March 2025 and sought to restrain the first and second defendants from exercising any rights pursuant to various instruments between the plaintiff and National Australia Bank (NAB) in circumstances where the first and second defendants had paid out the NAB and taken an assignment of the NAB rights.

4. The orders made on 19 March 2025 followed a hearing on 13 March 2025 during which various undertakings were proffered and I indicated I was not minded to grant any interlocutory relief. I requested the parties to agree orders recording the undertakings and the dismissal of both motions. The undertakings proffered are in the following terms:

1 The First and Second Defendants undertake that they will not, without giving seven days’ notice in writing to the other parties to the proceedings, exercise any rights pursuant to the following instruments (including, without limitation, seeking to appoint any external administrator to the Plaintiff or listing for sale or entering into any contract for sale in relation to the property knowns as 5 – 7 Church Street, Terrigal NSW 2260, being the property shown in Folio Identifiers 19/7861 and 20/7861 (Property)):

a. the facility agreement(s) entered into between the Plaintiff and the First and Second Defendants and the National Australia Bank (NAB) on or about 8 January 2021 (the Facilities);

b. the guarantee and indemnity in the amount of $9,850,000.00 granted by George Daaboul (of the Plaintiff) in respect of the Facilities;

c. the General Security Agreement between the NAB and the Plaintiff dated 19 January 2021; and

d. the first registered mortgage over the Property with registered dealing AQ885985 dated 19 January 2021.

2 The First and Second Defendants undertake that they will not, without giving seven days’ notice in writing to the other parties to the proceedings, take any step to invoke:

a. clause 48 – “Vendor may delay Completion or termination contract”; or

b. clause 49 – “Alternative transfer”

of any contract for the sale of the Property.

3 The Plaintiff undertakes that it will not, without giving seven days’ notice in writing to the other parties to the proceedings, take any step to invoke clause 48 – “Vendor may delay Completion or termination contract” of any contract for the sale of the Property.

5. All that remains to be determined is the costs of the two motions, which was determined on the papers. The parties provided written submissions on 28 March 2025, 3 April 2025, 4 April 2025 and 9 April 2025.

Brief overview of the proceedings

6. In order to understand the two motions and what costs orders should be made, it is necessary to provide a brief overview of the proceedings.

7. The proceedings were commenced by summons filed on 29 April 2024. The plaintiff sought orders appointing trustees for sale of the Property pursuant to s 66G of the Conveyancing Act 1919 (NSW). The Property is the subject of a joint venture agreement between the plaintiff and the first and second defendants.

8. On 7 May 2024, the plaintiff filed a motion seeking to restrain the first and second defendants from entering into a contract for sale of the Property or otherwise listing it for sale pending the determination of the s 66G application. The first and second defendants had recently paid out a liability of the plaintiff secured by way of mortgage to the NAB and had assigned to them the rights of the mortgagee.

9. The claim for interlocutory relief was ultimately listed for hearing before the duty judge on 21 June 2024. A substantive hearing was not necessary on that day because the plaintiff and first and second defendants entered into the HOA pursuant to which the now third and fourth defendants were appointed receivers to sell the Property. The HOA also contained various provisions in relation to the manner of sale, the terms of the contract for sale and how the proceeds of sale are to be paid. By clause 9, the first and second defendants undertook to the Court not to take any enforcement steps against the plaintiff.

10. On 4 March 2025, the plaintiff’s solicitor wrote to the solicitor for the first and second defendants alleging that the defendants had repudiated the HOA and purporting to terminate the HOA.

11. On 6 March 2025, the plaintiff filed the Auction Injunction Motion. On 7 March 2025, the Auction Injunction Motion was set down for hearing on 13 March 2025, and the now third and fourth defendants were added as parties to the proceedings given they were sought to be restrained by the Auction Injunction Motion. The urgency was dictated by the fact that the auction of the Property was scheduled for 18 March 2025.

12. Later on 7 March 2025, the plaintiff approached me ex parte and was granted leave to file the Mortgage Injunction Motion. I also granted interim ex parte relief and made the motion returnable on 13 March 2025. The essence of the concern of the plaintiff outlined on the ex parte hearing was that if the HOA were no longer on foot (as the plaintiff had purported to terminate it) there was nothing preventing the first and second defendants purporting to exercise rights as a mortgagee.

13. On 12 March 2025, the solicitor for the first and second defendants wrote to the solicitor for the plaintiff affirming the HOA and contending that the plaintiff’s position was misconceived.

14. On 13 March 2025, both motions were returnable before me. The undertakings recorded above were proffered and I indicated that I did not propose to grant any interlocutory relief.

Overview of parties’ contentions

Plaintiff

15. The plaintiff seeks the following orders:

16. There should be no order as to costs of the Auction Injunction Motion with the intent that each party bear its own costs; and

17. An order that the plaintiff should have its costs of the Mortgagee Injunction Motion paid by the first and second defendants.

18. In regards to the Auction Injunction Motion, the plaintiff submits the first and second defendants did not proffer an undertaking until the hearing, after which the plaintiff obtained a satisfactory compromised position. Further, in relation to the costs of the receivers, the plaintiff submits that they took an agnostic position correctly identifying the motion as inter partes, and accordingly a discrete costs order in the Auction Injunction Motion ought not be made.

