Federal Court of Australia
Hema Maps Pty Ltd v HemaX Digital Pty Ltd, in the matter of HemaX Digital Pty Ltd [2024] FCA 1127
ORDERS
DATE OF ORDER: |
THE COURT ORDERS THAT:
1. Until further order, pursuant to s 472(2) of the Corporations Act 2001 (Cth) (Act), Neil McLean and Brodie Hilet of Rodgers Reidy, Level 11, 385 Bourke Street, Melbourne, be appointed jointly and severally as the provisional liquidators of the defendant.
2. The provisional liquidators shall have the functions and powers conferred by the Act other than the functions and powers referred to in paragraphs 477(2)(c), (g) and (m) of the Act.
3. The plaintiff’s originating application dated 13 August 2024 seeking an order that the defendant be wound up on just and equitable grounds (Winding Up Application) be listed for hearing on a date to be fixed.
4. By 8 November 2024, the interested party file and serve any additional affidavits to be relied on in respect of the Winding Up Application.
5. By 22 November 2024, the plaintiff file and serve any affidavits in reply in respect of the Winding Up Application.
6. By 29 November 2024, the plaintiff file and serve an outline submission limited to 20 pages in respect of the Winding Up Application.
7. By 6 December 2024, the interested party file and serve an outline submission limited to 20 pages in respect of the Winding Up Application.
8. The plaintiff’s costs of its Interlocutory Process dated 16 September 2024 for the appointment of provisional liquidators be reserved.
9. Until 1 November 2024, and pending an application for non-publication or suppression orders under Pt VAA of the Federal Court of Australia Act 1976 (Cth), the confidential annexures to the affidavit of Sam Hayward sworn on 13 August 2024 (being confidential annexures SHH-6, SHH-12, SHH-13, SHH-14, SHH-15, SHH-19, SHH-49, SHH-51, SHH-52 and SHH-53) shall be kept confidential on the Court file.
10. There be liberty to apply.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
O’BRYAN J:
Introduction
1 This proceeding concerns HemaX Digital Pty Ltd (HXD), which is the defendant to the proceeding. HXD is, in effect, a joint venture company the shares in which are held equally by two shareholders being:
(a) the plaintiff, Hema Maps Pty Ltd trading as Emprise Group Holdings (Hema Maps); and
(b) the interested party, Cindy Gail Derry as trustee for the Derry Family Trust (the Derry Trust).
2 On 13 August 2024, Hema Maps filed an originating process seeking orders that:
(a) under s 461(1)(k) of the Corporations Act 2001 (Cth) (Act), HXD be wound up on just and equitable grounds on the basis that there is a deadlock between its directors and an irretrievable breakdown in the relationship between its members; and
(b) Neil McLean and Brodie Hilet of Rodgers Reidy be appointed liquidators of HXD.
3 The application was accompanied by a consent signed by Messrs McLean and Hilet to their appointment as liquidators. The application was also supported by an affidavit of Sam Hoskins Hayward sworn 13 August 2024. Mr Hayward is a director of Hema Maps and is also one of two directors of HXD appointed to represent Hema Maps’ shareholding interest in HXD.
4 On 12 September 2024, the Derry Trust filed a notice of appearance. The notice stated lengthy grounds of opposition to the winding up application filed by Hema Maps. The notice was supported by an affidavit of Adam Nathaniel Brown sworn 12 September 2024. Mr Brown is the solicitor acting for the Derry Trust (and for Cindy Derry and Justin Derry, both of whom are directors of HXD appointed to represent the Derry Trust’s shareholding interest in HXD).
5 On 16 September 2024, Hema Maps filed an interlocutory process seeking an order under section 472(2) of the Act for the appointment of Messrs McLean and Hilet as provisional liquidators of HXD. The application was accompanied by a consent signed by Messrs McLean and Hilet to their appointment as provisional liquidators. The application was also supported by a second affidavit of Mr Hayward sworn 16 September 2024.
