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Category: Procedural rulings

Parties: JJZ Building Group Pty Ltd (Plaintiff)
B&L Trading Co Pty Ltd (First Defendant)
Edmond El Khoury (Second Defendant)

Representation: Counsel:
J Ireland KC (Plaintiff)
D Allen (Defendants)
Solicitors:
AND Legal (Plaintiff)
Edmond Khoury Solicitors (Defendants)

File Number(s): 2026/00048321

Publication restriction: Nil

JUDGMENT

1. HIS HONOUR: By its statement of claim filed on 4 February 2026, the plaintiff claims the following relief:

“1. A declaration that by written notice dated 26 August 2025 the Plaintiff validly terminated the Investment Agreement dated 14 April 2025 (Investment Agreement) between the plaintiff and the First Defendant relating to the residential development of the land located at ** Ormond Street, North Gosford in the State of New South Wales (Gosford Land) being the land in Folio Identifier 200/1280196.

2. A declaration that Mortgage AV36053 (Registered Mortgage) presently registered upon the title to the Gosford Land was not validly executed by or on behalf of the Plaintiff.

3. A declaration that the Second Defendant invalidly certified the Registered Mortgage for Registration for the purposes of the Real Property Act 1900.

4. An order that the Registrar-General cancel the recording of the Registered Mortgage upon the title to the Gosford Land.

5. Damages for breach of contract against the First Defendant.

6. Damages for negligence against each of the First and Second Defendants.”

2. Those claims arise out of the following uncontroversial facts.

3. The plaintiff is the registered proprietor of land at North Gosford. On 14 April 2025, the plaintiff and the defendants entered into an Investment Agreement by which the first defendant agreed to provide $11.3 million by instalments to assist the plaintiff in the completion of residential apartments then under construction on their land. The moneys were to be provided by 13 instalments between execution of the agreement and periodically thereafter between 2 June 2025 and 1 June 2026. The first instalment of $3 million was paid on 15 April 2025.

4. The agreement contemplated that the first defendant would not be repaid in conventional terms. Instead, the agreement provided for the transfer of completed apartments in the development with a total assigned value of $16,490,000.

5. The first defendant did not make instalment payments due in accordance with the terms of the agreement in June, July and August. The plaintiff treated this failure as a repudiation of the agreement and terminated it. Those matters are pleaded in the statement of claim as follows:

“Breach by B&I of the Investment Agreement

8. B&I failed and refused to make any further payment of the Investment Moneys required to be made by it upon the due dates pursuant to the terms of the Investment Agreement and thereby breached the same.

Particulars

(i) B&I failed to pay instalment 2 of $1,000,000 required to be paid by it on 2 June 2025.

(ii) B&I failed to pay instalment 3 of $630,000 required to be paid by it on 1 July 2025.

(iii) B&I failed to pay instalment 4 of $630,000 required to be paid by it on 1 August 2025.

9. B&I failed to provide in writing any notice of ‘Investors delay concerns’ within 24 hours of the due date for payment as required by Clause 3.4 of the Investment Agreement in respect of any of the three instalments 2, 3 and 4 referred to in the particulars in paragraph 8 above and thereby breached the same.

Repudiation of the Investment Agreement by B&I

10. By virtue of the matters pleaded in paragraphs 8 and 9 above B&I thereby repudiated the Investment Agreement.

Termination of the Investment Agreement

11. By letter dated 26 August 2025 sent by email by Mr Darian Iacono the principal of AND Legal, acting as solicitors on behalf of JJZ, to Mr El Khouri acting as the solicitor for B&I, JJZ accepted B&I’s repudiation of the Investor Agreement and validly terminated the same.”

6. The terms of the agreement also anticipated the execution and grant of a mortgage over the land by the plaintiff in favour of the first defendant. The second defendant, who is a solicitor, prepared a mortgage on or about 14 April 2025 in his capacity as the first defendant’s solicitor. It was signed by Mr Ishaq Akkouche on the same day, purportedly in his capacity as a director of the plaintiff. Mr Ishaq Akkouche was not a director of the plaintiff and had no authority to sign the mortgage. That mortgage was in due course registered upon the title to the plaintiff’s land.

