Carson v Dynasty Metals Australia Ltd

THE EVIDENCE 9 On the evidence before me, it is apparent that the number of votes represented by the Schedule A proxies - those said to have been forwarded indirectly to Dynasty Metals via Mr Tay, and so to have been invalid - would not have been material to the outcome of the vote held at the 21 March meeting and as a result of which Mr Carson, amongst others, was removed as a director. In his affidavit, however, Mr Carson has provided some evidence that certain of the Schedule B proxies were also forwarded indirectly to Dynasty Metals via facsimile to Mr Tay. If those proxies are also taken into account, and Mr Carson's contentions regarding the invalidity of all disputed proxies forwarded via Mr Tay are accepted, there would be a sufficient number of invalid votes to have materially affected the outcome of the 21 March meeting. 10 I have before me an affidavit of Anthony Billis, a director of two of the shareholders of Dynasty Metals: Tribune Resources Ltd (Tribune Resources) and Rand Mining Ltd (Rand Mining). Mr Billis' affidavit confirms that on or about 10 March 2011, he sent emails to Mr Tay attaching proxy forms for both Tribune Resources and Rand Mining in favour of the resolutions to be determined at the 21 March meeting. The affidavit also indicates that, some five days later, Mr Billis caused further proxy forms for Tribune Resources and Rand Mining, this time against the resolutions, to be sent by facsimile directly to Dynasty Metals. 11 I also have before me the evidence in Mr Carson's affidavit indicating that he was a director of Dynasty Metals between 26 October 2007 and 21 March 2011, and that on or about 21 March 2011 he was the beneficial holder of some 52,436 shares in Dynasty Metals held via an investment vehicle, Mineral Resource Consultants Pty Ltd (Malcolm Carson Superfund Account). 12 I also have before me two affidavits from Terence John Gygar. Mr Gygar is an alternative director of Dynasty Metals nominated by a director of the company, Ms Xiao Dong Sun. Mr Gygar himself is not, on the evidence, a shareholder of Dynasty Metals. In his evidence he states that he initially received notice of a meeting relating to the placement of shares in Dynasty Metals on 27 May 2011. Mr Gygar also sets out the communications he entered into in relation to that proposed meeting, the reasons the meeting did not take place, and the notice he received yesterday of a further proposed meeting to be held on 1 June 2011 at 8.00 a.m., again for the purposes of seeking approval for the placement of shares equivalent to 15% of the existing capital of Dynasty Metals. Finally, Mr Gygar notes that the current directors of Dynasty Metals have recently entered into an agreement with a Chinese company. In Mr Gygar's view, which he has outlined in detail both in his evidence and in correspondence to Dynasty Metals itself, this agreement is uncommercial and is not in the interests of the company's shareholders. 13 Last, I have before me an affidavit of Nicola Emma Batalin, who is a solicitor employed by Bennett + Co Solicitors and was authorised to affirm an affidavit on behalf of Dynasty Metals. Ms Batalin explains that Bennett + Co act on behalf of Dynasty Metals in Western Australia Supreme Court proceedings CIV 1480 of 2011 (the Western Australian proceedings). The Western Australian proceedings were commenced on 23 March 2011 by a shareholder of Dynasty Metals, Stanley Gabriel Thaler. Mr Thaler sought substantive relief similar to that which Mr Carson seeks in the present proceeding, on essentially the same grounds. I have been informed by the parties that the Western Australian proceedings were on foot as at the time the present proceeding was commenced, but that they were discontinued as recently as today. I have also been informed that the discontinuance was consequent on orders being made in the Western Australian Supreme Court that Mr Thaler provide security for costs on the basis that he was not resident in Australia, with the amount for security being $100,000.

APPLICABLE PRINCIPLES 14 The principles relevant to the disposition of the present notice of motion are not in dispute. The general test is that, if I am to grant an interlocutory injunction, I must be satisfied that: - (i) there is a serious question to be tried, and (ii) the balance of convenience favours the grant of injunction. These two requirements are not unrelated, as it has been said that in order to show there is a serious question to be tried, the party seeking interlocutory relief must demonstrate that there is "a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial": Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57; [2006] HCA 46 at [65]. It has also been said that this is not a particularly onerous threshold.

Balance of convenience 15 If for current purposes I assume that there is a serious question to be tried - a matter to which I will return in these reasons - I am nevertheless satisfied that no injunction should be granted as sought, as the balance of convenience does not favour a grant of interlocutory relief. One reason alone is sufficient for me to reach this view: namely, the delay in bringing both this proceeding and the application for interlocutory relief, and the inadequacy of any rational explanation for that delay. 16 Although the events subject of the proceeding occurred at or before the 21 March meeting, no application was made in this Court until 30 May 2011. The evidence before me does not provide any reason for this delay. If I understand the submissions for Mr Carson correctly, it is said that the Western Australian proceedings - which, as noted above, raised substantively the same issues as the present proceeding - were commenced in a timely fashion (apparently on or about 23 March 2011), but had to be discontinued in the face of the order for security for costs made against the applicant, Mr Thaler, who was not resident in Australia. By contrast, Mr Carson is apparently resident in Australia, and accordingly this proceeding was commenced. 17 I consider the fact that the Western Australian proceedings were commenced on 23 March 2011 establishes that any person who considered themselves adversely affected by the outcome of the 21 March meeting could have taken steps immediately thereafter to have their rights tested and vindicated in court proceedings. Instead, there was an unexplained delay for over two months by Mr Carson, followed by an application for urgent relief brought only in the face of the resolutions sought to be passed at the meeting of Dynasty Metals shareholders scheduled for tomorrow morning. The absence of any explanation for this delay is further compounded by the fact that it seems, on his own evidence, Mr Carson was well aware of the issues giving rise to this proceeding even before the 21 March meeting: notably, Mr Carson wrote a detailed letter to the chairman of the meeting on 19 March 2011 foreshadowing his objection to the taking into account of the disputed proxies. Presuming that Mr Carson made the foreshadowed objection at the 21 March meeting, and that the chairman determined or did not accept that objection, Mr Carson was at that time well and truly on notice of all his potential rights. Against this background, no evidence has been placed before me to explain why the application for interlocutory relief was brought in such an untimely manner. 18 As noted above, it seems to me that this unexplained delay, in the circumstances I have identified, is itself sufficient to support a conclusion that the balance of convenience weighs against the granting of any interlocutory order as sought by Mr Carson. If it be necessary to address other issues, I consider that other factors also weigh against the grant of interlocutory relief. 19 First, the evidence does not, apart from the reference in Mr Carson's affidavit to his beneficial shareholding, disclose Mr Carson's financial position. In circumstances where the applicant has had since 21 March 2011 to determine what action he might take and what evidence he might call in support, I was not prepared to allow further oral evidence on this question to be given by Mrs Carson, who I am informed is in Court today. I consider that such a course would have been unfair to Dynasty Metals as first respondent. As the evidence stands, therefore, it is not at all apparent that Mr Carson would be able, should he be called upon to do so, to meet any order made pursuant to the proffered undertaking as to damages. 20 Secondly, I accept Mr Giles' submission on behalf of the first respondent that the evidence of the loss which Mr Carson would sustain if the relief sought were not granted is entirely unsatisfactory. In essence, it goes no further than Mr Gygar's evidence that in his opinion a recent commercial deal into which Dynasty Metals has (or may have) entered is uncommercial and is not in the interests of its shareholders. I do not think it necessary for me to resolve any ambiguity as to Mr Carson's current shareholding, as I am prepared to proceed on the assumption that he is still the beneficial holder of the shares to which he refers in para 3 of his affidavit of 27 May 2011. However, that information, even considered in conjunction with Mr Gygar's evidence, falls far short of establishing that any loss will be suffered by Mr Carson which would not (if appropriate) be compensable by an order for damages. Such an order could (if necessary) be sought through a proceeding taken by leave under s 237 of the Corporations Act. 21 For both these reasons, the balance of convenience determines that interlocutory relief should not be granted - although, for the reasons given above, I am satisfied that the unexplained delay in bringing the application is itself a sufficient reason to dismiss it.

Serious question to be tried 22 I turn now briefly to the question whether there is a serious question to be tried. As noted above, the authorities suggest that the applicable standard is not particularly onerous, and that what is required is a sufficient likelihood of success in all the circumstances. Although the issues to which the substantive proceeding gives rise have not been explored in detail given the nature of the interlocutory hearing, there are two difficulties with my reaching the conclusion on the material before me that there is a sufficient likelihood of success in this matter. 23 The first difficulty is that, on the evidence available, the issues relating to the Schedule A proxies (which, as noted above, are those relied on by the applicant as showing there is a serious question to be tried) would not, even if decided in favour of the applicant, be sufficient to demonstrate that the acceptance of those proxies had a material effect on the outcome of the 21 March meeting. Although Mr Carson asserts that he will obtain evidence that certain of the Schedule B proxies were also sent by facsimile through Mr Tay, the evidence does not yet demonstrate this to a satisfactory standard. Indeed, the evidence in relation to the Schedule A proxies itself requires inferences to be drawn which are not entirely persuasive even at this interlocutory stage. 24 Be that as it may, the second difficulty is that I accept Mr Giles' submission that, contrary to what has been said on behalf of the applicant, no authority has been brought to my attention which supports the proposition that the sending of proxies to Mr Tay to be forwarded to Dynasty Metals would constitute a breach of ss 250A or 250B of the Corporations Act. There is no requirement in those sections that the relevant proxy documents be sent directly by the shareholder in question to the company. Section 250B(1) simply requires that the documents be received by the company. The decisions on which Mr Carson relies - Bisan v Cellante and Portman Iron - relate, at least on their face, to entirely different circumstances: namely, circumstances in which the company's notice of meeting specifically directed shareholders to send their proxies to a third party rather than to the company itself. Read in this light, the decisions stand for the principle that a notice of meeting cannot so direct because the result would be contrary to the express requirement in s 250B(1) that proxy documents be received by the company. It is one thing to accept this statement of principle as accurate; it is another to accept the proposition that proxies cannot be handled by any third party on their way from a shareholder to a company. 25 While I accept that the threshold for demonstrating that there is a serious question to be tried is not particularly high, the Court must nonetheless be satisfied that the applicant's case has a sufficient likelihood of success. Absent any authority in support of the proposition of law on which Mr Carson's case effectively rests, I cannot be so satisfied. Accordingly, even if I had reached the view that the balance of convenience favoured the granting of the interlocutory relief sought, I would have declined to grant such relief on the basis that there is no serious question to be tried.

CONCLUSION 26 For the reasons I have given, I am satisfied that the applicant's unexplained delay in bringing this application is a sufficient reason in this case to deny the interlocutory relief sought. I dismiss the motion accordingly. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.