FEDERAL COURT OF AUSTRALIA
CIP Group Pty Ltd v So (No 5) [2024] FCA 1373
File number: QUD 93 of 2022 Judgment of: DERRINGTON J Date of judgment: 4 December 2024 Catchwords: PRACTICE AND PROCEDURE – application to vary interlocutory order made following contested hearing – injunction over proceeds purportedly payable to respondents – variation sought to permit the release of funds to enable continued defence of proceedings – where there has been a material change in circumstances – value of undertaking given in support of injunction has diminished – injunction varied Legislation: Corporations Act 2001 (Cth)
Federal Court Rules 2011 (Cth)
Cases cited: Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44
Cantarella Bros Pty Ltd v Lavazza Australia Pty Ltd (No 2) [2021] FCA 894
CIP Group Pty Ltd v So (No 3) [2023] FCA 518
Goulston v Sundell as executor of the estate of the late James Ralph Sundell [2024] NSWSC 12
Idoport Pty Ltd v National Australia Bank Ltd [1999] NSWSC 828
Marino v FM Capital Partners Ltd [2016] EWCA Civ 1301
Maverick Biomaterials Pty Ltd v Abouelkheir [2021] FCA 1157
Morara Pty Ltd v Kingslane Property Investments Pty Ltd (No 2) [2022] WASC 372
Pivotel Satellite Pty Limited v Optus Mobile Pty Limited [2010] FCA 121
Re D G Brims and Sons Pty Ltd (1995) 16 ACSR 559
Roberts-Smith v Fairfax Media Publications Pty Limited (No 31) [2022] FCA 271
Division: General Division Registry: Queensland National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 71 Date of hearing: 25 November 2024 Counsel for the Applicants and the Second to Thirteenth Respondents: Mr A Pomerenke KC with Mr A Psaltis and Ms D Tay Solicitor for the Applicants and the Second to Thirteenth Respondents: Bartley Cohen Counsel for the First and Fourteenth to Twentieth Respondents: Mr S Couper KC with Ms J Sargent Solicitor for the First and Fourteenth to Twentieth Respondents: Colin Biggers & Paisley Counsel for the Twenty-First Respondent: The Twenty-First Respondent did not appear Counsel for the Twenty-Second and Twenty-Third Respondent: The Twenty-Second and Twenty-Third Respondents did not appear ORDERS
QUD 93 of 2022 BETWEEN: CIP GROUP PTY LTD ACN 610 483 577
First Applicant
CIP 1 PTY LTD ACN 611 408 710
Second Applicant
PYRMONT PORTFOLIO PTY LTD ACN 608 496 617
Third Applicant
AND: SHAN NGAI SO
First Respondent
GGPG PTY LTD ACN 609 675 505 (RECEIVER AND MANAGER APPOINTED)
Second Respondent
PARK RIDGE 94 PTY LTD ACN 616 893 924 (RECEIVER AND MANAGER APPOINTED) (and others named in the Schedule)
Third Respondent
ORDER MADE BY:
DERRINGTON J
DATE OF ORDER:
4 DECEMBER 2024
THE COURT ORDERS THAT:
1.The interlocutory application dated 1 November 2024 be allowed.
2.Within 3 days of the date of this Order, the parties provide written submissions as to the appropriate form of order arising from these reasons.
3.The applicants and second to…
Keep reading for free
Create a free CaseChat account to read CIP Group Pty Ltd v So (No 5) and more:
- Read every judgment in full
- Ask AI and get answers linked to paragraphs
- See how each paragraph was cited in later cases
- Download judgments as PDF or Word
One click creates your free account or signs you in.
By continuing you agree to the Terms and Privacy Policy.
Details
- Case
- [2024] FCA 1373
- Decision Date
CaseChat Overview and Summary
In the case of CIP Group Pty Ltd v So (No 5), the So interests, represented by Mr Shan Ngai So and associated entities, applied to the court for a variation of an interlocutory order that had been made following a contested hearing. This order imposed an injunction over certain proceeds that were purportedly payable to the respondents. The application sought to vary the injunction to permit the release of some funds to enable the continued defence of the proceedings. The application was made due to a material change in circumstances, specifically the diminution in value of an undertaking given by Mr Marc Clancy, one of the Clancy interests, in support of the injunction. The court was required to determine whether the circumstances justified a variation of the injunction and, if so, to what extent.
The court considered the nature of the dispute, which was a commercial conflict between co-venturers in a land development project. The dispute involved complex allegations of breaches of fiduciary duty and other corporate obligations. The court noted that the So interests would likely be substantial creditors of the Carver’s Reach entities, even if they were not successful in defending the claims against them. The injunction had caused significant damage to the So interests and made it substantially more difficult for them to defend the proceedings. The court also took into account the evaporation of the value of Mr Clancy's undertaking as to damages, which had been a factor in the original injunction.
The court concluded that the circumstances justified a variation of the injunction to permit the release of funds to the So interests. The injunction had caused significant harm and made the defence of the proceedings more difficult. The court rejected the basis for the variation that had been initially advanced by the So interests, which was that they had no assets unaffected by the injunction to draw upon. Instead, the court considered the general discretionary factors, including the costs of the litigation, in reaching its decision. The court allowed the application and ordered that the So interests could access up to $3.5 million of the proceeds for legal costs.
The final orders of the court were that the interlocutory application dated 1 November 2024 be allowed. The parties were required to provide written submissions as to the appropriate form of order arising from the reasons. Additionally, the applicants and second to thirteenth respondents were ordered to pay the first and fourteenth to twentieth respondents' costs of the application. Entry of orders was to be dealt with in accordance with Rule 39.32 of the Federal Court Rules 2011.
The court considered the nature of the dispute, which was a commercial conflict between co-venturers in a land development project. The dispute involved complex allegations of breaches of fiduciary duty and other corporate obligations. The court noted that the So interests would likely be substantial creditors of the Carver’s Reach entities, even if they were not successful in defending the claims against them. The injunction had caused significant damage to the So interests and made it substantially more difficult for them to defend the proceedings. The court also took into account the evaporation of the value of Mr Clancy's undertaking as to damages, which had been a factor in the original injunction.
The court concluded that the circumstances justified a variation of the injunction to permit the release of funds to the So interests. The injunction had caused significant harm and made the defence of the proceedings more difficult. The court rejected the basis for the variation that had been initially advanced by the So interests, which was that they had no assets unaffected by the injunction to draw upon. Instead, the court considered the general discretionary factors, including the costs of the litigation, in reaching its decision. The court allowed the application and ordered that the So interests could access up to $3.5 million of the proceeds for legal costs.
The final orders of the court were that the interlocutory application dated 1 November 2024 be allowed. The parties were required to provide written submissions as to the appropriate form of order arising from the reasons. Additionally, the applicants and second to thirteenth respondents were ordered to pay the first and fourteenth to twentieth respondents' costs of the application. Entry of orders was to be dealt with in accordance with Rule 39.32 of the Federal Court Rules 2011.
Orders
Orders of the court
1. The interlocutory application dated 1 November 2024 be allowed.
2. Within 3 days of the date of this Order, the parties provide written submissions as to the appropriate form of order arising from these reasons.
3. The applicants and second to thirteenth respondents pay the first and fourteenth to twentieth respondents’ costs of the application.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
The So interests now seek a variation of those orders to allow them to use some of the funds held for the payment of legal costs which have been incurred and which will be incurred in the prolonged litigation brought by the Clancy interests.Background There is no need to set out at any length the full nature of the dispute between the Clancy interests and the So interests as it arises in the current complex litigation. It suffices to mention that Mr Marc Clancy and Mr Shan Ngai So are land developers who, through their various corporate entities, undertook the “Carver’s Reach” project. For that purpose, they incorporated and jointly owned and controlled a number of companies, namely, the Carver’s Reach entities. Mr Clancy and Mr So had a falling out during the course of the development of Carver’s Reach. Each has made a number of allegations against the other, including of breaches of fiduciary duty and other corporate obligations. Those allegations underpin the various claims and counterclaims made in the current actions. The litigation has been prolonged and persons and companies in the general orbit of the main protagonists have been impacted by its gravitational pull, with a number of them becoming participants in one way or another. Presently, there are three separate proceedings which are all being heard together commencing on 7 April 2025. The progress of the combined proceedings has been marred by persistent interlocutory skirmishing between the parties and that has no doubt added to the substantial costs incurred on both sides. It has also been affected by the slow pace at which the Clancy interests have sought to prosecute their claims. They have failed to comply with the Court’s directions on a number of occasions and this too has contributed to the increasing costs. Significantly, the hearing of the trial in the matter, which was initially set down to commence in September 2024, recently had to be adjourned as a result of difficulties encountered by the Clancy interests.The current application The substance of the current application is found in paragraph 2 of the interlocutory process dated 1 November 2024 on which the Court was moved. It read:In the alternative to paragraph 1 above, upon the undertaking by the respondent to repay any amount paid out of the funds that are the subject of paragraph 1 of the orders made by Justice Derrington on 24 May 2023 (Stage 7 to 11 proceeds) if the applicants and second to thirteenth respondents are successful in establishing a claim to those funds, an order that paragraph 1 of the orders made by Justice Derrington on 24 May 2023 be varied such that it does not prevent the first and fourteenth to twentieth respondents from using the Stage 7 to 11 proceeds up to an amount of $3,500,000 to pay:(a)invoices issued by the solicitors acting for them in this proceeding in respect of professional fees and disbursements incurred in relation to this proceeding;(b) invoices issued by the solicitors acting for the nineteenth respondent in her capacity as the respondent to proceeding QUD498/2023 in respect of professional fees and disbursements incurred in relation to that proceeding;(c) invoices issued by the solicitors acting for the applicants and cross-respondents in proceeding QUD462/2022 in respect of professional fees and disbursements incurred in relation to that proceeding.(Emphasis omitted).
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
If the So interests are successful on this application, allowing them access to funds now would have the result that one party to an oppression action would be using funds from the companies in respect of which the claim is made to defend the claim against them. That should usually be avoided: see Re D G Brims and Sons Pty Ltd (1995) 16 ACSR 559, 591 – 592; Morara Pty Ltd v Kingslane Property Investments Pty Ltd (No 2) [2022] WASC 372 [74]. However, this is not a usual oppression action. Whilst such relief is sought, the action substantively involves commercial claims between two co-venturers who have fallen out and, in particular, cross-allegations of breaches of fiduciary duty and other corporate obligations. More importantly, the parties are not on an equal footing in relation to the outcome. If the So interests successfully defend the claims of the Clancy interests and of the Carver’s Reach entities, they will effectively recover all of the proceeds derived from the land development as the repayment of the loans plus interest. Conversely, even if the So interests are not successful, they will retain a 50% interest in the recoveries of the Carver’s Reach entities and, in relation to some of the claims advanced, will likely be entitled to repayment of the money advanced. At the very least, it is likely that they will be substantial creditors of the Carver’s Reach entities. In this latter respect, even if the oppression action is successful, it will be in respect of companies which have substantial liabilities to the So interests. Conclusion as to the variation of the injunction It follows that the weight of the current circumstances supports the conclusion that the terms of the injunction should be varied to permit the release of funds to the So interests. Chief amongst those circumstances is the evaporation of the value of Mr Clancy’s undertaking as to damages, assuming that it had any value when it was given. The injunction has caused damage to the So interests who presently have little recourse to remediation should the claims against them fail. It has also made the prosecution of the defence of the proceedings substantially more difficult. Extent of variation The next issue is the extent to which the injunction should be varied. The So interests sought a variation to enable them to access the proceeds the subject of the injunction up to the amount of $3.5 million. This, it was said, would enable the funds to be used to fund their legal expenses of the three proceedings which will be heard together in April 2025. The amount was put forward on the basis of the anticipated costs to be expended to the end of the hearings of the three actions. The cost of completing the main proceedings from April 2024 was said to be $2.2 million, and about $1.3 million was identified as being the cost of prosecuting the other two actions to completion. No doubt, this breakdown was advanced to support the initial basis for the variation of the injunction, being that the So interests had no assets unaffected by the injunction to draw upon to fund the three actions. Ultimately, that basis for effecting a variation was rejected above, with the consequence being that the breakdown of the amount sought is less relevant. However, as is mentioned above, the cost of the litigation has been taken into account in a more general way as part of the discretionary considerations.
Ratio Decidendi
Legal Principle Established
Full text does not contain this section.