Ansons Pty Ltd v Merlex Corporation Pty Ltd

[2001] WASC 204

ANSONS PTY LTD & ANOR -v- MERLEX CORPORATION PTY LTD [2001] WASC 204

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2001] WASC 204
Case No:	COR:55/2001	Heard:	28 JUNE 2001
Coram:	MASTER SANDERSON	Delivered:	9/08/01
No of pages:	27	Judgment Part:	1 of 1
Result:	Order discharged
Category:	A
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Parties:	ANSONS PTY LTD BARRY REGINALD HOBSON MERLEX CORPORATION PTY LTD (ACN 072 109 641) EASTBANK HOLDINGS PTY LTD (ACN 062 858 226) TECHNOLAB PTY LTD (ACN 072 109 365)
Catchwords:	Practice and procedure Application to discharge perfected order made by consent Principles
Legislation:	Corporations Law, s 290(1), s 1303 Supreme Court Act 1935, s 58(1)(a)
Case References:	Bailey v Marinoff (1971) 125 CLR 529 Commonwealth Scientific and Industrial Research Organisation v Perry (1988) 92 FLR 182 DJL v Central Authority (2000) 170 ALR 659 Esther Investments Pty Ltd v Markalinga Pty Ltd (1992) 8 WAR 400 FAI General Insurance Co Ltd v Southern Cross Exploration (1988) 165 CLR 268 Forbes Ex Parte Bevan (1972) 127 CLR 1 Gamser v The Nominal Defendant (1977) 136 CLR 145 Gould v Vaggelas (1985) 157 CLR 215 Harvey v Phillips (1956) 95 CLR 235 Nicholas v R (1998) 151 ALR 312 Quin v The Mercury Bay Timber Company (Limited) (1885) NZLR 3SC 352 Re South Queensland Broadcasting Holdings Pty Ltd [1976] Qd R 69 Ridgeway v R (1995) 184 CLR 19 State of Pennsylvania v The Wheeling and Belmont Bridge Company 59 US 435 System Federation No 91, Railway Employees Department, AFL-CIO v Wright 364 US 642 Tak Ming Co Ltd v Yee Sang Metal Supplies Co (1973) 1 WLR 300 The Council of the Shire of Werribee Council v Kerr (1928) 42 CLR 1 United States v Swift & Co 286 US 106 Adam P Brown Male Fashions Pty Ltd v Phillip Morris Incorporated (1981) 148 CLR 170 Chanel Ltd v F W Woolworth & Co (1981) 1 All ER 745 Christmas Island Resort Pty Ltd v Geraldton Building Co Pty Ltd (1997) 18 WAR 334 Hutchinson v Nominal Defendant [1972] 1 NSWLR 443 Lane; Ex Parte Project Tile Fixing Pty Ltd, unreported; FCt SCt of WA; Library No 980223; 10 March 1998 Permanent Trustees Co v Stocks & Holdings Pty Ltd 15 ACTR 45 R J Davies Pty Ltd v C R Keith Earthmoving Co Pty Ltd [1965] WAR 189 Woods v Sheriff of Queensland (1895) 6 QLJ 163

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : ANSONS PTY LTD & ANOR -v- MERLEX CORPORATION PTY LTD [2001] WASC 204 CORAM : MASTER SANDERSON HEARD : 28 JUNE 2001 DELIVERED : 9 AUGUST 2001 FILE NO/S : COR 55 of 2001 MATTER : Section 1303 of the Corporations Law of Western Australia

BETWEEN : ANSONS PTY LTD

First Plaintiff

BARRY REGINALD HOBSON
Second Plaintiff

AND

MERLEX CORPORATION PTY LTD (ACN 072 109 641)
Defendant

FILE NO/S : COR 56 of 2001 MATTER : Section 1303 of the Corporations Law of Western Australia

BETWEEN : ANSONS PTY LTD

First Plaintiff

BARRY REGINALD HOBSON
Second Plaintiff

AND

(Page 2)

EASTBANK HOLDINGS PTY LTD (ACN 062 858 226)
Defendant

FILE NO/S : COR 57 of 2001 MATTER : Section 1303 of the Corporations Law of Western Australia

BETWEEN : ANSONS PTY LTD

First Plaintiff

BARRY REGINALD HOBSON
Second Plaintiff

AND

TECHNOLAB PTY LTD (ACN 072 109 365)
Defendant

Catchwords:

Practice and procedure - Application to discharge perfected order made by consent - Principles

Legislation:

Corporations Law, s 290(1), s 1303

Supreme Court Act1935, s 58(1)(a)

Result:

Order discharged

(Page 3)

Category: A

Representation:

COR 55 of 2001

Counsel:

First Plaintiff : Mr P A Tottle
Second Plaintiff : Mr P A Tottle
Defendant : Mr D M Stone

Solicitors:

First Plaintiff : Tottle Christensen
Second Plaintiff : Tottle Christensen
Defendant : Williams & Hughes

COR 56 of 2001

Counsel:

First Plaintiff : Mr P A Tottle
Second Plaintiff : Mr P A Tottle
Defendant : Mr D M Stone

Solicitors:

First Plaintiff : Tottle Christensen
Second Plaintiff : Tottle Christensen
Defendant : Williams & Hughes

(Page 4)

COR 57 of 2001

Counsel:

First Plaintiff : Mr P A Tottle
Second Plaintiff : Mr P A Tottle
Defendant : Mr D M Stone

Solicitors:

First Plaintiff : Tottle Christensen
Second Plaintiff : Tottle Christensen
Defendant : Williams & Hughes

Case(s) referred to in judgment(s):

Bailey v Marinoff (1971) 125 CLR 529
Commonwealth Scientific and Industrial Research Organisation v Perry (1988) 92 FLR 182
DJL v Central Authority (2000) 170 ALR 659
Esther Investments Pty Ltd v Markalinga Pty Ltd (1992) 8 WAR 400
FAI General Insurance Co Ltd v Southern Cross Exploration (1988) 165 CLR 268
Forbes Ex Parte Bevan (1972) 127 CLR 1
Gamser v The Nominal Defendant (1977) 136 CLR 145
Gould v Vaggelas (1985) 157 CLR 215
Harvey v Phillips (1956) 95 CLR 235
Nicholas v R (1998) 151 ALR 312
Quin v The Mercury Bay Timber Company (Limited) (1885) NZLR 3SC 352
Re South Queensland Broadcasting Holdings Pty Ltd [1976] Qd R 69
Ridgeway v R (1995) 184 CLR 19
State of Pennsylvania v The Wheeling and Belmont Bridge Company 59 US 435
System Federation No 91, Railway Employees Department, AFL-CIO v Wright 364 US 642
Tak Ming Co Ltd v Yee Sang Metal Supplies Co (1973) 1 WLR 300
The Council of the Shire of Werribee Council v Kerr (1928) 42 CLR 1
United States v Swift & Co 286 US 106




(Page 5)

Case(s) also cited:

Adam P Brown Male Fashions Pty Ltd v Phillip Morris Incorporated (1981) 148 CLR 170
Chanel Ltd v F W Woolworth & Co (1981) 1 All ER 745
Christmas Island Resort Pty Ltd v Geraldton Building Co Pty Ltd (1997) 18 WAR 334
Hutchinson v Nominal Defendant [1972] 1 NSWLR 443
Lane; Ex Parte Project Tile Fixing Pty Ltd, unreported; FCt SCt of WA; Library No 980223; 10 March 1998
Permanent Trustees Co v Stocks & Holdings Pty Ltd 15 ACTR 45
R J Davies Pty Ltd v C R Keith Earthmoving Co Pty Ltd [1965] WAR 189
Woods v Sheriff of Queensland (1895) 6 QLJ 163

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1 MASTER SANDERSON: On 21 March 2001 in each action, by consent, I made the following orders on the plaintiff's originating process:

"1. The defendant make available for inspection by the authorised representative of the first plaintiff:

1.1 The register of members of the defendant;

1.2 Any other register required to be maintained by the defendant pursuant to the provisions of the Corporations Law of Western Australia; and

1.3 All minute books containing the minutes of meetings of members and recording the resolutions passed by members of the defendant.


2. The defendant make available for inspection by the authorised representative of the second plaintiff;

2.1 The register of members of the defendant;

2.2 Any other register required to be maintained by the defendant pursuant to the provisions of the Corporations Law of Western Australia;

2.3 All minute books containing the minutes of meetings of members and recording the resolutions passed by members of the defendant;

2.4 All minute books containing the minutes of meetings of directors and recording the resolutions passed by the directors of the defendant;

2.5 All financial records (as that term is defined in the Corporations Law of Western Australia) of the defendant.


3. The defendant pay the plaintiffs' costs of the application."

2 By an amended interlocutory application the defendant now seeks discharge of these consent orders. The relief claimed by the defendant is in the following terms:

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"1. That orders 2.4 and 2.5 of the consent orders made 21 March 2001 by Master Sanderson be discharged;

1A. alternatively, that the consent orders made 21 March 2001 by Master Sanderson be varied in accordance with the enclosed Minute of Amended Consent Order;

2. the Second Plaintiff pay the Defendant's costs of this application in any event."

3 As at the date the consent orders were made the second plaintiff was a director of the defendant. He was therefore entitled to access to the financial records of the defendant at all reasonable times: see s 290(1) of the Corporations Law ("the Law"). The actual order for compliance with the provisions of s 290(1) was made under s 1303 of the Law. It is not in dispute that at the time the order was made it was within power and properly made. However, on 12 April 2001 the second plaintiff, so the defendant now says, was removed as a director. In his evidence in opposition to this application and in the written submissions filed by counsel, it was submitted that the purported removal of the second plaintiff as a director of the defendant was ineffective. Although counsel for the second plaintiff did not press this argument during the course of submissions, it is a matter which has been raised and should be dealt with.

4 The application is supported by two affidavits of Raalin Wheeler, which were sworn on 8 May 2001 and 8 June 2001. The picture that emerges can be summarised in the following way. On 21 March 2001 written notice of a general meeting of shareholders of the defendant was issued. The notice advised that the general meeting would be held at 10.30am on Thursday 12 April 2001 at 77 Chatsworth Street, Highgate. The notice contained advice that a resolution would be put at the general meeting to remove the second plaintiff as a director of the defendant. Written notice of the general meeting was sent to the second plaintiff personally and in his capacity as a director of the first plaintiff on 21 March 2001. The general meeting of the defendant duly took place at the appointed hour and on the appointed day and the resolution removing the second plaintiff as a director of the defendant was passed. Thus, says the defendant, the second plaintiff ceased to be a director of the defendant on 12 April 2001.

5 The second plaintiff complains that the notice of the general meeting contained the words "By order of the Board". It is said by the plaintiffs that no meeting of directors had taken place and therefore the notice of

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general meeting could not have been issued by the Board of the defendant. It is said that in the face of an irregular notice the general meeting was not properly convened, the resolution of the general meeting was not properly passed and the second plaintiff remains a director of the defendant.

6 Accepting, for present purposes, that the inclusion of the words "By order of the Board" is an irregularity, it is clearly a procedural irregularity only and would not affect the validity of the shareholders' resolution. Under s 1322(2) of the Law the general meeting would not be invalidated because of a procedural irregularity in the notice of meeting. There is, in effect, a presumption that the notice was regular and to establish that was not the case it would be necessary for the second plaintiff to issue proceedings seeking a declaration to that effect. That has not been done. In the circumstances I am satisfied that the effect of the general meeting of 12 April 2001 was to remove the second plaintiff as a director of the defendant.

