52 SPIGELMAN CJ: Subject to the following observations, I also agree with Justice Mason.
53 With respect to the issue of whether or not the evidence before the Court, limited as it understandably is in the context of an urgent interlocutory application, satisfies the substantial question to be tried test in the case of Melewar I agree with the remarks that have just been made by Justice Hodgson. Nevertheless, for the reasons given by Justice Mason, there are very significant legal and factual hurdles which must be overcome, with respect to the claim against the ANZ Bank, for any kind of equitable interest that could establish a proprietorial right in the shares in either Gindalbie or Conquest.
54 I also agree with Justice Hodgson that Justice Windeyer was correct in assessing the case of Terpu, on the admittedly limited evidence now available to the court, as not being a strong case. Similarly, the approach that Justice Windeyer plainly adopted on the second issue to be determined, namely the balance of convenience, was that if contrary to his view there was a substantial question to be tried in the case of Melewar, then that also would not be a strong case. That is how Justice Windeyer approached the formulation of the judgment required on the balance of convenience test. I see no error in his Honour's approach.
55 I would, however, wish to elaborate on the comparative detriments to the applicants and to the respondents in the application of the balance of convenience test.
56 The detriment to the ANZ Bank is clearly the detriment to a financial institution which, an event of default having occurred under a loan agreement, is seeking to realise its securities. Any interference by a court with the process of realisation constitutes, in and of itself, a significant detriment to a financial institution. Liquidity is always of significance to such an institution. The court is entitled to take judicial notice of the fact that in the current state of the credit markets liquidity is, if anything, even more significant than usual.
57 Each of the securities, on the evidence before the court, has been subject to considerable volatility over recent months. Therefore any interference with the ability to realise those securities is itself also a significant detriment in the current context. An undertaking as to damages is not equivalent to liquidity for a financial institution.
58 The commercial substance of an order by this Court, from the perspective of a financial institution, would have the following characteristics: first, there is a forced loan to each applicant by the bank. Secondly, the amount of that "loan" is the current realisable value of the shares. Thirdly, the "loan" will be advanced on terms and conditions determined by the Court, rather than by any form of commercial bargaining. Finally, the security of the "loan" is, in each case, a single mining share with, in effect, a one hundred percent loan to valuation ratio. One only has to state this commercial reality on the impact of a financial institution of an order of the character sought to realise that the detriment to the bank is substantial.
59 This has to be balanced, as Justice Windeyer did, with the effect on the applicants. If each applicant is correct, then they are entitled to a certain number of shares, their entitlement being of a proprietorial nature. On the materials before the Court, this would amount to five percent of the shares issued in Conquest. As Justice Mason has pointed out, of the original thirty-four million or so shares in Gindalbie, made subject to the agreement with Opes by Melewar, the ANZ Bank is now only in custody of 8.5 million shares, constituting some two percent of Gindalbie. The actual interest of the applicant is probably something less than two percent if, as seems likely, some other shareholder in Gindalbie may also have a right to trace, on the assumption that Melewar has a right to trace. In any event, I will proceed on the basis that what is in issue in the current interlocutory proceedings is five percent of Conquest and two percent of Gindalbie.
60 It is relevant to note that these are publicly listed securities with a widely dispersed shareholding. On the evidence before the court, in Gindalbie some 60 percent of the total shareholding is held by shareholders who each have less than 0.3 percent of the capital. In the case of Conquest, some 50 percent of all shares are held by shareholders with less than one percent of the capital.
61 There would be no difficulty in either applicant acquiring the claimed number of shares at a price, if damages were eventually awarded. This is a typical example of why, as a final order in final proceedings, the Court would probably conclude damages to be an adequate remedy. It would award the applicant, assuming it was successful, a sum of money that would enable it to acquire the shareholding in which it claimed a proprietorial interest. Damages would clearly be adequate, even on a final hearing, because of the fact that we are dealing in each case with a listed company with a widely dispersed shareholding. The point applies with greater force in the context of an interlocutory order where the balance of convenience, rather than legal right, is to be determined.
