Yousseff El Bayeh v Samir Bayeh & Ors

Supreme Court of NSW|2011-03-02|Before: Einstein J, Slattery J, White J

The Summons 1There is before the Court an application brought by the plaintiff Yousseff El Bayeh against the first, second and third defendants seeking interim relief that Cambridge Law be restrained from distributing the sum of $2,284,940.95 held in a controlled money account for BI Constructions until further order of the Court. 2By reason of the urgency dictated by the fact that unless the Court made an immediate interlocutory order the plaintiffs claim would have been rendered otiose, the Court granted an interim restraining order in terms of paragraph 3 of the claim for interim relief and at the same time extracted from the plaintiff by its counsel the usual undertaking as to damages.

The nature of the issues 3It is apparently common ground that Justice Slattery of this Court was called upon during 2010 to adjudicate upon matters which then separated the parties. Unfortunately Justice Slattery was not available today to deal with somewhat similar issues and Justice White, currently the duty judge, requested that I deal with the instant application. 4As I have understood the plaintiff's contention, in or about October 2002 the first defendant, the second defendant and the plaintiff set up a company called BI Constructions, each of them having an equal number of shares, the company having been set up to be an equal joint venture partner in a property development at Bankstown. 5The plaintiff's evidence is that towards the end of 2002 the company and Chikal Pty Ltd signed an agreement to form the joint venture partnership. The plaintiff's case is that the purchase price of the first parcel of land for the development was approximately $4,240,000. 6The plaintiff's case is that subsequently an adjoining piece of land became available and the partnership negotiated to buy that piece of land for approximately $1,250,000. The two parcels of land were developed together. 7The plaintiff's case is that it was agreed that each of the joint-venture partners would make an equal contribution to the purchase price. This apparently meant that the company had to raise about $2,750,000 to cover the purchase price, stamp duty and initial costs of the joint-venture partnership. 8The plaintiffs case is that at the time of the purchase of the first and second parcels of land neither the first defendant nor the second defendant had any cash available. The plaintiff had recently sold some property and had about $400,000 from net sale. The plaintiff contends that he made payments totalling about $400,000 towards the company's share of the deposit on the purchase of the first and second parcel of land and other incidental costs that were incurred at the time of purchase. 9The plaintiff contends that before the completion period for each of the contract for sale of the first and second parcel of land, the first defendant and the second defendant each contributed approximately $500,000 and $600,000 respectively to the company. 10The plaintiff then contends that in or about the beginning of the 2003 year, he met with the first defendant and the second defendants to discuss their share of the initial contribution to the joint-venture partnership. The plaintiff's contention is that at this point BI was still short of approximately $1,600,000. The purpose of that meeting was to discuss whether they could raise the additional money required for their share of the joint venture partnership. It is unnecessary for present purposes to repeat the conversations before the Court in that regard. 11The plaintiff's case is that from the beginning of a loan secured from the NAB for $931,000 the plaintiff granted the bank a mortgage over his two properties. 12The plaintiff contends that he has spoken to the other two directors on many occasions after he paid out the loan telling them about having to sell his properties and that they needed to pay him back all the money he lost before anything else. The parties disagreed as to whether each party was to pay $2000 towards the cost of mortgage repayments or whether they were to split $2000 equally between the three of them.

The joint-venture partnership 13The plaintiff's case is that the development property was purchased and developed by the joint-venture partnership. There is evidence before the Court that sales of all the units in the development have now settled except for two remaining units. 14The plaintiff contends that as a result of a dispute raised by him and the second defendant after they were not given proper access to the paperwork and accounts for the charges of the construction company, of which the second defendant was a director, the net proceeds of sale were held in a Court account.

The board meeting of 15 October 2010 15There is evidence before the Court from the plaintiff that on 15 October 2010, a board meeting of the company was convened. The plaintiff's evidence is that he opposed the joint-venture proceeds being distributed. Nonetheless the plaintiff's evidence is that the resolution to transfer the Joint Venture Proceeds and then distribute it in accordance with an audit report was passed with the votes of the first and second defendants. 16On the plaintiffs case the money in the Court account was paid out and the solicitor for the company received a sum of $2,284.940.95 which was banked into a controlled money account on behalf of the Company on or about 24 February 2011. 17The plaintiffs case is that on or about 23 February 2011 he instructed his solicitors to act on his behalf to seek to stop the release of the money by Cambridge Law in order to prevent the money being owed to him by the first and second defendants being disbursed. The plaintiff's evidence is that he wanted to ensure that they would not get rid of the money before he could start his claim against them. 18The plaintiffs evidence is that he is concerned that the second and third defendants are using their numbers within the shareholders to ensure that they get what they think is their money out of the company before the plaintiff can take steps to see the company or to have the amount to which she is said to be entitled out of the joint venture money is adjusted. 19The plaintiff contends that he has not done anything before now because the joint-venture proceeds were held in a Court account until very recently. He was also apparently told only recently by Raed Rahal of Cambridge Law that he would not disperse the money without all three directors signing.

The way forward 20It is trite that in applications such as the present the Court endeavours to discern whether or not the plaintiff has shown an arguable case, the second parameter requiring the Court to be satisfied that the balance of convenience favours the granting of the relief sought. 21The gravamen of the respective defendants contentions raises questions of failures by the plaintiff to comply with directions given by the Court including as I have understood it, to comply with directions given by Justice Slattery in relation to the section of the litigation which was before him. 22In particular there is evidence before the Court in the form of chronology making clear that certain orders by Justice Slattery ordering the release of the moneys in the Court were to be stayed until 4 February 2011 to allow further time for the plaintiff to file and to finalise his proposed pleading or summons for relief and evidence. That further time was apparently granted upon application by counsel for the plaintiff, Justice Slattery also directing that the parties, including the directors attend a mediation to attempt to resolve the issues between them. 23The agreed chronology includes the following : 4 November 2010 Judgment of Slattery J handed down in Chikal Pty Ltd v Bi Constructions Pty Ltd [2010] NSWSC 1286: [35] The purpose of making these orders is so Mr Samir El Bayeh and Mr Joe El Bayeh can be given clear notice of these proceedings. It is expected on the return date that if either Mr Samir El Bayeh or Mr Joe El Bayeh has any claim over the fund in court such that they wish to oppose its payment out of court by the orders sought in the summons, they should appear on that occasion personally or by a legal representative to make clear what that claim is and why they oppose payment out. If they do not appear on that occasion, it is likely, given the evidence and proof that has been provided to the court to date, that the funds will be paid out in accordance with this summons. 22 November 2010 Matter listed before Slattery J: (1)Plaintiff's then solicitor (Ms Boustani) swore an affidavit in which she deposed: (a)(in paragraph 11) that she was instructed to seek the funds to be retained in Court save the debt to Barrack lawyers; (b)(in paragraph 14) onwards as to the nature of the dispute; (c)(in paragraph 16) "that the three directors agreed to pay the interest and repayments equally between them on the loaned amounts and Issam Issa and Samir Bayeh failed to do something resulting in Mr El-Bayeh maintaining the repayments alone". (2)Slattery J ordered that by 10 December 2010 Mr Youseff El Bayeh should serve: "his proposed pleading and his written submission based on that pleading which fully articulate the causes of action and claims for relief (and his best present quantification of any claim for damages) on which he relies to support any contention that: (a)He has standing to appear in these proceedings to oppose payment of the funds out of Court to the plaintiffs; (b)That the funds should remain in Court in preference to being paid out to Mr Macken on behalf of the joint venturers as the plaintiffs seek; and (c)Specifically that: (i)$500,000 should not be paid out to Mr Macken on account of Home Owners Insurance Liability of the joint venture, and (ii)$326,000 should not be paid out to Mr Macken on account of the joint venturers obligation to Bidana Pty Ltd". 10 December 2010 Draft summons circulated by the plaintiff's then counsel. 15 November 2010 Matter listed before Slattery J. Orders included: (1)A direction to the parties, including the directors of BI, attend a mediation to attempt to resolve the remaining issues between them; and (2)An order that the moneys held in Court be released to BI and Chikal, such order to be stayed until 4 February 2011. 4 February 2011 Date upon which stay of Slattery J's order for release of funds lapsed. 10 February 2011 Email from Slattery J's Associate expressing concern about the plaintiff's failure to demonstrate a willingness to participate in the mediation in accordance with order 8 of the orders of 15 December 2010. 24There is also evidence that the plaintiff did not file a summons for relief, or serve any evidence. The funds were to be released and the proceedings before Justice Slattery are now complete otherwise than costs. 25There is evidence that the stay imposed on the release of the funds by Justice Slattery in the proceedings before his Honour expired on 4 February 2010. 26The Court has been assisted by both parties in terms of what may in my view be classed as the critical area in relation to the plaintiff's claim to relief and the defendants' claim that no relief should now be forthcoming. 27There is before the Court evidence that there is $2,284.940.95 in a controlled money account. From that amount it is proposed that $2,168.354 be distributed in accordance with the resolutions of the board. That would mean that $116,585.95 would remain in the controlled money account. 28The plaintiff's debt has been estimated by his counsel at between 1 million and $1.3 million. 29If the plaintiff receives his disbursement of $551,399.90 according to the resolution dated 1 March 2011, this would reduce the money owed to the plaintiff to between $448,600.10 and $748.600.10. Considering BI's other assets, namely a one half share of a Westpac Account, SHAD Partners money and the remaining 2 unsold units less approximately $60,000 for sale expenses, BI's other assets total $716.000. On the evidence before the Court this is sufficient to cover the money owed to the plaintiff in all but the highest estimate of money owed.

Decision 30In all the circumstances the plaintiff has not discharged his onus of satisfying the Court that he has a prima facie case, nor that the balance of convenience justifies the orders which he seeks. 31The plaintiff's application for interlocutory relief is dismissed and the plaintiff is ordered to pay the costs of each of the defendants. 32Order discharging the interim order made during the interlocutory hearing.

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: 03 March 2011

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