Luxcon Developments No. 2 Pty Ltd v Ratner

Judgment 1HIS HONOUR: This is an application for an interlocutory injunction in relation to the disposition of the net proceeds of sale of lots 3, 19, 23 and 29 of Strata Plan 89685. The plaintiff/cross-defendant, Luxcon Developments No. 2 Pty Limited ("Luxcon Developments") became the owner of a site at 46 Pacific Highway, North Sydney which was developed into residential apartments with two retail premises. The cross-claimant/defendant, Mr Ratner, contends that he is entitled to 25 per cent of the profit from the development pursuant to a joint venture agreement made with Luxcon Developments. 2On or about 3 June 2014 Mr Ratner lodged caveats over seven lots in the strata plan claiming an equitable interest in the land under an undated joint venture agreement entered into in or about 2010. He claimed an equitable interest in the land arising from a resulting or constructive trust, the particulars of which were said to be contained in the agreement. 3On 6 June 2014 Luxcon Developments filed a summons for removal of the caveats. That application came before me on Friday, 13 June 2014. On that occasion Mr Ratner was given leave to file in court a cross-summons by which he has sought interlocutory injunctive relief in respect of the disposition of the proceeds of sale of four of the lots. 4On 13 June 2014 I ordered that the caveats be withdrawn. No challenge was or is made to the propriety of the sale of the lots. Mr Ratner's real case is not about restraining the disposition of the land. Indeed, he wants the lots sold so that the profits of the venture can be realised. 5I adjourned the further hearing of the relief sought in the cross-summons until today. 6The development has largely been completed, save for the sale of five lots in the subdivision. The sale of one of the lots was completed this week. Pursuant to orders that I also made on 13 June 2014 I am told that the net proceeds of sale of that lot, being an amount of $1,156,284.82 has been paid into the trust account of Luxcon Development's solicitor. On 13 June 2014 I made an order requiring the proceeds of sale of any of four lots, 3, 19, 23 or 29 to be paid into the solicitor's trust account or controlled moneys account, but that order and an order restraining Luxcon Developments from otherwise dealing with the net proceeds of sale was made only up to today and in order to hold the position until Mr Ratner's claim for injunctive relief could be properly addressed. 7The strata plan for the development was registered on or about 1 May 2014. Most of the lots in the development have been sold. Contracts to a gross value of more than $37 million have been exchanged and most have settled. Luxcon Developments says that the costs of the development comprising building acquisition costs, financing costs, consultants' costs, council contributions, land tax, rates, long service levy, commissions and project management fees total in excess of $31.5 million, although, on one view, when GST is added, the claimed expenses would total about $32,725,000. 8Luxcon Developments anticipates that the net profit from the development would be in the order of $2.3 million. It accepts that the cross-claimant, Mr Ratner, is entitled to a proportion of that net profit. But whereas Mr Ratner claims to be entitled to 25 per cent of the net profit of the venture, Luxcon Developments contends that at best he is entitled to only 11.92 per cent share of the profit. According to Luxcon Developments, the parties' entitlement to the share of the profits depends upon the extent to which they made equity contributions to the land acquisition. 9Luxcon Developments contends that Mr Ratner's likely share of the net profit is approximately $275,000. Mr Ratner contends that no proper accounting in respect of the development has been provided, but that on the information with which he has been provided he estimates his share of the net profit to exceed $1.8 million. 10Mr Ratner complains that proceeds from the development have been applied by Luxcon Developments for non-joint venture purposes. He points to sums that have been paid out of the bank account maintained by Luxcon Developments into which proceeds of sale were paid, but from which payments have been made for what appear to be personal expenses, or expenses in relation to other developments with which related companies to Luxcon Developments are concerned. Mr Ratner says that Luxcon Developments is a trustee of a trust that owns no assets other than the development in question and he is apprehensive that unless appropriate injunctions are made or another form of security is provided, he may be unable to enforce any judgment for what he claims to be his share of the profit of the development. 11The matter is complicated by the absence of any signed agreement between the parties. A draft of a joint venture agreement was prepared by a solicitor. By his cross-claim, Mr Ratner seeks a declaration that the document called the joint venture agreement is binding and enforceable between the parties. It is his evidence that after discussion about the contributions he would make to the venture and the splitting of profits a draft joint venture agreement was provided to him by the director of Luxcon Developments, Mr Melnikoff. The document was prepared by a Mr Denes, solicitor, who appears to have been retained by Luxcon Developments. According to Mr Ratner he and Mr Melnikoff had a conversation in which they both agreed that they were happy with the agreement and that words to the effect, "the agreement protects us both and there are no issues in it. Well that's it. We are partners now. Let's get on with it", were said. That is, Mr Ratner contends that the parties effectively, orally adopted the terms of the document prepared by the solicitor as the terms of their agreement. 12Mr Melnikoff disputes this version of events. According to him, in about late October or early November 2010 he had a conversation with Mr Ratner in which he said that they needed to discuss the draft agreement that had been sent to Mr Ratner and go through it further. According to Mr Melnikoff, Mr Ratner said words to the effect, "Mate, no worries. We can sort that out later. We are friends. I understand that we split the profits in line with our contributions. We don't need anything more", and he, Mr Melnikoff, said "OK". 13It is Mr Melnikoff's position that Mr Ratner lent a sum of $500,000 to Luxcon Developments and that it was a term of the loan that the money to be repaid would be not only the principal amount advanced, but a share of the net profits of the project, but that share would depend upon the equity contributions both parties made. According to Mr Melnikoff and Luxcon Developments the equity contribution made by Mr Ratner was $500,000 and the equity contribution made by Luxcon Developments was $3,694,948. Hence Mr Ratner's share of the net profit was 11.92 per cent. 14Luxcon Developments has offered to set aside $700,000 from the net proceeds of sale which would stand as security for Mr Ratner's claim for an account of profits. In the course of final submissions counsel for Mr Ratner submitted that an appropriate order would be that a sum of $1.5 million from the proceeds of sale received, or to be received, should be set aside as security for his claim for an account of profits. That, it was said, would not be a complete security because Mr Ratner's claim was for more than that sum. Nonetheless, and no doubt having regard to the need to give an undertaking as to damages, that was the principal relief for which Mr Ratner contended. 15On the basis of Mr Ratner's affidavit there is a serious question to be tried that the parties did adopt the terms of the joint venture agreement drafted by Mr Denes as the terms of their agreement. The document included clauses 6.2, 6.3 and 7 as follows: "6.2(i) The parties shall be entitled to the profits and shall bear and pay any losses of the Joint Venture in the following proportions: Luxcon 75% JR 25% (ii) the sharing of profits and losses as set out in clause 6.2(i) above is subject to the amount of final equity contribution by both parties as at the commencement of the Funding Facility. Should the final equity contribution of each party represent a greater or lesser proportion than the percentages set out in clause 6.2(i) above the sharing of profits or losses by the parties will be adjusted upwards or downwards accordingly. (iii) The parties agree to share in any equity uplift of the Property by the revaluation of the site upon DA Approval. The equity uplift will be shared by the parties in the proportions set out in clause 6.2(i) above. 6.3 Upon completion of the sale of all of the strata lots comprising the Property, the gross proceeds of sale of the Property shall be applied as follows and in the following priority: (i) firstly, in discharge of the Facility; (ii) secondly, in discharge of any outstanding costs of the Project; (iii) thirdly, in payment of amounts (if any) contributed by the parties in funding the Project; (v) finally, the balance (if any) to be paid to the parties in accordance with Clause 6.2. 7. COMPLETION 7.1 This joint venture shall be dissolved when the Property has been sold and the selling price of the Property has been received and all the profits therefrom paid to the parties hereto in accordance with this Agreement but subject always to Clause 7.2 hereof this joint venture shall not be otherwise dissolved nor shall such powers and authorities be at an end except by the Agreement under seal of the parties hereto. 7.2 Upon completion of the Project and after a full and complete and proper accounting in respect thereof (including any necessary adjustments between the parties as herein provided or contemplated and upon the final division of profits thereof between the parties hereto or the final contribution by the parties hereto towards the losses incurred hereunder all rights and liabilities herein created or then existing between the parties hereto shall immediately determine and no party shall have any claim whatsoever either in law or in equity against the others PROVIDED THAT the parties hereto shall contribute towards any cost, expense or outgoing referred to in Clause 6.1(b)(xii) hereof AND the parties shall account unto each other for any receipt in other income received in respect of the Project that may be received by either party hereto after the final division of profits as herein referred to notwithstanding the fact that this agreement may be otherwise at an end." 16The document also provided that the joint venture was confined to the property on the Pacific Highway, North Sydney and did not extend to any other land held by any party. Clause 1.2 provided that the parties agreed to remain joint venturers until the property had been sold and the parties had made final settlement in terms of clause 7 or until the agreement was terminated by agreement of the parties. 17Clause 2 provided that Luxcon was to undertake enumerated services in relation to the completion of the project including applying for development consent, appointing the builder, appointing suitably experienced architects, liaising with statutory authorities, managing other professionals, keeping and maintaining adequate records and accounts and records of the joint investment, keeping Mr Ratner fully informed at all times as to the progress of the project, using its best endeavours to secure funds necessary for the project, appoint a surveyor, registering the strata plan, appointing selling agents and otherwise conducting all joint venture operations diligently. 18The document included a term: "14.14 The parties hereby agree that for the purposes of this Agreement, JR will act as a lender of project funds into the joint venture and notwithstanding Luxcon's responsibility to keep JR informed and to consult JR in a reasonably timely manner regarding the progress of the Project and to provide regular updates to JR it is agreed by the parties for the purpose of resolution of any disputes that Luxcon is entitled to make all final decisions in relation to all project related commercial, planning and construction decisions and the provisions of this clause shall be paramount notwithstanding anything else contained in this Agreement or to the contrary." 19Mr Ratner puts his claim for an interlocutory injunction on three bases. First he contends that he had an interest in the land and thus has a propriety interest in the proceeds of sale of the land, and is entitled to an injunction to protect his proprietary interest in the proceeds. This argument was adverted to but not fully developed. I think it sufficient to say that the terms of the joint venture agreement do not create any proprietary interest in the proceeds of sale except if, notwithstanding the terms of the agreement, the true relation of the parties were as partners. 20Mr Ratner has not really contended, except in passing in the course of submissions, for that relationship. It was not a claim that he made in support of a caveatable interest. 21Mr Ratner claims to be entitled to acquire Luxcon Developments' interest in the joint venture pursuant to clause 8.1.1 of the agreement. That provision in substance provided a mechanism whereby if one party failed to observe or perform a fundamental term of the agreement, then in certain circumstances, the other could elect to acquire the joint venture interest of the offending party at a fair price to be determined by an accountant. 22Mr Ratner claims to have invoked that clause. But understandably I think on the evidence as it currently stands, counsel for Mr Ratner did not rely upon that ground in the course of submissions in support of the claim for injunctive relief. 23The second, and more promising ground for injunctive relief, is to enforce a negative stipulation in the agreement to the effect that the proceeds of sale should not be dealt with until the final balance is to be distributed to the parties as their share of the profits. 24I think it is seriously arguable that this is the effect of clause 6.3 assuming that Mr Ratner is successful at the hearing in establishing that that clause was a term of the party's agreement. Clause 6.3 provides that the gross proceeds of sale are to be applied in discharge of first the lending facility, secondly the outstanding project costs, thirdly, the amounts contributed by the parties in funding the project, and finally, the balance in accordance with the parties' shares provided for in clause 6.2. It provides that those payments are to be made "upon completion of the sale of all of the strata lots comprising the property". No doubt the parties can agree to a variation of that, and understandably, and probably necessarily, the clause was not applied in accordance with its terms in relation to the first three items. Clearly it was in the interest of both parties for the financing facilities to be discharged as soon as funds were available. In any event the mortgagees would have required that. Secondly, Luxcon Developments which incurred the costs of the project would have had to pay the costs it incurred in accordance with its contracts with those who provided services for the project. 