Jaken Properties Australia Pty Ltd v Naaman

Court of Appeal (NSW)|2024-10-21|Before: Gleeson JA, Leeming JA, Richmond J

Background

The underlying proceedings commenced in 2019. They have a complicated procedural history as the main parties to the dispute have been involved in litigation since 2006. That history is summarised by Richmond J at [15] of his 24 March 2023 judgment referred to at [17] below. It is sufficient to recount the following.
Jaken is the successor trustee to Jaken Property Group Pty Ltd (JPG), the former trustee of the Sly Fox Family Trust, following the retirement of JPG on 13 February 2007 pursuant to a deed of appointment and retirement of trustee. Peter Sleiman was the sole director and shareholder of JPG until at least 11 August 2006. Although not formally a director of Jaken, Peter Sleiman is a de facto director and a shadow director of Jaken.
As trustee of the Sly Fox Family Trust, JPG acquired various properties including (i) two properties at Southbank in Victoria in August 2005, (ii) O'Malley's Hotel at Kings Cross in October 2005, and (iii) land at Cowper Street Granville in February 2006. The Victorian properties were later transferred by JPG to Jaken on 13 February 2007, although the transfer was not registered until 5 February 2008. On 27 February 2007, JPG was wound up voluntarily and a liquidator was appointed.
Jaken transferred the Granville land to a related party (Superior Family Investments Pty Ltd) in October 2012 and the Victorian properties to another related party (PSJK Holdings Pty Ltd) in March 2013 (together, the 2012 transactions).
In September 2014 Jaken and Powerhouse Corporation Pty Ltd (Powerhouse) entered into several transactions referred to as the "Draw Down" whereby Jaken's liability as principal debtor to National Australia Bank (NAB) increased by $3.6 million and Powerhouse's liability as principal debtor to NAB reduced by $3.6 million (the 2014 transactions).

The primary judgment

His Honour summarised the history of the various proceedings (at [12]-[34]), and identified the two issues to be resolved on the motion (at [35]): (1) Whether the November and March Orders should be discharged and an order made to remove the caveat upon the payment into court of the sum of $3.6 million; (2) Whether as an alternative to discharging the asset preservation orders they should be varied and the caveat lifted to permit RHG Nominees to discharge the mortgage over the Royal Hotel Granville and register a replacement mortgage to the same face value as that mortgage, on such terms as the Court thinks fit.
After noting that the relief claimed by Mr Naaman in the cross-claim in the 2019 proceedings may exceed $5 million when prejudgment interest is taken into account (at [38]), his Honour accepted that there had been a material change in circumstances which justified the bringing of the application: at [39].
There is no dispute that his Honour correctly stated the applicable legal principles, including the factors to be balanced in considering the application for discharge of the existing orders, namely, (1) whether Mr Naaman has a good arguable case; (2) whether there is a danger that an actual or prospective judgment debt will be wholly or partly unsatisfied; and (3) whether the interests of justice (including the balance of convenience) favour the continuance of the orders: at [39].
As to the first factor, his Honour held that Mr Naaman's case was reasonably arguable, given the strong dissent by Bell CJ and the grant of special leave on the question of fiduciary duties owed by a successor trustee to a former trustee: [40]. There is no challenge to this finding.
As to the second factor, his Honour found at [41] that the considerations set out in his March 2023 judgment at [46] continued to apply, that is, there was still "a danger that a prospective judgment against the parties to the transactions … will be wholly or partly unsatisfied because assets of those parties are disposed of, dealt with or diminished in value". The applicants challenge this finding. It is said that upon payment into court of the "proper" sum, whatever that might be found to be, there is no longer any real danger that a prospective judgment will be wholly or partly unsatisfied.
As to the third factor, his Honour found at [43] that whilst the change in circumstances (being the decision of the Court of Appeal) did not justify the discharge of the existing orders notwithstanding the proposal to pay into court $3.6 million, a sum which his Honour had found was inadequate: The balance of convenience favours varying the asset preservation orders to permit the applicants to refinance the ANZ facility if this can be done while preserving the status quo as between the applicants and Mr Naaman. The applicants also challenge this finding. It is said that his Honour erred by considering the maintenance of the status quo between the parties, and that the orders made on 7 May 2024 are "wildly in excess of what is reasonable and necessary" to prevent the abuse or frustration of the Court's process with respect to Mr Naaman's claim.
Addressing the alternative relief sought in par [2] of the motion, his Honour found at [51]: … the balance of convenience justifies the lifting of the caveat and the variation of the November and March Orders to permit a refinancing to occur on similar terms to the ANZ facility on the condition that the new mortgage over the Royal Hotel Granville does not secure a greater amount than the ANZ facility and on the basis that Mr Naaman will be given leave to lodge a further caveat, with respect to the same interest in the property as is claimed in the current caveat, immediately after registration of the new mortgage.
Pursuant to directions given by his Honour, the parties provided competing written submissions with respect to the terms of the relief sought in par [2] of the motion to allow a refinancing to occur. It is not necessary to reproduce the whole of orders (1) to (5) made on 7 May 2024. It is sufficient to note that order (1) contained a series of notations identifying the parties and background matters, and order (3) dealt with administrative arrangements relating to the temporary lifting of the caveat. The focus of the applicants' challenge is orders 4(b) and (c). These orders are set out at [58] below.