7 It is clear that once a person ceases to be a director of a corporation the right to inspect the financial records of that corporation is automatically lost. It is not the case that the person's right to inspect the financial records after the date of his removal as a director is lost. After removal the former director has no right at all to inspect any of the financial records - at least not pursuant to s 290(1). This issue was considered by the Full Court of the Supreme Court of Queensland in Re South Queensland Broadcasting Holdings Pty Ltd [1976] Qd R 69. The legislation there under consideration was the precursor to s 290, but the same principles apply. Matthews J said (at 72):

"If he ceases to be a director his right to inspect is automatically lost and any ancillary right to have assistance must also be lost. …

After he ceased to be a director … (he) could not claim or carry on with an inspection of accounting records pursuant to that subsection bona fide for the purposes for which the power was conferred. It would no longer be within the scope of the power and so could not be validly exercised."

8 At the outset a number of points can be made which, while uncontroversial, put the precise nature of this application in context. First, as I have indicated above, the order in question has been perfected or as some commentators prefer to say, has been entered: see E Campbell, "Revocation and Variation of Administrative Decisions" (1996) 22

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MULR 30 at 31 -- 36; M Allars, "Perfected Judgments and Inherently Angelical Administrative Decisions: The Power of the Courts and Administrators to Re-open or Reconsider their Decisions" (2001) 21 Aust Bar Rev 50 at 50 - 51. This stands in contrast to the position where the order is unperfected or unentered and where different rules apply. Secondly, there is no question of the application to this case of the so-called slip rule: See O 21 r 10. It was not suggested by counsel for the defendant that the form of the order did not accurately reflect the agreement reached between the parties. Thirdly, it was submitted by counsel for the defendant and conceded by counsel for the plaintiff that although the general rule was that a perfected or entered judgment could not be subsequently amended, there were certain exceptions to this rule. Some of these exceptions were well defined. For instance, a default judgment could be re-opened, interlocutory orders can be varied, a judgment could be re-opened where it was made in the absence of a party, or a judgment was affected by fraud. Further, both counsel agreed that a perfected judgment could be varied by consent of the parties. Both counsel also agreed that none of these instances applied in this case.

9 The defendant's submissions can be reduced to one simple proposition. It was said that if the underlying circumstances which led to the making of an order are changed so that there was no longer any legal basis for the making of that order, then even if the order had been perfected it could be varied. It was submitted that the power to vary the order rested on the inherent jurisdiction of the Court and the need to ensure that justice was done between the parties.

10 Counsel relied on a number of decisions, beginning with the decision of Malcolm CJ in Esther Investments Pty Ltd v Markalinga Pty Ltd (1992) 8 WAR 400. This case concerned a situation where judgment on an action for specific performance of an agreement was delivered on 28 April 1989. Counsel for the defendants moved successfully for orders that the claim be dismissed with costs. Nearly 3-1/2 years later, and after the judgment had been perfected, the defendant applied by a notice of motion for a "special order" as to costs. The first question was whether the court had power to entertain the application. His Honour said (at 407):

"The jurisdiction to add to or vary a judgment which has been delivered and which has been perfected by formal judgment being entered and extracted in the court is an unusual one. The jurisdiction, of course, exists. Quite apart from the slip rule in

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O 21 r 10, the court has an inherent jurisdiction to rectify situations which may perpetuate an injustice to litigants."

11 His Honour referred to the decision of the High Court in Gould v Vaggelas (1985) 157 CLR 215 where, at 274 - 275, Gibbs CJ, Wilson, Brennan and Dawson JJ refer to the inherent power of the court to amend an order. In that case the court was dealing with the situation where the failure to include a provision with respect to interest in the judgment came about by inadvertence of counsel. The case was complex and the court accepted that in the circumstances the accidental omission on the part of the applicants' legal representatives was understandable. Malcolm CJ also referred to the decision of the Privy Council in Tak Ming Co Ltd v Yee Sang Metal Supplies Co (1973) 1 WLR 300 as a case to like effect.

12 In the event his Honour refused to make the order. In doing so he said (at 409):

"In my view, the circumstances of this case are such that it would be a wrong exercise of the discretion which I undoubtedly have to exercise it in favour of the defendant in this case. I am not persuaded that it is necessary to show delay coupled with prejudice in the sense in which that was demonstrated in Tak Ming Co Ltd v Yee Sang Metal Supplies Co (supra) before the court would decline to exercise its discretion. In the context of that case, the question was whether under the slip rule there was a discretion to refuse an order if something had intervened which would render it inexpedient or inequitable to do so."

13 Reading the report, it is not entirely clear whether in the end his Honour dealt with the application under the slip rule or under the inherent jurisdiction of the court. Either way, the case concerned a situation where amendment was sought to rectify an omission by counsel. That distinguishes Esther Investments from the present case. What Esther Investments does establish, relevantly, is that there exists a power in the court to vary a perfected judgment. As I have said, that principle was not questioned by counsel for the plaintiff.

14 Counsel for the defendant placed strong reliance upon the decision of the Full Court of the Supreme Court of South Australia in Commonwealth Scientific and Industrial Research Organisation v Perry (1988) 92 FLR 182. The facts of the case can be summarised in this way. The plaintiff, an agency of the Commonwealth, in 1980 proposed to import into

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Australia and release certain insects for the purpose of eradicating or controlling a plant known as Salvation Jane. The plaintiff regarded Salvation Jane as a noxious weed. However, apiarists and certain others engaged in the production of honey regarded Salvation Jane as useful in agricultural production. The defendants brought an action initially in the High Court seeking to restrain by permanent injunction the plaintiff from importing, breeding or releasing the species of insect. The matter was remitted to the Supreme Court of South Australia pursuant to s 44 of the Judiciary Act.

15 In 1980 the action was settled by agreement between the parties. This agreement was embodied in a document which allowed for a grant of a perpetual injunction against the plaintiff. Orders were made accordingly. However, the agreement between the parties recognised that there was a prospect that the Commonwealth and/or State governments may legislate to allow for the import and release of the insects. Two recitals of the agreement were in the following terms:

"(m) The defendant has become aware the Commonwealth, State and Territory Governments are considering the need to legislate in respect of biological control systems for weeds and pests and that a working party (consisting of officials of the said Governments) has been established to develop proposals for legislation;

(n) Should such legislation be enacted and should the defendant propose to engage in programmes for the biological control of the plant (Salvation Jane) making use of any of the species of insects which are mentioned in paragraph (a) or paragraph (b) or Clause 1 of the Minutes of Orders contained in annexure "F" hereto the defendant gives notice that it may wish to apply to the Court for a dissolution of the perpetual injunction referred to hereinafter but the plaintiffs reserve their right to oppose any such application."

