FEDERAL COURT OF AUSTRALIA

Billy-Budd Investments Pty Limited v Positive Real Estate Partners Pty Limited; in the matter of Positive Real Estate Partners Pty Limited [2009] FCA 1591

INJUNCTION – multiple share transfers executed in favour of different transferees – whether interlocutory relief should be granted

Held:  interlocutory process dismissed

Corporations Act 2001 (Cth) ss 175, 236-7 and 1324  

Castlemaine Tooheys Limited v South Australia (1986) 161 CLR 148

Australian Broadcasting Corporation v Lenah Game Meats Pty Limited (2001) 208 CLR 199

Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57

Shercliff v Engadine Acceptance Corporation Pty Limited (1978) 1 NSWLR 729

Appleton Papers Inc v Tomasetti Paper Pty Ltd (1983) 3 NSWLR 208  

BILLY-BUDD INVESTMENTS PTY LIMITED A.C.N. 126 978 443 and JASON JOHN WHITTON v POSITIVE REAL ESTATE PARTNERS PTY LIMITED A.C.N. 103 496 957, RYAN SHIELS, HBA PARTNERS PTY LIMITED A.C.N. 111 486 812, ROBSAN INVESTMENT HOLDINGS PTY LIMITED A.C.N. 113 994 728, QUEENSLAND RESOURCE INVESTMENTS PTY LIMITED A.C.N. 116 937 538, LISANNE MARIE SANDERS, ADRIAN BRENNOCK and AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

NSD 1415 of 2009

GRAHAM J

16 DECEMBER 2009

SYDNEY

IN THE MATTER OF POSITIVE REAL ESTATE PARTNERS PTY LIMITED A.C.N. 103 496 957

THE COURT ORDERS THAT:

1.                  The Interlocutory Process filed 10 December 2009 be dismissed.

2.                  The plaintiffs pay the costs of the Interlocutory Process of the second, fourth, fifth, sixth and seventh defendants.

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.

IN THE MATTER OF POSITIVE REAL ESTATE PARTNERS PTY LIMITED A.C.N. 103 496 957

REASONS FOR JUDGMENT

1                     The first defendant, Positive Real Estate Partners Pty Limited, ACN 103 496 957, was registered on 24 January 2003.  It is common ground that prior to March 2009 the shareholders were Alhumbra Holdings Pty Limited, ACN 098 637 837, and Yohme Group Pty Limited, ACN 095 745 609.  Alhumbra Holdings Pty Limited would appear to be a company controlled by a Lyndal Wayman, and the Yohme Group Pty Limited would appear to be a company controlled by Shay Dana Whitton.

2                     As it transpires Mrs Wayman’s husband, Christopher Charles Wayman, was a director of the first defendant between 24 January 2003 and 31 March 2004, at least according to an Australian Securities & Investments Commission Historical Company Extract as at 9 December 2009.  Mr Wayman was also the secretary of the first defendant and apparently held that office from 24 January 2003 until 8 December 2009. 

3                     According to the same Australian Securities & Investments Commission Historical Company Extract for the first defendant, Mr Jason John Whitton, the husband of Shay Dana Whitton, was a director of the first defendant from 24 January 2003.  The same Extract suggests, although it is disputed, that Mr Whitton ceased to be a director of the first defendant on 8 December 2009.  The Historical Company Extract, as at 9 December 2009, shows the current members as being the fourth defendant, Robsan Investment Holdings Pty Limited, ACN 113 994 728 as the holder of one share and the fifth defendant, Queensland Resource Investments Pty Limited, ACN 116 937 538 as the holder of one share.  The Extract shows that there were two issued shares.  It also shows that the first plaintiff was a former member.

4                     The evidence presently before the Court is plainly the best that the parties were able to put on in the available time, since these proceedings were instituted by the filing of an Originating Process on 10 December 2009.

5                     It is clear from an affidavit of Mr Whitton, sworn 16 December 2009, that he had business dealings with the sixth defendant, Lisanne Marie Sanders, the seventh defendant, Adrian Brennock and the second defendant, Ryan Shiels.  In his affidavit Mr Whitton referred to an interconnection between the Yohme Group Pty Limited, which he described as ‘a company controlled by my wife’, and a company called Source Finance Pty Limited, now known as SGR Finance Pty Limited (‘Source Finance’).  He deposed to Ms Sanders having formerly been a director of Source Finance.  He referred to Mr Shiels as being presently the director and secretary of Source Finance.

6                     In paragraph 14 of his affidavit Mr Whitton deposed to the fact that, ‘With the onset of the global financial crisis, the business [which I understand to be a reference to the business of the first defendant], and various other business ventures in which I had an interest, suffered significant losses.’  He then said that the developments that occurred brought about a need for Ms Sanders and himself to ‘separate our financial interests.’  He deposed that:  ‘Accordingly, we engaged in communication with the objective of separating our respective financial interests.’

