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[2012] NSWSC 462
defendant. The originating process was dismissed. Leave to bring the proposed derivative proceedings and the requested books-inspection order were refused. The Court reserved the question of costs for further...
MCP wanted to sue in COQ Holdings' name over the path to a proposed IPO and to inspect company records. Black J accepted that the company would not sue, MCP was acting in good faith, and proper notice had been given. But those points did not satisfy all the statutory requirements. The Court was not persuaded that litigation was more likely than not to benefit COQ Holdings, given uncertainty about the alleged Uplift Right and evidence of commercial risks and timing problems. It also found the proposed claims insufficiently supported or particularised to show a serious question to be tried. Because the requested inspection was broad and linked to proceedings for which leave was refused, inspection was also denied. The application was dismissed; costs were reserved.
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In Mathews Capital Partners Pty Ltd v Coal of Queensland Holdings Limited [2012] NSWSC 462, Black J considered an application for statutory derivative-proceedings leave under s 237 of the Corporations Act 2001 (Cth), together with an application to inspect company books under s 247A. MCP sought permission to bring proposed proceedings in the name of COQ Holdings, and asked that two people employed by its solicitors be authorised to inspect specified records ([1]).
The commercial background was a pair of capital raisings by COQ Holdings in mid-2011, which raised $35.6 million. MCP acquired a 15.4% interest in COQ Holdings through the first raising. COQ Holdings then applied $20.5 million to acquire shares in COQ and subscribe for new COQ shares. The new capital was intended to support exploration and development of coal tenements held by COQ and its subsidiaries ([2]).
The parties’ dispute centred on the contractual arrangements for a proposed initial public offering. An agreement executed on 28 June 2011, subsequently amended by a deed effective 10 August, included a commitment to negotiate in good faith and use reasonable endeavours to agree and complete a compliant IPO by 30 April 2012 ([6]-[9]). The parties disputed whether that deadline was later extended to 30 June 2012. Emails among advisers in October and November 2011 referred to preparing a variation, but the evidence included statements that the QCC Parties did not intend to sign an extension and did not regard the date as having been extended ([10]-[15]).
A second central dispute concerned MCP’s alleged “Uplift Right”: an asserted right for COQ Holdings, in connection with a compliant IPO, to acquire the remaining COQ shares from the QCC Parties for specified consideration, including an interest in the IPO vehicle. The Court saw significant uncertainty about whether that right arose from the operative amended agreement ([23]-[27]).
COQ Holdings’ board had decided not to bring the proposed proceedings ([16]-[17]). MCP therefore sought leave to bring them in the company’s name. It also sought a wide range of books, including communications concerning the potential IPO and dealings with advisers and the QCC Parties ([57]). Black J dismissed the originating process. Leave and inspection were both refused; the question of costs was left for further submissions ([59]).
The statutory leave requirements were cumulative. Black J stated that the Court had to be satisfied of five matters under s 237(2), and that the first requirement, that it was probable COQ Holdings would not bring the proceedings, was met because the board had resolved not to do so ([17]). The Court also accepted that MCP acted in good faith. Although no MCP officer gave sworn evidence expressly asserting good faith, MCP was a current shareholder with a meaningful interest, had no obvious collateral purpose, and had pursued the application diligently ([18]-[20]). The statutory notice requirement was also met ([55]).
The decisive difficulty was the company’s best interests. The Court treated this as requiring more than a prima facie indication of benefit: the applicant had to establish on the balance of probabilities that the proposed proceedings actually were in the company’s best interests. It identified relevant matters including prospects, costs, possible recovery, consequences of failure, company resources and effects on other business ([21]). The Court regarded the alleged Uplift Right as potentially valuable, but found a “real doubt” about whether it existed. It therefore could not simply treat preserving that alleged right as a certain commercial benefit ([23]-[27]).
The Court also considered evidence that litigation could divert management time and resources, damage relations with the QCC Parties, harm IPO prospects and make recruitment of a chief executive more difficult ([30]). The proposed timetable mattered: Black J considered it unlikely that contested litigation, any appeal, and the IPO process could all be completed by 30 June 2012 ([31]). Evidence that investment banks considered a later IPO timing preferable, and that additional preparation was needed, also informed the commercial assessment ([29]-[31]). On the whole of the circumstances, the Court was not satisfied that the proposed proceedings were in COQ Holdings’ best interests. It expressly treated that failure as sufficient to decline leave ([32]).
The Court separately examined whether the draft claims presented a serious question to be tried. It applied the interlocutory-injunction test, describing it as a relatively low threshold, while emphasising that the assessment depends on the material available in the case ([36]). For the alleged extension of the IPO Date, the evidence did not show mutual promises or consideration for a contractual variation. Nor did it show that the advisers exchanging emails had authority to make a binding variation rather than advance a draft for client consideration. The agreement’s signed-variation clause was relevant to interpreting the subsequent conduct, though it did not necessarily rule out a later oral or implied contract ([39]-[40]). The Court concluded that a serious question had not been established on this part of the case ([43]).
For the alleged breach of IPO obligations, the Court distinguished evidence about what the QCC Parties may have thought from evidence about what they were required to do and what they actually did. Statements suggesting that a director preferred alternatives to an IPO did not, by themselves, prove non-compliance with contractual obligations ([45]-[46]). The proposed pleading did not identify with adequate precision the required steps that had not been taken, or facts showing that the QCC Parties caused or contributed to delay ([47]-[49]). Black J therefore found no serious question established in the claim’s then-current form ([53]).
This judgment applied the statutory derivative-action framework in s 237 as it stood in 2012. It did not purport to create a new statutory test. Instead, it applied existing authorities on good faith, company best interests and the serious-question threshold. For good faith, the Court referred to factors including an honest belief in a good cause of action and the possibility of a collateral purpose, while noting that the claim’s merits were considered under the separate serious-question criterion ([18]-[20]).
The decision’s practical contribution is its application of the best-interests criterion to a commercial dispute involving the timing and structure of a proposed IPO. The Court assessed not only the asserted benefit of preserving a potentially valuable right, but also whether that right was likely to exist and the consequences of bringing litigation for the company’s business and financing prospects ([23]-[32]). It also treated the company’s commercial circumstances and the feasibility of the proposed timetable as relevant to that statutory assessment ([29]-[32]).
On the s 237(3) presumption, the Court addressed an issue arising where proposed proceedings involved both third parties and a related party. It considered the statutory wording unclear in that situation, but concluded that the provision’s purpose did not support applying the presumption where the related party’s role was substantive rather than merely formal or insignificant. Because the proposed proceedings sought specific performance of obligations involving COQ, the presumption did not apply ([34]-[35]).
For books inspection, the judgment emphasised that s 247A does not make a broad inspection request automatic. The Court considered the stated purpose, the relationship between requested records and that purpose, and the breadth of the categories. It declined to recast MCP’s request itself, particularly where MCP had not narrowed it and COQ Holdings had not had an opportunity to address narrowed categories ([56]-[58]).
The judgment provides no account of later treatment of the decision. Accordingly, this source does not establish whether later courts followed, distinguished or reconsidered its reasoning. It records the authorities Black J relied on at the time, not the subsequent history of the case.
At [32], Black J stated: “I am not satisfied that it has been established that the Proposed Proceedings are, on the balance of probabilities, in COQ Holdings’ best interests.” In plain English, the Court was not persuaded that bringing the proposed case was more likely than not to benefit the company. This was not simply a finding that litigation might be costly: the assessment also depended on the uncertain value and existence of the alleged Uplift Right, the company’s IPO readiness, and the possible commercial effects of proceedings.
At [35], the Court said the s 237(3) presumption did not apply in the circumstances. The practical explanation was that COQ, although related to COQ Holdings, was not merely named in a formal or insignificant way. The proposed orders included obligations involving COQ, so the Court did not treat the proceedings as fitting the relevant statutory category for that presumption.