16 Clause 5 of the agreement was in the following terms:

"That, in the event that the defendant proposes to carry out any programme of biological control of (Salvation Jane) (being a programme other than the programme the subject of the perpetual injunction) and the defendant remains subject to the perpetual injunction referred to in clause 1 hereof, the defendant

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shall give the plaintiffs' solicitors three months' notice in writing of its intention to carry out any further programme."

17 As anticipated, the Commonwealth and the Australian States enacted legislation allowing for the import and release of the insects. After the enactment of this legislation but prior to the release of the insects, the plaintiff applied for variation of the perpetual injunction. In the course of his judgment King CJ pointed out that there was no reported case either in Australia or England in which a permanent injunction had been dissolved in a subsequent action. His Honour then referred to three United States decisions and one New Zealand decision where perpetual injunctions were dissolved consequent upon subsequent legislation. His Honour concluded (at 186):

"I have no doubts as to the power of the court to dissolve a permanent injunction where Parliament expressly authorises that which the party is prohibited by the injunction from doing."

18 With respect, it does not seem that the precise basis upon which his Honour reached his conclusion emerges from the reasons. On one reading it may be said that the decision applies only in cases where a subsequent act of parliament expressly authorises that which the party is prohibited by the injunction from doing. If that is the proper view of the decision, it is of limited application and not directly relevant to this case. There is no discussion in the reasons as to whether the discharge of the injunction is based upon the need to do justice between the parties and there is no mention of the policy consideration of bringing an end to litigation and how that relates to the facts in the case. Nor is there any discussion of the effect of the agreement between the parties and its impact upon the application, or the significance of the fact that the order was made by consent.

19 Some assistance may be gained from consideration of the three US decisions and the New Zealand decision referred to by his Honour in his judgment. The first of these is the State of Pennsylvania v The Wheeling and Belmont Bridge Company 59 US 435. The facts of the case can be summarised in this way. The State of Pennsylvania sought orders in the US Supreme Court for the removal of an alleged obstruction to the navigation of the Ohio River caused by the erection of a bridge at Wheeling. In May 1852 the court declared the bridge in question to be an obstruction of the free navigation of the Ohio River and directed that the obstruction be removed either by elevating the bridge to a height designated or by abatement. On 31 August 1852, before the execution of

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the decree, and by an act of Congress, the bridge constructed was declared to be a lawful structure in its then condition. Subsequently the bridge was blown down in a gale of wind and the defendant was making preparations to rebuild it when the plaintiff filed an application for an injunction. No opposition was made on the part of the defendant and the injunction was granted. The defendant disregarded the injunction and the matter came before the US Supreme Court on motions by the plaintiff for attachment and sequestration of the property of the defendant for contempt. The defendant moved for dissolution of the injunction.

20 By a majority the court determined the injunction should be dissolved. During the course of his judgment Mr Justice Nelson said (at 437):

"But it is urged that the Act of Congress cannot have the effect and operation to annul the judgment of the court already rendered, or the rights determined thereby in favour of the plaintiff. This, as a general proposition, is certainly not to be denied, especially as it respects adjudication upon the private rights of parties. When they have passed into judgment the right becomes absolute, and it is the duty of the court to enforce it.

The case before us, however, is distinguishable from this class of cases, so far as it respects that portion of the decree directing the abatement of the bridge. Its interference with the free navigation of the river constituted an obstruction to a public right secured by Acts of Congress.

But, although this right of navigation be a public right common to all, yet a private party sustaining special damage by the obstruction may, as has been held in this case, maintain an action at law against the party creating it, to recover damages; or to prevent irreparable injury, file a bill in chancery for the purpose of removing the obstruction. In both cases, the private right to damages, or the removal, arises out of the unlawful interference with the enjoyment of the public right, which, as we have seen, is under the regulation of Congress. Now, we agree, if the remedy in this case had been an action at law, and a judgment rendered in favour of the plaintiff for damages, the right to these would have passed beyond the reach of the power of Congress. It would have depended, not upon the public right of free navigation of the river, but upon the judgment of the

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court. The decree before us, so far as it respects the costs adjudged, stands upon the same principles, and is unaffected by the subsequent law. But that part of the decree, directing the abatement of the obstruction, is executory, a continuing decree, which requires not only the removal of the bridge, but enjoins the defendants against any reconstruction or continuance. Now, whether it is a future existing or continuing obstruction depends upon the question whether or not it interferes with the right of navigation. If, in the mean time, since the decree, this right has been modified by the competent authority, so that the bridge is no longer an unlawful obstruction, it is quite plain the decree of the court cannot be enforced. There is no longer any interference with the enjoyment of the public right inconsistent with law, no more than there would be where the plaintiff himself had consented to it, after the rendition of the decree. Suppose the decree had been executed, and after that, the passage of the law in question, can it be doubted that the defendants would have had a right to reconstruct it? And it is it not equally clear that the right to maintain it, if not abated, existed from the moment of the enactment?"

21 The case of United States v Swift & Co 286 US 106 concerned injunctions issued under the provisions of the Sherman Anti Trust Act. The conclusion reached by the court as found in the Statement of Case (the equivalent of the headnote in our reports) relevantly reads:

"1. A court of equity has power to modify a continuing decree of injunction which is directed, not to the protection of rights fully accrued upon facts substantially permanent, but to the supervision of future conduct in relation to changing conditions.

2. This power, if not reserved expressly in the decree, is still inherent; and it is the same whether the decree was entered by consent or after litigation.

3. The decree in this case is to be treated as a judicial act, not as a contract; the consent to it was directed to events as they then were and was not an abandonment of the right to exact revision in the future, if revision should become necessary in adaptation to events to be."

