Federal Court of Australia

Vitnell v Vellenga, in the matter of Australian Carers Pty Ltd [2024] FCA 1492

ORDERS

THE COURT ORDERS THAT:

1.    The plaintiff’s application for urgent injunctive relief dated 22 November 2024 is dismissed.

2.    The matter be referred to the National Operations Registrar for allocation to a docket judge.

3.    The plaintiff is to pay the first defendant’s costs of and incidental to the application for interim and interlocutory relief.

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

REASONS FOR JUDGMENT

CHARLESWORTH J

1    On 17 December 2024 I made orders dismissing an application for interlocutory relief with costs. Oral reasons were given on that day. This is a written record of those reasons with some uncontroversial modification and the addition of some details as foreshadowed to the parties.

2    This application relates to three companies Australian Carers Pty Ltd (ACN 633 325 854), Australian Carers Training Pty Ltd (ACN 646 676 888) and Australian Carers Property Pty Ltd (ACN 663 452 051) (together, the Companies). Australian Carers operates a business providing or coordinating services under the National Disability Insurance Scheme (NDIS) and is the recipient of federal government funding for that purpose.

3    Mr Reginald Vitnell (plaintiff) and Mr John Vellenga (first defendant) are co-directors of each of the Companies. The shares in each company are held equally by Mr Vitnell and a company controlled by Mr Vellenga, Vellenga Holdings Pty Ltd (ACN 159 506 117) (second defendant). As will be seen, the two directors are in disagreement about some aspects of the business conducted by Australian Carers.

4    By his originating process, Mr Vitnell alleges that Mr Vellenga has contravened and remains in contravention of s 232 of the Corporations Act 2001 (Cth) and that he is in breach of his duties as a director prescribed in ss 180, 181 and 182 of the Act. He seeks final relief in the form of declarations, orders for compensation and injunctions (including mandatory injunctions). For present purposes his claims relate to two broad factual issues. The first relates to a recent change in the Companies’ banking arrangements which introduces a requirement that both directors authorise expenditure from the Companies’ accounts. I will refer to that as the Signatory Issue. The second relates to an alleged inability of Mr Vitnell to access records of the Companies stored on a server situated in Sydney. I will refer to that as the Server Issue.

5    By [2] and [3] of his interlocutory application filed on 22 November 2024, Mr Vitnell seeks the following orders on an urgent basis:

2.    That an interim injunction be issued in the action requiring the respondent:

2.1.    Within 2 business days of the date of the order to do such acts as may be necessary and to give all necessary instructions to the Commonwealth Bank of Australia (‘CBA’) to enable the following accounts of the following companies to be operated on the authority of each director of the company independently of the other director in the ordinary course of business of the company:

2.1.1.    Australian Carers Pty Ltd ACN 633 325 854:

2.1.1.1.    BSB 062347 Account 11017062; and

2.1.1.2.    BSB 062347 Account 11017070.

2.1.2.    Australian Carers Property Pty Ltd ACN 663 452 051:

2.1.2.1.    BSB 062347 Account 017089;

2.1.2.2.    BSB 062347 Account 1107054; and

2.1.2.3.    BSB 062347 Account 11035308.

2.2    To do such acts as may be necessary to permit the applicant to have full and unrestricted access to all computer servers wherever located used by Australian Carers Pty Ltd ACN 633 325 854, Australian Carers Property Pty Ltd ACN 663 452 051 and Australian Carers Training Pty Ltd ACN 646 676 888 (‘the companies’) and to instruct any administrators of the servers, including Workout Group Limited ACN 644 193 260, to ensure that access to the applicant to each server is permitted within two business days of the order.

2.3    Until further order, to do such acts as may be necessary from time to time to make or authorise payment on behalf of the companies:

2.3.1.    To all employees of the companies of their remuneration and other employment entitlements in the ordinary course of business of the companies;

2.3.2.    To suppliers and creditors of the companies’ all payments to the suppliers and creditors of the companies in the ordinary course of business of the companies and

2.3.3.    To the applicant of all expenses and payments made by the applicant on behalf of the companies to employees, suppliers and creditors of the companies and paid by the applicant personally (including payments charged to the applicant’s personal American Express charge card number 340090215432006) in the ordinary course of business of the companies;

3.    That an interim injunction be issued in the action restraining the respondent until further order:

3.1    From making any changes, without the prior consent of the applicant, to the persons authorised to operate the accounts of Australian Carers Pty Ltd ACN 633 325 854 and Australian Carers Property Pty Ltd ACN 663 452 051 with the CBA in a manner which would prevent each director of the companies from operating those accounts independently of the other director in the ordinary course of business of the companies.

