Background
Agency Settlements Pty Ltd, a newly established law firm acting for real-estate agents, offered a service under which purchasers paid property deposits directly into its solicitor trust account. Its proposed special contract condition appointed the firm as depositholder and stakeholder, while the real-estate agent never received or handled the deposit. The model was intended to assist agents with obligations arising from new anti-money-laundering rules.
Solicitor Jared Zak publicly questioned whether the arrangement complied with s 86 of the Property and Stock Agents Act 2002 (NSW), including through communications with clients and industry participants and an online petition. Agency Settlements sought declarations that its model was lawful, relief under s 18 of the Australian Consumer Law, and proposed damages for injurious falsehood. Pending trial, it asked the Court to restrain Zak from representing that its model contravened s 86.
The Court’s Holding
Hmelnitsky J dismissed the interlocutory-injunction application with costs. The Court did not finally determine whether Agency Settlements’ model was lawful. It held only that the company had a good arguable case that, where the vendor and purchaser agreed to the special condition, the agent did not contravene s 86 because the agent never received the deposit. The online petition also presented a seriously arguable Australian Consumer Law claim because it may have conveyed the model’s unlawfulness as fact rather than opinion.
The proposed injurious-falsehood claim was not strong enough to support interim relief. The evidence of malice was weak because Zak appeared honestly to hold his interpretation of the untested legislation, and Agency Settlements had not adequately demonstrated actual damage attributable to his representation. The company’s failure to produce ordered financial and other material also undermined its evidence.
In any event, the balance of convenience opposed an injunction. The uncertain boundary between legal opinion and asserted fact would make compliance difficult and would significantly impede Zak’s communications with clients and colleagues. Relief would also have limited utility because other industry participants remained free to criticize the model, while Agency Settlements had not shown that it could provide a meaningful undertaking as to damages.
Key Takeaways
- The Court did not rule that Agency Settlements’ deposit model was lawful; it found only that compliance with s 86 was sufficiently arguable for interlocutory purposes.
- A statement that a business model is unlawful may arguably be misleading factual conduct, but distinguishing legal opinion from fact can be difficult and context-dependent.
- An interlocutory injunction may be refused despite a serious question to be tried when its scope is uncertain, its practical value is limited, and the applicant cannot support a meaningful undertaking as to damages.
Why It Matters
The decision illustrates the difficulty of obtaining interim orders that restrict a lawyer’s statements about an unsettled legal issue. Even carefully framed relief aimed only at factual assertions may impermissibly chill professional advice when fact and legal opinion cannot readily be separated.
For property practitioners, the substantive operation of s 86 in this novel deposit arrangement remains unresolved. The ruling preserves Agency Settlements’ Australian Consumer Law claim for later determination while leaving Zak free, pending trial, to continue expressing his views.