FEDERAL COURT OF AUSTRALIA

Tenteye v Albury Gas & Plumbing Pty Ltd [2009] FCA 1513

CRAIG WILLIAM TENTEYE and BELINDA JANE TENTEYE v ALBURY GAS & PLUMBING PTY LTD

NSD 1019 of 2009

PERRAM J

17 NOVEMBER 2009

SYDNEY

THE COURT ORDERS THAT:

1.                  The motion be dismissed.

2.                  The defendant to pay the plaintiffs’ costs of the motion.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

REASONS FOR JUDGMENT

1                                             These proceedings were commenced on 16 September 2009 by the Tenteyes, who are the plaintiffs.  On that day they filed an originating process seeking the winding up of the defendant, which I will call “Albury Gas”, on the just and equitable ground and upon a number of other grounds to be found in s 461 of the Corporations Act 2001 (Cth).  On 4 November 2009 Albury Gas moved for an order that the application be dismissed or, alternatively, stayed until further order. 

2                                             The basis upon which that application is made requires for its proper comprehension some understanding of the background to the present proceedings.  The Tenteyes were formerly in a business arrangement with a Mr Quinlivan.  Mr Quinlivan is currently the sole director of Albury Gas.  He is also the proprietor of half of the share capital of Albury Gas.  The Tenteyes are the proprietors of the other half.  The Tenteyes and Mr Quinlivan conducted some form of plumbing business until about 2002, when Albury Gas was incorporated for the purpose of carrying on that business. 

3                                             This it did for a number of years until the parties fell out.  Subsequently, they have fallen into dispute as to the manner in which that business was conducted.  Mr Quinlivan, for his part, complains that the Tenteyes used their powers as directors inappropriately to incur expenses on the company's account which were for their own benefit and not for the company's. He also complains that the company incurred a debt to the Australian Taxation Office for which, in a way not fully articulated by the evidence, he holds the Tenteyes responsible. 

4                                             For their part, the Tenteyes deny the wrongful nature of the acts alleged against them and point to a number of chattels which they say were owned by them prior to the incorporation of the company and which are now said, the substratum of the business having collapsed, to be returnable to them.  There are other aspects to the dispute but it is not presently necessary to delve into them in any detail.  The Tenteyes resigned their positions as directors of the company in 2004, leaving Mr Quinlivan in control.  There was no dispute before me that the effect of the constitution of Albury Gas was that its affairs were deadlocked and that it was not possible for any group of shareholders to bring about a decision of the members in general meeting. 

5                                             The consequence, therefore, of Mr Quinlivan being the only director has been to equip him with a practical ability to control the company.  In the exercise of that practical ability it would appear that he has caused Albury Gas to commence proceedings against the Tenteyes in the District Court at Albury entitled Albury Gas and Plumbing Pty Ltd v Tenteye and Anor beingproceedings No. 10/2008.  By the statement of claim filed in those proceedings the company complained about various defaults alleged against the Tenteyes including the ones set out above.  In due course, the Tenteyes filed a defence and a cross-claim which also set out their complaints.

6                                             The effect of the pleadings in the District Court is that the dispute which I have outlined above is effectively therein embodied.  Those proceedings have not progressed at a rate which could be described as a rapid.  As at today's date I was informed that the pleadings have been completed, that the matter of particulars had been attended to and that discovery had now been provided.  It was not said that the evidence for the hearing of the matter was ready. 

7                                             At some stage in the latter half of this year the Tenteyes filed a notice of motion in the District Court proceedings seeking security for costs against Albury Gas which, of course, is the defendant in these proceedings.  That application was unsuccessful but it does seem to have provoked, either directly or indirectly, an increased level of attention to the proceedings in the District Court.  The result of each of those matters is that the case came before Sidis DCJ who referred the matter to mediation.  The parties informed me that the question of the terms upon which part or all of the proceedings might be referred to a reference was also shortly to be argued. 

8                                             It is thus accurate to say that the District Court proceedings have travelled some, but not a great, distance towards a hearing.  The evidence before me suggested that in the ordinary course of events the putative reference might come on in March 2010 but there was no particular certainty about that and, as yet, the precise terms of that which is to be referred has not been determined. 

9                                             Albury Gas now asks this Court for a stay of the present proceedings on the basis that the pursuit in two different courts of effectively the same case is not a sensible use of either the resources of the parties or the Court. 

10                                          It is said that this Court has power to stay proceedings in situations where largely identical proceedings are pending in two different courts.  I accept that proposition.  It is both obvious and also supported by the decision of Lockhart J in Sterling Pharmaceuticals Pty Ltd v Boots Company (Australia) Pty Ltd (1992) 34 FCR 287 at 291;  see also Software Engineers Australia (NSW) Pty Ltd v Bonket Pty Ltd (2002) 140 IR 112 at 119 per Goldberg J.  In the Sterling Pharmaceuticals Lockhart J set out a useful list of relevant considerations to be taken into account in determining whether this Court should stay proceedings pending before it. 

11                                          Useful though that decision is I do not think that it is applicable to the current proceeding.  This is because the application to wind up Albury Gas on the just and equitable ground, in terms, depends upon a suggestion that its affairs are being conducted in an oppressive fashion.   Part of the conduct said to constitute the oppression is the very existence of the District Court proceedings.  It will be recalled that the Tenteyes do not have an ability to bring those proceedings to an end or to influence the conduct of those proceedings through the organ of the company in general meeting. 

12                                          Mr Quinlivan is, therefore, in control of the District Court proceedings against the Tenteyes, which he may use against them as he wishes.  This is not to say that Mr Quinlivan is, in fact, using the proceedings in an oppressive fashion; it is, rather, only to underscore that that is one of the issues which arises in the proceedings in this Court.  If these proceedings were substantially the same as the District Court proceedings there might be some force to the idea that this Court should stay its hand.  However, for the reasons I have just given, that is not an accurate statement about the relationship between the proceedings in the two courts. 

13                                          There is, therefore, a proceeding before a Federal Court which claims, in terms, that the pursuit of District Court proceedings against the plaintiffs is itself a species of oppression which this court should remedy with a winding up order. 

14                                          That, so it seems to me, is not the situation with which Sterling Pharmaceuticals was concerned at all.  Rather, this is a case where the jurisdiction of this Court is directly engaged to cure the existence of proceedings in another court.  Leaving to one side questions of discretion, it seems to me that it would be quite inappropriate for this Court to stay proceedings whose very purpose was, in part, to remedy the existence of other proceedings.  For those reasons I do not think that Sterling Pharmaceuticals is pertinent.  It follows that I do not think that it is appropriate for these proceedings to be stayed. 

15                                          That conclusion is not one which is necessarily a desirable one for the parties.  If this winding up proceeding now goes forward and a liquidator is appointed, the cost of that liquidation will be very significant compared to what is at stake.  Indeed, the cost of these proceedings, taken together with the cost of the District Court proceedings, is already grossly disproportionate to what is at stake.  Be that as it may I do not see that that is, by itself, an independent ground for disentitling the plaintiffs from their day in court.  I note that Sidis DCJ, in the District Court, has ordered those proceedings off to mediation.  That is, with respect to her Honour, a most sensible course to take. 

16                                          In due course this morning I will fix a hearing date for the hearing of the just and equitable winding up, but I propose to do it in a way which will in no way interfere with that mediation.  Further, should it transpire as a result of that mediation that further time is needed to assist in that mediation then I will move these proceedings accordingly.  I do not, however, anticipate that those comments should result in any substantive delay in these proceeding. 

17                                          For those reasons I dismiss the defendant's notice of motion with costs.

Associate:

Dated:         17 November 2009