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22 In delivering the opinion of the court Mr Justice Cardozo said (at 114 - 115):

"The distinction is between restraints that give protection to rights fully accrued upon facts so nearly permanent as to be substantially impervious to change, and those that involve the supervision of changing conduct or conditions and are thus provisional and tentative. The result is all one whether the decree has been entered after litigation or by consent. In either event, a court does not abdicate its power to revoke or modify its mandate if satisfied that what it has been doing has been turned through changing circumstances into an instrument of wrong. We reject the argument for the interveners that a decree entered upon consent is to be treated as a contract and not as a judicial act. A different view would not help them, for they were not parties to the contract, if any there was. All the parties to the consent decree concede the jurisdiction of the court to change it. The interveners gain nothing from the fact that the decree was a contract as to others, if it was not one as to them. But in truth what was then adjudged was not a contract as to any one. The consent is to be read as directed towards events as they then were. It was not an abandonment of the right to exact revision in the future, if revision should become necessary in adaptation to events to be.

Power to modify existing, we are brought to the question whether enough has been shown to justify its exercise."

23 It is worthy of note that in this case the injunction the subject of the action was granted by consent. However, the decree which led to the injunction contained the provision that the decree itself "shall not constitute or be considered as an adjudication that the defendants or any of them, have in fact violated any law of the United States".

24 The United States government consented to a modification of the consent decree if it were shown that there were changed conditions. As is apparent from the judgment of Mr Justice Cardozo, it was certain interveners who submitted that it was not open to the court to modify the injunction. The court concluded that there was a power to modify the injunction if changed circumstances were shown.

25 The same question arose for consideration again by the US Supreme Court in System Federation No 91, Railway Employees Department,

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AFL-CIO v Wright 364 US 642. The facts of this case, taken from the headnote, were as follows:

"In 1945, when the Railway Labour Act prohibited union-shop agreements between railroads and labour unions, nonunion employees of a railroad brought a suit against the railroad and certain unions of its employees which resulted in a consent decree forbidding the defendants to discriminate against nonunion employees because of their refusal to join unions. After the Act was amended in 1951 so as to permit union-shop agreements between railroads and labour unions, the petitioner unions moved that the decree be modified so as not to prohibit the defendants from entering into such agreements. The District Court, which had retained jurisdiction of the suit, denied the motion."

26 The Supreme Court determined that the District Court had erred since the change in the law had expressly made lawful what had before been unlawful. The Court reaffirmed the power of the District Court to modify the injunction. State of Pennsylvania v Wheeling and Belmont Bridge Company and United States v Swift & Co were referred to with approval. After referring to these two cases Mr Justice Harlan who delivered the opinion of the court continued (at 647 - 648):

"The source of the power to modify is of course the fact that an injunction often requires continuing supervision by the issuing court and always a continuing willingness to apply its powers and processes on behalf of the party who obtained that equitable relief. Firmness and stability must no doubt be attributed to continuing injunctive relief based on adjudicated facts and law, and neither the plaintiff nor the court should be subjected to the unnecessary burden of re-establishing what has once been decided. Nevertheless the court cannot be required to disregard significant changes in law or facts if it is 'satisfied that what it has been doing has been turned through changing circumstances into an instrument of wrong'. (A quote from United States v Swift & Co at 114 - 115). A balance must thus be struck between the policies of res judicata and the right of the court to apply modified measures to changed circumstances.

Where there is such a balance of imponderables there must be wide discretion in the District Court. But the discretion is never without limits and these limits are often far clearer to the

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reviewing court when the new circumstances involve a change in law rather than facts."

27 The New Zealand decision of Quin v The Mercury Bay Timber Company (Limited) (1885) NZLR 3SC 352 is of rather less assistance. Justice Gillies dissolved a perpetual injunction which had been granted prohibiting acts which were subsequently made lawful by an Act of Parliament. His Honour noted that the Act of Parliament entitled the plaintiffs to do what they would otherwise have been prevented from doing by injunction. He went on (at 353):

"Such being the case, the exercise now by the defendants of their legal rights would not be punishable as a breach of the injunction. The defendants, instead of disregarding the injunction, have adopted the wiser course of asking this Court to remove it, and although I have been able to discover no precedent for dissolving a perpetual injunction, I think on principle the injunction ought be dissolved instead of being allowed to remain as a mere brutum fulmen."

28 All four of these cases have two aspects in common. First they relate to injunctions which, upon the reading of the decisions, involve an exercise of equitable jurisdiction. Secondly, each involves a situation where an act of parliament directly authorises a party to take some action which it would otherwise have been prevented from taking by the injunction. Furthermore, the United States decisions, and perhaps by implication the decision of the Supreme Court of New Zealand, make it plain that the power to discharge the perfected order exists even though the injunction was granted by consent and pursuant to an agreement between the parties. The underlying reasoning, at least of the US courts, is that relief imposed by the courts should not be static and eternal, but adapted as changing circumstances demand.

29 There are a number of obvious differences between the circumstances of this case and the facts in the authorities that I have mentioned. First, and most obviously, this is not a case where there has been a change of the legislation after the order has been perfected. But it is the case that the facts have changed - the second plaintiff was a director as at the date the order was perfected, but is no longer a director. In that sense the second plaintiff's rights have changed between the date when the order was perfected and the date of this application. That alteration to the second plaintiff's rights has not been effected by the passage of legislation, but rather by the change in his status from director to

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ex-director. However, in all instances - both in the authorities I have cited and in this case - the rights of the parties at law have been altered.

30 As I have said, all of the authorities cited relate to a situation where injunctive relief has been granted pursuant to the equitable jurisdiction of the court. In United States v Swift & Co the injunction had been granted in an action brought under the Sherman Anti Trust Act. But the decision makes it plain that the injunction was not granted pursuant to a provision of the statute but rather in the exercise of the court's equitable jurisdiction. In this action no injunction was granted. Rather, an order was made under s 1303 of the Law. That section is couched in terms which are akin to the granting of a mandatory injunction. Nonetheless it must be acknowledged that there is a point of distinction between the statutory remedy ordered in this case and the equitable relief under consideration in the authorities.