6    When the matter first came before another Judge of the Court for an initial hearing, Mr Vellenga (by his Counsel) informed the Court that he would be willing to resolve the matters arising on the application for interim relief by proffering an undertaking to Mr Vitnell the terms of which have since been recorded in written correspondence. They are as follows:

1    That Mr Vitnell will have unfettered access to all business records of the Australian Carers group of companies (Group) that exist on the Sydney ‘server’.

2    That our client will not withhold or unreasonably delay consent to:

(a)    The payment of any salaries or wages properly due and payable;

(b)    The payments to any supplier to the Group that are properly due and payable;

or

(c)    The reimbursement to Mr Vitnell or any other person of any authorised expense incurred on behalf of the Group, subject to reasonable substantiation.

In connection with these undertakings, it is our client’s position that:

1.     an expense will be considered authorised if it is an expense incurred in the ordinary course of business or is customarily allowed without express approval; and

2    reasonable substantiation will, except where impractical, require a receipt or invoice detailing the nature of the expense claimed and showing that the payment has been made.

We are further instructed that:

1.    the Sydney ‘server’ is not a computer as such, but a digital storage unit that is accessible via Google Drive;

2    the storage unit is not a Group asset but owned by Mr Vellenga personally and contains a mixture of personal and Group business records.

3    Mr Vitnell already has access to access the Google Drive accounts containing all the Group business records.

4    Should Mr Vitnell identify any Group business records that he believes are on the server and to which he does not have access, our client will promptly search for those records and where found, provide access to Mr Vitnell.

7    That undertaking has not assuaged Mr Vitnell. He alleges that the undertakings have since been breached and presses the Court for orders with injunctions.

THE POWER TO GRANT AN INJUNCTION

8    In Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57, Gleeson CJ and Crennan J said (at [19]) that in all applications for an interlocutory injunction, a court will ask whether the plaintiff has shown that there is a serious question to be tried as to his entitlement to relief, that the plaintiff is likely to suffer injury for which damages will not be an adequate remedy and that the balance of convenience favours the grant of interlocutory relief. Gummow and Hayne JJ said (at [65]) that the applicant must show a “sufficient likelihood” of success to justify the preservation of the status quo for the duration of the restraint. The criteria for an injunction interrelate such that the sufficiency of the likelihood of success depends upon the nature of the rights the applicant asserts and the consequences that are likely to flow from the order:  see Beecham Group Limited v Bristol Laboratories Pty Ltd (1968) 118 CLR 618, Kitto, Taylor, Menzies and Owen JJ (at 622); Samsung Electronics Company Ltd v Apple Inc (2011) 217 FCR 238, Dowsett, Foster and Yates JJ (at [59]). The question of whether damages would be an adequate remedy is not necessarily to be regarded as a standalone criterion, but rather informs the Court’s assessment of where the balance of convenience lies.

ISSUES TO BE TRIED

9    Whether there is a sufficient likelihood of success to justify the relief requires an examination not only of the facts relied upon, but on the elements of the contraventions that Mr Vitnell alleges have occurred or are likely to occur.

10    At trial it will be necessary for Mr Vitnell to establish that he has standing to obtain the remedies sought in connection with the alleged contraventions of ss 180, 181 and 182 of the Act, but for present purposes I will proceed on the assumption that he does. As Counsel for Mr Vitnell acknowledged, the facts relied upon are the same in relation to the alleged breach of directors’ duties and in relation to the alleged contravention of s 232 of the Act. It is convenient to focus on the latter allegation as that was the focus of the parties’ oral submissions.

11    Section 232 of the Act provides:

232    Grounds for Court order

The Court may make an order under section 233 if:

(a)    the conduct of a company’s affairs; or

(b)    an actual or proposed act or omission by or on behalf of a company; or

(c)    a resolution, or a proposed resolution, of members or a class of members of a company;

is either:

(d)    contrary to the interests of the members as a whole; or

(e)    oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity.

For the purposes of this Part, a person to whom a share in the company has been transmitted by will or by operation of law is taken to be a member of the company.

12    In a case where a contravention of s 232 is established, the Court may make one or more orders under s 233. Relevantly for present purposes they include orders restraining a person from engaging in specified conduct or from doing a specified act or requiring a person to do a specified act. An application for relief under s 233 may be made by a member of a company even if it relates to an act or omission that is against the member in his or her capacity other than as a member:  Act, s 234(a)(i).

13    Mr Vitnell’s allegations principally relate to the conduct of the Companies’ affairs. His allegation is that Mr Vellenga has engaged in conduct that is both contrary to the interests of the Companies’ members as a whole and that is oppressive to, unfairly prejudicial to, or unfairly discriminatory against a member or members whether in that capacity or in any other capacity. Mr Vitnell relies upon his capacity not only as a member but as an employee of Australian Carers and as a director of all of the Companies.

14    In Wayde v New South Wales Rugby League Ltd (1985) 180 CLR 459 Brennan J said this of the compound expression “oppressive, unfairly prejudicial or unfairly discriminatory against” as it appeared in a similar provision contained in the Companies (New South Wales) Code (at 472 – 473):

…  Section 320 requires proof of oppression or proof of unfairness:  proof of mere prejudice to or discrimination against a member is insufficient to attract the court’s jurisdiction to intervene.  …  At a minimum, oppression imports unfairness and that is the critical question in the present case.

…  The question of unfairness is one of fact and degree which s. 320 requires the court to determine, but not without regard to the view which the directors themselves have formed and not without allowing for any special skill, knowledge and acumen possessed by the directors. The operation of s. 320 may be attracted to a decision made by directors which is made in good faith for a purpose within the directors’ power but which reasonable directors would think to be unfair. The test of unfairness is objective and it is necessary, though difficult, to postulate a standard of reasonable directors possessed of any special skill, knowledge or acumen possessed by the directors. The test assumes (whether it be the fact or not) that reasonable directors weigh the furthering of the corporate object against the disadvantage, disability or burden which their decision will impose, and address their minds to the question whether a proposed decision is unfair. The court must determine whether reasonable directors, possessing any special skill, knowledge or acumen possessed by the directors and having in mind the importance of furthering the corporate object on the one hand and the disadvantage, disability or burden which their decision will impose on a member on the other, would have decided that it was unfair to make that decision.

15    The principles are otherwise summarised conveniently by Croft J in LL Up Pty Ltd v Kegland Distribution Pty Ltd [2024] VSC 651 (at [66]) in terms that I gratefully adopt:

(a)    The essential criterion of oppressive conduct for the purpose of s 232(e) is that of commercial unfairness.

(b)    Unfairness is assessed by reference to whether ‘objectively in the eyes of a commercial bystander, there has been unfairness, namely conduct that is so unfair that reasonable directors who consider the matter would not have thought the decision fair’ and can be established by wrongful exclusion from participation in a company’s management or by conduct in breach of a shareholders or services agreement even if the person undertaking that conduct thinks he or she is acting properly.

(c)    Whether the treatment of one member was fair also needs to be assessed against the background of the fair treatment of the whole body of members. Fairness cannot be considered in a vacuum, and in relation to a family company can only be considered in the light of the history of the company and the family and the purpose for which the company was formed.

(d)    The question is whether there has been unfairness. The test is objective, and it is viewed from the perspective of the commercial bystander. As the test is objective, whether or not the conduct is oppressive will not depend upon the motives for what was done. It is the effect of the conduct that is material.

(e)    The task is to be undertaken in the context of the particular relationship in issue, and in the context of the facts and circumstances existing at the time of the oppression.

(f)    The oppression need not be of a member in its capacity as a member, and may include conduct that impacts upon a member in his capacity as a director.

(g)    The doctrine is informed by equitable considerations. However, there is no independent or overriding requirement that it should be just and equitable to grant relief or that the petitioner should come to the court with clean hands.

(h)    It is unnecessary for an applicant to prove that the respondent knew or believed that the impugned conduct was unfair. A defendant may act oppressively even though its motives are honest.

(i)    The conduct of a company’s affairs may be oppressive even though the conduct is otherwise lawful, and the person engaging in the conduct believes he or she is acting lawfully. An exercise of a discretionary power under a company’s constitution in a particular way may enliven s 232.

(j)    A single instance of oppression is sufficient to constitute a basis for relief. Separate instances of conduct may, cumulatively, constitute oppression.

(k)    The oppression need not exist at the time of the application or trial.

(footnotes omitted)

16    The Court has read the affidavits of Mr Vitnell affirmed on 22 November 2024, 2 December 2024 and 13 December 2024, as well as an affidavit of Mr Brendan Murphy sworn on 11 December 2024 and an affidavit of Mr Vellenga sworn on 11 December 2024. I have also had regard to a document tendered in the course of oral submissions.

common ground

17    Australian Carers has business operations in Sydney, Adelaide, Perth and Rockhampton. The business of providing NDIS services has grown over time so that it now has about 120 employees.

