Melewar Steel Ventures Limited v ANZ Nominees Limited; Terpu v ANZ Nominees Limited

Supreme Court of NSW|2008-04-11|Before: Windeyer J, Bergin J

CITATION : Melewar Steel Ventures Limited v ANZ Nominees Limited; Terpu v ANZ Nominees Limited [2008] NSWSC 345 This decision has been amended. Please see the end of the judgment for a list of the amendments.

DECISION : Application for continuation of interlocutory injunctions refused.

CATCHWORDS : EQUITY - interlocutory injunctions - claim for interest in shares transferred to transferee on documents giving legal title to transferee - claim that entry into documents resulted from fraud or misleading and deceptive conduct or breach of fiduciary duty - claim of notice to third party taking title from first transferee bearing on priority interest - whether serious question to be tried - whether damages a sufficient remedy

LEGISLATION CITED : Australian Securities and Investment Corporation Act 2001

CMG Equity Investments v ANZ Banking Group Limited [2008] FCA 455 CASES CITED : El Ajou v Dollar Land Holdings plc [1993] 3 All ER 717 McMillan Inc v Bishopgate Investment Trust plc (No 3) [1995] 3 All ER 747 Melewar Steel Ventures Limited v ANZ Nominees Limited [2008] NSWSC 295

Melewar Steel Ventures Limited (Plaintiff in 2148 of 2008) John Sotirious Terpu (First Plaintiff in 2204 of 2008) Valleybrook Investments Pty Limited (Second Plaintiff in 2204 of 2008) PARTIES : ANZ Nominees Limited (First Defendant in both matters) Opes Prime Stockbroking Limited (Receivers & Managers Appointed) (Administrators Appointed) (Second Defendant in 2149 of 2008 and Fourth Defendant in 2204 of 2008) ANZ Banking Group Limited (Third Defendant in 2149 of 2008 and Second Defendant in 2204 of 2008) Southeastern Capital Limited (formerly called Opes Prime Securities Limited) (Third Defendant in 2204 of 2008) Leveraged Capital Pty Ltd (Receivers & Managers Appointed) (Administrators Appointed) (Fifth Defendant in 2204 of 2008)

F M Douglas QC with him Mr V Gray and Mr D Sulan (Plaintiffs in both matters) COUNSEL : CRC Newlinds SC with him Mr B Crutchfield (ANZ Banking Group Limited and ANZ Nominees) M Mathas (Opes Prime Stockbroking Limited and Leveraged Capital Pty Limited) No appearance (Third Defendant in 2204 of 2008)

Slater and Gordon (Plaintiffs in both matters) SOLICITORS : Minter Ellison (ANZ Banking Group Limited and ANZ Nominees) Deacons (Opes Prime Stockbroking Limited and Leveraged Capital Pty Limited) No appearance (Third Defendant in 2204 of 2008)

18 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2149/08 MELEWAR STEEL VENTURES LIMITED V ANZ NOMINEES LIMITED & ORS 2204/08 JOHN SOTIRIOUS TERPU & ANOR V ANZ NOMINEES LIMITED & ORS JUDGMENT 1 These two matters were heard together before me on 9 and 10 April 2008. The present claims are an application for continuation of interlocutory injunctions granted on 2 April 2008 in the first matter and on 4 April in the second matter. There is also an application to cross-vest the actions to the Federal Court in Victoria. 2 The injunctive orders were somewhat different in each case. In the action which I will call the "Terpu claim" the injunction restrained ANZ Nominees Limited (Nominees) and ANZ Banking Group Limited (ANZ Bank) from disposing of or otherwise dealing with "the plaintiff's security holding". 3 In the "Melewar claim" the same defendants were "restrained from disposing of or otherwise dealing with the shares identified in certain SRN collateral lodgement forms identified by number. The particular form of order was a result of shares being held under the CHESS system so that individual shares are impossible to identify. 4 In each case shares were transferred from the plaintiff to Opes and it is claimed from Opes to Nominees as trustee for ANZ Bank under agreements which I will explain. 5 So far as has been necessary the injunctions have been continued until delivery of this judgment. While there has been a part contested interlocutory hearing on the Melewar claim, there has been no such hearing on the Terpu claim. In any event the judgment of Bergin J in the Melewar claim makes it clear that her decision was an interim one even on an interlocutory basis, as it had to be given in urgent circumstances. It was envisaged that the parties might wish to adduce further evidence particularly on the question of adequacy of damages. The judgment in the Melewar action appears as Melewar Steel Ventures Limited v ANZ Nominees Limited [2008] NSWSC 295. It should be read with this judgment, as I will not repeat the matters which are referred to there. It does not relate to the Terpu claim, although some of the matters mentioned are relevant to that claim. 6 The summons filed originally in each action sought an order for rectification of a document in the Melewar claim called a Global Master Securities Lending Agreement (GMSLA) between Melewar and Opes Prime Stockbroking Limited (Opes) and sought orders and declarations consequent upon such rectification. The summons in the Terpu matter, as originally filed, in the same way sought rectification of a document called The Security Lending and Borrowing Agreement (SLBA) with declarations and orders consequent upon such rectification. The purpose of rectification in each case was to claim an interest in shares transferred to Opes under each of the agreements in priority to any interest of the ANZ Bank. 7 In the Melewar action the defendants are ANZ Nominees Limited (Nominees), Opes Prime Stockbroking Limited (Receivers and Managers Appointed) (Administrators Appointed) (Opes) and Australia and New Zealand Banking Group Limited (ANZ Bank). 8 In the Terpu action the plaintiffs are Mr Terpu and Valleybrook Investments Pty Limited as trustee for the Terpu Trust. The defendants in this action are Nominees, ANZ Bank, Southeastern Capital Limited (formerly Opes Prime Securities Limited), Opes, and Leverage Capital Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed). 9 On the first day of the hearing before me the summons was amended in each case to include a claim of misleading and deceptive conduct on the part of the Opes defendants, and to seek an order for transfer by Nominees to the plaintiff in each case of the shares in question upon payment of moneys advanced and remaining due to Opes by the relevant plaintiff. 10 I set this out only to explain the course of events. On 10 April 2008 a further document called an amended summons was filed in each action. The consequence of this is that the claim for rectification was abandoned. Both claims will require pleading in due course, but in brief they are as follows:

In the Terpu action that the SLBA between the plaintiffs and Opes should be set aside on the following grounds: (a) that Opes was in a fiduciary relationship with the plaintiffs and breached that duty by acting in a situation of conflict of interest and failing to disclose and by misrepresenting the true nature of the transaction;

(b) that entry into the SLBA was induced by fraudulent and/or false and misleading representations by Opes to the effect that the plaintiffs would retain beneficial ownership of the shares in Conquest Mining Limited (Conquest) transferred to Opes pursuant to the SLBA and would be entitled to redeem them upon payment of their outstanding loan balances;

(c) that the SLBAs were entered into by the plaintiffs under mistake of fact as to a fundamental term which mistake was deliberately concealed by Opes;

(d) for breach of ss 12CB, 12DA, 12DB, 12DF, 12GD and 12GM of the Australian Securities and Investment Corporation Act 2001. In this action the plaintiffs now seek (a) a declaration that Nominees holds shares in Conquest on a constructive trust as to 7 million shares for Terpu and as to 7,709,000 shares for Valleybrook Investments Pty Limited (Valleybrook) and that those companies are entitled to transfer of the shares by Nominees upon payment of the balance of moneys owing by each plaintiff to Opes; and (b) orders to set aside the SLBAs and orders as to tracing and equitable compensation and for damages.