6 On 17 September 2024, the Derry Trust filed a second affidavit of Mr Brown, sworn that day, in response to the application for the appointment of provisional liquidators to HXD.
7 The matter was initially listed in the Corporations List before Stone JR. However, given the scope of the dispute between the parties, on 18 September 2024 Stone JR made orders referring the matter to the Commercial and Corporations Duty Judge for listing on 20 September 2024.
8 In advance of that listing, Hema Maps filed an affidavit of Sean Anthony Williams sworn 19 September 2024. Mr Williams is the Chief Operating Officer of Hema Maps, and the second director of HXD appointed to represent Hema Maps’ shareholding interest in HXD. The Derry Trust also filed a third affidavit of Mr Brown sworn on 19 September 2024.
9 On 20 September 2024, as Commercial and Corporations Duty Judge, I conducted a case management hearing. At that hearing, Hema Maps pressed for the urgent hearing of its application for the appointment of provisional liquidators on the basis that the disputes between the members of the company and the deadlock between the directors was causing irremediable damage to the business of HXD, and to Hema Maps as a customer of HXD. The Derry Trust submitted that time should be allowed for the parties to participate in mediation and explore other dispute resolution procedures before the application for the appointment of provisional liquidators is heard. At the case management hearing, I made orders:
(a) granting leave to Cindy Derry (as trustee of the Derry Family Trust) pursuant to r 9.12 of the Federal Court Rules 2011 (Cth) to intervene in the proceeding as an interested party and to file evidence and make submissions in relation to Hema Maps’ applications for interim and final relief;
(b) adjourning the hearing of the application for the appointment of provisional liquidators to 25 September 2024 to allow the Derry Trust further time to file and serve any further evidence in opposition; and
(c) setting a timetable for the filing of any further evidence and submissions.
10 On 23 September 2024, Hema Maps filed a second affidavit of Mr Williams sworn that day. On 24 September 2024, the Derry Trust filed an affidavit of Cindy Derry affirmed that day and an affidavit of Justin Derry affirmed that day.
11 At the hearing on 25 September 2024, the Derry Trust informed the Court that it no longer opposed the appointment of provisional liquidators to HXD. Hema Maps formally read the affidavits that had been filed on its behalf, as referred to above. On the basis of those affidavits, and the withdrawal of opposition by the Derry Trust, I made orders pursuant to s 472(2) of the Act appointing Messrs McLean and Hilet jointly and severally as the provisional liquidators of HXD, along with other related orders.
12 These are my reasons for making those orders.
Relevant legal principles
13 Section 461(1)(k) of the Act provides that the Court may order the winding up of a company if the Court is of the opinion that it is just and equitable to do so. Under s 462(2)(c), a winding up order can be sought by a contributory of the company (which includes a shareholder).
14 Under s 472(2), the Court can appoint a liquidator to a company provisionally any time after the filing of the winding up application and before the making of the winding up order.
15 The role of a provisional liquidator is traditionally to preserve the status quo until the determination of a winding up application: Re Brylyn No 2 Pty Ltd (1987) 12 ACLR 697 (Re Brylyn) at 707; Constantinidis v JGL Trading Pty Ltd (1995) 17 ACSR 625 (Constantinidis) at 637 per Kirby P (with whom Meagher JA agreed) and at 674 per Powell JA. The function is analogous to that of a court-appointed receiver. A provisional liquidator’s appointment can be terminated by an order of the court.
16 As observed by Austin J in Lubavitch Mazal Pty Ltd v Yeshiva Properties No 1 Pty Ltd [2003] NSWSC 535; 47 ACSR 197 at [106], the principles governing the appointment of a provisional liquidator are broadly analogous to the considerations relevant to the grant of other interlocutory relief to protect assets. In Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57, the High Court reiterated the organising principles for the grant of interlocutory relief which take account of the strength of the applicant’s case and the practical consequences likely to flow from the specific relief sought: see at [19] per Gleeson CJ and Crennan J and at [65]-[72] per Gummow and Hayne JJ.