7                     The evidence presently before the Court includes an undated transfer of one share in the first defendant from Yohme Group Pty Limited to Robsan Investment Holdings Pty Limited, the fourth defendant.  The transfer on behalf of Yohme Group Pty Limited appears to be signed by Mrs Whitton as the sole director of Yohme Group Pty Limited.  The form of transfer appears to be signed by Ms Sanders as the sole director of Robsan Investment Holdings Pty Limited.  Whilst I have indicated that that transfer of shares was undated, in its terms it appears to have been prepared with a view to its execution on a day in March 2009.

8                     The evidence also includes another copy of what appears to be the very same transfer, but on this occasion the copy which is in evidence suggests that the date 30th was inserted into the form of transfer prior to the reference to ‘March 2009’.  The original of the transfer has not been made available to enable matters such as ink colours and so on to be carefully examined.

9                     The evidence also includes a form of transfer of one share in the first defendant from Alhumbra Holdings Pty Limited to Queensland Resource Investments Pty Limited, the fifth defendant.  That transfer appears to have been executed by Mrs Wayman as the sole director of Alhumbra Holdings Pty Limited and by the seventh defendant, Adrian Brennock, as the sole director of Queensland Resource Investments Pty Limited. 

10                  The evidence also includes another form of share transfer which bears the typed date 1 April 2009, under which Yohme Group Pty Limited purports to transfer one share in the first defendant to the first plaintiff Billy-Budd Investments Pty Limited, ATF the Billy-Budd Investments Trust.  That transfer appears to have been signed by Mrs Whitton on behalf of Yohme Group Pty Limited and by a Mr Sam Billy-Budd Saggers on behalf of Billy-Budd Investments Pty Limited.  As it transpires, the sole director and shareholder of Billy-Budd Investments Pty Limited is Mr Sam Billy-Budd Saggers. 

11                  The matter presently before the Court is an Interlocutory Process filed 10 December 2009 seeking inter alia the following relief:

‘3.        To the extent necessary, the Plaintiff be granted leave pursuant to section 236 of the Corporations Act 2001 to commence and maintain these proceedings on behalf of the First Defendant.

4.         An Order that the Second Defendant, the Fourth Defendant, the Fifth Defendant, the Sixth Defendant, and the Seventh Defendant each until further order, by themselves, their servants agents or employees be restrained from holding themselves out in any way as being a shareholder, director, officer or employee of the First Defendant or in any way being able to represent the or (sic) dealing with any of the property (as that word is defined in section 9 of the Corporations Act 2001) of the First Defendant.’

12                  At the time when the Interlocutory Process was filed the only plaintiff was Billy-Budd Investments Pty Limited.  Pursuant to an application made ore tenus on the afternoon of 16 December 2009 at about 4:35pm an order was made, at the request of the then plaintiff, that Jason John Whitton be added as a second plaintiff.  Such an order was made without any opposition from the second, fourth, fifth, sixth and seventh defendants. 

13                  No explanation as to how the execution of the inconsistent transfers of shares in the first defendant came about has been provided by Mrs Whitton or Mrs Wayman.  Mr Whitton has sworn as follows:

‘20.      Whilst in or around mid March 2009, my and Mr. Wayman’s respective wives, as controllers of our respective family trust companies, Yohme and Alhumbra Investments Pty Limited, executed a form of share transfer in favour of the Fourth Defendant and Fifth Defendant, with the intention that the asset would be removed and thereby preserved, the share transfers remained undated, with no ultimate agreement to effect registration.  No board meeting of [the first defendant] was ever held to give effect to any [such] transfer. …

…

22.       Over the following weeks, namely in the period between mid March 2009, and early April 2009, our negotiation over the separation of our financial interests continued, and resolution was reached whereby on the one hand the Sixth Defendant and the Seventh Defendant would assume exclusive control of Source Mortgage and Source Finance, and on the other hand, Mr. Saggers, and I would assume exclusive control over [the first defendant] and [a company called Positive Real Estate Pty Limited, (ACN 103 496 322)].’

14                  It is significant to note that the consideration shown in each of the inconsistent share transfers was one dollar per share. 

15                  The evidence for the plaintiffs includes a record of decision apparently signed by Mr Whitton, as a director of the first defendant, on 27 March 2009 at 1:00pm.  That resolution purported to approve the transfer of shares from Alhumbra Holdings Pty Limited and Yohme Group Pty Limited to Billy-Budd Investments Pty Limited.  It will be appreciated that the purported resolution of the sole director was purportedly given some five days before the transfers to which the resolution related were executed, if indeed they were executed on the date shown in the share transfers, namely, 1 April 2009. 

16                  On 7 April 2009 a ‘Change to company details’ document was lodged with the Australian Securities & Investments Commission in relation to the first defendant.  That document recorded that the plaintiff, Billy-Budd Investments Pty Limited had become the holder of two shares in the first defendant on 1 April 2009 and that Alhumbra Holdings Pty Limited and Yohme Group Pty Limited had ceased to hold their respective shares (one each) on the same date.  The Change to company details form was certified by Mr Whitton. 

17                  As it transpires, a document No. 7E2592555 was lodged with the Australian Securities & Investments Commission by electronic lodgement at about 5:35pm on 8 December 2009.  That document was said to have been certified by Mr Shiels on 8 December 2009.  It recorded that the members of the first defendant had become Robsan Investment Holdings Pty Limited and Queensland Resource Investments Pty Limited, with the effective date in each case of 8 December 2009.

18                  The evidence presently before the Court also includes a minute of a purported ‘Circulating Resolution’ of the members of the first defendant dated 7 December 2009.  The resolution was signed by Mr Brennock as the sole director of Queensland Resource Investment Pty Limited and Ms Sanders, as the sole director of Robsan Investment Holdings Pty Limited.  By the circulating resolution the claimed shareholders of the first defendant purported to remove Mr Whitton as a director and Mr Wayman as the secretary.  The resolution also purported to appoint Mr Ryan Sheils (sic) as Director and Secretary of the first defendant.  A further minute of a meeting of members of the first defendant, said to have taken place on 7 December 2009, purported to note the passage of the Circulating Resolution dated 7 December 2009, which had been apparently circulated, signed and was attached.

19                  A further document, No. 025135351, would appear to have been lodged with the Australian Securities & Investments Commission on 8 December 2009.  That document was apparently signed by Mr Shiels.  By it, he purported to inform the Australian Securities & Investments Commission that Mr Wayman had been removed as secretary of the first defendant on 8 December 2009, that Mr Whitton had been removed as a director on 8 December 2009 and that he had been appointed as a director on a date which appears to be 6 December 2009, but may be 8 December 2009.

20                  It will be obvious that this document does not sit comfortably with the circulating resolution said to have been signed by people entitled to sign it on behalf of the corporate shareholders on 7 December 2009.  The document lodged with the Australian Securities & Investments Commission on 8 December 2009 also purported to record the changes in the membership of the first defendant, which were said to have occurred on 30 March 2009, whereby Yohme Group Pty Limited and Alhumbra Holdings Pty Limited ceased to be shareholders and Robsan Investment Holdings Pty Limited and Queensland Resource Investments Pty Limited were said to become shareholders.

21                  No evidence has been placed before the Court as to whether or not the first defendant has a constitution.  No subpoenas have been issued or notices to produce served calling for the production of the first defendant’s statutory records, which were held by Hall Chadwick, Chartered Accountants, and apparently handed over to a representative of Robsan Investment Holdings Pty Limited and Queensland Resource Investments Pty Limited on 9 April 2009.  Ms Sanders swore to the fact that the corporate documents were so handed over to the representative, Kym Corfield, with the consent of Mr Whitton.  There is no evidence which conflicts with that evidence. 

22                  In the Originating Process the first prayer for relief that was sought was a declaration that Mr Whitton is and has at all times remained the sole director of the first defendant after 1 April 2009.  The second prayer for relief was that the first plaintiff is the sole member of all of the issued share capital of the first [defendant].

23                  One infers that orders will be sought for the rectification of the share register in the event that, upon its production, it reveals that the shareholders in the first defendant are the fourth and fifth defendants rather than the first plaintiff (see s 175 of the Corporations Act 2001 (Cth) (‘the Corporations Act’)).  It does not seem to me appropriate, in the circumstances of this case, as recounted above, that an order be made pursuant to ss 236-7 of the Corporations Act granting leave to the first plaintiff to bring proceedings on behalf of the first defendant as sought in paragraph 3 of the Interlocutory Process.

24                  It would appear that the first plaintiff would answer the description of being a ‘person aggrieved’ within the meaning of s 175(1) of the Corporations Act in respect of the removal of its name from the register of members.  As indicated above, the Australian Securities & Investments Commission Historical Company Extract of 9 December 2009 revealed that the first plaintiff was a ‘former member’ of the first defendant, although it does not appear to have been a party to any transfer of shares to the persons now said to be members of the first defendant.

25                  It would also seem to me open to Mr Whitton, who has been added as a plaintiff, to seek relief in respect of his purported removal from office as a director of the first defendant by the purported circulating resolution of 7 December 2009 of Queensland Resource Investments Pty Limited and Robsan Investment Holdings Pty Limited. 