7. It is not in issue that the agreement contemplated the execution and registration of a mortgage over the Gosford land. There is a dispute that the plaintiff agreed to give a mortgage to the first defendant in the terms of that which was registered in fact. The plaintiff claims damages against the defendants alleging a breach by them of a duty of care owed to the plaintiff. The relevant paragraphs of the statement of claim are as follows:

“Duty of Care of the First and Second Defendants

20. In the course of preparing and including the statements which Mr El Khouri did in the Registry Instrument identified in paragraph 18 above (Registration Statements) on his own behalf as certifier and also in the capacity as solicitor and agent for B&I and in thereafter lodging the Registry Instrument for registration upon the title to the Gosford Land under the provisions of the Real Property Act 1900, each of B&I and Mr El Khouri owed a duty of care to JJZ to ensure that the Registration Statements were correct and complete.

Particulars

(i) The Defendants had sole control under the applicable conveyancing procedures and legislation of the drafting of the Registration Statements and the lodgement of a Registry Instrument;

(ii) The Defendants did not intend to and in fact did not seek confirmation of the completeness and accuracy of the Registration Statement before lodging the Registry Instrument for registration upon the title to the Gosford Land; and

(iii) In the event that the Defendants lodged for registration a Registry Instrument with materially inaccurate statements B&I would thereby encumber the registered title to the Gosford Land owned by JJZ with an invalid mortgage security interest on the public register which would inhibit and prevent JJZ from raising investment funds necessary to complete the Gosford Project.

Breach of duty of care by the First and Second Defendants

21. In breach of the duty of care pleaded in paragraph 20 above and negligently the First and Second Defendants and each of them:

a. lodged a false and inaccurate Registration Instrument upon the registered title to the Gosford Land;

b. thereby procured registration of an apparent but invalid mortgage encumbrance in favour of B&I upon the registered title to the Gosford Land;

c. thereby inhibited after 26 August 2025 the procurement of further investment funds to finance the completion of the Gosford Project; and

d. substantially delayed the completion of the Gosford Project at great expense to JJZ.”

8. In the light of those anodyne facts, the plaintiff and the defendants moved the Court for various orders. The first in time was the defendants’ notice of motion filed on 5 March 2026 seeking these orders:

“1. The statement of claim be summarily dismissed on the basis that, inter alia:

a. No cause of action requiring removal of Mortgage AV36053 is pleaded.

b. It is an abuse of process to seek removal of the Mortgage in the circumstances pleaded when the first defendant is entitled to have a mortgage registered on title to the plaintiff’s land in the form prepared by the first defendant, and the plaintiff is not offering to do equity and agree to the first defendant preparing and registering a mortgage on title to land.

c. There is no arguable loss or damage pleaded in paragraphs 22 and 23 because causation is not pleaded.

d. The material facts required to plead negligence are absent, in particular, the material facts required to be pleaded by operation of ss 5B and 5D of the Civil Liability Act 2002.

2. In the alternative the statement of claim be struck out in whole or in part.

3. Costs.”

9. The plaintiff’s amended notice of motion filed on 7 May 2026 sought the following orders:

“1. That the First Defendant, by itself, its servants, and agents, be restrained pending the determination of these proceedings from exercising any purported powers as mortgagee under the mortgage identified as dealing AV36053.

2. That the Second Defendant be restrained from acting as solicitor for the First Defendant in these proceedings.

3. That the final hearing of these proceedings be expedited.

4. That further directions be made for the conduct of these proceedings.”

10. By reason of an appropriate undertaking given by the first defendant, there is no need to deal with the first order sought in the plaintiff’s amended notice of motion. Moreover, having regard to the view I have formed about the orders sought by the defendants in their notice of motion, the order sought by the plaintiff to restrain the second defendant from acting for the first defendant can be put to one side for the time being.

11. It is convenient to record the bases upon which the defendants attack the statement of claim.

12. The defendants submit, even assuming that there is some basis to say that the mortgage was registered without approval, there is no cause of action pleaded that entitles the plaintiff to the relief that it seeks. As for the negligence claim, the defendants maintain that the plaintiff approved the registration of the mortgage. Moreover, and in any event, the statement of claim makes no reference to the matters that are required to be pleaded in accordance with ss 5B, 5C and 5D of the Civil Liability Act 2002. The defendants contend that reference to these matters is particularly important because the claim made by the plaintiff in this matter is novel inasmuch as the second defendant is alleged to owe a duty of care to “a client” on the other side of a transaction. The plaintiff also wishes to recover damages from the first defendant for the actions of the second defendant on the limited basis that the second defendant was the first defendant’s agent.