31 For the sake of completeness and before turning to the authorities relied upon by the plaintiff, I should also make reference to the decision of Nicholas v R (1998) 151 ALR 312. The appellant in that case had obtained an order for a stay of criminal proceedings brought against him based upon evidence being excluded consistent with the decision of the High Court in Ridgeway v R (1995) 184 CLR 19. Subsequent to the stay being obtained, legislation was introduced which allowed such evidence to be tendered. Inter alia it was argued before the High Court that the stay having been granted, the order could not be varied. The court rejected that argument. Kirby J, consistent with the views of the other members of the court, said (at 369):

"It being conceded that no res judicata (or issue estoppel) was affected by the stay order the power of the court to lift the order in the changed circumstances would seem clear enough."

32 In making the statement his Honour noted the decisions in CSIRO v Perry, United States v Swift & Co, System Federation v Wright and Quin v Mercury Bay Timber Co. However, in my view, the decision on this point should be treated with some caution. What the court was dealing with in the Nicholas decision was a stay order granted in criminal proceedings. Furthermore, the issue appears not to have been fully argued and certainly did not receive detailed consideration by the court. Perhaps the best that can be said is that there is nothing in the decision of Nicholas v R which is inconsistent with the authorities relied upon by the defendant.
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33 Counsel for the plaintiff placed reliance on a line of authorities, the best known of which is the decision of the High Court in Bailey v Marinoff (1971) 125 CLR 529. The facts in this case taken from the headnote were as follows:

"In an appeal pending in the Court of Appeal Division of the Supreme Court of New South Wales, the Court on 10 February 1970 ordered that if Dimiter Marinoff, who was appellant in the appeal, did not file and serve the appeal books therein on or before 31st March 1970 the appeal was to stand dismissed for want of prosecution. Appeal books were filed by that day but they were not served until 6th April 1970. By notice of motion dated 20th May 1970 the said appellant gave notice of an application for orders (1) that the time for filing and serving appeal books be extended to 6th April 1970; (2) that the appeal be restored to the list for hearing.

On 28 September 1970 the Court of Appeal ordered that the filing and service of appeal books that had been affected should be deemed a sufficient compliance with the requirements of the order of 10th February 1970 and that a note of the order be endorsed on the order of 10th February 1970."

34 The respondent to the appeal appealed to the High Court. The court held by a majority that the Court of Appeal had erred. Barwick CJ concluded (at 530 - 531):

"Once an order disposing of a proceeding has been perfected by being drawn up as the record of a court, that proceeding, apart from any specific and relevant statutory provision is at an end in that court and is in its substance, in my opinion, beyond recall by that court. It would, in my opinion, not promote the due administration of the law or the promotion of justice for a court to have a power to reinstate a proceeding of which it is finally disposed. In my opinion, none of the decided cases lend support to the view that the Supreme Court in this case had any inherent power or jurisdiction to make the order it did make, its earlier order dismissing the appeal having been perfected by the processes of the Court."

35 Menzies J reached the same conclusion. His Honour said (at 531 - 532):

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"This appeal is not concerned with the power of a court to alter orders in pending litigation. It is concerned with the power of a court to make an order in litigation which, without any error or lack of jurisdiction, has been regularly concluded and is no longer before the court. To recognise the problem is, I think, to solve it. However wide the inherent jurisdiction of a court may be to vary orders which have been made, it cannot, in my opinion, extend the making of orders in litigation that has been brought regularly to an end."

36 Gibbs J dissented and in the course of doing so said (at 539 - 540):

"It is a well-settled rule that once an order of a court has been passed and entered or otherwise perfected in a form which correctly expresses the intention with which it is made the court has no jurisdiction to alter it … The rule rests on the obvious principle that it is desirable that there be an end to litigation and on the view that it would be mischievous if there were jurisdiction to rehear a matter decided after a full hearing. However, the rule is not inflexible and there are a number of exceptions to it in addition to those that depend on statutory provisions such as the slip rule found in most rules of court. Indeed, as the way in which I have already stated the rule implies, the court has the power to vary an order so as to carry out its own meaning or to make plain language which is doubtful, and that power does not depend on rules of court but is inherent in the court ... Further, it has been held that the court may amend part of a judgment or order which is 'not the operative and substantial part' …; such an amendment, which may be far from being merely formal in its effect, could, as Singleton LJ pointed out in Thynne v Thynne, only be made under the inherent jurisdiction … Moreover, it has been held that in certain cases circumstances occurring since the judgment may warrant the making of a supplemental order: Preston Banking Co v William Allsup & Sons [1895] 1 Ch 144 and Prestney v Corporation of Colchester [1883] 24 Ch D 376."

37 The decision in Bailey has been followed in a number of decisions, perhaps the best known of which is Gamser v The Nominal Defendant (1977) 136 CLR 145. Neither decision is easy to reconcile with the decision of the High Court in FAI General Insurance Co Ltd v Southern Cross Exploration (1988) 165 CLR 268. Wilson J and Gaudron J both distinguish Bailey and Gamser and like decisions. However, Gaudron J

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in particular expressed reservations about the policy considerations underlying the rigid rule as expressed by Barwick CJ in both Bailey and Gamser: see 290. Her Honour's comments on the policy considerations, as supported by the brief judgment of Brennan J, are worthy of note.

