FEDERAL COURT OF AUSTRALIA

Owston Nominees No.2 Pty Ltd v Branir Pty Ltd [2002] FCA 1358

CORPORATIONS – proceedings for interlocutory injunction –history of commercial disputation between parties concerning pastoral interests – applicant seeks orders to cease continuation of oppression as minority shareholder – interim application to main status quo of pastoral assets – order made.

Corporations Act 2001 (Cth) ss 233, 247A

Owston Nominees No. 2 Pty Ltd v Branir Pty Ltd [2000] FCA 145 cited

Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833 cited

Re A Company [1985] BCLC 80 cited

OWSTON NOMINEES NO. 2 PTY LTD v BRANIR PTY LTD, PT BAKRIE NUSANTARA CORPORATION, ABURIZAL BAKRIE & GREAT ASIAN HOLDINGS PTE LIMITED

N 3065 OF 2002

CONTI J

21 OCTOBER 2002

SYDNEY

THE COURT ORDERS THAT:

1.                  Until further order the First Respondent shall not sell, lease, sub-lease, surrender, further mortgage or charge, part with possession, or howsoever otherwise dispose of, alienate or encumber, the whole or any part of any of the Properties referred to in the following Schedule of Properties, or any asset that represents more than 5% in value of the First Respondent’s assets, until 14 days after the day on which the Applicant's solicitors have been given in writing full details of the proposed action or transaction, provided always that  this order shall not be taken to prohibit any dealing with assets in the nature of livestock that are sold in the ordinary course of the First Respondent's business as conducted prior to the date of this order.

SCHEDULE OF PROPERTIES

(a)                The property known as “Elizabeth Downs Station”, Northern Territory, Northern Territory Certificate of Title Volume 395 Folio 120, the subject of Perpetual Pastoral Lease 01005 (Northern Territory portion 1666).

(b)               The property known as “Lichfield Station”, Northern Territory, Northern Territory Certificate of Title Volume 395 Folio 121, the subject of Perpetual Pastoral Lease 01006 (Northern Territory portion 2681).

(c)                The property known as “Fish River”, Northern Territory, Northern Territory Certificate of Title Volume 395 Folio 122, the subject of Crown Lease in Perpetuity 00815 (Northern Territory portion 3435).

(d)               The property known as “Douglas”, Northern Territory, Northern Territory Certificate of Title Volume 627 Folio 922, the subject of Pastoral Lease 00903 (Northern Territory portion 2683).

(e)                The property known as “Murranji”, Northern Territory, Northern Territory Certificate of Title Volume 627 Folio 892, the subject of Perpetual Pastoral Lease 01074 (Northern Territory portions 851 and 908).

(f)                 The property known as “Buchanan Downs”, Northern Territory, Northern Territory Certificate of Title Volume 549 Folio 128, the subject of Perpetual Pastoral Lease 01082 (Northern Territory portion 2725).

(g)                The property known as “Kalala”, Northern Territory, Northern Territory Certificate of Title Volume 395 Folio 125, the subject of Perpetual Pastoral Lease 01064 (Northern Territory portion 697).

(h)                The property known as “Tipperary Station”, Northern Territory, Northern Territory Certificate of Title Volume 395, Folio 119, the subject of Perpetual Pastoral Lease 01004.

2.                  Liberty to apply on 3 days’ notice.

3.                  Stand interlocutory application over to 30 October 2002 for further hearing before Allsop J.

4.                  Costs of the application be reserved.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     On the morning of 21 October 2002, Allsop J granted leave to the applicant, Owston Nominees No. 2 Pty Ltd (“Owston”), to file in Court two separate originating processes and accompanying interlocutory applications. The first application was subsequently allocated the file number N 3065/02, being that presently the subject of my consideration, namely to enjoin the four respondents, namely Branir Pty Ltd (“Branir”), PT Bakrie Nusantara Corporation, Aburizal Bakrie, and Great Asian Holdings Pte Limited. That first application has been made pursuant to s 233 of the Corporations Act 2001 (Cth) (“the Act”), the applicant seeking thereby orders to prevent or remedy oppression complained of as a minority shareholder of Branir.

2                     The second application which Allsop J granted leave to file in Court on 21 October 2002, and which is now allocated file number N 3066/02, seeks orders under s 247A of the Act, for the grant to the applicant of access to the financial books and records of Branir.

3                     After accepting those applications for filing, Allsop J directed that the parties approach the Duty Judge to further ventilate the issues thereby arising, if the degree of urgency of the interlocutory applications might warrant any such expedient treatment.

4                     Shortly after Allsop J adjourned the hearing of the interlocutory proceedings on the morning of 21 October 2002, my Associate was contacted by Senior Counsel for Owston, with a view to the two matters pending hearing before Allsop J being dealt with in the afternoon of 21 October 2002, since I was the Duty Judge on that day. Mr Margo SC appeared for the applicant in both proceedings, and Mr Kunc of counsel announced his appearance for both the first and third respondents in the so-called “minority oppression” suit (N 3065/02), and of course for Branir in the “access to books” suit (N 3066/02).

5                     The factual matrix from which the present applications arise is complex and does not warrant recitation in detail for the purposes of this short judgment. The proceedings, which have been in progress for over seven years, have been the subject of substantial judicial examination in this Court. The substantive proceeding, of which these present applications form part, was commenced in 1995 (NG 3184/95) and was heard at first instance by Einfeld J, who gave judgment in favour of Owston on 25 February 2000 ([2000] FCA 145). That judgment was the subject of a lengthy and complex appeal which was dismissed by a Full Court, and which provided additionally for recognition of Owston’s entitlement to an issue of shares in Branir upon the footing of the Branir pastoral properties being free of debt : Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833 (Drummond and Mansfield JJ agreeing with Allsop J). After the Full Court judgment was delivered on 20 December 2001, the original proceedings (NG 3184/95) were placed in the docket of Allsop J.

6                     For present purposes, it is sufficient to record that these extended proceedings involve the breakdown of an international pastoral joint venture between Mr Anderson, the principal of Owston on the one part, and Mr Bakrie the apparent principal of the Branir interests on the other part. That joint venture involves millions of dollars in value of assets, including livestock, pastoral properties, and a cattle feed-lot in Indonesia. Of course, comprehensive detail of the background facts is contained in the judgments cited in [5] above.

7                     On 21 October 2002, after the commencement of argument on the two applications before me, and in the light of their complexity and the availability of a hearing time confined at that stage to the afternoon, I queried the respective parties as to the urgency or otherwise, of the present applications. I was informed by Mr Margo SC that strictly speaking, N 3066/02 was not a matter of urgency for Owston, and that he was content to defer argument on that interlocutory application for another day, and only ventilate the interlocutory issues arising on the application filed in N 3065/02, being the minority oppression suit.

8                     Apparently the urgency for the minority oppression application emanated from certain orders made in the earlier proceedings by Einfeld J on 15 October 1998. Those orders were continued by Allsop J on 30 September 2002, and were subsequently further continued until midnight on 21 October 2002, by reason of further order of Allsop J on 18 October 2002. The effect of those orders was to enjoin Branir from disposing of the pastoral properties until shares in Branir (which the Full Court in its judgment had found to be Owston entitlement), representing a 40.815% indirect interest in Branir’s assets, had been issued to Owston in accordance with the Full Court’s orders made on 20 December 2001.

9                     While it is not in dispute that Owston has since been issued with that shareholding interest (albeit only recently on 18 October 2002 after some delay on the part of Branir), it is evident that Owston, and its principal Mr Anderson, is seeking to protect itself from the disadvantages flowing from being a minority shareholder of Branir, by obtaining, inter alia, representation on the board of directors of Branir, that course representing in substance the relief sought by the application filed in N 3065/02. In the meantime, what Owston was by then seeking by its interlocutory application, was in substance an extension of the orders of Allsop J made on 30 September 2002, in so far as they prevented the assets of Branir being disposed of without notice, to the detriment of Owston as minority shareholder, at least until the final determination of the pending minority oppression application.

10                  In support of the interlocutory application in that minority oppression suit, Owston filed in Court an affidavit of Warren Anderson, apparently sworn 20 October 2002, which was read without objection upon an interlocutory basis. In opposition to the application, the first and third respondents tendered affidavits of Christopher Greiner and Kellie Wheelahan, each sworn 21 October 2002, which were also read without objection on an interlocutory basis. Mr Greiner and Ms Wheelahan are both solicitors in the firm acting for the first and third respondents. These affidavits would seek to dissuade the Court as to the existence of any intention of the respondents to dispose of the assets of Branir in the manner or to the extent apprehended by Owston.

11                  In his submission to the Court in support of the application, Mr Margo outlined the history of disputation, including Owston’s success before the Full Court, and submitted that in the events that had happened, and particularly in the light of the delay of Branir in issuing the shares to Owston pursuant to the Full Court’s orders, Branir should be subjected to the continuance on foot of Allsop J’s orders of 30 September 2002 until after the minority oppression suit was determined, and that authority in favour of maintaining that status quo, “except where the change was absolutely essential”, was to be found in Re A Company [1985] BCLC 80 (Harman J).

12                  In response, Mr Kunc submitted that I should be guided by the need for the applicant to satisfy the test as to the existence of a “serious question to be tried” on the face of the applicant’s minority oppression suit, and further that such was not presently the case, because what the applicant was in effect attempting to do, as evidenced by the final orders that it sought, was judicially unprecedented in the context of a situation where Owston was a non-controlling shareholder, and further that there was no prospect of the applicant in fact succeeding at the final hearing. I mentioned in passing however that Branir did appear to be in the nature of a partnership or joint venture albeit not an equal one, in corporate form. Mr Kunc also reminded the Court of the need for the applicant to found its interlocutory application on a fresh equity, separate from any equity stemming from the earlier proceedings, being a purported new equity requiring evidence of oppression which, it was further submitted by Mr Kunc, did not exist. After hearing the submissions of the respective counsel as to the orders sought in the interlocutory minority oppression application, being orders similar to the terms of the order of Allsop J dated 30 September 2002, and without coming to a final view on the relative merits of the respective submissions carefully articulated to me, I formed the preliminary opinion, and without having the depth of understanding of the potential issues that would be held by a presiding judge for some time already involved in this complex and protracted litigation, that Branir would not be prejudiced, if I were to maintain the status quo by making an order in a form similar to order 4 sought in the interim application, which would effectively extend Allsop J’s orders of 30 September 2002 in so far as they related to the restriction on the disposal of Branir’s property. In expressing that preliminary view, I informed counsel that the Court would arrange to have the matter promptly heard on an interlocutory basis, or alternatively, at an expedited final hearing.

13                  I therefore made the orders attached to these reasons. It was my opinion, being orders formulated with assistance from both counsel. Until the issues can be given closer judicial attention, those orders strike in my opinion a fair balance between the protection of the substantial commercial interests of the applicant, and the avoidance of undue prejudice to the first and third respondents.

Associate:

Dated:              1 November 2002