18    The Adelaide operations are undertaken and overseen by Mr Vitnell, where most of Australian Carers’ employees are situated. The evolution of the business in the other locations is less progressed, such that the profitability of the business is dependent upon the Adelaide operations. Australian Carers employs Ms Ellie Grantham to manage the Adelaide operations. It does not appear to be disputed that she is a key employee. Both Mr Vitnell and Mr Vellenga are each employees of Australian Carers. So too is Ms Katherine Jagger a relation of both Mr Vellenga and Mr Vitnell.

19    Australian Carers Property Pty Ltd was incorporated for the purpose of holding assets related to the enterprise including some cash at hand in the bank.

20    Australian Carers Training Pty Ltd was incorporated to undertake training activities related to the enterprise, but it has not commenced trading and did not otherwise feature in the submissions or the evidence to any large extent.

21    When Australian Carers and Australian Carers Property Pty Ltd were first established, Mr Vellenga opened bank accounts for each of them with Bankwest and later with the Commonwealth Bank (CBA). He established the accounts on the basis that either of the directors could authorise transactions (specifically withdrawals) without the signature or other form of authority of the other director. That state of affairs persisted until 27 September 2024. On that date, Mr Vellenga altered the account authorities so that it then became necessary for both directors to sign off on or otherwise authorise the withdrawal of funds from any of the accounts. Whilst not expressly dealt with in the evidence, it was not suggested that the physical signature of each director was required before a transaction could occur. The Court proceeds on the basis that authorisation from both directors can be given electronically.

22    As a consequence of the changed banking conditions, Visa debit cards previously attached to one or more of the CBA accounts held by Australian Carers were cancelled. Those debit cards had previously been used by Mr Vitnell and by employees of Australia Carers to pay expenses associated with the conduct of its business without the need for Mr Vellenga’s prior authorisation.

23    In addition, Mr Vitnell is the holder of an American Express (AMEX) credit card. There is a dispute as to whether or not that account is held in Mr Vitnell’s personal name and right as opposed to the name of Australian Carers. For present purposes I will proceed on the assumption that it is an account held in Mr Vitnell’s personal name.

24    Prior to 27 September 2024, the AMEX credit card was used to pay business-related expenses, with those amounts then reimbursed to the account attached to the AMEX card by way of transfer out of one of the CBA accounts.

25    After the signature authorisations were changed and the debit cards cancelled, Mr Vitnell has caused Australian Carers to pay significantly more of its expenses using the AMEX card. He has, in addition, authorised trusted Australian Carers employees to pay business expenses on additional AMEX cards attached to the same account.

26    It is also common ground that some of the documents relating to the affairs of the Companies and the operation of its business are stored on a server situated in Australian Carers’ Sydney office (Sydney Server). Mr Vellenga has refused to allow Mr Vitnell to have administrator access to the Sydney Server. The parties are in dispute as to whether or not Mr Vitnell is otherwise excluded from accessing documents that are stored there.

Contextual evidence

27    Mr Vitnell relies on three affidavits in support of his application for injunctive relief. Those affidavits, and an affidavit sworn by Mr Vellenga contain evidence about the series of disputes between the two directors relating to the operation of the Companies over time that do not appear to have any direct bearing on the urgent application for injunctive relief presently before the Court. The evidence does, however, demonstrate that the relationship between the two directors has deteriorated over time and continues to deteriorate and that they are in dispute in relation to matters concerning (among other things) the ongoing employment of certain employees and the development and ownership of the Companies’ information systems. Each of the directors has made allegations of wrongdoing or poor business judgement on the part of the other. For present purposes it is not necessary to descend into those areas of dispute let alone to resolve them.

28    The evidence also shows that Australian Carers continues to trade profitably notwithstanding that the directors cannot come to an agreement in relation to some disputed matters involving business judgement. In other words, the evidence does not establish the relationship is entirely ineffectual.

29    As the recipient of federal government money under the NDIS, Australian Carers was initially required to have an auditor reporting on matters concerning its governance. The need for an auditor to be presently engaged, and the purpose of any subsequent engagements or elongated engagement, is an issue in dispute and at trial may inform an assessment as to whether or not Mr Vellenga has acted improperly and unilaterally in changing the bank authorisations.

