G B Radio (Australia) Pty Ltd v Marchant [2001] VSC 98

Supreme Court of Victoria|2001-05-08|Before: BEACH, J.

On 26 May 2000 I granted an interlocutory injunction in this proceeding in favour of the plaintiffs restraining the defendant from disposing of five broadcasting licences granted to him by the Australian Communications Authority pending the hearing and determination of the proceeding or further order.

These reasons for judgment are to be read in conjunction with my earlier reasons.

Unfortunately due to the dilatory behaviour of the parties, notably in my opinion, that of the plaintiffs, I was not successful in achieving that end. It is now clear to me that rather than the proceeding being heard in August or September 2000 as I had intended it is now unlikely to be heard this year.

At all events I now have before me two further summonses filed by the parties.

By his summons filed 6 April 2001 the defendant seeks to have the injunction granted against him discharged. He does so on two principal grounds. In the first place he contends that the plaintiffs were guilty of serious non-disclosure at the time they made their application for interlocutory relief such as to now preclude them maintaining the injunction.

In the second place he contends that the delay which has been caused by the plaintiffs and which will occur hereafter before the proceeding comes to trial has been, and will be such, that it is not in the interests of justice that the injunction remain on foot.

By their summons filed 24 April 2001 the plaintiffs seek a variation or addition to the order of 26 May 2000.

I should add that both summonses seek other orders in the proceeding. However, those aspects of the matter were dealt with by McDonald, J. on 26 April 2001.

When the second plaintiff Roger Thomas, the third plaintiff Alan Thomas and the defendant entered into partnership in respect of the radio licences it was agreed that the interests of the three men in the partnership would be:

It was further agreed that in due course the three men would set up the appropriate corporate structure to hold and operate the licences.

In about August 1998 the first plaintiff G.B. Radio (Australia) Pty. Ltd. was incorporated for the purpose.

Six percent of the shares in G.B. Radio (Australia) were held by a further partner in the venture named Kerry Philip Grills, the remaining 94% of the shares were held by G.B. Radio Ltd. a company incorporated in the United Kingdom, the directors of which are Roger Thomas and his wife Susan.

It was agreed by the parties that 47% of the shares in the U.K. company would be held by Roger Thomas, 6% by Alan Thomas and 47% by the defendant.

When the application for the interlocutory injunction came before me on 23 May 2000 I was informed that the share capital of G.B. Radio Ltd. consisted of 100 U.K. £1 shares of which 47 were then held by Roger Thomas, 6 by Alan Thomas and 47 by the defendant.

Indeed in paragraph 8 of his affidavit of 19 May 2000 Roger Thomas swore and I quote:

"G.B. Radio Limited has issued 47 of the 100 issued shares to Marchant which represents 40% of the issued capital of the company. Now produced and shown to me at the time of swearing this my affidavit and marked with the letters 'RT22' is a copy of the said share certificate."

The share certificate stated on its face that the shares issued to the defendant Marchant were unpaid. No significance attached to that fact at the time as the certificates issued to Roger Thomas and Alan Thomas were not produced to the Court and as no request had ever been made to the defendant to make any payment in respect of his shares it was assumed that the shares issued to Roger Thomas and Alan Thomas were also "unpaid shares".

What the plaintiffs did not disclose to the Court was the fact that by resolution of 18 May 2000, that is some five days before the hearing of the application for the interlocutory injunctions commenced before me, the directors of the U.K. company increased the authorised share capital of the company from £100 to £100,000; nor did they disclose to me the fact that the shares issued to Roger Thomas and Alan Thomas were "fully paid" shares.

As the defendant's shares are unpaid shares they do not give him any voting rights so far as the affairs of the U.K. company are concerned.

The reality of the situation is that the Thomas family now fully controls G.B. Radio Limited and through it G.B. Radio (Australia) and at any time can cement its position further to the detriment of the defendant by allotting further shares to one or more of them.

In my opinion it was incumbent upon the plaintiffs to disclose those facts to me at the time they made their original application, as had I been aware of the true situation concerning the share capital of the company and of the fact that the defendant's shares did not have voting rights, it is highly unlikely I would have granted the injunctive relief in the matter.

In that situation I now order that the injunction granted by me in paragraph 1 of my order of 26 May 2000 be dissolved.

In the circumstances there is in my opinion no sound basis for granting any further interlocutory injunctive relief in the proceeding.

Counsel for the defendant has given an undertaking to the Court on behalf of the defendant that the defendant will keep a full account of his dealings with the licences and the income generated by them. If the plaintiffs are successful in the proceeding they can be adequately compensated by an appropriate award of damages.

The following are the formal orders of the Court:

1. I order that the injunction granted by me in paragraph 1 of my order of 26 May 2000 be dissolved forthwith.

2. I order that the plaintiffs' summons filed 24 April 2001 be dismissed.

3. I substitute for paragraph 4 of the order made by McDonald, J. on 26 April 2001 the following order:

"By 4.00 p.m. on 11 May 2001 the defendant provide pursuant to Rule 29.08 specified discovery of any and all documents in relation to broadcasting licence 1130396 for narrow band area station St. Mary's New South Wales including but not limited to financial records, communications with the Australian Communications Authority by and with the defendant, and the letting by the defendant, or any sub-letting with respect to the said licence."

4. I order that the plaintiffs pay the defendant's costs of the application to dissolve the injunction and the defendant's costs of their summons filed 24 April 2001.

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