In the Melewar claim there is no claim for breach of fiduciary duty. The claims are otherwise the same as in the Terpu action; except that the claim is for re-transfer of 32,087,000 in Gindalbie Metals Limited (Gindalbie) transferred to Opes under the GMSLA. 11 In the Melewar claim the evidence at present establishes that Melewar transferred to Opes under the GSLMA 32,087,000 shares in Gindalbie. It also establishes that Nominees holds 85 million shares in Gindalbie which came to it as a result of what it calls an AMSLA contract with Opes, which shares it holds as bare trustee for ANZ Bank. In the Terpu claim Nominees holds 18,300,000 shares in Conquest all of which appear to be come to it through an AMSLA contract with Opes. The injunctive orders, if continued, could only cover the shares in Gindalbie and 14,709,000 shares held in Conquest. 12 The evidence is that at the present time Nominees holds 8,500,000 in Gindalbie which came to it from Opes. So far as Conquest is concerned it holds approximately 18 million shares all of which it appears have come to it through Opes. In other words an injunctive order, if continued, in the Terpu action, would cover the number of those shares transferred by the Terpu plaintiffs to Opes, whether or not those shares held by ANZ Bank actually came from those plaintiffs. 13 The most important provision in the GMSLA document is set out in the judgment of Justice Bergin. The relevant provision in the Terpu case is similar. It is clause 3.4 of the SLBA which is as follows: 3.4 [Transfer] Notwithstanding the use of expressions such as "borrow", "lend", "Collateral", "Margin", "redeliver" etc., which are used to reflect terminology used in the market for transactions of the kind provided for in this Agreement, all right title and interest in and to Securities "borrowed" or "lent" and "Collateral" which one Party transfers to the other in accordance with this Agreement will pass absolutely from one Party to the other free and clear of any liens, claims, charges or encumbrances or any other interest of the Transferring Party or of any third party (other than a lien routinely imposed on all securities in a relevant clearance system) without the transferor retaining any interest or right to the transferred property, the Party obtaining such title being obliged only to redeliver Equivalent Securities or Equivalent Collateral, as the case may be. Each Transfer under this Agreement must be made so as to constitute or result in a valid and legally effective transfer of the Transferring Party's legal and beneficial title to the recipient. If, in respect of any Transaction, any distribution is made, or income or fee is paid, other than in cash, the provisions of this Agreement (other than clause 3.2(b)) apply, with necessary modifications, to the same extent as if the distribution, income or fee had been made or paid in cash, and terms such as "pay" and "amount" must be construed accordingly. 14 Insofar as is relevant clause 1.4(b) in the document described as the AMSLA contract in general use by the ANZ Bank is the same as 3.4 in the SLBA contract. The SLBA agreement also included the following provision 3.1: 3.1 [Passing of Title] The Parties must execute and deliver all necessary documents and give all necessary instructions to procure that all right, title and interest in: (a) any Securities borrowed pursuant to clause 1; (b) any Equivalent Securities redelivered pursuant to clause 6; (c) any Collateral delivered pursuant to clause 5; (d) any Equivalent Collateral redelivered pursuant to clauses 5 or 6; will pass absolutely from one Party to the other, free from all liens, charges, equities and encumbrances on delivery or redelivery of the same in accordance with this Agreement. In the case of Securities, Collateral, Equivalent Securities or Equivalent Collateral title to which is registered in a computer based system which provides for the recording and transfer of title to the same by way of electronic entries, delivery and transfer of title will take place in accordance with the rules and procedures of such system as in force from time to time.

All three documents contain warranties as to title as the "lender" of the shares. 15 All documents provide that on repayment by the lender of the cash collateral advanced against the transfer of shares, the borrower Opes or the ANZ Bank will transfer to the lender an equivalent number of shares to those transferred under the agreement. Thus the ANZ Bank says that when Opes pays to it the moneys due under the various AMSLA contracts it will transfer to Opes shares equivalent to those involved in the transactions. 16 There is no doubt the documents are difficult to understand and at least so far as the Opes document is concerned, difficult to read, because the print is very small. Terms such as "lender" and "borrower" would appear to an unsophisticated person to refer to the party to which they do not refer, in other words the lender is the lender of the shares, not the provider of funds. Nevertheless the documents, if read carefully, do state that a transfer of legal title is involved and that there is no equity of redemption, is but rather an entitlement to a transfer of an equivalent number of shares to those "lent" upon payment of the amount "collateral" consideration for the loan of the shares and. The documents also stated that the right to dividends as expressed in the promotional material is no such right but a right to a payment equivalent to the dividend. All this can be gleaned by a determined reading of the documents. Even after such a reading, an unsophisticated "lender" could well be surprised to know that in the case of the contract between the lender and Opes and in the case of the contract between Opes and ANZ Bank that each of Opes and the ANZ Bank could lend the shares lent, but really transferred, to another "borrower" who could use such borrowed shares to enable that borrower to short sell shares in the company with the intention of running down the value of shares so as to make a profit by purchasing shares below the sale figure and handing those purchased shares back to Opes or the ANZ Bank in repayment of the loan of the shares. Such a person would no doubt be even more surprised, if that were possible, to realize that the result of this short selling of his or her lent shares was intended to drive down their price with the inevitable result that a liability, equivalent of a margin call, would result. This is not just a general statement of concern. It is at least relevant to the claim of breach of fiduciary duty. 17 I turn to fraud and misleading and deceptive conduct. The Terpu plaintiffs rely on a document called the "Opes' Services and Financial Services Guide". This has annexed to it a copy of the document containing the facility terms. It was received by Mr Terpu in February 2005 when he first made contact with Opes. It contains an overview of Opes and its services, a financial services guide an application form and the facility terms. So far as is relevant here, it deals with equity financing which is the description of the transaction in the cases being dealt with here and states as follows: Equity Financing - a method to finance and leverage long security positions. Under an equity financing arrangement an investor lends listed equities against cash as collateral. The cash can then be reinvested by the investor, thus leveraging exposure to the market. The amount of cash collateral available is at a set loan valuation ratio (LVR). The investor retains beneficial and economic ownership of the lent stock, including full exposure to dividends and corporate actions, and exposure to market risk. The transaction can be reversed at any time.

