Canstruct Pty Ltd v Project Sea Dragon Pty Ltd (Subject to a Deed of Company Arrangement)

In the case of Canstruct Pty Ltd v Project Sea Dragon Pty Ltd (Subject to a Deed of Company Arrangement), Canstruct sought an interlocutory injunction to prevent the performance of a Deed of Company Arrangement (DOCA) that would, if completed, result in the plaintiff's right to seek to set it aside being brought to an end. The dispute involves Canstruct's claim for payment against Project Sea Dragon, a wholly-owned subsidiary of Seafarms Group Limited, which operates in the prawn aquaculture business. The legal issues that the court needed to decide included whether the entry into the DOCA was an abuse of Part 5.3A of the Corporations Act 2001 (Cth) and whether an injunction should be granted to prevent the performance of the DOCA. The court found that the entry into the DOCA was an abuse of the relevant provisions of the Corporations Act, and it granted the injunction. The court considered the balance of convenience and found that it favoured granting the injunction. The court also ordered that certain documents be disclosed to the plaintiff and that the defendants pay the plaintiff's costs of the interlocutory application. The matter was listed for a further case management hearing.
The court's reasoning was based on the fact that the administrators of Project Sea Dragon had provided an undertaking to the court that they would give seven days' notice prior to making any distributions. However, that undertaking lapsed upon the conclusion of the application for interlocutory relief or on 23 May 2023, whichever came first. The court considered the urgency of the matter and found that the balance of convenience favoured granting the injunction. The court also found that the entry into the DOCA was an abuse of the relevant provisions of the Corporations Act and that it would be unjust for Canstruct's right to seek to set it aside to be brought to an end. The court ordered that certain documents be disclosed to the plaintiff and that the defendants pay the plaintiff's costs of the interlocutory application. The matter was listed for a further case management hearing.