62 Nevertheless, there are advanced certain special reasons in each case why damages would not be an adequate remedy. There may of course be circumstances in which a special value attaches to a shareholding. That would be the case for example where a shareholder has a strategic shareholding, as Melewar originally had in the amount of 14.5 percent in Gindalbie. That kind of level of strategic shareholding may not be readily replicable and it may be that damages would not be an adequate remedy in the case of such a strategic shareholding. However, as I have pointed out, only 7.25 percent or so of the total shares, being half the holding of Melewar in Gindalbie, were the subject of the arrangements with Opes and only some two percent is still held by the ANZ Bank.
63 Because what is in issue here is only, at most, two percent of the shareholding in Gindalbie, in a context where the applicant retains 7.25 percent or so, this is not a large enough parcel to be given significant weight in the balancing exercise. It does appear that the Melewar's strategic holding, by reason of the events associated with the arrangements with Opes, has now been reduced from the largest single shareholding to the second largest shareholding. If it is the case that the two percent now in issue in these proceedings can make a difference in the comparative influence of the two strategic shareholders, then Melewar can readily acquire that shareholding. This element is not entitled to any significant weight in assessing the balance of convenience.
64 As Justice Mason has already pointed out, the case of Terpu is somewhat stronger but, in my opinion, it is not enough to change the balance. On the materials before Windeyer J, and on the submissions in this Court, something like five percent of the shares in Conquest is involved. The largest shareholder, indeed it appears the only other sizeable shareholder, is a subsidiary of the Goldfields Group which is a co-venturer of Conquest. As Justice Mason has pointed out, it is the apprehension by the applicants in the Terpu matter about the future intentions of Goldfields, both with respect to the joint venture and the control exercised by Mr Terpu of the affairs of Conquest, that gives rise to the possibility of some kind of adverse consequence for which damages would not be adequate.
65 Goldfields had about 9 percent of Conquest, but it has since announced that it has acquired about a further five percent bringing it up to 14 percent. Whether that is as a result of an acquisition of an interest in the applicants' shares, or is some other process of acquisition, does not appear with clarity on the evidence before the court. Mr Terpu is concerned that there may be a change of control to Goldfields, particularly if it were to acquire further shares up to 20 percent, which it could acquire without triggering the threshold for a takeover offer for the whole shareholding.
66 The difficulty here is that the widely dispersed nature of small shareholdings is such that, as one would expect, they are unlikely to vote. The affidavit evidence before the Court indicates that a very small proportion of shareholders has in fact turned up to vote in past annual general meetings. It may be the case that, given the wide dispersion of the shareholding, the absence of the significant block of some five percent, that was originally held by the applicants and which is now in dispute, could make a difference. In this respect I attach some significance that in the period between the present proceedings and the final disposition of the proceedings, the applicants' shares probably do constitute the only substantial voting block other than Goldfields. This could be of significance if Goldfields were to seek to take steps contrary to the applicants' interests.
67 The ANZ Opes agreement makes it clear that Opes can direct ANZ as to how the shares should be voted. If it were the case that the applicants, particularly in the case of Terpu, could direct Opes as to how those shares should be voted, that would be an element that was entitled to some weight, although not in my opinion determinative weight, in deciding the balance of convenience. It is, however, clear on a reading of the contractual provisions to which our attention was drawn, that neither Melewar nor Terpu have a contractual right to direct Opes. It is Opes rather than the lenders that exercises the voting rights upon the transfer for which the agreements provide.
68 It does appear on a number of pieces of the evidence to which our attention was drawn by Mr F Douglas QC, that Opes has proceeded on the basis that it will vote in accordance with a lender's wishes. There may be some basis, when all of the evidence is taken, to assert an estoppel or some other relief available against Opes with respect to the voting rights issue. However, the materials before the Court do not enable it to proceed on any such basis. The evidence is not sufficient to establish any kind of a significant capability on the part of Mr Terpu to direct the voting of the five percent to which he claims to be entitled in the present proceedings.
69 Accordingly, with respect to the factors to which I have referred in addition to the factors identified by both Justice Mason and Justice Hodgson, the formulation of the judgment as to where the balance of convenience lies by Justice Windeyer was correct. At least at the level appropriate for determination in this Court, no error has been identified in his Honour's analysis. Indeed, none was suggested in any pointed manner in the submissions to this Court. Rather, it was submitted that his Honour ought to have reached a different conclusion. I am not satisfied that his Honour erred in any respect and, on the principles applicable to an appeal from a judgment of this character, this Court should refuse leave to appeal.
70 Accordingly, for those reasons, I joined in the orders made last Friday.