38 Counsel for the plaintiff also relied upon the High Court decision in Harvey v Phillips (1956) 95 CLR 235. The facts of this case taken from the headnote were as follows:

"The plaintiff brought an action for damages against the defendants as executors of a surgeon in respect of injuries which she attributed to an operation. Before the trial offers to settle were made by the defendants but were rejected by the plaintiff, against the advice of her counsel. When the case came on for trial discussions of settlement were held after the jury had been sworn, but the plaintiff remained adamant even after the judge had seen her in his chambers and had advised her to heed counsel's opinion. Senior counsel for the plaintiff then went from the court and it appeared that the plaintiff was left with the impression that he had thrown up her case. Ultimately, after extreme pressure from her friends and legal advisers, the plaintiff intimated that she would accept the offer. Senior counsel on each side signed terms of settlement and the judge adjourned the Court. It appeared that the plaintiff who was deaf did not hear these final proceedings. The plaintiff then said she had never given her consent to settle and applied by motion to the Full Court to set aside the judgment. Judgment had not in fact been signed or entered. The Full Court dismissed the motion."

39 The High Court dismissed the appeal essentially on the basis that the plaintiff's counsel had acted in accordance with his authority. As the case concerned a judgment which had not been perfected in must be treated with some caution. Nonetheless, during the course of their reasons the court dealt with the status of a judgment entered by consent after agreement between the parties. The court said (at 243 - 244):

"The question whether the compromise is to be set aside depends upon the existence of a ground which would suffice to render a simple contract void or voidable or to entitle the party to equitable relief against it, grounds for example such as illegality, misrepresentation, non-disclosure of a material fact where disclosure is required, duress, mistake, undue influence,

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abuse of confidence or the like. The rule appears rather, from positive statement of the grounds that suffice … but there is a dictum of Lindley LJ which is distinct enough: '… nor have I the slightest doubt that a consent order can be impeached, not only on the ground of fraud but upon any grounds which invalidate the agreement it expresses in a more formal way than usual … To my mind the only question is whether the agreement on which the consent order was based can be invalidated or not. Of course if that agreement cannot be invalidated the consent order is good': Huddersfield Banking Co Ltd v Henry Lister & Son Ltd (1895) 2 Ch 273 at 280."

40 The most recent decision where the question of varying an order has been considered is the case of DJL v Central Authority (2000) 170 ALR 659. The facts of the case again taken from the headnote were as follows:

"The appellant, an Australian citizen, was the mother of a child. In 1995 the mother left the matrimonial home in the United States, abducted the child and brought the child to Australia. Under the provisions of the Hague Convention on the Civil Aspects of International Child Abduction, an application was filed in the Family Court of Australia for an order that the child be returned to the father in the United States. The matter came before O'Ryan J in the Family Court who ordered pursuant to the Family Law (Child Abduction Convention) Regulations 1986 (Cth) (the 1986 Regulations) that the child be returned to the father in the United States. On 10 October 1996 a Full Court of the Family Court dismissed an appeal by the mother. On the same day, the High Court delivered judgment in De L v Director-General, NSW Department of Community Services (1996) 187 CLR 640. As a result of the decision in De L, the view was taken that O'Ryan J had erred in that he had applied the FamilyLaw (Child Abduction Convention) Regulations 1995 (Cth) (the 1995 Regulations) instead of the 1998 Regulations. In August 1998 the mother applied to the Full Court of the Family Court for orders that it set aside its order of 10 October 1996 and in place order that the order of O'Ryan J be set aside and the matter be remitted for rehearing before a single judge. This application was heard by a five member Full Court. By majority the Full Court dismissed the application. A majority of the judges held that the Full Court had a power to set aside one of its own orders which had been perfected by entry in the formal orders of the court, although a majority also

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held that the order of the earlier Full Court should not be reopened or changed."

41 The majority, Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ concluded that the Full Court of the Family Court did not have the power to re-open perfected orders. Their Honours pointed out that the Family Court was created by statute and accordingly had no inherent jurisdiction, unlike the State Supreme Courts which had conferred upon them the same jurisdiction as the courts of Westminster. In essence the majority held that the Family Court, as a creation of statute, had in addition to its statutory jurisdiction, power to make orders which were necessary and ancillary to the exercise of that jurisdiction: see Forbes Ex Parte Bevan (1972) 127 CLR 1 per Menzies J at 8, a decision relied upon by the majority. Dealing as it does with the power of a court created by statute the decision in DJL is of limited relevance to the matters presently under consideration. However, in the course of their joint judgment the majority did touch upon the general power of courts of Chancery to re-open orders once perfected. Their Honours said (at 670 at par [35] - [37]):

"The Court of Chancery had power to reopen and rehear cases which had been tried before it, even after the decree had been entered. The right of rehearing in the Court of Chancery had involved the exercise of appellate rather than original jurisdiction. Sir George Jessel MR so concluded in Re St Nazaire Co (1879) 12 Ch D 88 at 97 - 98. However, that peculiar state of affairs in Chancery did not continue with respect to the exercise of equitable jurisdiction by the Supreme Court of Judicature established by the Judicature Act 1873 (UK). The structure it provided included the Court of Appeal.

The Court of Chancery also had jurisdiction to enjoin, by a species of common injunction, the enforcement of judgments fraudulently obtained, including those recovered in the common law courts, or to oblige the holder of such a judgment to enter satisfaction of it upon the judgment roll of the common law court. The exercise of this jurisdiction involved the institution of a separate proceeding. In dealing with the matter, the Court of Chancery might send the issues respecting the alleged fraud to a common law court for trial by a new jury. It is unsettled whether this jurisdiction might have been invoked to set aside judgments by reason of the availability of 'fresh evidence'.

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A mainspring of the equity jurisdiction was the view taken in Chancery of the deficiencies of the common law procedures, particularly with respect to appeal processes and the absence of a record of the evidence which had been called before the jury. It is significant that this was at a time before the creation of the modern statutory appellate structure in England. The equity jurisdiction remains in Australia, at least with respect to the impeachment of judgments for fraud, but the preferable course remains the institution of separate proceeding."

42 Apart from the decision in Re St Nazaire Co, the majority refers in a footnote to the decision in The Council of the Shire of Werribee Council v Kerr (1928) 42 CLR 1. Isaacs J said (at 20 - 21):

"The old Chancery Court had rehearings either by the Judge who originally heard the cause or by the Lord Chancellor … To a certain extent, when the Judicature Act merged jurisdictions in one Supreme Court, rehearings were applied generally. … It means that the Court of appeal is authorised to make such order as ought to be made according to the state of things at the time it makes its order. A true appeal is one where the appellate Court has to decide what order ought to have been made by the primary tribunal at the time the order appealed from was made. But that does not affect the duty of the appellate Court to judge for itself unhampered, so far as circumstances permit, by the prejudgments of the Court appealed from."