After receiving this document Mr Terpu opened accounts for himself and Valleybrook with Opes Prime Securities Limited. 18 At the end of the document is a page setting out the names of the Bankers and custodian Bank of Opes, its accountants and its auditors. Under the Bankers and custodian Bank appears: the Australian and New Zealand Banking Group 388 Collins Street, Melbourne Victoria 3000; then appears what can be recognized as the ANZ logo with a different address, 525 Collins Street, Melbourne, Victoria. Underneath Accountants is the name of the accountants and underneath Auditors is the name of the auditor. 19 In August 2005 Mr Terpu was asked to consent to the assignment of the SLBA from Opes Prime Securities to Opes. He agreed to do so. The letter from Opes requesting this said that Opes, unlike Opes Prime Securities Limited, was "a stockbroker on the ASX and you will therefore have the added security of dealing with a stockbroking firm." 20 So far as the Melewar claim is concerned, the documents to which I have just referred did not come into its possession, but there was material on the internet site of Opes to the same effect, which Kim Lim, the Chief Operating Officer of Melewar says that he found and read and relied upon and that he particularly noticed that passage which I have just set out, as to retention of beneficial and economic ownership. He thought that the rest of the document was consistent with his experience in what might be described as ordinary margin lending transactions in Malaysia. I should make it clear however that the document says that Opes is not in the business of providing general or personal investment advice and says that Opes provides "highly specialised services to sophisticated market players. This includes wealthy individuals, boutique fund managers and corporations." 21 For the purpose of this application I consider there is a serious issue to be tried on the question of misleading and deceptive conduct of Opes on the basis of the statements in the service guide but no so as to amount to fraud. 22 I come now to breach of fiduciary duty. This is not raised in the Melewar matter. That transaction was clearly one between borrower and lender. In the Terpu matter as I said, Opes stated that one of the benefits of the transfer of the contract to it was the stockbroker relationship, although it clearly pointed out that this was not a relationship under which advice would be available. There is, at the present time, no evidence that the relationship was ever treated as one of agent rather than as lender and borrower. There is no evidence of any stockbroking business carried out for Terpu to indicate that the relationship ever became one of agency. In any event the move from that to a finding of a prima facie case or a serious question to be tried that the use of the logo would constitute notice of breach of fiduciary duty, thereby bringing into play the question of knowing receipt of trust property, is, I think, a hurdle the plaintiff would have almost insuperable difficulty in jumping. That is because the ANZ Bank was not shown to have any knowledge of the correspondence which lead to the relationship moving to Opes. The position of the ANZ Bank was it believed the client to Opes contracts were similar to its contracts with Opes, so far as title was concerned and that belief was correct. 23 On the basis of my finding there is a serious question to be tried on to the question of misleading and deceptive conduct which could lead to an order for rescission or setting aside the contract between client and Opes, under s 12GM(7) of the ASIC Act which could give rise to an entitlement in the plaintiff to the shares in question, the question then is whether this could prevail in the case of the third party rights of the ANZ Bank. There are real problems with this. The transactions might have been back to back transactions, but this is not certain. Nominees held for Opes as well as for the ANZ Bank. The ANZ Bank claims to be a bona fide purchaser for value without notice. For the purposes of this decision I just note that there is authority for the proposition that where the legal title is held by a nominee as bare trustee for the true owner the defence of bona fide purchase for value is available, even though the interest of the beneficiary is an equitable interest. McMillan Inc v Bishopgate Investment Trust plc (No 3) [1995] 3 All ER 747 at 776. 24 I turn to notice. In the Terpu matter the evidence relied upon for notice is the fact that the ANZ logo was used on the Opes material. That is said to indicate that the ANZ Bank and Nominees must have approved the use of the logo and would not have done so without examining the material is now claimed to be misleading and deceptive. All that can be said about this is that it is not a strong case, but it could succeed. 25 In the Melewar case there is no evidence that the logo was on the material on the website which was inspected by Mr Lim. The different form of contract was used, presumably because Melewar was a Malaysian company and it was put, perhaps not strongly, that the ANZ Bank would have notice of misleading and deceptive conduct so far as Melewar was concerned, relying upon the logo relevant to the Terpu action. Unless there were evidence of continuing use, which there is not, I do not consider that claim of notice is one on which there is a serious issue for trial. 26 In her decision of 2 April 2008, Justice Bergin held a document which purports to be a detailed worksheet of Gindalbie as at 8 January 2008 which shows 19 million shares in Gindalbie with Opes as intermediary and Melewar as beneficial owner could have been produced from material supplied by the ANZ Bank pursuant to its obligations to disclose relevant interests. The relevance of this, as I understand it, is that it is and was argued that ANZ Bank at least had notice of the interest of the person shown as a holder of the beneficial interest. The evidence is, of course, now more detailed than it was eight days ago. The document appears to have been produced by the Thomson organisation which conducts company searches. There is no evidence from Gindalbie to suggest the details on the document came from the ANZ Bank or from Nominees. It could have come from Opes. I do not think there is any basis for inferring it came from the ANZ Bank. Unless the ANZ Bank posted the material in the company records it does not give any evidence of notice. Opes responded to a disclosure request, stating that it was the legal owner of 19,181,000 shares in Gindalbie and then stated: All shares were held under the names of the Australian Securities Lending Association Limited Master Securities Lending Agreement (AMSLA) signed with the following for the following number of shares. Under the terms of an AMSLA, while Opes Prime Stockbroking has legal ownership of the shares, it has neither beneficial nor economic ownership of the stock. As such subject to the terms of the AMSLA, those holders below have full authority with relation to the acquisition and disposal of shares, the exercise of voting and underwrites, and any other matters relating to the shares.

