Aussie Broadband Limited v Superloop Limited

Case [2024] FCA 312

FEDERAL COURT OF AUSTRALIA

Aussie Broadband Limited v Superloop Limited [2024] FCA 312

File number(s): VID 217 of 2024
Judgment of: O’CALLAGHAN J
Date of judgment: 28 March 2024
Catchwords: PRACTICE AND PROCEDURE – application for interlocutory injunction – whether applicant had established prima facie case that respondent had acted for a purpose foreign to the powers contained in its constitution by issuing a notice requiring the applicant to dispose of certain shares in the respondent – whether applicant had established prima facie case that respondent’s conduct of the affairs of the company was oppressive for the same reason – whether the balance of convenience favoured an injunction – whether damages an adequate remedy – where it was common ground that the applicant’s acquisition of shares was in breach of respondent’s constitution and applicable foreign law – application for injunctive relief dismissed
Legislation:

Corporations Act 2001 (Cth) ss 180, 181, 182, 232, 232(e), 1324(4)

Federal Court of Australia Act 1976 (Cth) s 23

Telecommunications Act 1999 (Singapore) ss 10(1), 10(2), 38(5)

Code of Practice for Competition in the Provision of Telecommunication Services 2022 (Singapore) ss 10.1.2, 10.1.2(ff), 10.3.1.1, 10.3.5.2, 10.11, 12.6.4, 12.6.4.4, 12.6.4.5

Cases cited:

Australian Broadcasting Corporation v Lenah Game Meats Pty Limited (2001) 208 CLR 199

Beecham Group Limited v Bristol Laboratories Pty Limited (1968) 118 CLR 618

Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) (2008) 39 WAR 1

Castlemaine Tooheys Limited v South Australia (1986) 161 CLR 148

Samsung Electronics Company Ltd v Apple Inc (2011) 217 FCR 238

StarTrack Express Pty Ltd v TMA Australia Pty Ltd [2023] FCAFC 200

Whitehouse v Carlton Hotel Proprietary Limited (1987) 162 CLR 285
Division: General Division
Registry: Victoria
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Number of paragraphs: 101
Date of hearing: 27 March 2024
Counsel for the Applicant: PH Solomon KC with N Walter
Solicitor for the Applicant: Gadens
Counsel for the Respondents: M Borsky KC with L Hamzi
Solicitor for the Respondents: Baker & McKenzie    

ORDERS

VID 217 of 2024
BETWEEN:

AUSSIE BROADBAND LIMITED (ABN 29 132 090 192)

Applicant
AND:

SUPERLOOP LIMITED (ABN 96 169 263 094)

First Respondent

PETER O’CONNELL

Second Respondent

PAUL TYLER (and others named in the Schedule)

Third Respondent

ORDER MADE BY:

O’CALLAGHAN J

DATE OF ORDER:

28 MARCH 2024

THE COURT ORDERS THAT:

1.The applicant’s application for interlocutory relief is dismissed.

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


REASONS FOR JUDGMENT

O’CALLAGHAN J

INTRODUCTION

  1. I have before me, in my capacity as a Commercial and Corporations Duty Judge, an application by Aussie Broadband Limited (ABB) for an interlocutory injunction to restrain the first respondent, Superloop Limited (SLC), from acting upon or giving effect to a notice issued by it to ABB on 15 March 2024.

  2. The notice directed ABB to dispose of its legal and beneficial interest in 37,621,056 fully paid ordinary shares in SLC (or such lesser number…

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AGLC
Aussie Broadband Limited v Superloop Limited [2024] FCA 312
Case
[2024] FCA 312
Decision Date

CaseChat Overview and Summary

In the Federal Court, Aussie Broadband Limited (ABB) sought an interlocutory injunction against Superloop Limited (SLC) to prevent the enforcement of a notice issued by SLC requiring ABB to divest itself of certain shares. The dispute arises from ABB's acquisition of a 19.9% shareholding in SLC, which it admitted was in breach of SLC's constitution and Singaporean law. The primary legal issues before the court were whether ABB had established a prima facie case that SLC had acted for a purpose foreign to the powers contained in its constitution by issuing the notice and whether SLC's conduct in this matter was oppressive. The court also needed to consider whether the balance of convenience favoured the grant of an injunction and whether damages would be an adequate remedy.

The court considered the arguments presented by both parties and examined the relevant provisions of SLC's constitution, which were designed to ensure compliance with Singaporean law. The court found that SLC's actions were within the scope of the powers granted to it by its constitution and were taken in circumstances precisely as envisaged by those provisions. The court held that ABB had not made out a prima facie case that SLC had acted for an improper purpose. Furthermore, the court found that the balance of convenience did not favour the grant of an injunction and that damages would be an adequate remedy for any loss or damage suffered by ABB. Consequently, the court dismissed ABB's application for interlocutory relief.

The Federal Court dismissed Aussie Broadband Limited's application for interlocutory relief against Superloop Limited, finding that there was no basis to support the claims made by ABB regarding improper conduct by SLC. The court held that SLC's actions were within the scope of its constitutional powers and that ABB had not demonstrated a sufficient case for the exercise of the court's discretion in favour of an injunction. The decision underscores the importance of compliance with constitutional and statutory requirements in corporate governance and the limited circumstances in which interlocutory relief will be granted where the applicant's case is weak.