43 In the DJL case Kirby J reached the conclusion that the Full Court of the Family Court did have the power to amend an order which had been perfected. Dealing with the question of amendment of orders his Honour said (at 685 par [92]):

"Where a court is subject to appellate or other judicial review, it will often be possible within the judicial hierarchy, an error being shown, to obtain correction of a perfected order and the substitution of an order unaffected by the error brought to light. Apart from this, other means have been developed to afford exceptional relief from the affront to justice which would be done by the enforcement of a perfected order where this is in some way tainted by manifest error confined with demonstrable injustice."

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44 His Honour then goes on to refer to the slip rule and other instances where perfected orders may be amended such as where the parties consent. Interestingly enough, his Honour does not refer to the CSIRO decision, nor does he refer to the State of Pennsylvania v The Wheeling and Belmont Bridge Company or United States v Swift & Co, although he did mention these decisions in Nicholas v R. His Honour then goes on to deal with the question of intermediate appellate courts. He concludes (at 686 par [96]):

"It is now recognised both in Australia and England that orders made by ultimate appellate courts may be reopened by such courts in exceptional circumstances to repair accidents and oversights which would otherwise occasion a serious injustice. In my view, this can be done although the order in question has been perfected. The reopening may be ordered after due account is taken of the reasons that support the principle of finality of litigation. The party seeking reopening bears a heavy burden to demonstrate that the exceptional course is required 'without fault on his part'."

45 With the exceptions of the decision of Malcolm CJ in Esther Investments and Gilles J in Quin, all of the cases I have referred to in these reasons involve decisions of either intermediate appellate courts or ultimate Courts of Appeal. It is not easy to reconcile the views expressed by Malcolm CJ in Esther Investments with the dicta of the High Court in DJL to the effect that a perfected order ought only be varied or discharged by an appellate court. I note in passing that s 58(1)(a) of the Supreme Court Act 1935 appears to give the Full Court the jurisdiction to vary a judgment which has been perfected.

46 Having said that, in the CSIRO decision the application to discharge the injunction was, at first instance, made to a single Judge. The case proceeded by way of determination of preliminary issues. The first question put was in the following terms: "Whether, upon their true construction, the Acts either effect or permit the dissolution, discharge or variation (and if variation, to what extent) of the injunction." The answer given by his Honour was: "On the basis of their true construction alone, the Acts neither effect nor permit the dissolution, discharge or variation of the injunction."

47 King CJ concluded that his Honour had construed the question put too narrowly. His Honour suggested, in effect, that the real question was whether, in all the circumstances, the injunction ought be discharged.

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His Honour concludes that this decision should have been in the affirmative. He suggests no impediment to this decision being taken by a single Judge.

48 It must be acknowledged that there is some difficulty in reconciling all of the competing authorities in this area. Furthermore, the decision in the CSIRO case is not without its difficulties. No mention is made by the Full Court of the High Court decisions in Bailey v Marinoff, Gamser v The Nominal Defendant and other decisions to like effect. Equally, there is no reference in DJL to the CSIRO decision. The suggestion by Kirby J in Nicholas v R that a court can vary a perfected order does not receive further consideration in the DJL decision. In Esther Investments Pty Ltd v Markalinga Pty Ltd Malcolm CJ was dealing with a notice of motion which was made to him in his capacity as the trial Judge. His Honour did not doubt the jurisdiction to vary the order. There was no suggestion that the matter could only be dealt with by the Full Court.

49 Based upon all of the authorities to which I have referred, I think it is possible to set out a number of principles which are relevant to an application such as the present. These principles are:

(1) There is power to vary or discharge a perfected or entered order.

(2) The power should be exercised with care and only in the most unusual circumstances.

(3) If the perfected order has continuing operation and there is a change in the underlying circumstances which applied when the order was made, then the order can be varied or discharged to take account of those changed circumstances.

(4) In a circumstance where the substratum of fact or law underpinning the order has changed, the perfected order can be discharged or varied by a single Judge.

(5) The fact that the perfected order in question was made by consent and pursuant to an agreement between the parties does not in any way affect the power of the Court to vary or discharge the order.

50 Based upon these principles, in the circumstances of this case it is open to me to grant or refuse the defendant's application. The question is whether in all the circumstances I ought make that order.
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51 This problem has arisen, in part at least, because of the way the consent order was framed. If counsel for the defendant has ensured that the order had a temporal qualification so that it only applied so long as the second plaintiff was a director of the defendant, there would have been no difficulty. Such a provision would have been entirely appropriate. On the other hand, s 1303 of the Law allows the Court to compel an "immediate inspection" of the books and records of a company. The second plaintiff was provided with notice that he was to be removed as a director of the defendant. The provisions of s 1303 provided him with the opportunity to inspect all relevant records before his removal as a director. If the defendant was unco-operative and prevaricated in providing the opportunity for inspection, it was open to the second plaintiff to take further action to protect his position. To that extent at least, the fact that if the order is varied he will not now be able to inspect the defendant's books is the result of his inaction.

52 (In making the above comments, I do not attribute any blame to counsel or solicitors representing the parties. I simply make the observation in attempting to weigh up the merits of the application.)

53 In my view, it is appropriate in all the circumstances of this case to grant the defendant's application. I regard the fact that the second plaintiff is no longer a director of the defendant as decisive. The underlying facts which gave rise to the order have changed. In my view, it would not be in the interests of justice to allow an individual who is not a director of a company unrestricted access to the books of that company. In this case any policy considerations directed at the need to bring litigation to an end are outweighed by the need to maintain the integrity of the company's records.

54 I will hear the parties in relation to the form of orders and as to costs.