D The Injunction
46 I now turn to the application for interlocutory relief. The evidence adduced by the plaintiffs alleged that if various changes were made to the share register, this may also have had an impact on the vote on resolution 2 of Shareholder Resolution 36. In his affidavit of 27 June 2017, Mr Shearwood referred to the implementation of what was described as a "staff equity scheme". When this scheme was implemented, it added 4,449,495 new ordinary shares, being an increase of 20.1% to the prior total of 22,128,628 shares, giving a new total of 26,578,123 shares on issue.
47 It was suggested in the evidence that the staff equity scheme, at its maximum, could not exceed 20% of all shares issued in Allied at any one time. The final determination as to what precisely occurred in relation to the staff equity scheme, and whether or not it exceeded authorised thresholds, will, if relevant, no doubt have to await examination at a final hearing. But I consider it as appropriate, for the purposes of the Application only, that I proceed on the basis that the approach to calculations adopted by Mr Shearwood is correct.
48 It seems to me, however, that irrespective of the fact that the scheme involved the allocation of shares to participants in a manner which caused a dilution of the position of Allied, a calculation prepared by Mr Lawry in his affidavit sworn 19 July 2017 does not impact upon the conclusion that, if the share register had been adjusted and if the staff equity scheme was found to be invalid, "it would at most have had a marginal impact on voting".
49 When an interlocutory injunction is sought, it is necessary to pay regard to the observations of the High Court of Australia in Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57 at 81-82 [65] per Gummow and Hayne JJ. There is no need for me to canvass these well-known principles other than to refer to the review, in the context of CA proceedings, by Foster J in Stratford Sun Ltd v OM Holdings Ltd [2011] FCA 414; (2011) 83 ACSR 84 at 87-90 [7]ff.
50 The first stage of the analysis is that I must be satisfied that there is a serious question to be tried in the sense that if the evidence remains as it is there is a probability that, at the hearing of the action, the plaintiff will be entitled to relief. In stating that, the matters called in aid of interlocutory relief in this matter form only a small part of the overall evidence that, from the affidavit material, is likely to be read on the final application. The question for me is whether or not there is a serious question to be tried in the way in which the argument was articulated on the Application; that is, that the alleged improper dilution, which was the subject of the evidence concerning the scheme, if proved, was of such a character as to justify interlocutory relief.
51 Given the state of the evidence on the Application, it does not seem to me that I can form the conclusion that proof of wrongdoing as to the staff equity scheme at a final hearing would be relevantly material, given the conclusion that I have reached based on Mr Lawry's evidence that the scheme had minimal impact on the outcome of any vote. Accordingly, I do not believe that, on the arguments deployed on this interlocutory hearing, there is a serious question to be tried in relation to the staff equity scheme having a sufficient impact on the vote to change its outcome.
52 Of course the argument at any ultimate trial, as I understand it, will be far more broad-ranging, seeking to justify relief under ss 233(1) and/or 461(1) of the CA that Allied be wound up on the basis that the conduct of its affairs is oppressive and related relief.
53 For the sake of completeness, I do not believe that, even if I had come to a contrary conclusion in relation to the first stage of analysis, the balance of convenience would favour the granting of relief, being the second aspect to which I need to have regard on the application for interlocutory relief and to which I now briefly turn.
54 Courts have long demonstrated an unwillingness to interfere with the democratic processes of a corporation, except where it is necessary to do so: Turnbull v National Roads and Motorists' Association Ltd [2004] NSWSC 577; (2004) 186 FLR 360 at 373-374 [51] per Campbell J. I have already determined that Shareholder Resolution 36 is not invalid and have declined to make a declaration in those terms. It follows that the defendant is, prima facie, entitled to vote its shares in LCK in accordance with Shareholder Resolution 36. Obviously, it is a matter for another day as to whether or not the underlying circumstances which led to the passing of Shareholder Resolution 36 will play any part in the substantive case that will go to hearing.
55 What is relevant for present purposes is that if I were to interfere, I would deprive Allied of its right to participate in the LCK meeting whereby it seeks ratification of the first two tranches of the share issue. I obviously cannot anticipate what the voting will be at that meeting, but if the vote failed because Allied has been enjoined, that may well have a significant impact on LCK. Although the evidence as to prejudice, including as to the effect such an outcome might have on CNE, is, it is fair to say, expressed at a very high degree of generality, and goes no further than the opinion of Mr Peters, the possibility of real prejudice cannot be discounted.
56 Moreover, the plaintiffs will have the opportunity of having their day in Court in order to agitate many of the complaints which seem to activate their concerns relating to the general conduct of the affairs of Allied. There has been no suggestion that any relief that could be granted at the end of the day would somehow be rendered otiose in the event that I fail to provide interlocutory relief. Whichever way it is looked at, the balance of convenience strongly favours the dismissal of prayers 2 and 3 of the interlocutory process.