Orders

Orders of the court

1. The applicant’s application for interlocutory relief is dismissed.

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

Background

Background to the litigation

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Evidence

Evidence Before The Court

For the reasons that follow, the application is to be dismissed.THE EVIDENCE ABB read affidavits, both affirmed on 18 March 2024, of Brian Gerard Maher and Rajesh Sreenivasan. Mr Maher is the Chief Executive Officer of ABB. He deposed to the circumstances of ABB’s acquisition of a 19.9% shareholding in SLC in late February 2024. Mr Maher also gave evidence regarding the alleged inconvenience, loss and damage that ABB would likely suffer if required to divest itself of 37,621,056 shares in SLC. Mr Sreenivasan is a practising solicitor in Singapore and a partner of Rajah & Tann Singapore LLP, the lawyers retained by ABB in relation to matters concerning the laws and regulations of Singapore. He gave uncontroversial evidence about the applicable statutory framework which regulates the information, communications and media industry in Singapore. He also deposed to his firm’s dealings with the IMDA regarding “retrospective” approval of ABB’s acquisition of shares in SLC. SLC opposed the application. It read two affidavits of Mark Desmond Chapple affirmed on 25 March 2024. The essence of SLC’s opposition to the application is that the powers in its Constitution (the relevant provisions of which are discussed below) were designed to ensure SLC’s compliance with its obligations under Singaporean law, and to provide a remedy where shares in SLC were acquired in contravention of SLC’s Constitution and Singaporean law. SLC contends that is precisely the circumstance in which it found and finds itself, as a result of ABB’s failure to obtain the approval of the IMDA before acquiring more than 12% of its shares. SLC says that the Board exercised the relevant power in its Constitution for the exact purpose and in the exact circumstance envisaged by the Constitution, and that there was thus no reasonably arguable improper purpose in it doing so. Mr Chapple is a partner of Baker & McKenzie, solicitors for the respondents in this proceeding. He gave evidence about a number of matters, including in relation to the following:(a)Superloop Singapore holds a15-year “Licence to provide facilities-based operations” (FBO licence), which was granted by the IMDA and allows Superloop Singapore to establish, install and maintain telecommunications systems and provide telecommunications services in Singapore;(b)The FBO licence imposes a number of conditions on Superloop Singapore , and allows the IMDA to suspend or terminate the licence, and/or to require Superloop Singapore to pay a financial penalty in the event of certain breaches of the FBO licence and applicable Singaporean law; and(c) Superloop Singapore and its operations are of central importance within SLC’s overall business.THE FACTSWhat the parties do SLC is an Australian public company listed on the Australian Stock Exchange (ASX). It operates fibre networks in Australia, Singapore and Hong Kong, directly and indirectly through subsidiaries. ABB is an Australian telecommunications and technology company also listed on the ASX.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

As SLC submitted, the authorities make it clear that where an applicant’s prima facie case is weak (assuming it is made out at all), the grant of interlocutory relief will be warranted only where there is a marked balance of convenience in favour of the applicant.CONSIDERATIONPrima facie caseImproper purpose As Owen J explained in Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) (2008) 39 WAR 1 at [4458]-[4459]:The limited powers of directors can only be exercised for the purpose for which they are granted. Any exercise of a power for an extraneous purpose is a fraud on the power. … It does not necessarily denote conduct on the part of the appointor amounting to fraud in the common law meaning of the word or any conduct that could properly be termed dishonest or immoral. It simply means that the power has been exercised for a purpose, or with an intention, beyond the scope of, or not justified by, the instrument creating the power.The first task of the court is to construe the power and to determine the limits within which it may be exercised. This is a question of law. Having done that, the court turns to a question of fact; namely whether, in all of the circumstances, the purported exercise goes beyond the constitutional powers of corporation or is otherwise an abuse of the power so construed. Put simply, the court must identify the nature and scope of the power and the purpose for which it was exercised and then decide whether the purpose was permissible or impermissible. And as Mason, Dawson and Deanne JJ said in Whitehouse v Carlton Hotel Proprietary Limited (1987) 162 CLR 285 at 294:As a matter of logic and principle, the preferable view would seem to be that regardless of whether the impermissible purpose was the dominant one or but one of a number of significantly contributing causes … [the relevant decision] will be invalidated if the impermissible purpose was causative in the sense that, but for its presence, “the power would not have been exercised” (citing Dixon J in Mills v Mills (1938) 60 CLR 150 at p.186). While ABB acquired 19.9% of the shares in SLC, it accepted for present purposes that, on 26 February 2024, it acquired commensurate voting power in Superloop Singapore in breach of the Code and the Telecommunications Act. ABB submitted, however, that because it gave an enforceable undertaking on 12 March that it would only exercise voting power up to 12%, the giving of that undertaking prospectively “cured” the breach that had occurred on 26 February. In those circumstances, ABB contended that there was no necessary occasion for the SLC Board to exercise the power under rule 12.A5 of the Constitution to require ABB to divest itself of the excess shares. ABB submitted that it had made good a prima facie case that SLC’s professed (legitimate) commercial interests for exercising the power as recorded in the 14 March 2024 Board minutes could therefore not be the actuating purpose for the exercise of the power under rule 12A.5 of the Constitution.