Harjai v Fraser

Harjai v Fraser - [2016] NSWCA 2 - NSWCA 2016 case summary — Zoe

Judgment

MACFARLAN JA: This is an application by Mr Jitender Harjai seeking, in effect, an order under s 46(4) of the Supreme Court Act 1970 (NSW) discharging a judgment and orders given and made by Beazley P in this matter on 21 December 2015: Harjai v Fraser [2015] NSWCA 415.
Mr Harjai seeks an order, that Beazley P declined to make, restraining the third respondent, Mr Sunny Gogia, and the fourth respondent, Adia Holdings Pty Ltd, a company controlled by him, from removing stock and items of fit out from three clothing shops situated in a factory outlet centre in Campbelltown. That centre is owned by companies of which the first and second respondents are receivers and managers. The receivers and managers have sold the property and seek to have the shops cleared to enable vacant possession to be given to the purchaser.
By judgment of 16 October 2015, Ball J, sitting in the Equity Division of the Court, rejected Mr Harjai's claim that he was entitled to the stock and fit out, relying inter alia on a Memorandum of Understanding (the "MOU") in which the entitlement of the fourth respondent to the stock and fit out in the shops was recognised: Fraser v Gogia [2015] NSWSC 1508.
Justice Beazley rejected Mr Harjai's claim for an injunction pending appeal on several bases, including that Mr Harjai had not demonstrated that he had a substantial prospect of success on appeal and that there was an absence of evidence of likely prejudice to Mr Harjai if the injunction were refused.
The present application for discharge is not strictly an appeal because s 46 of the Supreme Court Act does not describe it as such (see s 19(2)). Nevertheless it is established that the principles to be applied on such an application are effectively those stated in House v The King [1936] HCA 40; 55 CLR 499 in relation to appeals from discretionary decisions. I refer to the decision in Transglobal Capital Pty Ltd v Yolarno Pty Ltd [2004] NSWCA 136; 60 NSWLR 143 at [6].
As Heydon JA stated in Patrick v Howorth [2002] NSWCA 285 at [10], an application will: "ordinarily not succeed unless the decision turns on an error of law, a material error of fact, a failure to take into account some material consideration or the taking into account of an irrelevant consideration, or unless the decision is so unreasonable as to suggest that one of these types of error has been committed even though it does not appear on the face of the reasoning".
The arguments that Mr Harjai put on his own behalf on the present application (principally through his affidavit) were essentially as follows. First, he contended that it was inappropriate for the primary judge to declare that the subject stock and fit-out items were owned by Mr Harjai and Adia Holdings because another party, Gogia Holdings Pty Ltd (in liquidation), might ultimately be found to have an interest in them.
If, as this submission assumes, Mr Harjai has no interest in the stock or fit-out items, he has no proper concern about who of other parties might instead be entitled. Even if it were found on appeal that the declaration should have been framed more narrowly so as not to purport to bind others who claimed an interest in the property, that possibility does not support Mr Harjai's application for an injunction which could only be granted to protect a possible interest he had.
Secondly, Mr Harjai submitted that there was no written evidence of him reconveying the interest that he had in the stock and fit out items to Mr Gogia and Adia Holdings. However, written evidence was not necessary and in any event it was provided by the MOU and the associated stock agreement. Under the latter, Mr Gogia was to provide $50,000 worth of stock to Mr Harjai but it was for Mr Gogia to choose from what source he obtained that stock.
Thirdly, Mr Harjai contended that he did not acknowledge by the MOU that the stock and fit-out items were owned by Adia Holdings. However, in the document, the parties clearly recognised that the property was so owned.
Fourthly, Mr Harjai contended that the document did not reveal any consideration for a reconveyance of the property to Adia Holdings. However, the MOU and the stock agreement constituted a package of provisions clearly designed to resolve a dispute. As such, there was consideration for the various provisions in them.
Fifthly, Mr Harjai submitted that there was no evidence to show that there would be no prejudice to him if an injunction were not granted. However, subject to one matter, he did not suggest that there was in fact evidence of prejudice to him. As an applicant for an interlocutory injunction, he had the onus to produce such evidence if it was available. The particular matter of prejudice that he did assert was that damages would be an inadequate remedy, such that it would be unjust not to grant him specific relief in relation to the property itself. However, I can see no reason why damages would not be an adequate remedy.
In these circumstances Mr Harjai has not demonstrated any error or unreasonableness in Justice Beazley's judgment, with the result that his notice of motion should be dismissed with costs.
BASTEN JA: I agree with Macfarlan JA, subject to the following minor qualifications. First, for my purposes, it is not necessary to consider the precise scope of the exercise undertaken by this Court on an application to discharge an order made by a judge of the Court pursuant to s 46(4) of the Supreme Court Act 1970 (NSW): see Tyneside Property Management Pty Ltd v Hammersmith Management Pty Ltd [2014] NSWCA 417 at [2]-[7].
Secondly, so far as the nature of the application is concerned, the only basis for challenging the orders made below relies upon the procedural steps taken in the Court below. The matter started by way of an interpleader action in which the receivers and managers of a company which owned the premises from which the businesses of the third and fourth respondents were run, had no interest in the stock on the premises.
The parties joined as potential owners of the stock did not constitute the whole of the parties who might have had interests, there being other corporate interests, one of which was deregistered when the proceedings were commenced and later re-registered.
In these circumstances there may be a doubt as to whether the declarations as to ownership of the stock made in favour of the third and fourth respondents to the appeal, that is Mr Gogia and his company, Adia Holdings Pty Limited, were appropriate. The trial judge was clearly satisfied that Mr Harjai had not established that he was an owner of the stock contained in the premises.
The problem for Mr Harjai is that the question of ownership of the stock, in whomever it may rest other than he himself, is not a basis for seeking to restrain the receivers and managers from taking such steps as they may be advised to dispose of the property in order to allow settlement of the sale of the premises with vacant possession.
Further, in the course of raising an issue as to who might have an interest in the stock, Mr Harjai referred to the circumstances by which Gogia Holdings Pty Limited (which had been deregistered but was re-registered during the course of this litigation) came to lose its interest in the business. The difficulty in understanding the chronology means that this issue cannot be resolved in this interlocutory proceeding. Gogia Holdings appeared to have been deregistered at least a year before the premises were obtained in Campbelltown which contain the stock the subject of the present proceedings. In those circumstances, whether or not Gogia Holdings might have had an interest in some assets of the business at some prior date is of no consequence for the present argument.
There are a number of factors which have given rise to concern about the chronology, the parties involved, the manner in which the case was run below, none of which can be adequately dealt with on an interlocutory hearing. In those circumstances, no case has been made out to discharge the order made by the President.
MEAGHER JA: I agree with Macfarlan JA's judgment and proposed orders subject to one matter and that matter is the first of the qualifications identified by Basten JA with which I also agree.
BASTEN JA: Accordingly, the orders of the Court are: (1) The notice of motion dated 15 January 2016 filed by the appellant is dismissed. (2) The appellant must pay the respondent's costs of the motion.

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