There is then indicated the fact that Melewar is the beneficial and economic owner of 19 million of the shares. This, I think, indicates it is likely the information on the worksheets discussed came from Opes. I conclude there is no serious issue to be tried in the case of Melewar there being no material which would indicate notice of any claim. 27 I turn to balance of convenience. I deal with this in both matters in case I am incorrect in the case of Melewar. In the Melewar case the fact is the ANZ Bank through Nominees now retains 8,500,000 shares in Gindalbie of the 32 million transferred by Melewar to Opes. There is some dispute about the former figures, but I accept it. Opes in turn may have transferred some of these to funders other than the ANZ Bank. It has at least two other funders. In the Terpu action all the shares that Nominees held in Conquest from time to time, on the evidence presently available, came from Opes. Of the 8,500,000 shares held by Nominees in Gindalbie it cannot be established which shares came from Opes through Melewar and which came from other intermediaries. This is not a case of mixing funds of a beneficiary with funds of a defaulting trustee. It is more a case of mixing shares emanating from number of sources. It may be possible on a tracing exercise to ascertain all those persons who, as a result of borrowing transactions, have had legal title to their shares transferred to the ANZ Bank or Nominees as trustee for the Bank, either directly or through some intermediary. Under the present CHESS system operating on the stock exchange it is not possible to identify particular shares. A number of people may be able to be trace into the shares now held by the ANZ Bank or Nominees and may possibly be able to establish a right to trace to a proportionate number of those shares. There is no way that this can be established at the present time based on the claim of deceptive conduct. Thus as a matter of convenience, the more convenient course would be to allow the ANZ Bank to exercise its right to sell those shares with any proportionate interest being determined in a claim for damages particularly in light of my conclusion that the cases of the plaintiffs are not strong. In the Terpu action there may be no other claimants but the position of the ANZ Bank is that it is under no obligation to Mr Terpu but rather under an obligation to Opes if the full amount of pooled cash collateral is repaid. The question then is whether or not there is any reason why damages would be sufficient remedy. 28 Before turning to damages I should point out that many of the very interesting questions as to tracing priorities and postponement discussed by counsel are not matters which can be determined before a final hearing unless they can be determined so as to provide an answer for the action one way or the other. That is why I do not deal with them or discuss the tracing doctrines discussed in El Ajou v Dollar Land Holdings plc [1993] 3 All ER 717 at 733. Mr Newlinds SC made quite strong submissions as to postponing conduct in relation to priorities and therefore I just say that it is difficult to see how signing the transaction documents can amount to postponing conduct, if the signing was a result of deceptive conduct. Damages in Melewar claim 29 The shares the subject of this claim are shares in Gindalbie Metals Limited originally owned by Melewar but transferred to Opes under the SLBA. These shares are listed on the Stock Exchange. Melewar manufactures steel products, such as tubing. Gindalbie is an explorer for and miner of iron ore. Melewar, until the Opes transactions, held about 14.5% of the issued capital in Gindalbie. Anshan Iron & Steel Group Corporation (Ansteel), a Chinese company, was the second largest shareholder and is said to be the second largest steel producer in China. It holds 12.75% of the share capital in Gindalbie. Paragraph 73 and 74 of the affidavit of Mr Lim are as follows: 73 By retaining beneficial and economic control including the voting rights in its shares in Gindalbie, Melewar can ensure that the prices and terms that form part of the supply chain as between Gindalbie and Ansteel are competitive. Melewar proposes that this relationship with Ansteel may lead to more joint ventures with Ansteel in the steel business. 74. I am concerned that if Melewar loses the strategic position afforded it by its shares in Gindalbie, then Ansteel, being the second largest shareholder in Gindalbie, will likely become the largest shareholder and may have significant voting influence on the future direction of Gindalbie and influence on the price of iron ore to Ansteel, which may impact on the price of steel being sold to steel product manufacturers. 30 The force of this evidence is difficult to see. It may indicate that Ansteel would force the price of iron ore down but if Gindalbie is a purchaser from Ansteel it could benefit rather than suffer from this. If it were established that Melewar was entitled to the shares in question upon payment to discharge the liability to Opes then either an order would be made requiring the ANZ Bank to transfer 8.5 million shares or perhaps even 30 million shares in which case Melewar will be back in its original majority position. An alternative order for damages would be for an amount equal to the value of the shareholding at the date of order. These figures would, of course, have to be adjusted to the number of shares shown to have come to the ANZ Bank or to Nominees and traced back to Melewar. In addition Melewar could buy more shares in the market. It has funds available as it was prepared to secure an undertaking as to damages. In any case I consider that damages are sufficient remedy. The Terpu claim 31 Mr Terpu is managing director of Conquest. That company has a joint venture agreement with Gold Fields Australasia Pty Limited (Gold Fields). St Ives Gold Mining Company Pty Limited (St Ives) is a subsidiary of Gold Fields and is the second largest shareholder in Conquest. The joint venture between Conquest and Gold Fields is for Gold Fields to undertake large drilling works on a project of Conquest at Mount Carlton in North Queensland, which is now subject to a joint venture agreement between them. That work is estimated by Mr Terpu to be worth $50 million. Paragraph 21 of the affidavit of Mr Terpu is as follows: 21. If Gold Fields acquires the shares in Conquest which Valleybrook and I transferred to Opes and in which I say I and Valleybrook have a beneficial interest, it will take Gold Fields holding to approximately 18.9% of the total issued capital. This holding will be sufficient, because of normal minority shareholder apathy, to enable Gold Fields at a general meeting of Conquest to appoint directors and control the company. Gold Fields will then not need to undertake the drilling under to [sic] the joint venture agreement as it will control the company. 