Adler v Stadium Operations Ltd

[2006] VSC 356

c

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

COMMERCIAL LIST

F6015
No.  2068 of 2006

LORRAINE MARGARET ADLER & ORS	Plaintiffs
V
STADIUM OPERATIONS LIMITED (ACN 079 701 447) & ORS	Defendants

---

JUDGE:	Whelan J
WHERE HELD:	Melbourne
DATE OF HEARING:	15 September 2006
DATE OF RULING:	15 September 2006
CASE MAY BE CITED AS:	Adler v Stadium Operations Limited
MEDIUM NEUTRAL CITATION:	[2006] VSC 356

---

INTERLOCUTORY INJUCTION – Application to restrain meetings of shareholders and unitholders - Balance of convenience – Resolutions bound to be passed – Delay – Alternative Remedies – Substance of undertakings as to damages – Injunction refused.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr. P. J. Bick with Mr. A Kirby	MGA Lawyers
For the First and Second Defendant	Mr. P. Collinson with Ms. S. Marks	Freehills
For the Third Defendant	Mr. M. Harvey	Freehills

HIS HONOUR:

1. By a summons filed today the plaintiffs seek to restrain the holding on Monday of two meetings.  The first is a meeting of Stadium Operations Ltd, the first defendant.  The second is a meeting of unit holders of the Stadium Property Trust, a trust of which the second defendant is manager, and the third defendant is trustee.

1. The plaintiffs are the owners of something slightly less then nine per cent of what are described as stapled securities in the first defendant, Stadium Operations Ltd, and the Stadium Property Trust.  The securities are stapled in the sense that the Articles and the Trust Deed prohibit dealing with the shares or the units separately.

1. The meetings on Monday are to consider a variety of matters.  Most significantly, both meetings are to consider resolutions having the effect of de-stapling the shares and units.  The shareholders in the Stadium Operations Ltd meeting will also consider a resolution under s.260B(3) of the Corporations Act, a resolution removing from the chairman of the company his casting vote at directors’ meetings, and a resolution affecting the company's lien over shares to secure unpaid calls and instalments.

1. At one point the plaintiffs wished to restrain the holding of the meeting to consider the resolution under s.260B(3) of the Corporations Act.  As matters transpired, they did not persist in that part of their application.

1. The grounds upon which it is said the meetings should not be held are, in substance, that:

●the information sent to shareholders and unit holders is misleading, or deficient in that it does not address all the issues that ought to be addressed;

●the resolutions proposed to be put are uncertain, and,

●there has been a failure to comply with the Trust Deed in not putting the de-stapling resolution in relation to the Stadium Property Trust before class meetings.  All of the plaintiffs hold units known as special income units.

1. I have heard argument throughout the afternoon and into the evening as to the alleged deficiencies in the notice, and I'm prepared to proceed on the basis that there is a serious question to be tried.  I observe that I have heard the plaintiffs’ counsel at some length in relation to the alleged deficiencies in the material accompanying the notices of the meetings.  The plaintiffs have not demonstrated, to my satisfaction, that there is evidence which I would describe as clear and compelling and which would lead to a conclusion that there is a serious question that there has been a contravention of the legislation, or of some other fiduciary, or other duty.  A number of matters have been raised.  There may be substance in them.  In the time available it has been difficult for me to assess them.  In the circumstances I do proceed on the basis that there is a serious question to be tried, however.

1. It is on the balance of convenience where, in my view, the application must fail.

1. It fails for these reasons:

(1)It is clear that in excess of a 75 per cent majority of shareholders and unit holders have committed themselves to, or have clearly indicated that they intend to, vote in favour of these resolutions.  If the meetings are held and the resolutions are persisted in they will inevitably be passed, or so it seems on the material before me.  Those propounding the resolutions do not wish to supplement, or to expand upon, the material already provided.  It seems to me that there is simply no point in requiring the adjournment of the meetings so as to enable persons who do not want to expand upon, or supplement, their material to do so in circumstances where, on the basis of the material as it stands, it is certain, or close to certain, that the resolutions will be passed whether they are put on Monday, or on some day shortly thereafter.

(2)It seems to me that the plaintiffs have been guilty of delay which is significant, and which has been inadequately explained in the sworn material.  Notice of the meetings was given on or shortly after 21 August 2006.  The plaintiffs did not make their application until today, the last business day before the meetings are to be held.  I arranged for the matter to be mentioned yesterday after the application was foreshadowed to the court.  No material was filed, or served, until today.  An applicant for   an injunction in such a position must give a full explanation, on oath, of the reasons for the delay.  In my view that full explanation is missing here.  As I indicated in the course of argument, the explanation given I find to be quite inadequate.  Whilst counsel for the plaintiffs supplemented the explanation from his instructions, in the circumstances that is not a satisfactory way for the matter to be addressed.

(3)If it transpires that the material which has been provided is misleading, or is deficient, or if it transpires that a class meeting of unit holders ought to have been held, or if it transpires that the effect of de-stapling the shares and units is oppressive, or unfair, remedies will be available to the plaintiffs to address that position, notwithstanding the vote on Monday.

(4)I am concerned at the absence of material in relation to the undertaking as to damages.  In circumstances such as these, where an   application is made very late by minority securityholders to restrain a meeting, or meetings in this case, from proceeding, it is most important that the plaintiffs make it clear that undertakings as to damages are available which have real substance.  That is not the position here.  I observe, however, that there is similarly no evidence that any great harm would have been done other than the cost of convening further meetings if I had enjoined the meetings from being held on Monday.  Accordingly if this had been the only factor I would not have refused the injunction on that ground alone.  I do nevertheless take it into account. 

1. Accordingly, the summons of 15 September is dismissed.