At [46], Black J said the focus had to be on “whether what they did was or was not compliant with their obligations” rather than on what the QCC Parties thought. This distinction matters to the reasoning: a party’s preference for a different commercial strategy may be evidence of its attitude, but the proposed contractual claim required identification of the obligations and conduct said to breach them.
At [48], the Court explained that the pleading did not identify steps the QCC Parties were required to take but had failed to take. In plain English, the claim needed to connect the contractual duties to particular omissions or conduct. General allegations of opposition to an IPO did not fill that gap.
At [58], the Court refused inspection because the requested categories were broad and their stated purpose was to assist proceedings for which leave had not been granted. The decision did not establish that company books could never be inspected in connection with a later application. The Court expressly left open a further application directed to documents said to be necessary for another identified purpose ([58]).
The case is relevant to applications for leave to bring proceedings in a company’s name where a board has decided not to sue and the applicant must satisfy each statutory condition. Its particular reasoning is most closely connected to disputes in which a shareholder alleges that other participants frustrated an agreed transaction, but the company faces a commercial choice about whether litigation would advance its interests ([17]-[21], [32]).
It is also relevant where the asserted benefit of litigation depends on a contested contractual right. Here, the alleged Uplift Right could have been valuable if it existed, but the operative agreement’s language and the status of earlier investor materials left the Court in real doubt about that premise ([23]-[27]). The judgment therefore illustrates the difference between identifying a potentially large commercial upside and establishing a sufficient basis for treating that upside as a likely benefit to the company.
The decision also addresses allegations that contractual performance was frustrated because a party did not genuinely intend the transaction to proceed. The reasoning indicates that evidence of subjective intention must be related to the actual contractual duties and the conduct said to contravene them. The Court found the claim deficient where the pleading did not specify the concrete steps the relevant parties were obliged to take and failed to take ([45]-[49]).
Finally, it is pertinent where an applicant seeks a broad document inspection to investigate or support proposed derivative proceedings. The Court assessed whether the records were connected with the statutory purpose and whether the categories were sufficiently justified, rather than treating the application as a general right to examine company records ([56]-[58]).
The supplied judgment is dated 8 May 2012 and contains no later judicial decisions discussing its treatment. A source-grounded account therefore cannot say whether subsequent courts followed, distinguished or doubted Mathews Capital Partners. The judgment itself cites earlier authorities, including Swansson v RA Pratt Properties Pty Ltd, Fitzpatrick v Cheal, Re Gladstone Pacific Nickel Ltd and Majestic Resources NL v Caveat Pty Ltd. Those citations show the authorities Black J considered in 2012; they do not establish later treatment of this judgment.
Within this decision, the Court applied the serious-question test by reference to authorities concerning interlocutory injunctions and derivative leave ([36]). It also referred to earlier authority when assessing the best-interests factors, contractual variation, mandatory relief and books inspection ([21], [39]-[42], [56]). The judgment’s own stated conclusions are therefore best understood as an application of those existing principles to the facts and proposed pleadings before Black J, rather than as a claim about how later courts would resolve similar disputes.
The judgment did not decide whether the alleged Uplift Right existed. Black J identified difficulties in the operative agreement’s wording and treated the issue as seriously arguable in relation to the possible use of surrounding circumstances, but found enough doubt about the right to affect the best-interests assessment ([24]-[27]). The substantive contractual entitlement remained unresolved.
Nor did the Court finally determine whether the IPO Date had been varied. It assessed whether the material before it established a serious question to be tried, and found the evidence about agreement, consideration and the advisers’ authority insufficient in the proposed case as presented ([38]-[43]). The judgment did not decide the ultimate legal effect of all communications or conduct between the parties.
The alleged breaches of the QCC Parties’ obligations were also not finally tried. The Court found the pleaded case insufficiently specific for the leave application, and discussed evidence that could undermine it, but did not conduct a full trial on contractual performance ([46]-[53]). The judgment expressly left open the possibility of a further leave application based on differently constituted initiating documents ([54]).