32 I find it difficult to accept this evidence. It was put by Mr Douglas QC, senior counsel for Terpu, that if Gold Fields purchased the 15,209,000 held in the Terpu claimed interests through Opes it would have a controlling interest in Conquest. He then said that Gold Fields or St Ives or perhaps acting together would or could then dismiss the present directors, dismiss Mr Terpu as managing director, appoint their own nominees as directors of Conquest and bring the joint venture to an end. This seems to me to be outside the bounds of reasonable possibility. St Ives and Gold Fields now have over 10% of conquest. A finding should not be made that it is likely that directors appointed to Conquest, a public company, would act against the interests of that company and in the interests of another company. I accept that if they did so act then the claimed shareholding of Mr Terpu and his Trust, which is about 5% of the capital of Conquest, could be diminished. However, I do not think that it has been established that there is any special risk if the shares are sold. It is of course possible that Mr Terpu or his interests might buy them, but whether he has funding for that is not established. His position is particularly unfortunate as it is not clear he has drawn cash from Opes. If he ultimately succeeds and the shares in Conquest have increased in value the amount of his damages is easy to calculate. If the shares have gone down in value then he will still be entitled to damages for the value of the shares in question. If they have reduced in value as a result of improper actions by dominant shareholders, which seems to be rather in the realms of imagination than possibility, then it may be that damages would be calculated at the present value. The circumstances which might bring that about are too remote to consider, but nevertheless the calculation is possible. Again I consider damages a sufficient remedy. Cross-vesting application 33 There are presently in the Federal Court in Victoria, before Justice Finkelstein, two somewhat similar matters and there may be more. Those matters involve both Opes and the ANZ Bank. An application for an interlocutory injunction in one of them, namely CMG Equity Investments v ANZ Banking Group Limited [2008] FCA 455 has been dismissed. 34 The ANZ Bank has its head office in Melbourne; it has major offices in each capital city. Opes is situated in Melbourne. Its receivers and administrator are also there. One plaintiff in the cases before me is a Malaysian company and Mr Terpu comes from Western Australia. Proceedings were commenced here by the plaintiffs and they say they wish to retain their present solicitors being members of the Sydney office of Messrs. Slater and Gordon. It would be more convenient for the defendants for the action to be heard in Victoria and it may be slightly more convenient for the plaintiffs for it to be held in Sydney. To a large extent the evidence would be documentary. Most of it is already available. The actions, while they raise interesting points, are not very complicated. 35 If there were issues established to be similar, arising in the present case and the Victorian cases, then it might be desirable to have them heard by the same judge if that is certain to happen. It could in those circumstances be possible for the judge to hear the cases together with the evidence in one being evidence in the other. However, the cases I am dealing with do not claim rectification. One in Victoria does. The cases here are based on fraud, misleading and deceptive conduct and breach of fiduciary duty. They rely, to some extent, on their own facts including the conduct alleged to be fraudulent and misleading and deceptive and claimed reliance on misleading and deceptive conduct. They rely on particular matters relating to notice. It is also relevant to note that I was told from the bar table, probably as a result of press reports, that Justice Finkelstein had stated that he intends to set down and try a separate issue, apparently relevant to those matters before him, the question of whether on their proper construction the document in the transactions is one of mortgage or one of absolute transfer. That is not raised as an issue in the present actions before me, perhaps because there are real difficulties in a mortgage of unidentifiable shares. 36 It is possible that, as events turn out, cross-vesting might prove to be in the interests of justice. At present I am not prepared to say that it is. Rather than dismiss the motion I will stand it over in case dismissal would prevent a further application. I am inclined to think that it is desirable that the matters be heard as quickly as possible and it is likely that can be done in this Court just as quickly as would be the case in Victoria, particularly if many cases in Victoria are to be heard together. I accept that it is undesirable to have the possibility of inconsistent decisions, but as I have said, to some extent, it seems to me that each case depends upon its own facts. 37 The injunctive orders expire today. 38 The orders are as follows in each case:

Order that the applications for continuation of the interlocutory injunctions be dismissed.

Order exhibits be returned to be retained by the parties for the final hearing.

Order that the notice of motion seeking cross-vesting to the Federal Court of Australia in Melbourne be stood over with leave to restore it on seven days' notice after pleadings have been completed.

Order the action proceed on pleadings and that the plaintiff file and serve a statement of claim within 21 days. **********

22/04/2008 - To correct figure in paragraph 11 should read 8,500,000 and not 85,000,000 - Paragraph(s) 11 23/04/2008 - To correct editing errors. Corrections in italics - Paragraph(s) 14, 27, 29, 30, 32, 35

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Judgment (24 paragraphs)

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