25The capital contributions have also been repaid. Mr Ratner provided a sum of $500,000 as his equity contribution in about November 2010. Luxcon Developments' claim it made an equity contribution of $3,694,948. Mr Melnikoff says that it did so using moneys lent to it by related companies. Its accountant, Mr Newcombe, had provided Mr Ratner with information on 7 May 2014 in which he indicated that Luxcon Development's initial capital contribution was $3,334,408. In any event, the sum of $3,694,948 was repaid to Luxcon Developments. Those repayments were made earlier this month. The fact that such payments were made prior to the completion of the sale of all of the lots in the development does not necessarily mean that Mr Ratner could not seek to enforce the balance of the clause by contending that the balance, being the parties profit shares, were only to be paid to the parties on completion of the sale of all of the lots, presumably subject to their contrary agreement. Instead, it appears that Luxcon Developments has directed substantial payments to be made for purposes other than this development which could be justified if at all only as advances on account of its entitlement to profit from the venture. 26Counsel for Mr Ratner contends that the documents provided show payments of $1,431,138 to Luxcon Group in relation to a development in Kurraba Road, a payment of $369,275 in respect of what's called the Kensington development, credit card payments of in excess of $500,000 and what counsel describes as personal payments totalling in excess of $750,000. There has not been any audit or real analysis of those payments. 27I am satisfied that there is a serious question to be tried that Luxcon Developments is not entitled to apply the proceeds of sale of the lots for its own benefit or for purposes unrelated to the venture until the party's profit shares have been determined pursuant to clause 7 of the agreement, assuming the document does form the agreement. That would require a proper accounting. Even if the unsigned document does not incorporate the terms of the parties agreement, it is still clear that an audit will be required to ascertain the profit of the venture and the extent of the equity contribution made by Luxcon. 28Even if the unsigned document does not incorporate the terms of the agreement, I think there is a serious question to be tried that the parties assumed fiduciary obligations to each other. It is clear that there was an agreement to share net profits. It is disputed as to whether there was also an agreement to share losses, but it is arguable that there was such an agreement. These would be hallmarks, although not necessarily decisive aspects, of a partnership relationship. It appears that Luxcon Developments undertook to perform or to carry out the development not only in its own interests but in the interests of Mr Ratner. There appears to have been scope for it to exercise powers unilaterally and in a way which could affect his right and interests. There was some dependency on his part on the conduct and decisions of Luxcon Developments (see Breen v Williams [1996] HCA 57; (1996) 186 CLR 71 at 107; and United Dominions Corp Ltd v Brian Pty Ltd [1985] HCA 49; (1985) 157 CLR 1 at 10-11). 29I think it arguable that Luxcon Developments is not entitled to use the joint venture assets, that is to say the proceeds of sale of the lots, for its own benefit, that is, by directing payments to related developments, or making payments for its personal benefit or the benefit of those standing behind it, or by anticipating its share of the profits until a proper accounting has been taken. 30I think therefore, there is a serious question to be tried that Mr Ratner is entitled to invoke some restraint on dealing with the proceeds of sale. It is unnecessary to consider the third claimed basis for an injunction, i.e., whether the circumstances would justify an asset preservation order on Mareva grounds. 31Mr Ratner does not seek to restrain any dealings with the net proceeds. His contention that $1.5 million should be set aside is based upon his assertion that he is entitled to 25 per cent of the net profits of the venture, and his estimate as to what those net profits are. Luxcon Developments says that there is no serious question to be tried that he is entitled to 25 per cent of the net profits. 32Under the terms of the document, which Mr Ratner says contains the parties' agreement, he was required to fund the project to the extent of $800,000, not the sum of $500,000 that he put in. Clause 15.2.1 required him to provide the further $300,000 on the commencement of facility funding. 33Clause 6.2(ii) provides that the sharing of profits, 75 per cent and 25 per cent, as provided for in clause 6.2(i), is subject to the amounts of the final equity contributions of both parties as at the commencement of the funding facility, and that those percentages can be adjusted upwards or downwards. 34Although there has not yet been an accounting and Mr Ratner says that he is unable to verify the extent of Luxcon Developments' equity contributions, the material adduced on this application does not support a contention that Luxcon contributed less than $3,334,408. If those were the parties' respective equity contributions, then prima facie Mr Ratner would be entitled to a 15 per cent share of the profit, not 25 per cent or 11.92 per cent. That is on the basis that the total equity contributions were the sum of $3,334,408 and $500,000. 35Mr Ratner gave evidence that he did not know how Mr Melnikoff ultimately financed the purchase of the land, but left the financing arrangements to Mr Melnikoff. He deposed that he was ready, willing and able at all relevant times to provide his extra $300,000 if it were required by Luxcon. He says that he was never asked for the money, and he assumed that he had arranged sufficient finance without the need for it to be used. Mr Ratner deposed that from time to time after November 2010, and into 2011, he told Mr Melnikoff that he still had an extra $300,000, or that he asked to be told if and when Mr Melnikoff needed those moneys, but Mr Melnikoff told him that the extra $300,000 was not needed. Mr Melnikoff says that Mr Ratner never offered to lend more than $500,000. 36I think it is seriously arguable that Luxcon Developments owed an obligation of good faith or fidelity to Mr Ratner, and at least if the unsigned joint venture agreement document incorporates the terms of the parties' contract, Luxcon Developments should have told Mr Ratner when the further $300,000 provided for in clause 15.2.1 was required, that is on the commencement of facility funding. There is a serious question to be tried that it did not. 37The drawing down of facility funding and the making of decisions as to how much of the funds should be raised by the funding facility and how much by equity contributions from the parties was left to Luxcon Developments. It is clear from the terms of the document drafted by the solicitor, if not from the affidavit evidence and email correspondence, that the parties had proceeded, at least initially, on the basis that Mr Ratner would provide an equity contribution of $800,000. If the development was to be profitable, as was anticipated, and proved to be the fact, it was in his interest to make the full contribution and, to the same extent, it was in Luxcon Developments' interest to increase its equity contributions in proportion to his. 38I think there is a serious question to be tried that on the taking of an account Mr Ratner is to be put in the same position as if his further $300,000 equity contribution had been called on, rather than its being provided by Luxcon Developments. Had that been done, it would have been repaid in June this year. No doubt on an accounting Mr Ratner would have to give credit for the interest on that sum. But it would markedly increase his proportion of the equity contributions. Indeed, it would increase his equity contribution from 15 per cent to 21 per cent. 39The claim to a 25 per cent contribution is on shakier ground. Counsel for Mr Ratner refers to evidence of a conversation that Mr Ratner gives in which, according to Mr Ratner, Mr Melnikoff said: "Your money is needed to secure the site and some of the DA costs. By the time the site needs to settle, I will contribute the shortfall for the land purchase, and that will be my contribution. You will have 25 per cent for your $500,000 to $800,000. I will have 75 per cent for my $1.5 million to $2 million contribution to cover the shortfall in finance for the site acquisition ..." 40Mr Ratner deposed that he said that that was okay, and that he was happy with a 25 per cent/75 per cent split. 41This evidence, I understood, would have to be relied upon to show that there was an oral term of the agreement between the parties to the effect that Mr Ratner would have a 25 per cent interest in the venture or share of profits for contributing $500,000 to $800,000. 42The difficulty with this argument is that it is Mr Ratner's own case that the parties subsequently adopted the joint venture agreement, drafted by the solicitor, as the terms of their contract. That document provided that the agreement contained in it constituted the entire agreement between the parties and contained an acknowledgment that the parties did not rely on any representations, terms, warranties or conditions, save as set out in the document, and that the document superseded all prior or contemporaneous agreements of the parties in connection with it (clause 13.1). 43Clause 6.2(ii) is inconsistent with the term contended for by Mr Ratner. I do not think that on Mr Ratner's case there is a serious question to be tried that he is entitled to a 25 per cent profit share by reason of the conversations between the parties. 44It might be arguable that an aspect of the obligation of good faith would require that Luxcon Developments not increase its equity contribution above 75 per cent, if the project could be properly financed through third party lenders without detriment to the joint venture parties. Mr Melnikoff deposed that if total equity contributions of only $3.2 million to the property acquisition had been made, they would have been insufficient to obtain finance for the remainder of the settlement price for the purchase of the property. However, the basis for that opinion was not explained. Nonetheless, there is no evidence from Mr Ratner to show that the property acquisition could have been made with equity contributions of only $3.2 million. 45I do not think that, as the evidence presently stands, there is a serious question to be tried that Luxcon Developments was in breach of an implied term of good faith by making as high an equity contribution as it did. In saying that, I repeat that I think there is a serious question to be tried as to whether it may have been required to offer Mr Ratner the opportunity to make his full contribution of $800,000. 46It follows that I think there is a serious question to be tried that Mr Ratner may be entitled to a profit share of up to 21 per cent. The question then is; what is the likely amount of the profits that can be shared? On this, the evidence was highly confusing. 47As I have said Luxcon Developments contends that the likely net property was in the order of $2.3 million. Mr Ratner contends that the likely net profit is in excess of $7.5 million. 48Luxcon Developments' analysis proceeded by taking evidence of the sales and deductions of what it says were firmly established costs of the development and then deducting the equity contributions. There is a dispute as to some of the costs so claimed, namely the project management fees paid to Luxcon Developments. 49Luxcon Developments says that Mr Ratner knew of those payments and acquiesced in them. That is a matter he denies and it is not something that can be determined on this application. At least if the parties' agreement is on terms that incorporate the unsigned document, it is arguable that the project management services are part of the services that Luxcon Developments contracted to provide and it is not clear that it would be entirely to additional payment for them. 50I am not to be taken as deciding one way or the other whether that is so, but there is a serious question about it. 51The estimate made by Mr Ratner proceeds on a different basis. His starting point is the balance of moneys in the Luxcon Developments account. He then added the anticipated proceeds from the sale of lots on which contracts have been exchanged and the estimated value of the lots for which contracts are yet to be exchanged. He then adds back what he contends to be non-development expenses which had been paid out by Luxcon Developments, essentially, as it would seem, as advances on its profit share. These include credit card payments, other personal payments and payments relating to the Kurraba Road and Kensington developments. This analysis gives total amount of assets on hand, after Luxcon Development's deductions are added back, of approximately $10.7 million. From this, Mr Ratner deducts an estimate made by Mr Melnikoff of the GST payable on the sale of the lots of $2.9 million and a retention claim of $364,182, to produce net assets of approximately $7.5 million. This is not taking into account the disputed project management fees. Mr Ratner also contends that Luxcon Developments is entitled to GST credits of a further $1 million, approximately. 52I have not been able to reconcile the two approaches. One possibility would be that the money standing to the credit of the bank account includes money additional to the proceeds of sale of developments. For example, moneys lent which have not yet been repaid. Counsel for Luxcon Developments identified two such amounts of $1,325,074 and $128,030 as moneys lent, although it is not clear whether the repayments have not been made. In any event, those amounts do not go near explaining the apparent discrepancy. 53I do not propose to endeavour to resolve the conundrum. That will be a task for an accountant who should conduct an audit of the development's proceeds and expenses. 54I think on the basis of the analysis put forward by Ms Dawson, counsel for Mr Ratner, that there is a serious question to be tried, that the net profit available for distribution is in the order $7.4 million to $7.5 million. I think there is a serious question to be tried that Mr Ratner might be entitled to a share of the profits that exceed the $1.5 million figure, for which security is sought. (21 per cent of $7.5 million is $1.75 million.) 55The question is where the balance of convenience lies. As to that, Mr Melnikoff deposed: "23. The plaintiff is an active and growing player in the Sydney development field, and is a family trust with related entities that rolls over funds from profits and completion of one project to another. It has loaned the sum of about $300,000 to Luxcon 88 for the development at Kensington. Luxcon 88 requires further funds for the management of the development at Kensington that it is undertaking. If the plaintiff does not loan further funds to Luxcon 88 then Luxcon 88 will have to obtain those funds from other sources at more commercially disadvantageous rates. This will cause hardship to Luxcon 88 as it has approximately 70 pre sold contracts and a requirement to commence construction." 56No attempt is made to quantify the additional financing costs to which Luxcon 88 would be put if Luxcon Developments cannot advance it further funds for the Kensington development by reason of the injunction sought. 57The usual undertaking as to damages, which Mr Ratner offers, includes an undertaking to compensate third parties, such as Luxcon 88, if they suffer loss as a result of the grant of the injunction, as the court might consider to be just (see UCPR, r 25.8). It appears that Mr Ratner will be good for the undertaking. He has recently received a capital return of $500,000, and it appears likely that he will be entitled to at least some additional amount as profits from the development. 58I think the balance of convenience favours the grant of the injunction sought. If the injunction is not granted, and Mr Ratner succeeds on his claim for an account, it would appear likely that, in order to meet such a claim, Luxcon Developments would have to recover loans made to related entities. Their ability to repay such loans, or to repay them in a timely way, is not apparent. 59For these reasons, I consider that an interlocutory injunction in substance, in the form sought by counsel for Mr Ratner, should be granted. The injunction in theory should be a negative one, restraining Luxcon Developments from dealing with the net proceeds of the sale of the lots, except to the extent that a sum of $1.5 million has been set aside in the solicitor's trust account, or controlled moneys account, to await the outcome of the accounting. Mr Ratner does not press for an order in that form. As I have said, one property settled this week. Three other properties for gross sale prices, totalling $2,114,000 are due to settle. As I understood counsel's submission, Mr Ratner is content if the sum of $1.5 million is paid into the solicitor's trust account, or a controlled moneys account, from those properties. He acknowledges that GST will have to be paid. He does not press for the moneys currently held in the trust account necessarily to be retained, provided that proceeds from the other lots are paid in for an amount up to $1.5 million. 60There are two further lots on which contracts have not been exchanged. Mr Melnikoff estimates that they have a value of $3.675 million. However, they have been provided as a security for a loan to a related entity of Luxcon Developments. Mr Melnikoff deposes about $2.5 million is due under that loan. I accept Ms Dawson's submission that $1.5 million to be provided should be out of the proceeds of sale of the unencumbered lots. 61The order I propose, subject to hearing submissions from counsel for the parties, is that on the cross-claimant by his counsel giving the usual undertaking as to damages: (a) order that from the net proceeds of sale of lots 3, 19, and/or 23 of SP 89685, the cross-defendant pay into the trust account, or a controlled moneys account, of its solicitors, Salim Rutherford Lawyers, a sum or sums that, on completion of the last of the said lots to be sold, will bring the moneys held by Salim Rutherford Lawyers pursuant to these orders, or the orders of 13 June 2014, to an amount of not less than $1,500,000; (b) order that orders 3 and 4 made on 13 June 2014 be discharged. [Parties address on costs.] 62In my view the plaintiff is entitled to the costs of the summons which only sought orders for removal of the caveats. Pursuant to rule 42.2 costs follow the event unless the court thinks it appropriate to make a different order. 63The matter really in issue between the parties was the cross-claimant's claim for injunctive relief, but as the cross-claimant had lodged the caveats, it was necessary for the summons to be filed. I order that the defendant pay the plaintiff's costs of the summons. 64The claim for interlocutory relief in the cross-summons was heard on 13 June and today. The real matter in issue between the parties in relation to the injunctive relief sought was how much should be set aside from the proceeds of sale. That was a question upon which the cross-claimant has succeeded. 65Having regard to the position taken by the cross-claimant prior to the hearing on 13 June, the subsequent offer made on 16 June and the absence of any movement from the cross-defendant as to the amount it was prepared to quarantine from the proceeds of sale, I think that the just result is that the costs also follow the event in relation to the claim for interim relief in the cross-summons. By that I mean that the cross-defendant pay the cross-claimant's costs of the claim for interim relief. 66It will be a matter for a costs assessor to determine how much of the hearing on 13 June should be allocated to the claim for removal of the caveat and how much to the claim for interlocutory injunctive relief. 67I have already ordered that the defendant pay the plaintiff's costs of the summons. I also order that the cross-defendant pay the cross-claimant's costs of the claim for interim relief in the cross summons. 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: 27 June 2014