The Court did not decide the effect or sufficiency of MCP’s proposed costs indemnity. It noted possible questions about MCP’s assets and its rights concerning fund assets, but found it unnecessary to resolve them ([33]). It likewise did not decide what narrower categories of books might be appropriate for another purpose. It refused the request as framed and left open a further inspection application ([58]).
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Judgment 1By Originating Process filed on 11 April 2012, the Plaintiff, Mathews Capital Partners Pty Limited ("MCP") brings an application under s 237 of the Corporations Act 2001 (Cth) for leave to bring proceedings ("Proposed Proceedings") in the name of the Defendant, Coal of Queensland Holdings Limited ("COQ Holdings") in the form of a draft Summons and draft Commercial List Statement which are in evidence. MCP also seeks orders under s 247A of the Corporations Act that two persons employed by its solicitors be authorised to inspect specified books of COQ Holdings. Factual Background 2COQ Holdings raised $35.6 million by two capital raisings in mid-2011. As a result of participating in the first of these capital raisings, MCP acquired a 15.4% interest in COQ Holdings. Interests associated with the Teoh family, which also support the present application, also acquired an interest of 48.49% in COQ Holdings. Part of the amount raised by COQ Holdings, $20.5 million, was then paid by it to Queensland Coal Corporation Pty Limited and Queensland Coking Coal Pty Limited ("QCC Parties") to acquire shares in Coal of Queensland Pty Limited ("COQ") and the balance to subscribe for new shares in COQ. The funds subscribed for new shares in COQ were in turn to be applied by COQ to explore and develop certain coal tenements ("Tenements") owned by COQ. As a result of these transactions, COQ Holdings acquired an interest of approximately 21.4% in COQ which, through subsidiaries, owned the Tenements. The remaining ordinary shares in COQ were owned by the QCC Parties. COQ Founders Nominees Pty Ltd ("Founder") also holds 4 million converting shares in COQ. 3A first capital raising ("Raise 1") for COQ Holdings took place in June 2011 and potential investors were provided with a written investor presentation dated 18 June 2011. That presentation referred to a proposed Initial Public Offering ("IPO") of shares in COQ Holdings involving a raising of a further $51m, with $30m to be paid to the QCC Parties, with the outcome that COQ Holdings would hold all of the shares in COQ. The appendix to that presentation, which was expressly described as "indicative", also set out the capital structure of COQ Holdings following a listing and showed the QCC Parties as holding 50% of the shares in COQ Holdings. A letter dated 18 June 2011 from Grant Thornton, COQ Holdings' then financial adviser, to MCP also attached an annexure setting out the "indicative capital structures of COQ Holdings and COQ on each capital raising", but emphasised that "the indicative targeted capital structure may be amended at any time and may vary depending on the then prevailing conditions". 4MCP contends that, on or about 18 June 2011, the QCC Parties, COQ Holdings and COQ entered into a shareholders agreement which, it contends, contemplated the parties would use their best endeavours to enter into formal documentation that was fuller, but consistent with, the terms of that document. (MCP refers to that document as the "Initial Shareholders Agreement" and I will also adopt that term, although whether that document had contractual effect is in issue). That document is headed "Shareholders Agreement" and commences with the words: "This document is legally binding and records the key terms to be incorporated into a formal Shareholder Agreement between the parties set out in Item 1 ("Shareholders Agreement")". That document then identifies the "primary objectives and purposes of COQ" including a condition that the QCC Parties (or their nominee) would be issued that number of shares in the IPO that will equate with 50% of the issued capital of COQ Holdings immediately after the IPO, assuming an IPO raising $51 million and, in consideration for those shares, the QCC Parties would transfer all of their shares in COQ to COQ Holdings which would then directly or indirectly own 100% of the Tenements. 5That document was provided to MCP as an annexure to the offer letter dated 18 June 2011 which stated that COQ, COQ Holdings and others "have agreed" to use the their best endeavours to enter into various agreements including a Shareholders Agreement between the QCC Parties, COQ Holdings and others regarding COQ. The document which is in evidence is not executed and COQ Holdings contends that it was not executed. 