17 Stated in broad terms, before appointing a provisional liquidator pursuant to s 472(2), the Court will need to be satisfied of two matters.
18 The first is that a winding up application has been filed and there is a reasonable or sufficient prospect that a winding up order will be made on the application: Zempilas v J N Taylor Holdings Limited (No 2) (1990) 55 SASR 103 (Zempilas) at 104 per King CJ (with whom Cox and Olsson JJ agreed); Constantinidis at 635-636 per Kirby P (with whom Meagher JA agreed); Australian Securities and Investments Commission v ActiveSuper Pty Ltd (No 2) [2013] FCA 234; 93 ACSR 189 at [15].
19 The second factor is whether there is urgency and sufficient reason for intervention prior to the final hearing including whether the appointment is needed in the public interest, or to protect the company’s assets or to preserve the status quo in relation to the affairs of the company: Constantinidis at 635-636 per Kirby P (with whom Meagher JA agreed); Allstate Exploration NL v Batepro Australia Pty Ltd [2004] NSWSC 261 at [30]. There must be “some good reason” for the appointment, for example “urgency, or unusual circumstances such as danger to assets, lack of control, deadlock, or some public interest element for his appointment”: Re Brylyn at 707. A provisional liquidator can be appointed if the company’s assets are at risk or because of disputes between shareholders or directors: Re Club Mediterranean Pty Ltd (1975) 11 SASR 481 at 484; Re McLennan Holdings Pty Ltd (1983) 7 ACLR 732 at 736; Zempilas at 104; Nikolaidis v Camden Retail Pty Ltd [2010] NSWSC 977 at [32].
20 The appointment of a provisional liquidator pending the determination of an application for winding up has been described as a “drastic intrusion into the affairs of the company and is not to be contemplated if other measures would be adequate to preserve the status quo”: Zempilas at 106. That statement has been referred to with approval on many occasions: see for example Constantinidis at 635 per Kirby P and at 647 per Powell JA. The cautionary statement directs attention to the consequences of the appointment of a provisional liquidator. The appointment constitutes a significant intrusion into the affairs of the company because it has the effect of displacing the directors and the provisional liquidator assumes control of the company.
21 As noted, a provisional liquidator will not usually be appointed unless there is a reasonable prospect that a winding up order will be made. It is therefore relevant to consider the principles governing an application to wind up a company on the just and equitable ground under s 461(1)(k) of the Act. A deadlock or disagreement in the management of the company’s affairs is a common case for a winding up order under s 461(1)(k), including where the company was formed on the basis of a personal relationship involving mutual trust and confidence and that confidence has broken down so that continuation of the association would be futile: In the matter of Crow Inn Pty Limited [2020] NSWSC 601 (Crow Inn), at [53] (citing In the matter of Catombal Investments Pty Ltd [2012] NSWSC 775 at [19]-[20]; Boyd v Feeney [2017] NSWSC 1595 at [50]; Accurate Financial Consultants Pty Ltd v Koko Black Pty Ltd [2008] VSCA 86; 66 ACSR 325 at [119] (per Dodds-Streeton JA, with whom Ashley JA and Forrest AJA agreed); Nassar v Innovative Precasters Group Pty Ltd [2009] NSWSC 342; 71 ACSR 343 (Nassar) at [90], [96] and [117] and In the matter of Amazon Pest Control Pty Limited [2012] NSWSC 1568 (Amazon Pest Control) at [17]). This is particularly the case with a ‘quasi – partnership’ where there has been a loss of trust and confidence which justifiably frustrates the commercially sensible operations of the company in accordance with the incorporators’ expectations: Crow Inn at [53] (citing Nassar at [77]-[79]; Amazon Pest Control at [18]-[19]; Tomanovic v Argyle HQ Pty Ltd [2010] NSWSC 152 at [49]-[51]).
