Al Haje v Elassaad [2024] NSWSC 13

In this matter, Greg Walsh acts for the Plaintiff, Wisam Al Haje.

The Plaintiff sought an order against the Defendant for his costs for interlocutory proceedings that have resulted from the Defendant’s breach of an undertaking given on 3 September 2023, connected with an asset preservation order first made by Bellew J on 1 September 2021. Costs were sought on an indemnity basis under r.42.7(2) Uniform Civil Procedure Rules. This provides that costs may be payable forthwith rather than at the conclusion of the proceedings.

An order was sought that pursuant to s.98(4)(c) of the Civil Procedure Act 2005 (NSW), the Court should assess the quantum of costs in a specified gross sum. The matter was heard before Fagan J on 13 and 17 October 2023.

The Plaintiff commenced proceedings in the Supreme Court on 2 August 2021 alleging the Defendant assaulted him on 24 January 2021. The original asset preservation order, obtained ex parte, restrained the defendant from disposing of, dealing with, or diminishing the value of his assets generally. Such assets included a residential property at 170 Roberts Road, Greenacre, a second residential property at 69 Northcote Road. Greenacre and a half interest with his father in a third property at 83A Northcote Road, Greenacre.

On 3 September 2021, when the ex parte order was first returnable, Mr Khouzame was on the Court record as the defendant’s solicitor. On his application the order was varied to permit sale of the Roberts Road property on condition that the sale price should be not less than $1,350,000 and that on completion the net proceeds of the sale would be paid into the defendant’s solicitors’ trust account. An undertaking of the Defendant was given to the Court by his solicitor on his behalf.

That undertaking was to cause the net proceeds of any sale of the Roberts Road property to be paid on completion into a trust account operated by the First Respondent’s solicitors who were on record in these proceeding’s and will not direct that the proceeds be dissipated without an order of the Court.

The orders were varied so as to remain in force until 24 September 2021. They were subsequently varied so as they were in force up to 20 February 2024.

On 3 September 2021. after the asset preservation order had been varied and the undertaking given to the Court, the Defendant terminated his instructions to Mr Khouzame. He was not thereafter represented in these proceedings until he appointed Mr Kyriacou as his solicitor on some date prior to 20 October 2021. Mr Kyriacou continued on the record until the Defendant again changed his representation in May 2023.

The Defendant gave oral evidence before Fagan J on 13 October 2023 that he was unaware of the undertaking to pay the net proceeds of the sale of the Roberts Road property into his solicitors’ trust account. He stated that he was not present at the hearing on 3 September 2021 and that he was informed by Mr Khouzame later in the day that he was restrained from disposing of his other real property interests but was free to sell the Roberts Road property and to deal with the proceeds as he saw fit.

Fagan J found that it was highly improbable that the solicitor would not have fully and accurately informed the Defendant of the orders made and the undertaking given on the Defendant’s behalf. His honour was reluctant to accept the Defendant’s assertion unless he heard from the solicitor himself. No explanation was given for the Defendant’s failure to call Mr Khouzame. It was put to him in cross-examination that he well knew of the existence of the undertaking, and His Honour observed that his answers were unresponsive and evasive. His Honour made a specific finding that:

“l found him to be a very untrustworthy witness. I do not accept that he was unaware of the undertaking given to the Court on his behalf. I am satisfied that on and from 3 September 2021 he knew of his obligation to pay the net proceeds into trust. Even if the defendant did not know of the undertaking that his solicitor had given on his behalf, that could only have been through his own fault. He was well aware that the plaintiff was seeking an order to restrain him from dealing with his assets and it was incumbent upon him, as the respondent, to ascertain the outcome of the interlocutory proceeding.

The Defendant after 3 September 2021, entered into a contract to sell the Roberts Road property at a price of $1,315,000. The sale was completed on 4 February 2022. The defendant did not cause the net proceeds to be paid into the trust account of Mr Khouzame’s firm or into any other solicitor’s trust account. The Plaintiff did not learn of this breach until 3 March 2023. Greg Walsh conducted a Land Registry search and ascertained that there was a transfer dated 4 February 2022 which had been lodged and that Mr Khouzame had acted in connection with the transfer.

An application was then made to the Court to then remedy the situation. On 6 March 2023 Weinstein J ordered that the asset preservation order be extended to 4 September 2023, with certain variations. There was a specific order that a sum of money equivalent to the net proceeds of sale of [the Roberts Road property] be paid into a trust account operated by the respondent’s solicitor who is on the record in these proceedings, that is Mr Kyriacou, by 13 March 2023.

His Honour observed that the Defendant did not comply with order 2. He also did not provide copies of statements of bank accounts in his name for the period following settlement of sale on 4 February 2022 as required by the orders. It became apparent that the net proceeds of sale had been deposited into the trust account of Percentage Property Pty Ltd, the real estate agent thorough which the Defendant had affected the sale. There was no disclosure by the Defendant or on his behalf as to whether the funds were still held by Percentage Property Pty Ltd, or if not, how the funds had been applied.

A Notice of Motion was then filed by Greg Walsh on behalf of the Plaintiff on 29 May 2023, seeking an order that the Defendant pay into Court the proceeds of sale of the Roberts Road property. The Plaintiff appeared unrepresented when the motion was before Rothman J on 1 June 2023. His Honour ordered that the Defendant pay into Court “the proceeds of sale, if any” and that he provides within 28 days an account of all money disbursed from the proceeds. The Defendant was ordered to pay the costs of the notice of motion.

On 6 July 2023, the Defendant filed an affidavit purporting to account for disbursement of the proceeds of sale. That affidavit confirmed that the Defendant had not merely failed to pay the proceeds into trust, in breach of his undertaking, but that he had disbursed the proceeds, or allowed them to be disbursed so that a significant component of the original asset preservation order had been frustrated. This caused the Plaintiff to file on 1 September 2023 his notice of motion seeking the appointment of a receiver over the defendant’s assets.

As His Honour observed, there was no application to set aside the original asset preservation order as modified on 3 September 2021 nor to be released from the undertaking of 3 September 2021.

The only practical remedy was for the appointment of a receiver, however, His Honour suggested that the parties consider alternatives, such as the Defendant offering mortgages over his remaining real property to secure any judgment that the plaintiff may recover, as an alternative to incurring the professional fees of a receiver.

His Honour was satisfied that the Plaintiff was entitled to his costs in respect of the application to Weinstein J on 6 March 2023. He was also entitled to the costs in respect of proceedings before Rothman J and also Campbell J on 5 and 14 September 2023. Such costs will be assessed on an indemnity basis.

In the context of whether a lump sum order should be made, His Honour made findings as to the conduct of the Defendant which gave rise to the interlocutory contest which was unreasonable. His Honour ultimately made a finding that the case was not suitable for an order that the costs of the various interlocutory proceedings be paid a specific gross sum. His Honour made an order that such costs be assessed and be paid on an indemnity basis and paid forthwith.