19. In regards to the Mortgagee Injunction Motion, the plaintiff submits that the first and second defendants did not proffer any undertaking until the hearing, and when the undertaking was subsequently proffered at the hearing the need for the relief set out in the motion was obviated. As the plaintiff effectively obtained the relief it sought in the motion, it ought to be paid its costs for the motion from the first and second defendants.

First and second defendants

18. The first and second defendants submit that the plaintiff should pay their costs of both motions.

19. In regards to the Auction Injunction Motion, the first and second defendants submit that the plaintiff sought to restrain the auction, the first and second defendants opposed that relief, the Court dismissed the application, and costs should follow the event.

20. In regards to the Mortgagee Injunction Motion, the first and second defendants submit that in circumstances where an undertaking would have been given earlier if the plaintiff had asked, and the motion was ultimately dismissed, the first and second defendants should not be deprived of their costs for the motion.

Receivers

21. The receivers seek orders that the plaintiff pay their costs on the Auction Injunction Motion.

22. In summary the position advanced by the receivers is that the costs incurred on the Auction Injunction Motion were proper having regard to the comments of the Court on 7 March 2025 in which the Court wished to have submissions from all parties setting out their respective positions. Further, the plaintiff did not obtain the relief it sought on the motion, and thus costs should follow the event.

Relevant principles

23. The relevant principles as to costs are not in dispute.

24. Costs are in the discretion of the Court: s 98 of the Civil Procedure Act 2005 (NSW). Costs ordinarily follow the event, unless it appears to the Court that some other order should be made: r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW).

Determination of costs for the Auction Injunction Motion

25. I accept that the defendants – both the first and second defendants and the receivers - were successful in resisting the motion and that the plaintiff should be ordered to pay the defendants costs of the motion.

26. In the Auction Injunction Motion the plaintiff sought to not only restrain the sale of the Property but also sought declaratory relief in relation to the termination of the HOA; an order in relation to the termination of the appointment of the receivers; and declarations concerning the construction of the HOA.

27. On 13 March 2025, I declined to grant the relief sought to restrain the auction.

28. On 19 March 2025, I made orders by consent in chambers dismissing the motion.

29. In substance, the defendants successfully resisted the claim to restrain the auction which was the only substantive matter agitated on 13 March 2025. The plaintiff effectively abandoned the remainder of the relief sought in the motion in agreeing to the orders made on 19 March 2025.

30. I do not accept that the undertaking proffered on 13 March 2025 by the first and second defendants represented a substantial shift in position. The grounds advanced by the plaintiff to seek to restrain the sale went beyond the matters dealt with by the undertaking. One difficulty with the application was that, on the issue of balance of convenience, the plaintiff’s case was that the auction should not go ahead and that Court appointed trustees for sale should be appointed at some stage in the future. It was not readily apparent to me in these circumstances that any significant prejudice would be suffered by the plaintiff if the auction proceeded in circumstances where not insignificant costs would be wasted if the planned auction was aborted several days before it was scheduled to occur.

31. In regard to the receivers, it was proper for the receivers to file evidence and submissions and attend the hearing of the motion in circumstances where the plaintiff sought an order restraining the sale by the receivers and that the appointment of the receivers be terminated. In these circumstances and where the plaintiff was not successful on the motion and costs should follow the event, I am satisfied that the plaintiff ought to pay the costs of the third and fourth defendants on the motion.

Determination of costs for the Mortgagee Injunction Motion

32. In the Mortgagee Injunction Motion, the plaintiff sought to restrain the first and second defendants from exercising various rights under the HOA. The undertaking not to exercise those rights without giving seven days’ notice in writing to the other parties’ in the proceedings dealt with the substance of the motion.

33. The relevant issue is whether the proffering of the undertaking should be seen as a capitulation by the first and second defendants such that the plaintiff should be regarded as having succeeded in substance, or something which would have been proffered had it been sought such that the motion should never have been brought, and the first and second defendants should have their costs.

34. The motion was filed ex parte in circumstances where the plaintiff feared that the first and second defendants might seek to exercise their rights as mortgagee if the HOA was no longer on foot. The plaintiff did not seek an undertaking out of concern that the first and second defendants may act to the irremediable prejudice of the plaintiff.

35. The motion was brought on for hearing urgently and in the interim the first and second defendants wrote affirming the HOA but did not then offer any undertaking. That undertaking was offered at the hearing on 13 March 2025.

36. In all the circumstances the appropriate order is that there be no order as to costs of the Mortgage Injunction Motion to the intent that each of the parties pay their own costs of the motion. The plaintiff could perhaps be criticised for not seeking an undertaking prior to filing the motion. The first and second defendants could equally have proffered the undertaking prior to 13 March 2025, thus likely obviating the need for a hearing of this motion on 13 March 2025.

Orders

37. The orders of the Court are:

38. The plaintiff pay the defendants’ costs of the motion filed 6 March 2025.

39. There be no order as to costs of the motion filed 7 March 2025 to the intent that each of the parties pay their own costs of the motion.

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