6A detailed Shareholders Agreement was executed between COQ Holdings, COQ, the QCC Parties and Founder on 28 June 2011 ("Shareholders' Agreement"). Clause 5.1(a) of the Shareholders Agreement (as amended on 10 August 2011 as noted below) provides that: "The parties agree to negotiate in good faith and use reasonable endeavours to agree the terms of and complete a compliant IPO by the IPO Date." The term "IPO Date" is defined in the Shareholders Agreement as 30 April 2012. (It should be noted that the hearing before me commenced on Friday 27 April 2012 and was completed on Monday 30 April 2012.) 7Clause 5.2 of the Shareholders Agreement in turn required each shareholder, including the QCC Parties, COQ Holdings and Founder, to do all things and provide all assistance as was reasonably required to complete a Compliant IPO by the IPO Date, including specified matters. Clause 5.5 of the Shareholders Agreement provided that, if for any reason other than breach of the Transaction Documents (including the Shareholders Agreement) by the QCC Parties, a Compliant IPO had not been completed by the IPO Date, then the board of COQ may take certain steps and, without prejudice to the rights of the QCC Parties under clause 6, the Shareholders (referring to the shareholders in COQ including the QCC Parties, COQ Holdings and Founder) will use reasonable endeavours to work together to identify a revised timeline for a Compliant IPO and discuss an alternative process for the Shareholders to realise their investment in COQ. In that situation, the QCC Parties also have the right to take certain steps under clause 6.1 of the Shareholders Agreement. 8A representative of the Teoh family attended a meeting concerning a second capital raising by COQ Holdings in July 2011 ("Raise 2") and received an offer letter and investor presentation for Raise 2 on 28 July 2011. A number of entities associated with the Teoh family invested in Raise 2 after that meeting. 9The Shareholders Agreement was further amended by a Deed of Amendment effective as of 10 August 2011 following the completion of Raise 2. The terms of the amended document ("Amended Shareholders Agreement") were updated to refer to Raise 2 and were otherwise substantially consistent with the Shareholders Agreement. 10An exchange of emails between several advisers to the parties took place on 27 October 2011, which was copied to executives of the parties. In the first of those emails, a representative of Grant Thornton (then the financial adviser to COQ Holdings) sent an email to the solicitors for the QCC Parties stating that he understood "a change to the IPO Date has been agreed with an extension to 30 June 2012 (previously 30 April 2012) to reflect the revised development timeline" and requested the QCC Parties' solicitor to draft a variation agreement for that extension; an officer of the QCC Parties then confirmed that that document should be prepared. A presentation by COQ Holdings to investors on 27 October 2011 also referred to a timeline for an IPO in the period April-June 2012. By a further email on 2 November 2011, Grant Thornton followed up on that variation and the QCC Parties' solicitor indicated that he would prepare a variation document. 11A non-executive director of COQ Holdings, Mr Carroll, gives evidence that, in November 2011, he was sent a draft deed of amendment of the Amended Shareholders Agreement by Grant Thornton which provided for extension for the IPO Date to 30 June 2012 but, shortly after receiving that document, he was advised by the then Chief Operating Officer of the QCC Parties that the QCC Parties did not intend to sign that deed of amendment and did not think it was in their interests to give an extension of the IPO Date. A second non-executive director of COQ Holdings, Mr Vorias, also gives evidence that, to the best of his knowledge, the IPO date was not extended to 30 June 2012. 12The QCC Parties also rely on a document circulated on 25 January 2012 which referred to a timetable for a Compliant IPO by the end of the June quarter 2012. 13By at least March 2012, a dispute had arisen between MCP and the QCC Parties as to the terms on which the QCC Parties' shares would be transferred to COQ Holdings in connection with an IPO. By letter dated 23 March 2012, MCP's solicitors gave notice of the Proposed Proceedings to COQ Holdings. By letter of the same date to solicitors for COQ Holdings' directors, MCP's solicitors asserted that the Shareholders Agreement contained clauses which were materially adverse to COQ Holdings compared to the Initial Shareholders Agreement. 14COQ Holdings wrote to the QCC Parties on 26 March 2012 requesting an extension of the date for a compliant IPO from 30 April 2012. That request was declined by the QCC Parties. 15By letter dated 30 March 2012, the solicitors for COQ Holdings advised the solicitors for MCP that, inter alia, COQ Holdings had been working towards, and continued to work towards, a Compliant IPO; that achieving a Compliant IPO by 30 April 2012 became more difficult and was now "very likely to be practically unachievable"; and that COQ Holdings had been advised by the QCC Parties on 29 March 2012 that they did not agree to any extension to the IPO Date and had never agreed to extend that date beyond 30 April 2012. 16The Proposed Proceedings were considered by the Board of COQ Holdings on 13 April 2012, which decided not to bring them. The board meeting was attended by the two non-executive directors of COQ Holdings, Mr Carroll and Mr Vorias; a third director, Ms Ward, who is associated with the QCC Parties, did not attend that meeting. Mr Carroll's evidence is that, in deciding not to bring the claim, his aim was to maximise shareholder value for shareholders in COQ Holdings and COQ, including the QCC Parties, by maximising the prospects of a successful IPO of COQ Holdings and avoiding action that would harm those prospects, and he expressed the view that bringing the Proposed Proceedings would harm those prospects. I should note that MCP vigorously criticises this reasoning for failing to distinguish the interests of COQ Holdings, COQ and their respective shareholders. Probability that COQ Holdings will bring the Proposed Proceedings 17In order to grant leave under Corporations Act s 237(2), the Court must be satisfied of five matters, and must grant that leave if satisfied of those matters. The first requirement, under s 237(2)(a) of the Corporations Act, is that it is probable that COQ Holdings will not bring the proceedings. That requirement is satisfied, since, as noted above, the board of COQ Holdings has resolved not to bring the Proposed Proceedings. Whether MCP is acting in good faith 18The second criterion, specified in s 237(2)(b) of the Corporations Act, is that MCP is acting in good faith. MCP must establish this matter to the Court's satisfaction: Chahwan v Euphoric Pty Ltd t/as Clay & Michel [2008] NSWCA 52; (2008) 245 ALR 780; 227 FLR 43; 65 ACSR 661; Showtime Management Australia Pty Ltd v Showtime Presents Pty Ltd [2008] NSWSC 618 at [77]. Factors relevant to the good faith requirement include the applicant's honest belief that a good cause of action exists and has reasonable prospects of success (although that belief will be tested against whether a reasonable person in the circumstances would hold that belief) and whether the applicant is seeking to bring the action for a collateral purpose, and it is relatively easy to satisfy this requirement if an application is made by a current shareholder who has more than a token shareholding and the derivative action seeks recovery of property so that the value of the applicant's shares would be increased: Swansson v RA Pratt Properties Pty Ltd [2002] NSWSC 583; (2002) 42 ACSR 313 at 320-321; Maher v Honeysett and Maher Electrical Contractors Pty Ltd [2005] NSWSC 859 at [29]; Gerard Cassegrain & Co Pty Ltd v Cassegrain [2010] NSWSC 91 at [110]-[111]; Re Gladstone Pacific Nickel Ltd [2011] NSWSC 1235; (2011) 86 ACSR 432 at [58]. 19The Court does not consider the merits of the claim in deciding whether the applicant has satisfied the criterion under s 237(2)(b) since they are considered in respect of the question in s 237(2)(d) whether there is a serious question to be tried: Fitzpatrick v Cheal [2010] NSWSC 717 at [41]. The Court will otherwise have regard to all the circumstances of the claim to decide whether a person seeking orders under s 237 is acting in good faith: Fitzpatrick v Cheal above. It is not essential that an applicant say, by sworn evidence, that he or she believes in the existence of a good cause of action with reasonable prospects of success in order to establish good faith and inferences can be drawn from the nature and circumstances of the case sought to be brought: Maher v Honeysett and Maher Electrical Contractors Pty Ltd above at [28]. 20No officer of MCP has given evidence asserting that it is acting in good faith. However, MCP is a current shareholder of COQ Holdings and, if the Proposed Proceedings succeeded, would benefit as a shareholder in COQ Holdings from preserving the opportunity of a Compliant IPO as a result of the orders made in them. The commencement of the proceedings are supported by the Teoh family, another major shareholder in COQ Holdings. There is no obvious collateral purpose to be served by MCP in promoting the proceedings and it has acted diligently in its pursuit of the application under s 237 of the Corporations Act. I would accordingly find that the application is brought in good faith. Whether grant of leave is in the best interests of COQ Holdings 21The third criterion, under s 237(2)(c) of the Corporations Act, is that the grant of leave is in the best interests of the company. This test requires more than a prima facie indication that the proceedings may be or are likely to be in the interests of COQ Holdings and the court must be satisfied that the proposed action actually is, on the balance of probabilities, in the company's best interest: Swansson v Pratt above. Relevant matters include the prospects of success of the proceedings, their likely costs, the likely recovery if the proceedings are successful and the likely consequences if they are not: Maher v Honeysett and Maher Electrical Contractors Pty Ltd above at [44]. In Re Gladstone Pacific Nickel Ltd above at [57], Ball J observed that: "In considering what is in the best interests of the company, it is necessary to consider the prospects of success of the action, the likely costs and likely recovery if the action is successful and likely consequences if it is not. One relevant matter in considering these issues is the nature of any indemnity the applicant has offered to the company if the action is brought and the likelihood that the company will recover under that indemnity. It is also necessary to consider the resources the company will be required to devote to the action and the resources it has available, together with the effect that the action may have on other aspects of its business. Finally, it is necessary to consider whether some other remedy is available to the applicant so as to make the proposed action unnecessary from its point of view ..." 22MCP contends that matters which indicate that the Proposed Proceedings are in COQ Holdings' best interests are the potential loss to COQ Holdings arising from the failure to hold a Compliant IPO and the loss of the alleged "Uplift Right" (to which I will refer below); that there is no alternative means available to obtain the redress which MCP seeks, since shareholders in COQ Holdings are not parties to the Amended Shareholders Agreement; and that the scale of the QCC Parties' interests in the Tenements is such that they can meet at least a substantial part of any judgment in favour of COQ Holdings. (I should note, however, that the proposed Summons seeks relief other than damages.) 23The primary basis of MCP's contention that the Proposed Proceedings are in COQ Holdings' interest is that they are necessary to preserve COQ Holdings' alleged right, on a Compliant IPO, to acquire from the QCC Parties, for a fixed consideration, all of the remaining shares in COQ Holdings. The evidence indicates that such a right, if it exists, would be potentially very valuable to COQ Holdings. MCP contended such a right, which it described as the "Uplift Right", existed and COQ Holdings denied that such a right existed. The existence of that right is not itself raised in the Proposed Proceedings but is relevant to the extent of the commercial benefit which COQ Holdings might obtain if the Proposed Proceedings were successful so as to preserve any such right. 24The Uplift Right depends on the proposition that the QCC Parties will transfer all of their shares in COQ to COQ Holdings for payment of the specified amount and the issue of a 50% interest in COQ Holdings or another IPO vehicle (together referred to as "IPOco"). There are several difficulties with that proposition, as a matter of construction of the Shareholders Agreement and the Amended Shareholders Agreement:
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. Decision last updated: 11 May 2012
Mathews Capital Partners Pty Ltd
Coal of Queensland Holdings Limited
[2005] WASC 58
[2004] WASCA 201
(2008) 245 ALR 780
(2002) 209 CLR 95
(1982) 149 CLR 337
(2001) 205 CLR 1
(1987) 8 NSWLR 533
(1987) 15 FCR 159
(2002) 187 ALR 92
The originating process was dismissed. Leave to bring the proposed derivative proceedings and the requested books-inspection order were refused. The Court reserved the question of costs for further submissions ([58]-[59]).