22 In Davis-Jacenko v Roxy’s Bootcamp Pty Limited [2024] NSWSC 702, McGrath J made an order appointing a provisional liquidator in circumstances of a deadlock or irreparable breakdown in the relationship between the relevant protagonists. Factors relevant to the exercise of the discretion in that case (informing a view that first, it was highly likely an order would be made to wind up the company on just and equitable grounds and, second, that there was a justifiable lack of confidence in the conduct of the company’s management and affairs) included, amongst others (at [18]):
(a) the company being in the nature of a quasi-partnership dependent on both parties fulfilling their respective obligations;
(b) an irretrievable breakdown in the relationship between the protagonists;
(c) various, unsuccessful, attempts between the parties to bring the relationship to a consensual end;
(d) the inability of decisions to be made otherwise than unanimously – which was highly unlikely;
(e) the failure by one protagonist to provide services central to the company’s business;
(f) allegations of misconduct and mismanagement; and
(g) significant doubts as to the insolvency of the company.
Relevant facts
23 The facts stated below are based on the affidavits read by Hema Maps at the interlocutory hearing for the appointment of provisional liquidators. As noted above, the application was not opposed by the Derry Trust and the Derry Trust did not seek to cross-examine the deponents of the affidavits nor read its responsive evidence. The reason for referring to the facts stated below is merely to explain the basis for the Court’s order appointing provisional liquidators. For the avoidance of doubt, at the final hearing of the winding up application, the Derry Trust will be entitled to cross-examine the deponents of the affidavits read by Hema Maps at the interlocutory hearing and to adduce evidence in opposition to the winding up application.
Hema Maps
24 Hema Maps was incorporated in 1985. Its current directors are Robert Gallagher, Henry Boegheim and Sam Hayward. Sean Williams is the Chief Operating Officer.
25 The business of Hema Maps is to produce a range of maps, atlases, guides, navigation applications and Global Positioning System (i.e. GPS) devices with coverage in Australia and overseas. Hema Maps has a particular focus on "off-road touring" and has a reputation for being a proficient cartographer in the four-wheel drive and outdoor adventure industries.
CJ Global Tech Pty Ltd
26 CJ Global Tech Pty Ltd (CJGT) was incorporated on 7 January 2019. Its directors are Cindy and Justin Derry. Its shares are held jointly by Cindy and Justin Derry.
27 CJGT is a company which specialises in creating technology for niche market industries, including tourism. Mr Hayward deposed that CJGT has provided hosting and technological services to Hema Maps for a number of years.
Negotiations leading to the incorporation of HXD
28 In or around September 2018, Mr Gallagher commenced discussions on behalf of Hema Maps with CJGT and Appsecure Pty Ltd (Appsecure) (a company related to CJGT and which was deregistered on 30 September 2021). The discussions concerned Hema Maps, CJGT and Appsecure working together to create a market leading technology within the regional tourism road tripping/camping information space.
29 On 1 November 2018, Hema Maps (and Adventures Group Holdings Pty Ltd, a company related to Hema Maps), CJGT and Appsecure entered into a Service Agreement for the development and commercialisation of software solutions capable of hosting Hema Maps’ digital mapping content (Service Agreement). The Service Agreement contemplated each of CJGT and Hema Maps contributing intellectual property owned by them to the development of a digital platform to be operated under the HemaX brand. Mr Hayward referred to this as the “HemaX Project”.
30 By about October 2021, the first product developed under the Service Agreement, which was called “HX-2”, was ready to be released to market on a commercial basis. The release of HX-2 prompted the incorporation of HXD to facilitate the commercial release of HX-2 (and future solutions) to market.
HXD
31 HXD was incorporated on 17 November 2021. Its issued share capital comprises 20 ordinary shares which are held equally by Hema Maps and Cindy Derry (as trustee for the Derry Family Trust). Its current directors are Mr Hayward and Mr Williams appointed by Hema Maps and Cindy and Justin Derry appointed by the Derry Trust.
32 Hema Maps and HXD executed a Deed of Intellectual Property Assignment whereby Hema Maps transferred its intellectual property in relation to the HemaX Project to HXD in exchange for a 50% shareholding in HXD (being 10 shares). The Deed is not dated, but Mr Hayward deposed that it was signed in December 2021.
33 CJGT and HXD also executed a Deed of Intellectual Property Assignment whereby CJGT transferred its intellectual property in relation to the HemaX Project to HXD in exchange for a 50% shareholding in HXD (being 10 shares). Again, that Deed is not dated, but Mr Hayward deposed that it was signed in December 2021.
34 Mr Hayward further deposed that, to ensure that there was an equitable contribution by the shareholders of HXD, Hema Maps agreed to pay an initial amount of $250,000 and an additional amount of $360,000, in monthly instalments, to CJGT.
35 On about 8 December 2021, Hema Maps and the Derry Trust executed a Shareholders Deed in respect of HXD (Shareholders Deed). Clause 3.1 stipulates that each shareholder must exercise its rights as a holder of shares to ensure that the composition of the board of directors and the procedure for meetings of the board is as set out in schedule 2. Schedule 2 stipulates, among other things, that:
(a) each of Hema Maps and the Derry Trust may appoint two directors;
(b) to the extent permitted by the Constitution of the company, the Shareholders Deed and the Act, in exercising his or her powers and duties as a director, each director is entitled to pay regard to the interests of his or her appointing shareholder;
(c) at board meetings, each director has one vote or, if a poll is demanded, each director has one vote for each share held by his or her appointor (and where the appointor has appointed more than one director, those shares equally divided between those directors);
(d) a director nominated by a shareholder may represent the interests of that shareholder and will not, by doing so, in and of itself, be in breach of their duties as a director; and
(e) if a deadlock occurs, any director may give a notice to the other directors indicating the nature of the deadlock and requesting the matter be reconsidered at a meeting of shareholders or referred to mediation.
36 HXD’s business model is the development and operation of an interactive navigation and online travel planning tool, powered by the HemaX online cloud, that facilitates access to Hema Maps content. The tool is used by customers looking to travel into regional and or remote parts of Australia supported by rich point of interest information and Hema Maps content.
37 Since its incorporation, HXD has engaged CJGT to develop, operate and deliver its navigation and planning tools. There is no written agreement between HXD and CJGT. However, since shortly after its incorporation, HXD has paid CJGT fees of approximately $65,000 per month and an annual upfront hosting fee of approximately $90,000 per annum in respect of services provided by CJGT to HXD.
38 HXD and Hema Maps are parties to a Digital Platform License Agreement (License Agreement) dated 11 July 2022. Under that agreement, Hema Maps pays HXD a monthly minimum license fee of $40,000 “to sell Hema Maps Platform products within the Hema Maps branded channels to retailers, wholesalers and end users". HXD’s primary source of income is the license fees paid by Hema Maps under the License Agreement.
39 HXD and Hema Maps are also parties to a number of commercial agreements with third party clients including Alpine Electronics of Australia Pty Ltd and Directed Electronics Pty Ltd (Directed), among others, from which HXD derives revenue.
Disputes and current deadlock
40 Mr Hayward deposed that, over the first half of 2024, there has been a total breakdown in the relationship between the shareholders and their appointed directors such that the board of HXD is deadlocked. The breakdown in the relationship commenced in around January 2024, when Cindy and Justin Derry began to allege that the Hema Maps directors were in a position of conflict between the interests of Hema Maps and those of HXD. The allegations largely relate to:
(a) alleged breaches by Hema Maps of the License Agreement;
(b) the entry by HXD into a license agreement with Hema Maps and Directed on or about 20 June 2023 (Directed License Agreement); and
(c) the entry by Hema Maps into an intellectual property agreement with Directed on or about 20 June 2023 and a Sales & Distribution Agreement on or about 20 June 2023.
41 The allegations are denied by Hema Maps.
42 The disputes about those matters have not been resolved and, indeed, have escalated.
43 The dispute between the parties with respect to the Directed License Agreement is affecting HXD’s commercial relationship with Directed. Under the Directed License Agreement, Directed was granted a license to "sell HXD Navi compatible with their head units through direct integration or via a portable solution". HXD Navi is software developed by HXD, for a particular navigation hardware device, which allows the end user to access the mapping content of Hema Maps. The Hema Maps appointed directors are in dispute with the Derry Trust appointed directors with respect to the terms of the Directed Licence Agreement and whether amounts are currently owing under that agreement. A circumstance has been reached in which the Derry Trust appointed directors are purporting to act on behalf of HXD in pursuing payments from Directed which the Hema Maps appointed directors believe are not due and owing.
44 HXD is now many months behind on the delivery of software releases to its customers, including Directed and Alpine.
45 The dispute with respect to the License Agreement has broadened. Under that agreement, Hema Maps has an option to acquire the source code of the Hema Maps Platform from HXD. On 9 August 2024, Hema Maps exercised the option but claims that HXD has failed to respond to the option notice. Hema Maps has issued a notice of default to HXD.
46 In an attempt to resolve the disputes, Hema Maps attempted to negotiate a buy-out of the Derry Trust’s shares in HXD. A price was agreed, but the Derry Trust pulled out of the negotiations.
47 Mr Hayward deposed that the directors of HXD have attempted to hold board meetings to resolve the various issues, but the directors have been unable to make any decision on substantive issues.
48 On 3 September 2024, CJGT gave notice of termination of the technology and app development services that it supplied to HXD, with effect from 6 September 2024. The evidence indicates that the termination of those services has had a severe impact on HXD and Hema Maps’ services to customers. Mr Hayward deposed that the Hema Maps customer service team has received a significant number of customer queries since CJGT ceased providing services to HXD, specifically complaining about being unable to activate their products, having difficulty registering and accessing their accounts via the cloud and receiving software updates which rendered their HemaX product unusable.
49 Justin and Cindy Derry have denied that the applications are not functioning and that the ceasing of services by CJGT is the cause of the problem.
50 The evidence indicates that, by reason of the foregoing disputes and their impact on HXD’s customers and business, HXD is unlikely to remain solvent.
Appointment of provisional liquidators and other orders
51 As noted above, at the interlocutory hearing on 25 September 2024, the Derry Trust informed the Court that it no longer opposed the appointment of provisional liquidators to HXD. It is clear that this is an appropriate case for such an appointment. HXD is essentially caught in the middle of two feuding shareholders, each of which has (either directly or through a related entity) a day-to-day commercial relationship with HXD and on which HXD relies:
(a) Hema Maps licenses the Hema Maps Platform from HXD pursuant to the License Agreement and under which Hema Maps pays a license fee to HXD of $40,000 per month; and
(b) CJGT (a related entity of the Derry Trust) provided technology and app development services to HXD in relation to the Hema Maps Platform.
52 There has been a total breakdown of the relationship between Hema Maps and Cindy and Justin Derry, and the board of HXD is deadlocked and cannot make decisions. There appears to be no goodwill or trust between the protagonists. CJGT has ceased providing services critical to HXD’s business and its ability to provide services to third parties (including Hema Maps and Directed). The harm that is being caused to HXD’s business is now threatening its solvency.
53 The balance of convenience weighs heavily in favour of the appointment of provisional liquidators to HXD. The appointment is an interim step and can be terminated by the Court at any time. It does not prevent either party from pursuing other claims and remedies for perceived wrongs. Nor does it prevent the parties from attending mediation and seeking to resolve the dispute commercially.
54 The purpose of the appointment is to preserve the status quo until the determination of a winding up application. The functions and powers of the provisional liquidators are conferred by ss 472(3) and (4) of the Act, which incorporate the powers in s 477(2) (except for para (m)). In the current proceeding, I also think it appropriate to limit the powers of the provisional liquidators by excluding the powers in the following paragraphs of s 477(2):
(a) the power to sell or otherwise dispose of all or any part of the property of the company (para (c)); and
(b) the power to obtain credit, whether on the security of the property of the company or otherwise (para (g)).
55 An application can be made to the Court if the provisional liquidators consider that it is in the best interests of HXD to exercise those powers in a particular way.
56 It is also appropriate to make timetabling orders for the final hearing of Hema Maps’ application to wind up HXD. The Derry Trust sought a period of 5 to 6 weeks to prepare evidence in response to the application. It is desirable that the application be heard in this calendar year. I have therefore made timetabling orders with the objective of the application being heard in December 2024.
Costs
57 Hema Maps sought an order that its costs of the interlocutory application be paid by the Derry Trust. It argued that the Derry Trust had been on notice of all relevant events and that this was a clear case for the appointment of provisional liquidators. Further, the most proximate cause of the application was the decision by CJGT, a company associated with the Derry Trust, to terminate the provision of services to HXD.
58 The Derry Trust submitted that the appropriate order is for Hema Maps’ costs of the interlocutory application to be taxed and reimbursed in accordance with s 466(2) of the Act. The Derry Trust submitted that, until very recently, it did not consider that the shareholders and directors of HXD had reached a position of deadlock. However, recent conduct by Hema Maps had persuaded the Derry Trust that a position of deadlock has been reached. It was for that reason that the Derry Trust withdrew its opposition to the appointment of provisional liquidators.
59 In my view, it would not be just to require the Derry Trust to pay Hema Maps’ costs of the interlocutory application at this stage of the proceeding. There has been no substantive adjudication of the underlying merits of the winding up application. Whilst the Derry Trust initially opposed the appointment of provisional liquidators at the hearing on 20 September 2024, the hearing was listed on an urgent basis only a few days after Hema Maps had filed the application. The Derry Trust was not in a position to contest the application at that hearing, and timetabling orders were made for the further hearing on 25 September 2024. At the commencement of the further hearing, the Derry Trust informed the Court that it no longer opposed the application.
60 My present view is that this is an appropriate occasion for the Court to order that Hema Maps’ costs of the interlocutory application be taxed and reimbursed in accordance with s 466(2) of the Act. The application has been brought to preserve the status quo and to protect the property of HXD which is of benefit to both shareholders. However, on the application of Hema Maps, I was persuaded to make an order that Hema Maps’ costs be reserved. That will enable the question of costs of the entire proceeding to be considered at the time that the winding up application is determined, and in light of all circumstances that have brought about this proceeding.
Confidentiality orders
61 Hema Maps also sought an order that the annexures to the affidavit of Mr Hayward dated 13 August 2024 that are marked confidential (being confidential annexures SHH-6, SHH-12, SHH-13, SHH-14, SHH-15, SHH-19, SHH-49, SHH-51, SHH-52 and SHH-53) be “kept confidential on the Court file in a manner that maintains that confidentiality”.
62 The documents in those annexures comprise commercial agreements, emails and board minutes. Mr Hayward deposed that the documents contained confidential information, but did not depose that the entirety of each document was confidential.
63 Section 17 of the Federal Court of Australia Act 1976 (Cth) (FCA Act) stipulates that the jurisdiction of the Court is to be exercised in open court, reflecting the importance of the public interest in open justice. The principle of open justice is not absolute, and the Court is empowered under Part VAA of the FCA Act to make suppression or non-publication orders if the order is, relevantly, necessary to prevent prejudice to the proper administration of justice.
64 I am not presently persuaded that it is necessary to prevent prejudice to the proper administration of justice to make a non-publication order with respect to the entirety of the confidential annexures referred to above. It appears to me that possibly only small portions of the confidential annexures justify a non-publication order on the basis of commercial prejudice. For that reason, I made a temporary order, until 1 November 2024 and pending an application for non-publication or suppression orders under Pt VAA of the FCA Act, requiring the confidential annexures to be kept confidential on the Court file.
I certify that the preceding sixty-four (64) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Bryan. |
Associate: