Ashington Capital Ltd v Noosa Venture 1 Pty Ltd

Supreme Court of NSW|2010-05-28|Before: Brereton J

CITATION : Ashington Capital Ltd v Noosa Venture 1 Pty Ltd [2010] NSWSC 639

HEARING DATE(S) : 28 May 2010 JURISDICTION : Equity Division Corporations List

DECISION : Winding-up application summarily dismissed with costs.

Ace Insurance Ltd v Moose Enterprise Pty Ltd [2009] NSWSC 724 Bryanston Finance Ltd v De Vries (No.2) [1976] 1 All ER 23 CASES CITED : Charles Forte Investments Ltd v Amanda [1963] 2 All ER 940 Dance with Mr D Ltd v Dirty Dancing Investments Pty Ltd [2009] NSWSC 332 Fortuna Holdings Pty Ltd v Deputy Federal Commissioner of Taxation 1978 VR 83 State of New South Wales v Banabelle Electrical Pty Ltd (2002) 54 NSWLR 503

Ashington Capital Pty Ltd (plaintiff) PARTIES : Noosa Venture 1 Pty Ltd (first defendant) Valad Commercial Management Ltd (second defendant)

COUNSEL : D L Williams SC w A P Cheshire (plaintiff) A J Sullivan QC w S J Free (defendants)

SOLICITORS : McLachlan Thorpe Partners (plaintiff) Blake Dawson (defendants)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST

2010/124642 Ashington Capital Ltd v Noosa Venture 1 Pty Ltd; In the Matter of Noosa Venture 1 Pty Ltd JUDGMENT (ex tempore) HIS HONOUR:

On plaintiff's application to amend its interlocutory process:

1 Before the Court is an application by interlocutory process by the defendant for summary dismissal of winding-up proceedings. The plaintiff also has filed an interlocutory process, which seeks leave to amend the originating process by substituting a different plaintiff. It now seeks to amend that process, in order to also add to the relief claimed in the originating process various claims for relief for oppression. 2 Usually, the argument that an application for summary dismissal should be considered in the light of proposed or potential amendments to the claim as well as the claim as it stands is a strong one. In this case, however, there is the particular circumstance that the whole of the relief originally claimed was a winding-up, whereas the proposed amendment will expand the proceeding to claim other relief, while maintaining the claim for a winding-up. As I perceive the issues as present, the defendants' fundamental concern is that there is on foot an application for winding up, the pendency of which, if not sooner dismissed, will trigger an event of default under its finance arrangements in a few days' time. It was, as I understand it, for that reason that these matters were set down for urgent hearing today. 3 In those circumstances, it seems to me that the appropriate course is to focus on the winding-up application as it is at this stage, without prejudice to the plaintiff's ability to bring proceedings for other relief it wishes to do so. 4 Effectively, the amendment application amounts to an attempt to outflank the summary dismissal application by adding additional claims for relief not necessarily subject to the same objections as the winding-up application or the same discretionary considerations. They can be pursued, if appropriate, but in the special context of this case, after determination of whether the winding-up proceedings should be dismissed.

5 I decline leave to amend the interlocutory process. On defendants' application for summary dismissal: 6 Because these proceedings require urgent resolution, I shall give some reasons now, which will not be as ample as otherwise, but will indicate the essential basis of my decision. 7 The proceedings for winding up of the first defendant Noosa Venture 1 Pty Ltd on the just and equitable ground - essentially on the grounds of a deadlock between the interests of the plaintiff Ashington Capital Ltd and the second defendant Valad Commercial Management Ltd - as presently constituted, are doomed to fail, because Ashington does not have standing. It is not a shareholder in Noosa Venture 1 nor a creditor of the Noosa Venture 1, but the beneficiary of a trust, the trustee (TNL Trust Company Ltd) of which is a shareholder in Noosa Venture 1. The relevant party who would have standing is therefore not Ashington, but Ashington's trustee TNL, which is a shareholder. At least as presently constituted, the proceedings are therefore liable to be summarily dismissed, because they are doomed to fail for that reason. 8 The real question, therefore, is whether an amendment to substitute TNL for Ashington as plaintiff should be permitted. On that application, I consider that I should approach the matter by adopting the approach that the court would take on an application by the defendant for an interlocutory injunction to restrain the commencement of winding up proceedings against it. For those purposes I assume, as seems uncontroversial, that TNL, as a shareholder, has the requisite standing to bring winding up proceedings against Noosa Venture 1. I also assume that, but for clauses 22 and 23 of the Unitholders' Agreement, to which I shall come, it would have a seriously arguable case for a winding up order on the just and equitable ground.

9 Typically, injunctions restraining the institution of proceedings are granted on one of two grounds. In the context of winding up petitions, it has usually been on the basis that the proceedings are an abuse of process [see, for example, Bryanston Finance Ltd v De Vries (No.2) [1976] 1 All ER 23; Charles Forte Investments Ltd v Amanda [1963] 2 All ER 940; and Fortuna Holdings Pty Ltd v Deputy Federal Commissioner of Taxation [1978] VR 83.] As the developments in the law of the field of anti-suit injunctions have illustrated, such an injunction may also be granted on the basis of a breach of contract between the parties [see, for example, Ace Insurance Ltd v Moose Enterprise Pty Ltd [2009] NSWSC 724]. 10 In my view, there is a seriously arguable case that, having regard to the terms of clauses 22 and 23 of the Unitholders' Agreement, institution of these proceedings, while the deadlock and dispute resolution provisions contained in clauses 22 and 23 remain in play, have been invoked and are in the course of being worked out, would be in breach of express or implied obligations imposed by the Unitholders' Agreement, not to resort to litigation unless the dispute resolution mechanisms are exhausted. 11 Alternatively, having regard to the agreement of the parties contained in clauses 22 and 23, it is at least seriously arguable that for one of the parties to proceed with litigation in the face of agreement to follow a dispute resolution procedure may be an abuse of process [see State of New South Wales v Banabelle Electrical Pty Ltd (2002) 54 NSWLR 503, 517 and Dance with Mr D Ltd v Dirty Dancing Investments Pty Ltd [2009] NSWSC 332, [52] -[53]]. 12 On the balance of convenience, it is plain that serious jeopardy would be involved to Noosa Venture 1 if leave to amend were granted so as to maintain these proceedings on foot, namely that it would thereby commit an event of default under its arrangements with financiers. I am entirely unpersuaded by PXO3 that the financier could be relied on not to take advantage of any such default. There is no apparent urgency or other good reason why Noosa Venture 1 should be exposed to that jeopardy. On the other hand, it is not evident that there is any prejudice to Ashington or TNL from not being able to pursue winding-up proceedings immediately, at least before the dispute resolution proceedings have been worked through. 13 Moreover, as at the date of institution of proceedings (which is the relevant date) and as at today, winding-up proceedings could not succeed, because of the dispute resolution provisions to which I have referred. 14 When these proceedings were initiated, and today, those provisions had and have the potential to resolve any deadlock or failure of the substratum. Only if they fail to do so would the court make a winding-up order. Further facts, which have not yet occurred, would be required to entitle the proposed plaintiff to a winding-up order. 15 It may be that, at a later time, if the dispute resolution procedures are exhausted, or if the court were to determine that for some reason or another they should not be given effect, it then appears that winding up proceedings would succeed; but in my view, no court would have made a winding up order as at the date of the institution of the proceedings or as at today because of the potential for those alternative mechanisms for resolving the impasse. As I say, that may change at a later time, when any litigation about those dispute resolution provisions has been resolved. 16 For the foregoing reasons, in my view leave to amend by substituting the TNL Trust Company Limited as plaintiff should not be granted. It follows that the proceedings remain constituted as they are, with Ashington as plaintiff. So constituted, they are doomed to fail. 17 I therefore order that the proceedings be dismissed, with costs. 18 Although the case is a borderline one, really the position is no more than that the defendant telegraphed to the plaintiff in advance the basis on which it succeeded, as I have found it was entitled to, and the plaintiff did not accept its argument. The same arguments were presented to the court. The plaintiff failed, but the plaintiff's resistance was not so unreasonable as to attract the court's discretion to make an order for indemnity costs. I decline to make an indemnity costs order.

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.

At a glance

Court

Decision date

Before

Source

Judgment (15 paragraphs)

Parties

Cases Cited (3)