Disputed facts

30    In relation to the Signatory Issue, Mr Vitnell contends that there is an urgent need to restore the position that applied prior to 27 September 2024. He alleges that Mr Vellenga wrongfully changed the authority to operate the bank accounts in that he did so unilaterally and without the authority of the Companies other director. Mr Vitnell alleges that he did not consent to that being done and that mandatory injunctive relief is required to “ameliorate the irreparable damage being done to the business of the Companies” as a result of the change. He seeks to have the situation returned to the “status quo ante”; that is, to restore it to the practice of one director signing off on expenses that was in place for a number of years before the change.

31    Mr Vitnell further alleges that the expenses of the Companies are in the order of about $100,000.00 per month. That figure does not include wages totalling about $400,000.00 per month. He claims that since affecting the change, Mr Vellenga has wrongly and unreasonably withheld his authorisation to make certain payments to some employees and, in addition, has unreasonably withheld his authorisation to draw money from the Companies’ CBA accounts to reimburse an account attached to the AMEX card for ordinary expenses of the business. He further alleges that Mr Vellenga has otherwise withheld his authorisation for the payment of creditors so putting Australian Carers in reputational and financial peril.

32    Mr Vitnell alleges that the situation has come to a point where he has been required to make arrangements to sell his personal assets (including a watch collection) in order to personally meet the business expenses of Australian Carers. He claims that he has personally paid amounts owing to employees that Mr Vellenga has unreasonably refused to authorise, including an amount owing to Ms Grantham. He expresses concern that the non-payment of entitlements to employees exposes Australian Carers to claims under workplace laws and otherwise imperils the Companies in their financial position and reputational standing.

33    In addition, Mr Vitnell says that there is no basis for Mr Vellenga to deprive him of access to the Sydney Server, which he says is an asset of Australian Carers. He asserts that not having access to the server has the consequence that he cannot access records of the Companies in accordance with his entitlements, and indeed his obligations, as a director.

34    Mr Vitnell alleges that since the matter first came on before a different duty Judge, Mr Vellenga has engaged in conduct in breach of the undertaking that he then gave. Implicitly, it is submitted that the undertaking is insufficient to protect the interests of the members of the Companies, or his personal interests as a shareholder, director and employee.

35    Mr Vellenga deposes that the change in the signature authorisations affecting the CBA accounts occurred on the recommendation of an auditor and was in accordance with a discussion or resolution of the two directors at a meeting on 13 August 2024. He alleges that the auditor was engaged both for the purpose of ensuring that Australian Carers met its obligations under the NDIS funding arrangements, and later because there had been discussions between him and Mr Vitnell about listing Australia Carers (at least) on the Australian Stock Exchange (ASX). He produced a document dated July 2024 containing recommendations of an auditor relating to corporate governance, which included the following recommendation:

All bank payments should go through a review process with 2 to sign restrictions implemented on all payments, across all company bank accounts.

Debit and credit cards should have facility limits established to reduce the risk of fraud or error.

A delegation of authority should be prepared and utilised to provide structure to bank account interactions and approvals across the company.

36    Mr Vellenga also produced minutes of the 13 August meeting, which contain the following:

2.    Report from Ben Irvine. Ben has circulated initial findings report and noted recommendations based on his observations. Refer separate detailed report.

Noted the need for supporting documentation for all transactions, segregation of duties, governance and systems, and payment processing system, more frequent reconciliations, separate processing and banking roles, the need for dual bank signatures and the need for dedicated HR department. Agreed to review processes, Reg will get Kathryn to review policies. Need to get 2 account signatories in place for authorization of payments.

…

37    Mr Vellenga’s evidence was that the change in the signature authorisations was otherwise necessary and prudent to bring more transparency and accountability into the expenditure of the Companies’ money. He expressed concern about the level of Mr Vitnell’s personal indebtedness to the Companies. In that regard it does not appear to be disputed that Mr Vitnell has in the past drawn money from Australian Carers and that on each occasion that he did so there was a drawing made for the benefit of Mr Vellenga in the same amount. I proceed on the basis that the directors have previously acted in accordance with a convention of that kind.

38    In submissions, it was not suggested that Mr Vellenga that he had the authority to unilaterally change the bank authorisations without Mr Vitnell’s consent. Accordingly, the essence of the dispute between the parties is whether there was an agreement between the directors at the 13 August meeting about the change in bank signatory authorisations.

39    As to the Sydney Server, Mr Vellenga alleges that the server is his personal property and that it contains not only information relating to the affairs of the Companies, but also information that is personal and confidential or that otherwise relates to his commercial dealings. He claims that information contained on the Sydney Server is readily available and accessible to Mr Vitnell, specifically by way of a Google Drive cloud service. As I understood the evidence, all information contained on that part of the server relating to the Companies’ affairs is intended (by Mr Vellega at least) to be synced to the cloud. Mr Vellenga says that Mr Vitnell otherwise has no entitlement to access a server that is not his personal property and that if he were granted administrator status he would then have access to documents other than the Companies’ records and be in a position to inspect, alter or delete them.

40    I will give further consideration to the competing evidence in determining the two claims for injunctive relief. It is convenient to resolve those claims by reference to their factual subject matter, beginning with the Signatory Issue.

the Signatory Issue

41    On the material before me there is a genuine dispute between the parties as to whether or not Mr Vellenga acted unilaterally when he changed the signatory authorisations of the CBA accounts. Mr Vitnell invited the Court to conclude that Mr Vellenga’s version of events in respect of that issue is highly unlikely to be proven at trial. I do not consider it necessary to express such a view. The material produced in support of each party’s position in a short timeframe on an urgent interlocutory application will not necessarily resemble that which may bear on the same issues at trial. It is sufficient to observe that the question of whether or not Mr Vellenga has acted unilaterally is an important factual question to be tried.

42    However, assuming that it may be established at trial that Mr Vellenga acted without Mr Vitnell’s agreement, it would remain for Mr Vitnell to prove that the circumstances fulfilled the elements of the contraventions he alleges and, more importantly, for present purposes that an urgent interlocutory injunction is appropriate in accordance with the principles I have summarised earlier.

43    Mr Vitnell’s submissions on the present application were pitched at a level that alleged that the Companies were put into peril in their relationships with employees and creditors in a way that threatens their financial standing and stability warranting the urgent intervention of the Court until trial.

44    I have concluded that Mr Vitnell’s contentions in that respect find insufficient support in the evidence.

45    I accept that the change in the signatory authorisations has had the consequence that more reliance has been placed on the use of the AMEX card than had previously been the case, and that Mr Vitnell was now put to the inconvenience of seeking from his co-director an authorisation to reimburse those expenses from the Companies’ CBA accounts. I also accept that he is unwilling to persist in an arrangement where the AMEX card is used to pay the Companies’ expenses. I have given those circumstance some weight in assessing where the balance of convenience lies.

46    As to the allegation that there is a real threat that Australian Carers’ employees will not be paid their entitlements unless an injunction is granted (to remain in place until judgment on the originating application), the evidence does not establish that there is a reasonable basis for that concern.

47    The allegation of non-payment or under-payment was limited to four employees, namely Ms Grantham, Ms Jagger, Mr Vitnell, and Mr Vellenga.

48    The CBA bank statements for the period following 27 September 2024 evidence large withdrawals identified as attributable to fixed wages. That serves to reinforce the fact that any dispute in relation to the payment of employees’ entitlements is limited to those four employees mentioned in Mr Vitnell’s affidavit, which include himself and Mr Vellenga.

49    Among the business records before the Court are payroll records (including payslips).

50    The evidence shows that in his capacity as an employee Mr Vitnell is entitled to be paid $150,000.00 per annum. The payroll records do not establish that Mr Vitnell has been underpaid in the past, nor that he is presently owed any wages by Australian Carers or any of the Companies. To the contrary, the records show that he has previously received more on a year-to-date basis to which he is lawfully entitled. The Court was taken to no evidence to suggest that the payroll records were incorrect to the extent that they evidenced that Mr Vitnell was presently being overpaid, not underpaid. Nor was the Court taken to evidence to demonstrate that Mr Vellenga has been paid less than that to which he is lawfully entitled. Nor does the evidence establish that Ms Jagger is presently owed money by any one of the Companies by virtue of any unreasonable refusal on Mr Vellenga’s part to ensure that her proper entitlements are paid.

51    Mr Vellenga acknowledges that he has previously withheld his authorisation to make some payments to Mr Vitnell for the purpose of correcting the past overpayment of his entitlements, and that that correction will be complete by the next pay period.

52    The evidence also establishes that Mr Vellenga withheld his authorisation in respect of two payments that Mr Vitnell had alleged were owing to Ms Grantham, again because he took the view that Ms Grantham had been paid more than that to which she was lawfully entitled on a year-to-date basis. Mr Vitnell has not otherwise established that Mr Vellenga was wrong in his conclusion that Ms Grantham had indeed been overpaid.

53    I afford the payroll evidence paramount weight in determining whether an injunction should lie in respect of this aspect of the case. I am not satisfied that there is a real threat that Mr Vellenga might wrongfully or arbitrarily withhold his authorisation for payments that are lawfully owed to Ms Grantham or any other employee in the period pending the trial. The evidence does establish that Mr Vellenga has applied additional scrutiny to some employee payments that had not previously been applied in relation to three of Australian Carers’ employees and perhaps to himself. If he acted unlawfully in previously withholding payments for the purpose of correcting an earlier overpayment, then any loss or damage flowing to Mr Vitnell as a consequence can be the subject of evidence and submissions at trial.

54    Whilst I accept that there remains a dispute as to whether or not Mr Vellenga has lawfully imposed that degree of scrutiny (that is, whether he has done so unilaterally), it has not been established that the additional scrutiny in and of itself has placed any one of the Companies in a position of peril, whether in relation to its financial standing or its exposure to claims under workplace laws of such a kind and such a degree that would cause me to exercise the discretion to grant a mandatory injunction. If there be underpayments to Mr Vitnell himself as a consequence of the change in signatory authorisation, I am not satisfied that an urgent injunction is necessary to remedy the situation. The claimed underpayment can be the subject of an award of damages if it be shown that it is the result of a contravention of the Act of the kind Mr Vitnell alleges.

55    The evidence does not establish that Mr Vitnell is otherwise in immediate personal financial peril warranting the sale of personal assets. I am reinforced in that view by the dealings between the directors relating to a recent request to be reimbursed expenses paid on the AMEX card, as discussed below.

56    The allegation that Mr Vellenga is presently in breach of the undertaking is a serious one. The evidence before me is insufficient to support it, for these reasons:

(1)    It is alleged that Mr Vellenga has not authorised the payment of wages properly due in that he has not authorised payments owing to himself and Mr Vitnell. As I have said, the payroll evidence does not establish that Australian Carers is presently in breach of its obligation to pay either Mr Vitnell or Mr Vellenga their lawful wage entitlements. Nor does the evidence demonstrate an act or omission on Mr Vellenga’s part that would constitute a breach of that aspect of the undertaking after the date upon which it was made.

(2)    It is alleged that Mr Vellenga has withheld his authorisation to make payments to suppliers when they become due and payable. However, the document relied upon to support that allegation is an email dated 4 October (before the undertaking was given) evidencing an unsuccessful attempt to pay a creditor using the cancelled Visa debit card on that date. The evidence does not establish that the creditor concerned has not been paid by other means, nor that Mr Vellenga has unreasonably refused to authorise its payment. To the contrary, on the evidence before me it appears that there is nothing presently owing to that creditor.

(3)    Next it is alleged that Mr Vellenga has refused to authorise the payment of three invoices submitted for approval on 11 December 2024 (two days before the affidavit deposing to them was affirmed), which invoices were paid using the AMEX card. At 4:00 pm on that day, Mr Vitnell sent a bundle of invoices and a ledger of expenses to Mr Vellenga. Mr Vellenga responded at 2:00 pm on the following day giving authorisation for the immediate payment of all but three of them, which he queried. The immediately authorised amount was $3,612.33. There was then an exchange of messages, the latest of which occurred on 13 December 2024 at 7:37 am by which Mr Vitnell provided some further information to explain the expenses. The affidavit was affirmed on that day (a Friday) and the hearing took place on the following business day (a Monday). The evidence does not show that Mr Vellenga has withheld his authorisation for the reimbursement of the AMEX card in respect of those expenses, nor otherwise their payments. Rather it shows that Mr Vellenga promptly questioned three expenses, asked for more immediate detail about them and immediately authorised the reimbursement of the remainder. Nothing in the evidence suggests that the creditors have not or will not be paid, rather it shows that Mr Vitnell has used the AMEX card to meet the Companies’ expenses and that he was put to the inconvenience of demonstrating to his co-director that the payments properly related to the conduct of the business. It has not been shown that the queries raised by Mr Vellenga were arbitrary or disingenuous, nor that he unreasonably delayed in raising them.

57    The affidavit evidence does not establish that there is no alternative for the payment of many of the Companies’ expenses with dual authorisation other than by use and later reimbursement of the AMEX card. If the December authorisation request discussed above is anything to go by, the expenses of the business being charged to the AMEX card are a small portion of the non-wages expenses (said by Mr Vitnell to be $100,000.00 per month). The CBA bank statements before me show that a large number of transactions (in both events and dollar terms) continue to occur on those accounts by way of direct debit and other means of payment, which, I infer, have occurred with the joint authority of both directors with no evidence of difficulty, conflict or delay attending them.

58    The Court was not taken to evidence of any creditor being unpaid as and when invoices fall due including to the present day.

59    Accordingly, proceeding from the basis that there is a sufficient factual question to be tried, in relation to the changed bank authorisations and assuming that the asserted facts, if established, may constitute a contravention of the Act, I am not satisfied that urgent interlocutory relief relating to the bank accounts is necessary to avoid any one of the Companies facing financial or legal peril, or the interests of Mr Vitnell as the only plaintiff being irreparably harmed. To the extent that Mr Vitnell’s interests are affected in any capacity by the alleged contraventions, he has not established that loss or damage could not be adequately compensated by an award of damages. As I said from the outset, that is not a definitive consideration, but I give it paramount weight.

60    The present status quo is that both directors must authorise expenditure from the Companies’ accounts. Whilst inconvenient, that is not a circumstance that on the facts of the present case puts the Companies, its members or employees at risk of irreparable loss or damage of the kind asserted by Mr Vitnell.

61    I should not be understood to express any view as to the prospects of Mr Vitnell succeeding on his claims that the conduct constitutes a contravention of s 232 of the Act or any of the directors’ duties specified in the originating application.

62    On the other hand, if the injunction were to be granted and Mr Vellenga’s position was to be vindicated at trial there would have been prejudice to Mr Vellenga in that he would otherwise have been entitled (indeed obliged) to act in accordance with the resolution that he asserts was made at the 13 August meeting and which facilitates him taking the Companies in the more fiscally accountable position that he prefers. In and of itself, that preferred position is not contrary to the interests of the shareholders as a whole.

63    In my view, that is enough to support a conclusion that the balance of convenience does not justify a mandatory injunction reverting the bank arrangements to that in existence prior to 27 September 2024.

The Server issue

64    The short answer to this part of the application is that the dispute over the ownership and use of the Sydney Server has, on my understanding, been grumbling away for about two years. It may be that at trial Mr Vitnell can establish an entitlement to have administrator status on the server. However, administrator status on the server is not required in order for Mr Vitnell to inspect the records of the Companies at least in the period pending the trial. There are a multitude of other ways in which that entitlement can be enforced. The correspondence before me shows that Mr Vellenga is not asserting that Mr Vitnell cannot have access to records to which he is entitled. It is the means of access that has proved troublesome. It has not been established that Mr Vitnell has or will be deprived of access to any particular document that he needs in order to fulfil his duties as a director or to attend to the operation of the business that he could not obtain by some other means including by simply requesting a copy from Mr Vellenga.

65    Mr Vitnell alleges that he has technical difficulties accessing the cloud service. I will proceed on the assumption that that is correct. However, the evidence does not establish that that difficulty is due to Mr Vellenga deliberately interfering with that access in a way that would constitute a contravention of the Act of such a kind that warrants urgent interlocutory relief. The problems with access have not been shown to be urgent, nor have they been shown to affect Mr Vitnell’s interests to such an extent that warrants an injunction.

Mr Vellenga’s Undertaking to the Court

66    The undertaking given by Mr Vellenga to Mr Vitnell should remain in place. However, I am not satisfied that the circumstances warrant an undertaking now being given to the Court, notwithstanding that one has been offered. In reaching that conclusion I have had regard to a number of matters.

67    First, in circumstances where the requirements for an injunction are not satisfied. I do not consider it appropriate to extract or accept from a party an undertaking that would largely have the same effect as if the application had succeeded. Mr Vitnell chose to proceed to a contested hearing to seek something more than the undertaking given to him and he has failed in his application to have the Court make orders with injunctions having penal consequences for breach. I do not consider there to be a proper occasion to make orders having penal sanction, and I therefore do not consider there should be undertakings having the same consequences.

68    Second, I am satisfied that the undertaking given to Mr Vitnell was genuine and I am not satisfied that there has since that time been defiance or deliberate contravention of it.

69    Third, the allegation that there was a breach of the undertaking in relation to the withholding of authorisation for expenses properly incurred was, in my view, made without a proper evidentiary foundation. That gives rise to a concern that an undertaking given to the Court will spawn multiple urgent applications alleging breach on each occasion that Mr Vitnell and Mr Vellenga cannot agree as to whether a particular expense meets the description of a business expense. I do not consider it appropriate to have the Court’s limited resources utilised in that way. If there are disputed transactions, they can form a part of the issues in dispute at trial, but the Court should not in the meantime be called upon to arbitrate allegations of breach coupled with the threat of penal sanction.

70    There will be an order that the plaintiff’s application for urgent injunctive relief be dismissed and a further order that the matter is to be referred to the National Operations Registrar for allocation to a docket judge.

Associate:

Dated:    17 December 2024