26                  In the circumstances I decline to make any order as sought in paragraph 3 of the Interlocutory Process.

27                  In relation to the prayer seeking interlocutory injunctive relief against the second, fourth, fifth, sixth and seventh defendants, it is apparent that when the matter was previously before the Court, a suggestion was advanced to the effect that a substantial amount of money standing to the credit of a bank account in the name of the first defendant had been removed from that account.  That suggestion is no longer pressed by the plaintiffs.

28                  The evidence filed on behalf of the defendants mentioned includes a copy of a bank statement showing that as at 10 December 2009 there was $91,952.45 standing to the credit of an account in the name of the first defendant with Westpac Banking Corporation.  On the face of the bank statement covering the period 30 November to 10 December 2009, there would not appear to have been any irregular transactions.

29                  Whilst the question of injunctive relief is dealt with in s 1324 of the Corporations Act it seems to me that equitable principles continue to have application.  In order to secure an interlocutory injunction a plaintiff must show, firstly, that there is a serious question to be tried, or that the plaintiff has made out a prima facie case in the sense that if the evidence remains as it is, there is a probability that at the trial of the action the plaintiff will be held entitled to relief;  secondly, that he or she will suffer irreparable injury for which damages will not be an adequate compensation unless an injunction is granted; and, thirdly, that the balance of convenience favours the grant of an injunction (per Mason ACJ in Castlemaine Tooheys Limited v South Australia (1986) 161 CLR 148 at 153, cited with approval by Gleeson CJ in Australian Broadcasting Corporation v Lenah Game Meats Pty Limited (2001) 208 CLR 199 (‘Lenah Game Meats’)).  In his helpful outline of submissions, counsel for the second, fourth, fifth, sixth and seventh defendants has directed attention to Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 as well, where, at [65] the High Court said that there was a need for two inquiries:

‘The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief … The second inquiry is … whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant could suffer if an injunction were granted.’

This authority seems to me to do nothing more than to repeat the law as stated by Mason ACJ, as his Honour then was, and confirmed by Gleeson CJ in Lenah Game Meats.

30                  A plaintiff seeking an interlocutory injunction must be able to show sufficient colour of right to the final relief , in aid of which interlocutory relief is sought (per Gleeson CJ in Lenah Game Meats at [11]) 

31                  The word ‘probability’ does not lead necessarily to the conclusion that, for an interlocutory injunction, the plaintiff must show a better than even chance of success (per Mahoney JA, with whose reasons for judgment Glass and Samuels JJA agreed, in Shercliff v Engadine Acceptance Corporation Pty Limited (1978) 1 NSWLR 729 at 736).

32                  The degree of likelihood of success to be demonstrated is that which the Court thinks sufficient, in the particular case, to warrant consideration of where the balance of convenience lies (per McLelland J as his Honour then was, in Appleton Papers Inc v Tomasetti Paper Pty Ltd (1983) 3 NSWLR 208 (‘Appleton Papers’) at 214). 

33                  In considering the question of ‘balance of convenience’ the relative apparent strength of each party’s case may be a relevant matter (per McLelland J in Appleton Papers at 215). 

34                  In my opinion the plaintiffs have not made out a prima facie case in the sense that if the evidence remains as it is, there is a probability that at the trial of the action the plaintiffs would be entitled to relief.

35                  Whilst there are undoubtedly questions to be tried, I am not satisfied that, on the evidence presently before the Court, there is a serious question to be tried. 

36                  Plainly, those purporting to serve the first defendant as officers prior to the final resolution of these proceedings, will proceed with great caution lest they be held to account for action purportedly taken within authority, which may later prove to be completely unauthorised.  That said, and given that the value of the shares, whether transferred to the plaintiff or to the other interests, namely Robsan Investment Holdings Pty Limited and Queensland Resource Investments Pty Limited was only one dollar per share, I do not consider that irreparable injury would be done, for which damages would not be an adequate compensation unless an injunction was granted.

37                  In my opinion, the balance of convenience does not favour the granting of any injunctive relief at this stage. 

38                  It should not be presumed that this decision, on the evidence which the plaintiffs have been able to marshal at this stage, will bring finality to the situation between now and the date when the Court is able to deliver judgment on a final hearing of the matter.

39                  It may be that further inquiry will reveal facts and matters which would tip the balance in the plaintiffs’ favour so far as the prayers for interlocutory relief are concerned.  However, on the evidence presently before the Court it would, in my opinion, be inappropriate to grant interlocutory relief.

Associate:

Dated:         23 December 2009

The third defendant filed a submitting appearance.