Saba v Aladjadjian

Representation: Counsel:
M Klooster (Defendant)
Solicitors:
New South Lawyers (Defendant)

File Number(s): 2024/00098171

Publication restriction: No

JUDGMENT – EX TEMPORE

1. Before the Court is an ex parte application by way of Notice of Motion by the defendant/cross‑claimant, Mr Gary Aladjadjian, for an asset preservation or freezing order under Part 25.14 of the Uniform Civil Procedure Rules 2005 (NSW).

2. In substance, the background to the matter is that there is a longstanding dispute between Mr Aladjadjian, who I will refer to as the defendant, and Mr Issam Saba, in relation to building work performed by Mr Saba for the defendant at a property located at xx Fullagar Road, Wentworthville in NSW.

3. The contract between the parties is in evidence before me, and is dated 5 November 2020: see Exhibit A, p 66. The contract is a Residential Building Head Contract. The signatures of the parties are at Exhibit A, p 71. The contract in question has a fixed contract price of $1,020,000 plus GST. The contract required the builder, the plaintiff, to demolish an existing dwelling, and construct a detached duplex with two granny flats for the fixed price which I have indicated.

4. The builder is the sole director and secretary of SFR Construction Pty Ltd. The builder is also the registered proprietor of a property located at xx Chelmsford Road, South Wentworthville in NSW (Exhibit A, p 47).

5. There is a lengthy history relating to payments of moneys by the defendant under the contract, and disputes arising between the plaintiff and the defendant. The defendant paid on account allegedly the sum of $1,098,900 to the builder. When disputes arose between the parties, the builder commenced proceedings in NCAT for the amount of $85,000. An extensive Cross-Claim was filed by the defendant in relation to what is said to be defective and incomplete building works in the sum of over $965,000. Those proceedings were commenced on 22 December 2023: Exhibit A, p 100. In due course, the proceedings were transferred from NCAT to this Court. A Statement of Claim was filed by the plaintiff on 26 September 2024 seeking the recovery of $85,000, which reflects the application made in NCAT.

6. A Defence was filed by the defendant on 19 November 2024. On 19 November 2024, the defendant also filed a Cross-Claim alleging defective and incomplete works, seeking damages for breach of contract, and also seeking damages under s 236 of the Australian Consumer Law. Another order was sought in relation to a document entitled "Variation".

7. The application comes before me today out of concern by the defendant that the plaintiff is purporting to transfer the property, which I referred to above, at South Wentworthville. I am satisfied from the evidence before me that the only real property following a title search owned by the plaintiff is that property (Exhibit A, p 48).

8. What seems to have occurred is that on 8 February 2024 various agreements were entered into between a third party, OG Capital Pty Ltd (“OG”), and the company controlled by the builder, SFR Construction Pty Ltd (“SFR”), for the advance of considerable funds by OG to SFR (Exhibit A, p 525). What is also apparent from the documents in Exhibit A is that as well as the loan agreement relating to the advance, there was a guarantee entered into by the plaintiff and his son concerning the amounts advanced (Exhibit A, p 568). To secure that contract, and alleged advance, a mortgage was signed, which has been registered on the title of the defendant's property (Exhibit A, p 113). There is a document at p 116 of Exhibit A that purports to acknowledge receipt of the principal sum to be lent under the loan agreement of $360,000. There is no other evidence that the money has been advanced by OG. Mr Klooster, who appeared for the applicant/defendant, specifically brought my attention to that document.

9. The loan agreement is at p 525 of Exhibit A, and purports to provide for OG to make financial accommodation to SFR. The agreement provides for advances to be made following requests in writing. At pages 560 to 561, is the schedule to the loan agreement, providing in item 4 for the collateral security to the loan, being a registered second ranking mortgage over the plaintiff's property at South Wentworthville.

10. The terms of the loan agreement are relevant. The facility limit is $360,000. The agreement provides for repayment to occur one month after the contract date with an additional amount of $40,000 owing in interest. That is a very high interest rate. If that amount is not repaid, the higher rate in item 7 is 8% per month, which amounts to 96% interest per annum. Although such rates have been seen by the Court, and on occasions have even been accepted by the Court of Appeal, that is an exceptionally high rate, and may be either uncommercial or disclose a distressed borrower.

11. Another important document that was provided on request between the solicitors is the statement of account in relation to the loan between SFR and OG, which is at p 590 of the Exhibit. It shows that the principal sum was $360,000, but that the indicative amount of interest owing in addition was $809,989.32 suggesting that there may have been only one, if at all, payment in repayment of the loan being one purported to have been made on 13 April 2024.

12. In Exhibit A is correspondence between the solicitors. That showed that the first mortgagee, who is the Commonwealth Bank of Australia, is owed the sum by the plaintiff of $2.181 million (Exhibit A, p 598). If one adds the amount said to be outstanding to OG of $1.163 million, one gets an amount well in excess of $3 million. I have referred above to the property at South Wentworthville being the only property of the plaintiff.

13. A contract was entered into on 31 March 2025 by the plaintiff to sell the property at South Wentworthville for the sum of $2,900,000. See Exhibit A, p 184. That sum would not be sufficient to repay both the Commonwealth Bank as first mortgagee, and OG as second mortgagee. That total would in effect consume the entirety of the value of the property as reflected in the contract at Exhibit A, p 184.

14. I have referred to the underlying dispute between the parties relating to the building works. In evidence is a building defects and incomplete works expert report dated 18 June 2024 prepared by Mr Bournelis (Exhibit A, p 214), which concludes that there were substantial defective and incomplete works at the property amounting to close to $1 million.

15. On the basis of that expert report, there is at least prima facie evidence that the defendant has a strongly arguable Cross-Claim against the plaintiff.

16. The defendant is concerned in relation to the sale of the property, and the potential for substantial moneys to be paid to OG consuming the equity of the only property owned by the plaintiff. The defendant is concerned to see objective evidence in relation to the amount purported to be advanced by OG of $360,000. As part of that concern, extensive correspondence was entered into between the solicitors to obtain that documentation. This documentation may be found from p 591 in Exhibit A. Much of the correspondence is with Mr Chandrakumar, a solicitor from RM Legal Sydney Pty Ltd, purporting to act for the plaintiff on the sale.

17. Ultimately, by email dated 20 May 2024 sent at 9.55am, Mr Chandrakumar, having obtained instructions, asserted that he has been unable to obtain evidence of the $360,000 advance to SFR under the facility, which I have described above. It is asserted in that email, no doubt on instructions, that the advance was paid into the account of Advance Corp NSW Pty Ltd. At the purported direction of SFR, Advance Corp paid the moneys to repay debts of SFR. A search was made by the solicitors for the defendant of Advance Corp NSW Pty Ltd. The search results at Exhibit A, p 619, shows that no such company exists.

18. This raises serious concerns at least, in relation to the accuracy of the instructions given by the plaintiff to Mr Chandrakumar, and possibly in relation to whether any moneys have been advanced as claimed at all. This also raises concerns in relation to whether the transaction entered into by SFR and OG as guaranteed by the plaintiff in the documentation, reflects what has actually occurred.

19. When the solicitors for the defendant sought to obtain more information, new solicitors were instructed to act on behalf of OG. There was a refusal by them to provide information as it was asserted that the defendant did not have the standing to challenge the registered mortgage, and the outstanding moneys secured by it: p 637 to Exhibit A.

20. That is the background to the application before me. The full background is set out in the affidavit of the defendant dated 29 May 2025 and the extensive documentation in Exhibit A.

21. In relation to OG, there is a company search in evidence, which is Exhibit B. On its face, that company search does not suggest any direct legal relationship between the plaintiff, and/or SFR, and OG.

22. I then turn to the requirements under Part 25.14. Obviously, proceedings have commenced in this Court. There is no judgment given as yet for the defendant/applicant. There is a Cross-Claim as I have indicated.

23. Having regard to the expert evidence referred to, and the material in the defendant's affidavit, I accept for the purposes of an ex parte application that the defendant has a good arguable case on an accrued cause of action for damages, which is justiciable in this Court by way of the Cross-Claim which has been filed. If the defendant succeeds in that Cross‑Claim, in my view there is a real prospect that the judgment would be entered, and potentially enforced, in this Court.

24. I turn then to Part 25.14(4) of the Uniform Civil Procedure Rules, which grants the Court power to make a freezing order against a prospective judgment debtor if the Court is satisfied, having regard to all the circumstances, that there is a “danger” that a prospective judgment will be wholly or partly unsatisfied because of the various matters set out there, including that the assets of the prospective judgment debtor could be disposed of, dealt with, or diminished in value.

25. The principles applicable to the grant of a freezing order have been set out in a number of recent authorities:

(a) KR Properties Global Pty Ltd v Kazzi [2024] NSWCA 141 by Mitchelmore JA; (b) MaxRelief USA Inc v 365 Heath Australia Pty Ltd [2024] NSWSC 491 per Pike J; and (c) Atlanta Building Pty Ltd v Abela [2024] NSWSC 1193 per McGrath J.

26. I rely on those authorities, and apply them in this application. I accept, in considering the application, that a Court should not lightly grant a freezing order, given the serious impact that it might have on the affairs of a party. Here, it is not the usual freezing order that is sought, but a more limited order relating to the sale of the plaintiff’s property in question.

27. This Court does not have inherent power to give a freezing order, but the applicant relies on Part 25.14, which I have indicated. It is clear that the power to grant a freezing order is discretionary. As a general rule:

(a) A plaintiff will need to establish first a prima facie cause of action against the defendant; and (b) Secondly, a danger that by reason of the defendant absconding or of assets being removed out of the jurisdiction, or disposed of within the jurisdiction or otherwise dealt with in some fashion, the plaintiff, if he succeeds, will not be able to have his judgment satisfied: Gleeson CJ in Patterson v BTR Engineering Australia Pty Ltd (1989) 18 NSWLR 319 at 321 ‑ 2.

28. I have already dealt with the question of a good arguable case. To me it seems to be established on the evidence. However, I note that satisfaction of a prima facie or good arguable case does not require an applicant to show on an interlocutory application that the plaintiff's case will more probably than not succeed at a final hearing: MaxRelief at [36]. As has been stated in a number of cases, the threshold is relatively low: see McColl JA in Samimi v Seyedabadi [2013] NSWCA 279 at [69].

29. The real issue in the present case seems to turn on the risk of dissipation. There must be facts from which a prudent sensible commercial person can properly infer a danger of default if assets are removed from the jurisdiction: see the judgment of Bathurst CJ in Severstal Export GmBH v Bhushan Steel (2013) 84 NSWLR 141 at [57] ‑ [59].

30. Mitchelmore JA in KR Properties, above, noted that, depending on the circumstances, the interests of justice may favour the grant of a freezing order, even though the risk of dissipation is less probable than not: at [50] relying on Patterson at p 325. Her Honour stated that what must be established is a sufficient likelihood of risk, which in the circumstances of a particular case justifies an asset preservation order: at [50].

31. In the present case, there are a number of facts which are concerning. On an interlocutory basis, they would include the following matters:

(a) The quantum of the interest payable under the loan agreement between OG and SFR as guaranteed by inter alia the plaintiff; (b) The fact that the property at South Wentworthville is the only property registered in the name of the plaintiff; (c) That the sale of the property has occurred after the filing of the Cross-Claim in NCAT, and the Cross-Claim in this Court; (d) The refusal of the solicitors acting for OG to provide any further information in relation to the payment and advance of funds; (e) The instructions from the solicitor for the plaintiff on the sale that money was paid to Advance Corp NSW Pty Ltd in circumstances where that company does not exist; (f) The quantum of the first registered mortgage to the Commonwealth Bank of Australia, and the balance of the amount owed to OG, which would consume the sale price for the property; (g) The fact that no payments have been made under the facility apart from one alleged, thereby allowing for very large sums at very high interest to accrue secured on the property; (h) The fact that the defendant, who has advanced substantial moneys to the plaintiff, is concerned in relation to his capacity to recover them if the sale is completed.

32. All of those matters when looked at together, in the light of the history of the transaction, and taking into account the correspondence which is part of Exhibit A, in my view establish a sufficient danger of dissipation of the relevant asset to prove on an interlocutory ex parte basis, the matters required to be established by Part 25.14(4) of the Uniform Civil Procedure Rules.

33. I will accordingly now turn to the appropriate order to reflect this judgment with counsel for the applicant.

[Timetabling matters were then discussed.]

34. Leave is sought to join OG as the second cross‑respondent to the Cross‑Claim. It may be that it is proved that the funds advanced were all done legitimately, and there is a proper explanation for the matters which have concerned me. I have no difficulty with that order being made so as to ensure that OG is made a party to the proceedings.

[His Honour then finalised the necessary orders.]

…

35. I formally make the orders in accordance with the order which I have signed. I note that I have also provided to counsel for the applicant a Notice to Produce, which has been altered as to the return date to 6 June 2025, and the Amended Cross-Claim, leave to file which was granted in the order which I have initialled, and placed with the papers.

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