13. The defendants also complain that the statement of claim does not address how electronic conveyancing works in New South Wales. That is said to be significant having regard to the role played by the second defendant in obtaining registration of the mortgage in question.

14. Finally, the defendants assert that the current pleading is not one that fairly apprises them of the case they are required to meet and is correspondingly devoid of any utility in assisting the Court to determine the current dispute.

15. All of these submissions are contested by the plaintiff.

Consideration

16. The statement of claim pleads damages in these terms:

“Damages

22. As a consequence of the breaches of contract on the part of the B&I pleaded above JJZ has suffered loss and damage.

23. As a consequence of the negligence of each of B&I and Mr El Khouri pleaded above JJZ has suffered loss and damage.”

17. With respect to the allegation that the first defendant breached the Investment Agreement, amounting to a repudiation, which the plaintiff then accepted as a reason to terminate it, it is not clear to me how the plaintiff frames its case that it suffered loss and damage as a result. I appreciate that the plaintiff takes the position that loss and damage can legitimately be particularised at a later date. However, in the present case, the nature and extent of the plaintiff’s alleged losses may arguably inform the significance of the alleged breaches and for that reason the very existence of its right to rely upon them as a repudiation which it then purported to accept as founding an entitlement to put an end to the agreement.

18. More fundamentally, the plaintiff’s allegation that it suffered loss and damage as a result of the defendants’ negligence requires it to plead the loss and damage relied upon. Damage is the gist of the action in negligence. In the present case, it is by no means clear, and the plaintiff does not explain, how the way in which the mortgage that was registered on the title to the land differs from the mortgage that was contemplated by the agreement. Putting aside the issue of whether or not the defendants or either of them prepared a form of mortgage that actually differed from that which the plaintiff or the parties contemplated, the statement of claim does not clarify how the alleged differences caused the plaintiff to suffer loss. For example, how is it said that the mortgage that presently encumbers the plaintiff’s land has created some disadvantage that would not have been caused by the mortgage it maintains should have been registered?

19. I take the parties to acknowledge that the duty of care for which the plaintiff contends is, to some extent at least, novel. It relies upon the operation of the Electronic Conveyancing legislation and rules which, as far as I am aware, have not been the subject of a decision in New South Wales analysing the type of duty which the plaintiff propounds. The precise nature of the alleged duty is by no means clear to me from the matters described in paragraph 20 of the statement of claim.

20. Finally, but understandably having regard to the challenges they mount, the defendants have not yet filed a defence. Clearly enough, they should not be required to do so for as long as they are unable to understand the case pleaded against them. By the same token, I am mindful of the statutory exhortations in ss 56, 57, 58 and 59 of the Civil Procedure Act 2005. In particular I note that s 58 provides, in part, that in deciding whether to make any order or direction for the management of proceedings, including any order for the amendment of a document, that I must seek to act in accordance with the dictates of justice.

21. In my view, it is arguable that the statement of claim is vulnerable to being struck out in part. It is unnecessary for present purposes for me to say more about that than I have already. It seems to me in the circumstances that the preferred course is therefore for me to grant liberty to the plaintiff to file an amended statement of claim, if so advised, within a timeframe that is suitable to the parties. If the plaintiff decides not to do so, I will proceed to make orders that finally dispose of the defendants’ motion. If the plaintiff decides to amend its statement of claim, one of at least two possible things will likely follow. The defendants may take the view that the amended pleading is also deficient in which case I will deal with the competing contentions about it. Alternatively, the defendants will accept, or I may conclude, that the amended document is in a form that requires them to file a defence. In any of those outcomes, the just, quick and cheap resolution of the pleadings dispute at least will be achieved.

Orders

22. Accordingly I:

23. direct the plaintiff, if so advised, to file and serve any amended statement of claim upon which it proposes to rely within 14 days;

24. reserve the costs of the proceedings before me; and

25. list the matter for directions before me at 9.30am on Friday 5 June 2026.

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