Draft notice of appeal

Together, proposed grounds 1 and 2 claim that his Honour's discretionary decision to dismiss par [1] of the motion miscarried by refusing to permit the payment into court of $3.6 million on behalf of some of the applicants so as to constitute a fund in substitution for the asset protection regime that had been put in place relating to the Royal Hotel Granville. These grounds assert that his Honour acted on wrong principle, took into account extraneous considerations, and failed to determine such amount as the Court thought fit to be paid into court in lieu of varying and continuing the existing orders.
Proposed ground 3 claims that his Honour further erred in the exercise of his discretion by imposing unreasonable and manifestly unjust conditions in orders 4(b) and (c) on 7 May 2024 with respect to the terms of the relief sought in par [2] of the motion to permit a replacement mortgage over the Royal Hotel Granville.
Proposed ground 4 claims that his Honour erred in the exercise of the Court's jurisdiction under s 74MA of the Real Property Act by not ordering the removal of the caveat upon terms that the applicant pay into court an amount in lieu of the property made the subject of the equitable charge or lien claimed by Mr Naaman. This ground asserts, in effect, that his Honour acted on a wrong principle and disregarded a relevant consideration.
The relief sought in the draft notice of appeal includes that this Court determine such amount as it thinks fit to be paid into court in lieu of the existing asset preservation and freezing orders as varied and continued by Richmond J on 7 May 2024, and that on payment of that amount into court, Mr Naaman withdraw the caveat lodged against the title to the Royal Hotel Granville land.

Decision

The decisions of Richmond J to dismiss par [1] of the motion and to make orders as to the terms of the relief sought in par [2] of the motion were discretionary. When considering whether there should be a grant of leave to appeal, the considerations identified in House v The King (1936) 55 CLR 499 at 504-505; [1936] HCA 40 need to be kept in mind. The primary judge's decision is one which can be overturned by this Court only if this Court is satisfied that there has been some error of law or mistake of fact, or some other error appears in the judgment, such as taking into account irrelevant considerations or disregarding relevant considerations, or alternatively, if the result of the decision is unreasonable in such a way as to indicate some other latent error in the judgment.
The doctrinal basis of Mareva relief is well-established. The basis of asset preservation or freezing orders is the Court's inherent, implied or statutory jurisdiction to make such orders as it considers appropriate to ensure the effective administration of justice and to prevent the abuse or frustration of its process in relation to matters coming within its jurisdiction: Riley McKay Pty Ltd v McKay [1982] 1 NSWLR 264 at 270, 276; Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 617, 621, 622, 637-638; [1987] HCA 23; Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18 at [41]-[42].
In Cardile, the joint judgment of Gaudron, McHugh, Gummow and Callinan JJ referred with approval at [41]-[42] to the statement of Deane J in Jackson v Sterling Industries Ltd at 625 that "orders must be framed 'so as to come within the limits set by the purpose which [the order] can be properly be intended to serve' … the moulding of an interlocutory injunction must depend upon the circumstances of each case". The joint judgment in Cardile also emphasised at [70] the importance of limiting the grant of relief to the minimum relief necessary: It is appropriate therefore that some order be made with respect to the personal appellants requiring them effectively to hold and to keep unencumbered assets up to a value which is at least reasonable in all of the circumstances. A court, in granting interlocutory relief, should generally grant the minimum relief necessary to do justice between the parties. (Citations omitted; emphasis added.)

Proposed grounds 1 and 2: whether freezing orders and asset preservation should be discharged

The applicants do not challenge his Honour's finding at [38] that discharge of the existing orders was not justified by the applicant's proposal to pay into court $3.6 million, a sum which his Honour found was inadequate. Indeed, this amount was characterised by senior counsel for the applicants as "parsimonious".
Nor do the applicants challenge the finding at [38] that the relief claimed by Mr Naaman in the 2019 proceedings for both equitable compensation and under s 37A exceeds $5 million when prejudgment interest is taken into account. The applicants acknowledged that, on their calculation, Mr Naaman's claim in respect of the 2014 transactions including prejudgment interest is presently $5,652,049.
Nevertheless, it is said that his Honour erred because he did not identify the minimum amount necessary, greater than $5 million, to protect the integrity of the Court's processes. The applicants complain that his Honour only went so far as to find that the sum of $3.6 million was not enough to be paid into court to discharge the existing orders. It is said that his Honour should have identified what amount was "reasonable" in all of the circumstances to be paid into court to discharge the existing orders, referring to Cardile at [70]. In substance, the asserted error is that his Honour disregarded a relevant consideration.
A related submission is made that the failure to identify the minimum amount necessary to protect the Court's processes led his Honour into further error in determining the balance of convenience. His Honour found at [43] that the balance of convenience favours varying the asset preservation orders to permit the applicants to refinance the ANZ facility "if this can be done while preserving the status quo as between the applicants and Mr Naaman". The asserted error is that, in having regard to the maintenance of the status quo, his Honour took into account an irrelevant consideration.
The fundamental difficulty with these submissions is that they ignored the way in which the applicants conducted the motion before his Honour. The applicants took a binary approach of seeking orders, in the alternative, that (1) upon payment of $3.6 million into court, the existing orders would be vacated, or (2) the caveat ought to be removed to permit the refinancing of the ANZ mortgage, which the applicants acknowledged before his Honour "doesn't then involve any payment into court".
The relief sought in par [1] of the applicants' motion and submissions was tied to the offer to pay into court the sum of $3.6 million to vacate the existing orders. Although the applicants' written submissions invited the Court to consider an alternative figure for the payment into court (see [26] above), at no point did the applicants identify in their written or oral submissions what amount greater than $3.6 million would be reasonable in all of the circumstances to be paid into court as a condition of discharge of the existing orders. That was in circumstances where Mr Naaman's submissions on the motion asserted that the quantum of his claims certainly exceeded $5 million and was likely to exceed $7 million. Nor was evidence adduced or submissions made by the applicants before his Honour as to what factors should be taken into account in "all of the circumstances" in an assessment of a "reasonable" sum to be paid into court greater than $3.6 million. By contrast, counsel for the applicants submitted in this Court that a reasonable sum would need to take into account (implicitly, as a reduction) Mr Naaman's other claims in the 2019 proceedings in relation to the Granville property, the Victorian property, and that he also has private claims against the NAB relating to the proceeds of sale of O'Malleys Hotel.
There is no error, and certainly no error sufficient to warrant a grant of leave to appeal, in dealing with the application to discharge the existing orders on the express basis advanced by the applicants. As neither party asked his Honour to make a finding as to any amount greater than $3.6 million that should be paid into court to protect the integrity of the Court's processes, the determination of par [1] of the motion did not require his Honour to make such a finding.
It is also said with reference to Cardile at [41] and [70] that it was not open to his Honour to simply impose freezing orders over the entirety of the Royal Hotel Granville property and its business. Implicit in this submission is the assertion that his Honour acted on a wrong principle. But the premise of this submission is flawed. The existing orders have a ceiling of $4,783,343, referred to in the orders as the "Relevant Amount". The existing orders, in terms, freeze assets up to the Relevant Amount of the unencumbered value of the relevant applicants' assets. As Mr Naaman submitted, it is wrong to assert, as the applicants claim in their written submissions (par [14]), that the freezing orders apply "over the entirety of the Hotel property and business". That is a misreading of the freezing orders.
Next, it is said that his Honour approached the matter incorrectly as a matter of legal principle. It is said with reference to Cardile that his Honour conflated "status quo" principles applicable to injunctions with the principles applicable to freezing orders when addressing the balance of convenience. His Honour said at [43]: … bearing in mind that the jurisdiction to grant (and continue) asset preservation orders must be exercised with caution given their drastic nature, the balance of convenience favours varying the asset preservation orders to permit the applicants to refinance the ANZ facility if this can be done while preserving the status quo as between the applicants and Mr Naaman.
In Cardile at [27]-[44] the High Court held that the making of an asset preservation order had an entirely different juridical base from an injunction to protect property in which an applicant had at least a prima facie case for claiming a proprietary interest. But that does not mean that the maintenance of the status quo is an irrelevant consideration when determining whether to grant Mareva/freezing order relief or whether to discharge or vary a freezing order. Cardile says at [53] that the considerations that bear on the exercise of the discretion to make a freezing order are similarly relevant to an assessment of whether those freezing orders ought to be dissolved.
Relevantly, Cardile approved at [51] the judgment of this Court in Frigo v Culhaci [1998] NSWCA 88, where Mason P, Sheller JA and Sheppard AJA said of Mareva relief: [A Mareva order] is a drastic remedy which should not be granted lightly. … A [Mareva order] is an interlocutory order which, if granted, imposes a severe restriction upon a defendant's right to deal with his or her assets. It is granted at the suit of a plaintiff whose status as a creditor is in dispute and who need not be a secured creditor. Its purpose is to preserve the status quo, not to change it in favour of the plaintiff. The function of the order is not to 'provide a plaintiff with security in advance for a judgment that he hopes to obtain and that he fears might not be satisfied; nor is it to improve the position of the plaintiff in the event of the defendant's insolvency' … Many authorities attest to the care with which courts are required to scrutinise applications for [Mareva orders]. The leading decision in this State is Patterson v BTR Engineering (Aust) Ltd. (Citations omitted; emphasis added.)
The purpose of the existing orders is to prevent the abuse or frustration of the Court's processes by preventing the applicants from dissipating their assets up to the relevant amount prior to the Court's determination of the dispute: His Eminence Metropolitan Petar v The Macedonian Orthodox Community Church St Petka Inc [2006] NSWCA 277 at [62]. There is no error of principle in finding that the balance of convenience does not favour discharge of the existing orders, but rather favours varying the asset preservation orders to permit the applicants to refinance the ANZ facility if this can be done while preserving the status quo as between the applicants and Mr Naaman.
It is said that that his Honour erred by taking into account irrelevant considerations because it is not the purpose of freezing orders to provide security for the claimant's judgment or prospective judgment: Jackson v Sterling Industries Ltd at 623. The irrelevant consideration is said to be maintaining "debt to equity ratios" in relation to the applicants' assets, specifically the Royal Hotel. The premise of this submission is flawed.
The existing orders prevented the dissipation of assets of the relevant applicants up the relevant amount. His Honour found at [51] that "the balance of convenience justifies the lifting of the caveat and the variation of the [earlier orders] to permit the refinancing to occur on similar terms to the ANZ facility on the basis that Mr Naaman will be given leave to lodge a further caveat". By referring to the preservation of the status quo, his Honour was not referring to any concept of "debt to equity ratios". The status quo was that the relevant applicants' assets were frozen up to the relevant amount to prevent the applicants from dissipating their assets prior to the Court's determination of the dispute.
His Honour's refusal to discharge the existing orders upon payment into court of $3.6 million did not offend Supreme Court Practice Note SC Gen 14, par [11] which says that "the value of the assets covered by a freezing order should not exceed the likely maximum amount of the applicants' claim, including interest and costs". This reflects the constraining principle on the power to make asset preservation or freezing orders stated by Kirby J in Cardile at [124]. As his Honour found, Mr Naaman's claim including prejudgment interest totalled over $5 million, whilst the value of the assets covered by a freezing order was a lesser figure of $4,783,343.
His Honour was not persuaded that it was appropriate to discharge the existing orders upon payment into court of a sum of $3.6 million in circumstances where his Honour was satisfied that (i) Mr Naaman had a good arguable case for relief in an amount which exceeded the "relevant amount" in the asset preservation orders, (ii) the considerations in his March 2023 judgment with respect to the danger of dissipation of assets of the relevant applicants remained, and (iii) the balance of convenience did not justify the discharge of the existing orders, rather alternative orders were appropriate as sought under par [2] of the motion to permit a refinancing to occur on terms. There is no reasonably arguable error in his Honour's approach to par [1] of the motion or exercise of discretion.

