FEDERAL COURT OF AUSTRALIA

Bluebags Nominees Pty Ltd v Snowball [2012] FCA 1492

THE COURT ORDERS THAT:

Upon the Applicant and Terrace David Rowney:

(a)    giving the usual undertaking as to damages;

(b)    undertaking, until further order, to cause each of the first respondent, the second respondent and the third respondent to be paid by Label Plus (QLD) Pty Ltd, on the basis presently in force, their salary and superannuation entitlements as directors or employees of the applicant; and

(c)    undertaking, until further order, to preserve, and not to destroy or delete, any document or information owned or used by Label Plus (QLD) Pty Ltd in its business.

THE COURT ORDERS THAT UNTIL FURTHER ORDER:

1.    Subject to paragraph 2 of this Order, each of the first respondent and the second respondent, by themselves, their servants or agents or otherwise howsoever, be restrained, until the provision of written authority by Terrence David Rowney, from:

(a)    exercising, in connection with or in relation to the business or the affairs of the applicant, any power conferred upon them as a director of the fourth respondent by the Corporations Act 2001 (Cth), the Constitution of the applicant or otherwise;

(b)    attempting to exercise or purporting to exercise any such power as is referred to in sub paragraph (a);

(c)    exercising, in connection with or in relation to the business or the affairs of the applicant, any power held by them as an employee of the fourth respondent;

(d)    attempting to exercise or purporting to exercise any such power as it mentioned in sub-paragraph (c);

(e)    drawing or causing to be drawn or signing any cheque upon any account maintained by the fourth respondent at any bank or other financial institution;

(f)    paying or transferring, or causing to be paid or transferred, any monies in any account maintained by the fourth respondent at any bank or other financial institution; and

(g)    entering upon or remaining upon the fourth respondent’s property and premises at Nealdon Drive, Meadowbrook in the State of Queensland.

2.    Notwithstanding the provisions of paragraph 1 of this Order, the first respondent or the second respondent (as the case may be) must sign, and must promptly return to Terrence David Rowney, any cheque which is:

(a)    drawn upon an account maintained by the fourth respondent with any bank or other financial institution;

(b)    signed by Terrence David Rowney;

(c)    drawn in favour of a creditor of the fourth respondent; and

(d)    presented to the first and second respondent (as the case may be).

3.    The third respondent, by himself, his servants or agents or otherwise howsoever, be restrained, until the provision of written authority by Terrence David Rowney, from:

(a)    exercising, in connection with or in relation to the business or the affairs of the applicant, any power held by him as an employee of the fourth respondent;

(b)    attempting to exercise or purporting to exercise any such power as is mentioned in sub paragraph (c);

(c)    entering upon or remaining upon the fourth respondent’s property and premises at Nealdon Drive, Meadowbrook in the State of Queensland.

4.    Each of the first respondent, the second respondent and the third respondent must forthwith bring the fourth respondent’s premises at Nealdon Drive, Meadowbrook and deliver to Terrence David Rowney:

(a)    any computer or laptop computer or similar storage device used by them respectively in the course of or for the purposes of the fourth respondent’s business;

(b)    any mobile telephones used by them respectively in the course of or for the purposes of the fourth respondent’s business.

5.    The first respondent must forthwith:

(a)    take all steps necessary to open all operating systems, programmes and files which are present upon or accessible from the laptop computer of which he makes use in the course of or for the purposes of the fourth respondent’s business;

(b)    inform Terrence David Rowney in writing of all such steps as are required to be taken by the preceding paragraph, including any encrypted password necessary to be used to gain access to the said laptop computer.

6.    Each of the first respondent, the second respondent and the third respondent must forthwith inform Terrence David Rowney in writing of all passwords or access codes the use of which is necessary to enable:

(a)    access to be gained on the internet or by any other means to any account maintained by the fourth respondent with any bank or other financial institution;

(b)    financial transactions, including the transfer of money, to be carried out by or on behalf of the respondent;

(c)    access to be gained to any computer, computer program or computer database owned by the fourth respondent or used in the course of the fourth’s business (including the MYOB software so used);

(d)    transactions to be carried out by or on behalf of the fourth respondent with the use of or assistance of any such program or database;

(e)    data to be recorded in or retrieved from any such computer, computer program or computer database; and

(f)    the conduct otherwise of the fourth respondent’s business.

7.    Each of the first respondent, the second respondent and the third respondent, by themselves, their servants or agents or otherwise howsoever, be restrained from changing or causing to be changed or otherwise rendering ineffective or causing to be rendered ineffective any password or access code referred to in the preceding paragraph of this Order.

8.    Each of the first respondent, the second respondent and the third respondent, by themselves, their servants or agents or otherwise howsoever, be restrained from:

(a)    copying or causing to be copied;

(b)    destroying or causing to be destroyed;

(c)    deleting or causing to be deleted;

(d)    changing or causing to be changed;

(e)    removing or causing to be removed from the fourth respondent’s business premises,

any:

(i)    documents or copies of documents owned by the applicant or received or used in the course of the fourth respondent’s business, whether the same be a physical document or is stored or kept in an electronic or other intangible form; and

(ii)    information contained in or stored in any computer program or any computer database (or any copy of them) owned by the fourth respondent or used in the course of the fourth respondent’s business whether or not such program or database or copy thereof is stored upon or resides upon a device situated at the fourth respondent’s business premises.

9.    Each of the first respondent, the second respondent and the third respondent, by themselves, their servants or agents or otherwise howsoever, be restrained from obtaining access or attempting to obtain access or causing access to be obtained, by the use of a password or access code or any other means whatsoever:

(a)    to any account maintained by or on behalf of the fourth respondent at any bank or other financial institution;

(b)    to any computer program owned by the fourth respondent or used in the course of the fourth respondent’s business whether or not that program or any copy of it is stored or resides upon a device situated at the fourth respondent’s business premises or not; and

(c)    any database owned by the applicant or used in the course of the fourth respondent’s business, whether or not that database or any copy of it is stored upon or resides upon a device situated at the fourth respondent’s business premises.

10.    Each of the first respondent, the second respondent and the third respondent, by themselves, their servants or agents or otherwise howsoever, be restrained from contacting or communication with, or inviting any contact by/or communication from:

(a)    any person, body corporate or other entity for which the fourth respondent:

(i)    is currently carrying out any work;

(ii)    has agreed to carry out work in the future; or

(iii)    carried out work on or since 1 January 2012;

(b)    any person who is a director, manager, partner, owner (in whole or in part) or employee of an customer referred to in sub-paragraph (a) which is not a natural person:

about the pricing of or the performance of or the payment for work for any such customer of the type which the fourth respondent is capable of carrying out.

11.    Liberty to apply.

12.    Costs reserved.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

REASONS FOR JUDGMENT

1    Bluebags Nominees Pty Ltd is the majority shareholder (58% of the issued capital) of Label Plus (Qld) Pty Ltd (LPQ). Bluebags Nominees has by originating process made application under s 236 and s 237 of the Corporations Act 2001 (Cth) (Corporations Act) for leave to commence proceedings in the name of and on behalf of LPQ, the fourth respondent, against the first, second and third respondents. The first, second and third respondents are, respectively, as to the first and second respondents, directors of LPQ and as to their son, Mr Ronald Snowball Jnr, the third respondent, the General Manager of LPQ. The subject of the leave application is an application in respect of alleged past and ongoing breaches of duty to the company, LPQ involving the taking or diversion of some $660,000 of LPQ’s funds for their own benefit.

2    In aid of that application Bluebags Nominees seeks injunctive relief on an interim basis. The end to which that interim relief is directed might conveniently be summarised as the prevention of the exercise by the Snowballs of their powers as directors and managers of LPQ’s business. A granting of that interim relief would see the first, second and third respondents under an obligation to disclose passwords and related codes concerning LPQ’s bank account and other financial records and other corporate records held in electronic form to Mr Rowney who is the controller of Bluebags Nominees.

3    The shareholders in LPQ have executed, in 2001, a shareholders’ agreement the effect of which as to matters of corporate policy, is set out in clause 2.5 and require unanimous agreement (see, particularly, clause 2.5.3 of the shareholders agreement).

4    That agreement, at least as a matter of first impression, appears to be subsisting in its operation to the continuing parties to that agreement. Some of the original parties to the agreement have since ceased involvement with the company. Nonetheless, clause 7 of the shareholders agreement, in particular, subparagraph (c), seems to have the effect of continuing to bind the other shareholder parties. Those parties are, in effect, interests controlled by Mr Rowney and interests controlled or held by the Snowballs.

5    Regard to the material read today, which consists of affidavits of Mr Rowney, discloses, prima facie, a disparity between transactions as recorded in LPQ’s books of account and nominated payees on cheques drawn to the company’s bank account. It also discloses, prima facie, some rather unusual attrition in materials used in the conduct of the company’s business, which one might not, having regard to their usual life span, expect to have seen occurred.

6    All of this might, of course, be able to be the subject of ready explanation by one or other or each of the first, second and third respondents. It is enough for today’s purposes to indicate that I am well satisfied on the material read that there is a prima facie case. It is important to emphasise that, for a grant of leave, final conclusions on the merits are a matter for another day.

7    As to the question of the relief sought the applicant, Bluebags Nominees, does seem to me to be a “person interested” in terms of s 1324 of the Corporations Act. The approach to that section is to afford a wide interpretation to the notion of who constitutes a person whose interests are affected: see Allen v Atalay (1993) 12 ACLC 7 at 10.

8    To the extent, if any, to which s 1324 of the Corporations Act might not supply adequate power for the making of the orders sought that power would, in my opinion, be conferred by s 23 of the Federal Court of Australia Act 1976 (Cth) (Federal Court of Australia Act). That section is not, of course, a source of jurisdiction but a jurisdictional foundation here is found in s 236 and s 237 of the Corporations Act. Section 23 gives the Court power to make orders of such kinds, including interlocutory orders, and to issue or direct the issue of writs of such kinds as the Court thinks appropriate. Read together, s 1324 of the Corporations Act and s 23 of the Federal Court of Australia Act supply, in my opinion, power to make the orders that are sought and which I have described in general terms.

9    I note as to the seeking of those orders that, apart from Bluebags Nominees and Mr Rowney giving the usual undertaking as to damages they also undertake, until further order, to cause each of the first respondent, the second respondent and the third respondent to be paid by LPQ, on the basis presently in force, their salary and superannuation entitlements as directors and employees of LPQ and further undertake, until further order, to preserve and not to destroy or delete any document or information owned by the application or used by LPQ in its business.

10    The application is one which has today been heard on an ex parte basis. I am satisfied that it was an appropriate case to be so heard. I am also satisfied that Bluebags Nominees has observed, appropriately, an obligation of candour in relation to the nature of the relief sought, the material relied on and its strengths and weaknesses.

Associate:

Dated:    21 December 2012