1 On Friday 2 December 2005 an urgent application for an interlocutory injunction was heard in the directions list of the Corporations List and the application was dismissed. I indicated that my reasons would be delivered later and these are the reasons for dismissing the application.
2 The plaintiff ("Global Realty") sought an interlocutory injunction to restrain the completion of a contract of sale of land and the winery erected thereon. The vendor is the first defendant company ("Dominion Wines") and the second defendant is its liquidator ("Mr Mentha"). The purchaser is the third defendant company ("Plunkett"). The settlement date for the contract of sale was Monday 5 December 2005, hence the urgency of the application.
3 The proceeding was commenced on 23 November 2005 in the Supreme Court of New South Wales. It was transferred to the Supreme Court of Victoria by order of Barrett J on 30 November 2005. By the same order Barrett J dismissed Global Realty's application for an interlocutory injunction seeking the same or substantially the same relief as was later sought before this Court on 2 December 2005.
4 The relief sought in the proceeding was an order, pursuant to s.600B(3) of the Corporations Act 2001 (Cth) ("the Act") to set aside the resolution for the winding up of Dominion Wines passed at the reconvened second meeting of creditors, under Part 5.3A of the Act, held on 3 November 2005.
5 The prime asset of Dominion Wines is 107 acres of freehold land in the Strathbogie Ranges upon which was erected in 1999 a purpose-built contract wine-making facility with a production capacity of 7,500 tonnes of wine grapes. The land also has 24 acres under vine and Dominion Wines produces its own wine as well as providing the winery to other grape growers.
6 Global Realty is a creditor of Dominion Wines. On or about 20 September 2005 Mr Mentha was appointed administrator of Dominion Wines by resolution of its directors. Dominion Wines had previously been in voluntary administration between July 2004 and December 2004. Shortly after Mr Mentha's appointment in September 2005 he advertised the land and winery for sale. Whether or not the directors were aware of the administrator's intention to so advertise, they became aware of the advertisement on or about 22 September 2005.
7 In an administrator's report dated 7 October 2005, Mr Mentha said that he had commenced an intensive sale of business campaign on 22 September 2005 to identify potential purchasers of the company and/or its assets. Mr Mentha also reported that he had sought expressions of interest from parties interested in refinancing Dominion Wines' finance facilities, obtained from a secured creditor (hereafter referred to as "GE").
8 Mr Mentha's report of 7 October 2005 gave details of the implementation of his "three point plan", consisting of business as usual, sale process and statutory reporting. His report set out a short timetable for the sale process and also referred to a possible deed of company arrangement ("DOCA") proposed by the directors and Global Realty. Mr Mentha commented that the directors had advised him that they had been in discussion with a potential foreign investor for a number of months but that, to date, he had not been provided with evidence to give him any comfort that this investment was likely. He also referred to discussions by the directors with an alternate financier who had a genuine interest but was yet to provide a binding letter of offer. He said that he had asked the directors to provide him with a letter from the financier containing an unconditional offer of not less than $2.7M to support the proposed DOCA.
9 The second meeting of creditors was held on 17 October 2005. The chairman advised the meeting that two binding offers had been received (for the land and winery) and that, in Mr Mentha's view, one of the offers would provide a better return to creditors than the proposed DOCA. A resolution was passed that the meeting be adjourned for a period of up to 60 days.
10 An updated report was provided to creditors, dated 24 October 2005. Mr Mentha advised that, having received a firm offer to purchase the business and assets of Dominion Wines supported by a material deposit prior to the meeting on 17 October 2005, he had now executed a sale agreement with the purchaser. Mr Mentha advised the creditors that a condition precedent to the sale agreement was that the creditors must vote in favour of liquidating Dominion Wines at the reconvened second meeting. He said that the contract provided a better return to creditors than the current proposed DOCA but that any amended proposed DOCA would be tabled and discussed at the meeting which was reconvened for 3 November 2005.
11 At the reconvened meeting Mr Mentha as chairman stated that a sale agreement had been executed with Plunkett on 21 October 2005. Mr Mentha also advised the meeting that the previous evening he had received a proposal for a revised DOCA. Details of the sale contract and the revised DOCA were provided to the meeting and a number of slides were presented, the final one of which contained Mr Mentha's recommendation that Dominion Wines be wound up and that it would not be in the creditors' interest for the administration to end or for the proposed revised DOCA to be executed. The minutes of the meeting record that Mr Mentha's spokesman advised the creditors that the proposal from the directors was not unconditional and was subject to considerable completion risk. One of the directors of Dominion Wines (Mr Carl Voss) also addressed the meeting supporting a further adjournment of the meeting in order to finalise dealings with a private equity party and also the specifics of the revised DOCA. Mr Mentha's spokesman in effect warned the meeting that the adjournment of the meeting would result in the termination of the agreement with Plunkett - there was "a choice between certainty and the opportunity for a higher return based on uncertainty".
12 There was a poll on the resolution for winding up and the result was that 22 creditors voted for the resolution with a combined valued of $193,206.55 and 9 creditors voted against the resolution with a combined value of $4,322,919.30. Further, the chairman exercised proxies of a further 5 creditors with a value of $127,579.55 in favour of the resolution. As there was a majority in number for the resolution and a majority in value against the resolution, Mr Mentha advised that he would exercise his casting vote and stated that he had formed the opinion, on the information available and because of the more certain return, that it was in the best interests of creditors to wind up the company, and that he would cast his deciding vote in favour of the motion to wind up Dominion Wines. Under the resolution Mr Mentha was confirmed as liquidator.
13 Affidavit material filed on behalf of Global Realty indicated that the directors of Dominion Wines were not aware prior to 22 September 2005 that Mr Mentha was intending to sell the winery. That material also suggests some inaccuracies in the minutes of the reconvened second meeting and that the minutes do not record all that occurred at the meeting. In particular, there is a complaint that a motion to adjourn the meeting was not put to the meeting nor a motion to adopt the revised DOCA.
14 Global Realty's affidavit material also endeavours to explain the delay between the passing of the winding up resolution on 3 November 2005 and the commencement of the present proceeding on 23 November 2005. There are references to a delay in obtaining the minutes of the meeting, to discussions with Peter Voss (a principal investor in Dominion Wines and Global Realty) who was in the United States at the time, and to obtaining legal advice. There is also a reference to the fact that the head office of Global Realty is located in Florida and was damaged in a hurricane, although how this caused a delay in the commencement of this proceeding is not stated. Finally there is a reference to obtaining advice from counsel including senior counsel in the period from 16 November to 19 November 2005 and to the return of Peter Voss to Australia on 19 November 2005. An affidavit from Global Realty's solicitors shows that the liquidator was advised by letter on 16 November 2005 that Global Realty was considering its position and that the letter resulted in correspondence on behalf of the liquidator advising that settlement of the contract with Plunkett was scheduled for 5 December 2005.
15 An answering affidavit was sworn by Mr Mentha on 25 November 2005 and filed in the Supreme Court of New South Wales. The contract with Plunkett was exhibited and the affidavit contained material in relation to whether the proceeding should be heard in the Supreme Court of New South Wales. Among other things, an order was sought by the first and second defendants that the proceeding be transferred to the Supreme Court of Victoria or the Federal Court in Victoria.
16 The application before Barrett J was heard on 28 November 2005 and judgment was given on 30 November 2005. Barrett J ordered that the proceeding be transferred to the Supreme Court of Victoria under s.1337H(2) of the Act. His Honour also dismissed Global Realty's application for an interlocutory injunction. His Honour referred to the alleged shortcomings relied upon by Global Realty to undermine the integrity of the resolution for winding up. His Honour rejected the plaintiff's submission that the chairman should have preferred the majority in value over the majority in number when exercising his casting vote and added, referring to authorities,[1] that the correct approach was for the chairman to proceed according to what he believed to be in the best interests of those affected, considering also the objectives of Part 5.3A, and that a distinction was to be drawn between the propriety and the wisdom of the decision, the latter probably being non-justiciable. However his Honour found that there was a serious question to be tried under s.600B, on the basis that Mr Mentha may have taken steps to ensure that the winding up resolution was passed in order to satisfy the condition in the sale agreement and that he had subscribed to the sale agreement with an intention of maximising the chances of a successful completion of the sale and that this might on full investigation be found to be something that was not in the best interests of the creditors. His Honour also referred to possible problems with voting by non-creditors (and failure to supply information at the meeting, although that was not a particularly strong ground). A few other matters were mentioned.
17 Turning to the balance of convenience, Barrett J mentioned that the granting of an injunction might force Dominion Wines into a breach of contract but he emphasised that the plaintiff would have to give the usual undertaking as to damages and it was a foreign corporation having no presence in Australia. The latter fact brought into operation the principle that there was a heavy onus on a foreign plaintiff to show a capacity to meet the undertaking as to damages.[2] His Honour said that the plaintiff was given an opportunity to adduce evidence of its assets within the jurisdiction but declined the opportunity and that the sum of $50,000 offered to be paid into Court by way of security was manifestly inadequate. Finally his Honour raised the problem (which remains unresolved in the present application), that, if the liquidator was restrained from acting as such, who would control Dominion Wines pending trial. Accordingly the application was dismissed.
18 Upon the transfer of the proceeding to this Court, Global Realty urgently renewed its application for interlocutory injunctions including an injunction to prevent completion of the sale to Plunkett.
19 It was submitted on behalf of the defendants that this second attempt to obtain the same interlocutory relief constituted an abuse of process.
20 Reliance was placed by the defendants upon the decision of the Court of Appeal of this Court in D.A. Christie Pty Ltd v Baker[3]. In that case the County Court had refused an application under s.23A of the Limitation of Actions Act 1958 for an extension of time to bring an action in respect of an alleged injury because of the lack of explanation for a period of delay. Some two years later the applicant made a second application to a different County Court Judge supported by further evidence giving an explanation for the delay. That application was granted and the respondent appealed. The Court of Appeal (Brooking and Hayne JJA, Charles JA dissenting) allowed the appeal. Hayne JA (as he then was) referred to principles relating to abuse of process where it was sought to re-litigate a case which had already been disposed of by earlier proceedings. He said that there would be powerful reasons to conclude that a second application was vexatious where it was brought on precisely the same material as the first application, or the additional material put forward on the second application was available at the time of the first application or no explanation was proferred for why it was not put forward at the time of the first application.[4] Hayne JA referred to "the important public interest in ensuring that judicial determinations are binding, final and conclusive and that there should not be conflicting decisions on the same issue ...".[5] However, he added: