Federal Court Denies Injunction Against Company AGM

OUTCOME: Dismissed

FEDERAL COURT OF AUSTRALIA

[COMPANY_1] v [COMPANY_2], in the matter of [COMPANY_2] (No 2) [2019] FCA 1866 File number(s): QUD 801 of 2018

Judge(s): GREENWOOD J

Date of judgment: 8 November 2019

Catchwords: CORPORATIONS – consideration of an application for an urgent interlocutory injunction

Legislation: Corporations Act 2001 (Cth), s 250N(2), s 1324

Date of hearing: 8 November 2019

Date of last submissions: 8 November 2019

Registry: Queensland

Division: General Division

National Practice Area: Commercial and Corporations

Sub-area: Corporations and Corporate Insolvency

Category: Catchwords

Number of paragraphs: 14

Solicitor for the Plaintiff/Second and Sixth Cross-Respondents: [redacted]

Counsel for the Defendant/Cross-Claimant: [redacted]

Solicitor for the Defendant/Cross-Claimant: [redacted]

BETWEEN: [COMPANY_1] [PHONE] (and other Cross-Respondents named in the Schedule) Plaintiff/First Cross-Respondent

AND: [COMPANY_2] [PHONE] Defendant/Cross-Claimant

JUDGE: GREENWOOD J DATE OF ORDER: 8 NOVEMBER 2019

THE COURT ORDERS THAT:

1. The application for an injunction pending the determination of the principal proceeding is dismissed. 2. The applicant, [COMPANY_1], [COMPANY_6] and [NAME_8], pay the costs of the respondent of and incidental to the application. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

EX TEMPORE REASONS FOR JUDGMENT

GREENWOOD J: 1 This is an application for an injunction to restrain the conduct of the Annual General Meeting ("AGM") of the company described as [COMPANY_2] ("[COMPANY_2]"). The AGM is a meeting which has been sought to be convened by a Notice of Meeting dated 14 October 2019 and the meeting is to be held on Monday, 11 November 2019, commencing at 5.30 pm, at the Athenaeum Club, [ADDRESS], Melbourne, on Monday. 2 That AGM of the company is held in discharge of the company's obligation under s 250N(2) of the Corporations Act 2001 (Cth) which provides, relevantly, that a public company must hold an annual general meeting within five months after the end of its financial year. 3 The time required by s 250N(2) has fallen in in the sense that the company seeks to conduct its AGM within that timeframe, in compliance with the legislation. A failure to do so gives rise to the possibility of a penalty, although, of course, the Court can grant an extension of the period for holding the AGM. 4 The injunction that is sought today by the applicant is in aid of the causes of action which are advanced in the principal proceeding set down for trial for two weeks commencing on 2 December 2019. In that principal proceeding, the applicant seeks remedies or relief on the just and equitable ground arising out of a series of factual matters which are set out in the originating concise statement. These matters essentially go to contended conduct of the entity in respect of which it is said to be conducting a managed investment scheme operated unlawfully. This contention has been on foot for some considerable time and no interim relief has been sought in relation to that matter. 5 The circumstance which has arisen now is the intervention of the proposed AGM to be held on Monday, 11 November 2019. As I mentioned, this AGM is convened by the Notice of Meeting of 14 October 2019 and I understand the position to be that the applicants have had notice of that meeting from about at least about 21 October this year. 6 The matter concerning the principal proceeding was brought before the Court as recently as last Monday, 4 November 2019, in which some interlocutory questions were tested concerning a notice to produce and also an application on the part of the respondents for access to particular classes of documents. No mention was made on Monday of a concern about the AGM to be held on 11 November 2019 notwithstanding that the notice had gone out in October and the applicants were conscious of the impending meeting. 7 I am not satisfied that there is a serious question raised in relation to the contravening conduct which would warrant at this point in time the grant of a relief to restrain the conduct of the meeting by the company in discharge of its obligations under the Corporations Act. 8 The second aspect of the matter is that the subject matter of the meeting is set out in the notice and consists of five principal items. Those matters, relevantly for present purposes, include considering the possibility of the passing of an ordinary resolution that the directors be authorised to pay fees to directors of an amount not exceeding $60,000 or such other amount as may be resolved by members at the meeting in respect of the year ending 30 June. 9 What is put against the applicants is that the meetings historically, over the last few years at the very least, and at least since 2012, have been held at this time of the year, and the conduct of those meetings has comprehended resolutions for the approval of directors' remuneration. So it follows that the applicants have had a level of consciousness about the orthodoxy of these meetings at this moment in time of each year, and, in particular, they have had knowledge of the proposed meeting since October. However, the matter is now brought before the Court urgently on Friday afternoon, immediately before the conduct of the meeting. I am not satisfied that the application warrants the urgency that is now attached to it. 10 If this application was to be brought on, it ought to have been brought on properly on Monday of this week, but, certainly, with some greater degree of notice attaching to the contended urgency. As I said, I am satisfied that the applicants have had knowledge of the orthodoxy of the timing of these meeting and, of course, of the orthodoxy of the AGM being held in discharge of the Corporations Law obligations at which this very class of conduct historically has been brought before the meeting, that is to say, the approval of directors' fees in relevant amounts. So for those reasons, I am not satisfied that the status quo ought to be altered by the intervention of the Court today to restrain the AGM. 11 I am encouraged by the respondent to the application to characterise the present application as, in effect, yet another species of the oppressive conduct that is contended for in the principal proceeding. I choose not to do so. It is sufficient to dispose of the application today to simply recognise that I am not satisfied that there is a serious question made out in relation to the aid in which the injunctive relief is sought and in the way it is sought. Secondly, there has been delay in the bringing of the application as it could have been brought on in a timely way at any point, really, from about the third week of October going forward. 12 I do not propose to descend into any observations about whether this is a class of conduct which is said to fall within the oppressive conduct generally alleged in the principal proceeding. It is not appropriate to make any findings or observations about those matters. It is just sufficient to dispose of the matter to recognise that I am not satisfied that a contravention, relevantly, is made out which establishes properly a basis for intervention, and in any event, there has been delay in bringing the specific application, compounded by a recognition that, at least over the last few years, the applicants have had knowledge that the company brings on its AGM at about this time and foreshadows the possibility of ordinary resolutions being passed addressing the subject matter which is now addressed. 13 There is one further matter which I think is relevant to the question of the application. That concerns the entitlement of shareholders to vote at the meeting. It is conceded that at least there are some levies which have not been paid by CDLI or other applicants for this relief. In circumstances where that is an extant fact, I am satisfied that this is a matter that also goes to the discretion when urgent interlocutory relief is sought of the kind that is sought today. 14 For those reasons, I dismiss the application with costs. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood.

Associate: Dated: 8 November 2019

SCHEDULE OF PARTIES QUD 801 of 2018 Cross-Respondents Second Cross-Respondent [COMPANY_6] 152 386 617 Third Cross-Respondent [COMPANY_6] 146 828 122 [COMPANY_10] [PHONE] Fifth Cross-Respondent [COMPANY_10] [PHONE] Sixth Cross-Respondent [NAME_8]