Carson v Dynasty Metals Australia Ltd

Case [2011] FCA 621

FEDERAL COURT OF AUSTRALIA

Carson v Dynasty Metals Australia Ltd [2011] FCA 621

Citation: Carson v Dynasty Metals Australia Ltd [2011] FCA 621
Parties: MALCOLM ANTHONY CARSON v DYNASTY METALS AUSTRALIA LTD ACN 110 385 709, NICHOLAS GERARD REVELL, IAN LEVY and GRAHAM DOUGLAS ANDERSON
File number(s): NSD 772 of 2011
Judge: JAGOT J
Date of judgment: 31 May 2011
Catchwords: CORPORATIONS – application for interlocutory injunction – whether proxy appointment ineffective by virtue of s 250B of the Corporations Act if sent to third party and forwarded to company
Legislation: Corporations Act 2001 (Cth) ss 250A, 250B, 1322(4)
Cases cited: Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57
Bisan Ltd v Cellante (2002) 173 FLR 310; [2002] VSC 430
Portman Iron Ore Limited, in the matter of Golden West Resources Limited (2008) 170 FCR 409
Date of hearing: 31 May 2011
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 26
Counsel for the Applicant: Mr M S White with Mr B D Kaplan
Solicitor for the Applicant: Peter M Wayne & Associates
Counsel for the First Respondent: Mr J C Giles
Solicitor for the First Respondent: Bennett + Co Solicitors
Solicitor for the Second Respondent: The respondent did not appear
Solicitor for the Third Respondent: The respondent did not appear

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 772 of 2011
BETWEEN:

MALCOLM ANTHONY CARSON
Applicant
AND:

DYNASTY METALS AUSTRALIA LTD ACN 110 385 709
First Respondent

NICHOLAS GERARD REVELL
Second Respondent

IAN LEVY
Third Respondent

GRAHAM DOUGLAS ANDERSON
Fourth Respondent

JUDGE:

JAGOT J

DATE OF ORDER:

31 MAY 2011

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.The notice of motion filed by the applicant on 30 May 2011 seeking interlocutory relief against the first respondent be dismissed.

2.The applicant pay the first respondent’s costs of said notice of motion as agreed or taxed.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 772 of 2011
BETWEEN:

MALCOLM ANTHONY CARSON
Applicant
AND:

DYNASTY METALS AUSTRALIA LTD ACN 110 385 709
First Respondent

NICHOLAS GERARD REVELL
Second Respondent

IAN LEVY
Third Respondent

GRAHAM DOUGLAS ANDERSON
Fourth Respondent

JUDGE:

JAGOT J

DATE:

31 MAY 2011

PLACE:

SYDNEY

REASONS FOR JUDGMENT

BACKGROUND

  1. This is a notice of motion in which the applicant, Malcolm Anthony Carson, seeks an interlocutory order restraining the first respondent, Dynasty Metals Australia Ltd (Dynasty Metals), from considering and making any placement of shares. 

  2. The matter first came before me yesterday, on which date an application for substantive relief was filed, accompanied by a statement of claim and the present notice of motion.  I adjourned the motion for interlocutory relief, having made directions permitting short service of the relevant documents and listing of the motion for directions or hearing (as…

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Details
AGLC
Carson v Dynasty Metals Australia Ltd [2011] FCA 621
Case
[2011] FCA 621
Decision Date

CaseChat Overview and Summary

The parties involved in this case are Carson, the applicant, and Dynasty Metals Australia Ltd, the respondent. Carson seeks an interlocutory injunction to prevent the implementation of certain resolutions made by the directors of Dynasty Metals at a meeting held on 21 March 2011. The High Court of Australia heard the case. Carson argues that the resolutions made at the meeting are invalid due to the improper forwarding of proxies through a third party, Mr Tay, rather than directly to the company, which he claims breaches section 250B of the Corporations Act. This section requires proxy forms to be sent directly to the company to be valid.

The primary legal issue before the court was whether the proxy appointment is ineffective under section 250B of the Corporations Act if sent to a third party and subsequently forwarded to the company. Carson argued that the proxies forwarded via Mr Tay were invalid, which would have materially affected the outcome of the meeting. The court had to determine if there was a serious question to be tried on Carson's claims and if the balance of convenience favoured granting the interlocutory relief. The court considered the evidence provided by Carson and the affidavits of other witnesses, including Mr Billis and Mr Gygar, regarding the forwarding of proxy forms and the potential impact on the meeting's outcome.

The court found that although the threshold for demonstrating a serious question to be tried is not high, the applicant must still show a sufficient likelihood of success. The court noted that there was no authority supporting Carson's proposition that proxies forwarded via a third party are invalid. The court also considered the evidence indicating that the number of invalid votes would not have materially affected the meeting's outcome. Given the absence of legal authority and the evidence, the court concluded that there was no serious question to be tried. The court further noted that even if the balance of convenience favoured granting the relief, it would have declined to do so due to the lack of a serious question to be tried. The unexplained delay by Carson in bringing the application was also a factor in the court's decision.

The final orders of the court were to dismiss the notice of motion filed by Carson on 30 May 2011 and to require Carson to pay the respondent's costs of the notice of motion as agreed or taxed. The court's decision effectively denied Carson the interlocutory relief he sought against Dynasty Metals Australia Ltd.

Orders

Orders of the court

1. The notice of motion filed by the applicant on 30 May 2011 seeking interlocutory relief against the first respondent be dismissed.

2. The applicant pay the first respondent’s costs of said notice of motion as agreed or taxed.

Note:

Background

Background to the litigation

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Evidence

Evidence Before The Court

For present purposes, Mr Carson does not press the claims relating to the Schedule B proxies as part of his case that there is a “serious question to be tried”. To satisfy this element of the test for the grant of interlocutory relief, Mr Carson relies on the claims relating to the Schedule A proxies: that is, on the forwarding of disputed proxies via Mr Tay to Dynasty Metals, rather than directly to the company from the shareholders. THE EVIDENCE On the evidence before me, it is apparent that the number of votes represented by the Schedule A proxies – those said to have been forwarded indirectly to Dynasty Metals via Mr Tay, and so to have been invalid – would not have been material to the outcome of the vote held at the 21 March meeting and as a result of which Mr Carson, amongst others, was removed as a director. In his affidavit, however, Mr Carson has provided some evidence that certain of the Schedule B proxies were also forwarded indirectly to Dynasty Metals via facsimile to Mr Tay. If those proxies are also taken into account, and Mr Carson’s contentions regarding the invalidity of all disputed proxies forwarded via Mr Tay are accepted, there would be a sufficient number of invalid votes to have materially affected the outcome of the 21 March meeting. I have before me an affidavit of Anthony Billis, a director of two of the shareholders of Dynasty Metals: Tribune Resources Ltd (Tribune Resources) and Rand Mining Ltd (Rand Mining). Mr Billis’ affidavit confirms that on or about 10 March 2011, he sent emails to Mr Tay attaching proxy forms for both Tribune Resources and Rand Mining in favour of the resolutions to be determined at the 21 March meeting. The affidavit also indicates that, some five days later, Mr Billis caused further proxy forms for Tribune Resources and Rand Mining, this time against the resolutions, to be sent by facsimile directly to Dynasty Metals. I also have before me the evidence in Mr Carson’s affidavit indicating that he was a director of Dynasty Metals between 26 October 2007 and 21 March 2011, and that on or about 21 March 2011 he was the beneficial holder of some 52,436 shares in Dynasty Metals held via an investment vehicle, Mineral Resource Consultants Pty Ltd (Malcolm Carson Superfund Account). I also have before me two affidavits from Terence John Gygar. Mr Gygar is an alternative director of Dynasty Metals nominated by a director of the company, Ms Xiao Dong Sun. Mr Gygar himself is not, on the evidence, a shareholder of Dynasty Metals. In his evidence he states that he initially received notice of a meeting relating to the placement of shares in Dynasty Metals on 27 May 2011. Mr Gygar also sets out the communications he entered into in relation to that proposed meeting, the reasons the meeting did not take place, and the notice he received yesterday of a further proposed meeting to be held on 1 June 2011 at 8.00 a.m., again for the purposes of seeking approval for the placement of shares equivalent to 15% of the existing capital of Dynasty Metals. Finally, Mr Gygar notes that the current directors of Dynasty Metals have recently entered into an agreement with a Chinese company. In Mr Gygar’s view, which he has outlined in detail both in his evidence and in correspondence to Dynasty Metals itself, this agreement is uncommercial and is not in the interests of the company’s shareholders.

Decision

Reasons for decision

While I accept that the threshold for demonstrating that there is a serious question to be tried is not particularly high, the Court must nonetheless be satisfied that the applicant’s case has a sufficient likelihood of success. Absent any authority in support of the proposition of law on which Mr Carson’s case effectively rests, I cannot be so satisfied. Accordingly, even if I had reached the view that the balance of convenience favoured the granting of the interlocutory relief sought, I would have declined to grant such relief on the basis that there is no serious question to be tried. CONCLUSION For the reasons I have given, I am satisfied that the applicant’s unexplained delay in bringing this application is a sufficient reason in this case to deny the interlocutory relief sought. I dismiss the motion accordingly.

Ratio Decidendi

Legal Principle Established

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