Proposed ground 3: conditions in the 7 May 2024 orders (4(b) and (c))

The relief sought in par [2] of the motion was expressed to be "upon such terms as the Court thinks fit". The notations in order (1) made on 7 May 2024 identify the relevant ANZ facility, its limit, the mortgage, the property (Royal Hotel Granville), each of the relevant applicants, and provide a definition of "refinance" of the ANZ facility by reference to the Payout Amount, New Lender and New Securities. It is convenient to reproduce in full orders (2), (4) and (5) made on 7 May 2024: … 2. Order that: a. orders 1 to 6 and 9 made by Rees J on 3 November 2020 including the freezing orders in annexure "A" to order 9 those orders (November Orders); and b. orders 3 to 7, 9 and 10 made by Richmond J on 24 March 2023 including the freezing orders in annexure "A" to order 10 those orders (March Orders), be varied so as to permit the Applicants to refinance the Existing Facility on condition that the refinance of the Existing Facility is on similar terms to the Existing Facility and complies with the conditions set out in order 4 below. … 4. Order the Applicants: (a) not to transfer, dispose of, encumber, further encumber or otherwise deal with, or cause any transfer, disposal, encumbrance or dealing with the property of each of the Applicants, including the Property, other than, to undertake the refinance referred to in notation 1(d) above; (b) not to change the borrowers, guarantors and security providers (as set out in Annexure A) as part of the refinance referred to in notation 1(d) above, with the intent that the borrowers, guarantors and security providers remain the same (and in the same capacities) in any refinance; (c) not to increase or seek to increase the amount advanced on the security of the New Securities beyond the Payout Amount, until the earlier of the finalisation of these proceedings (including any appeals) and Supreme Court Proceedings 2022/00310019, or until further order of the Court. 5. Liberty to apply on 24 hours' notice to the Associate to Richmond J in relation to any further or other variation of the November Orders and/or the March Orders, or any variation of these orders, which may be necessary to effect the refinance transaction referred to in notation 1(d) above. …
There is no challenge to his Honour's statement of the legal principles, including at [48], that in an appropriate case the Court can require the caveator to temporarily lift the caveat to allow a refinancing: Finlayson v Bagala [2024] NSWSC 94 at [32].
Proposed ground 3 contends that his Honour erred in the exercise of his discretion by imposing unreasonable and manifestly unjust conditions in orders 4(b) and (c) on 7 May 2024. When addressing this contention, it is important to keep in mind that the applicants have not shown any arguable error in his Honour's finding at [41] that there is still "a danger that a prospective judgment against the parties to the transactions … will be wholly or partly unsatisfied because assets of those parties are disposed of, dealt with or diminished in value".

Order 4(b)

It is said of order 4(b) that the configuration of borrowers and guarantors has no bearing on the preservation of an asset which is the subject of an equitable charge or lien. In oral argument, the only example given was Ms Chantelle Maree Chapman, an existing guarantor of the $31.2 million ANZ facility on account of Grand Royal Nominees Pty Ltd. It is said that Ms Chapman, a "housewife" and sister-in-law of Peter Sleiman, "may" not wish to give a guarantee of a new facility. There are several difficulties with this submission.
First, the orders proposed by the applicants after the delivery of the judgment expressly stated that the proposed variation of the existing orders be on the condition that "the refinance of the ANZ Facility is on similar terms to the ANZ Facility" and "does not secure any amount in excess of the amount secured by the ANZ Facility as at the date of discharge of the ANZ Facility …".
Second, contrary to the applicants' submission, Ms Chapman's connection with the ANZ facility is not that of a mere "housewife"; she is the sole director of RHG Nominees, the owner of the Royal Hotel Granville. There was no evidence before his Honour, nor any submission by the applicants, that a new lender may not require a guarantee from a person in Ms Chapman's position, given her corporate responsibilities for the applicant which owned the Hotel, or that she was unwilling to give such a guarantee to a new lender.
Third, the applicants have not exercised the grant of liberty to apply in order (5) on 7 May 2024 in the event that they seek a variation of those orders which may be necessary to effect the refinancing of the ANZ facility.

Order 4(c)

It is said that order 4(c) contains an "inference of error" because it provides that the applicants not "increase or seek to increase" their proposed indebtedness in "the amount advanced on the security of the New Securities beyond the Payout Amount …".
In oral argument below, his Honour queried what was contemplated by the reference in par [2] of the motion to a replacement mortgage "to the same face value" as the ANZ mortgage. In exchanges with senior counsel for the applicants, his Honour stated his understanding that the replacement mortgage would secure the same amount, and no more than the amount secured by the existing ANZ mortgage. Counsel for the applicants responded "[n]othing in particular. That's just a broad term to indicate attention would need to be given to all of the details in any alternative order" but did not eschew his Honour's understanding of the intent behind the words "to the same face value".
Consistent with those exchanges at trial, there is no challenge to his Honour's finding at [49] as to the reference in par [2] of the motion to a replacement mortgage "to the same face value": What the applicants seek in prayer 2 of the notice of motion is the removal of the caveat and the variation of the March and November Orders to permit RHG Nominees to register a mortgage to a new lender replacing the mortgage held by ANZ over the Royal Hotel Granville to the same face value as that mortgage. By "same face value" I assume it is meant that the new mortgage will secure the same amount as the ANZ facility at the time of discharge of the ANZ mortgage.
Order 4(c), in terms, is consistent with the applicants' position in par [2] of the motion and the orders proposed by the applicants after delivery of judgment. It maintains the relevant applicants' indebtedness with respect to the Royal Hotel Granville at current levels, thus maintaining the status quo.
Finally, it is said that the 7 May 2024 orders unjustifiably impair commerce. Reference was made to the conditions precedent in the ANZ facility requiring a discharge of any caveat in relation to a security property, subject to certain specified exceptions. It is said, assuming a new transaction with a new bank containing an identical term, that the lodgment of a caveat after completion of the refinance will put the borrower into immediate default. Let it be assumed that a similar condition precedent is contained in a new facility. It does not follow that this will create an event of default if a caveat is lodged after the parties enter a new facility. That would depend on the terms of the new facility. The Court was not taken to any evidence below that this was the case or likely to be the case. On the contrary, there is no challenge to his Honour's finding at [50]: It was submitted for the applicants that no first or second tier lender (including the major banks) will consider an application to refinance existing debt where a caveat or freezing order is in place. However, I am satisfied based on the evidence of Mr Robert Gordon, a retired banker who was employed by Macquarie Bank for 23 years, that this is not the case. The effect of his evidence, which I accept, is that first and second tier lenders will review the position of the applicants on the merits, despite the present existence of the freezing orders and caveat, and will consider a proposal to refinance the ANZ facility if satisfied that the orders will be varied, and the caveat lifted, to enable the refinancing to occur.
The applicants have not shown any arguable error with respect to the conditions in orders 4(b) or 4(c) sufficient to warrant a grant of leave to appeal.

Proposed ground 4: removal of caveat

The argument that his Honour erred in his discretionary decision with respect to removal of the caveat relied upon the following propositions: 1. the sum of $3.6 million was "sufficient to satisfy the extent of Mr Naaman's putative equitable interest in the Hotel property" and his Honour did not address this issue in his judgment when dealing with the caveat at [44]-[48]; 2. Mr Naaman has been offered, but has declined, a "commercially adequate" alternative security, and the Court should order the removal of the caveat even though the caveat may be completely valid, referring to the statement by Campbell J in Marinkovic v Pat McGrath Engineering Pty Ltd (2004) 61 NSWLR 150; [2004] NSWSC 571 at [56]; and 3. had his Honour acted within the limitations on the Court's jurisdiction contended for by the applicants, his Honour would have granted relief in terms of par [2] of the motion by reference to an amount over $5 million.
That the Court will not permit a caveat to be used as a device for exerting commercial pressure is not in doubt. As Campbell J said in Marinkovic v Pat McGrath Engineering Pty Ltd at [56]: The Court has consistently taken the attitude that where the caveat claims an interest in land as security for the payment of money, if the registered proprietor is prepared to put up an alternative security which is commercially adequate, then it will remove the caveat even though the caveat may be completely valid: Kingstone Constructions Pty Ltd v Crispel Pty Ltd (1991) 5 BPR 11,987 at 11,991; Gibson v Co-ordinated Building Services Pty Ltd (1989) 4 BPR 9630; Australian Property & Management Pty Ltd v Devefi Pty Ltd (1997) 7 BPR 15,255 at 15,257.
But that is not this case. It bears repeating that the alternative relief with respect to removal of the caveat was sought on the express basis that it "doesn't then involve any payment into court". That was consistent with par [2] of the motion which did not, in terms, offer an alternative security as a condition of an order for removal of the caveat, let alone a security that was commercially adequate.
It is said against this reading of par [2] of the motion that the inclusion in par [2] of the words "upon such terms as the Court thinks" "contemplated that the court may, as a matter of discretion, require some other fund to be created in lieu of the continued freezing of the hotel". That cannot be accepted. The context of these words in par [2] of the motion was not the provision of an alternative security as a condition of removal of the caveat; the context was the terms of the replacement mortgage if the applicants refinanced the ANZ mortgage.
The premise of proposed ground 4 that the applicants offered an alternative security as a condition of removal of the caveat, let alone a security that was commercially adequate, is incorrect.

Conclusion

Leave to appeal should be refused. The proposed appeal does not involve an issue of principle or a question of public importance. Nor have the applicants shown that there is a reasonably arguable error in his Honour's exercise of discretion sufficient to warrant a grant of leave to appeal: Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 at [32]-[38]; Secretary, Department of Family and Community Services v Smith (2017) 95 NSWLR 597; [2017] NSWCA 206 at [28].
I propose the following orders: 1. Summons seeking leave to appeal be dismissed. 2. Applicants to pay the respondent's costs in this Court.
LEEMING JA: I agree with Gleeson JA.
GRIFFITHS AJA: I agree with Gleeson JA.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 November 2024

Solicitors: Jeresyn Legal (Applicants) KB Legals Pty Ltd (Respondent) File Number(s): 2024/122647 Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity - Real Property List Citation: [2024] NSWSC 216 Date of Decision: 6 March 2024; 7 May 2024 Before: Richmond J File Number(s): 2019/24203

(2023) 112 NSWLR 318

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