Dream Securities P/L v Dreamworld Ltd

[1994] FCA 1079

/07? 4 94-

JUDGMENT No. ........ ..... .., .. ........

C A T C H W O R D S

INTERLOCUTORY INJUNCTION - to restrain allotment of shares

before decision by Australian Securities Commission concerning validity of prospectus - interlocutory relief auxiliary to an application for judicial review of a decision not yet made and which may not be adverse to applicant's interest.

DREAM SECURITIES PTY LTD & ANOR v DREAMWORLD LIMITED

No. QG 156 of 1994

SPENDER J

BRISBANE

8 NOVEMBER 1994

QUEENSLAND DISTRICT REGISTRY

GENERAL DIVISION

BETWEEN : DREAM SECURITIES PTY LTD

ACN 008 647 667

First Applicant

AND BRUCE DAVID JENKINS

Second Applicant

AND DREAMWORLD LIMITED
ACN 063 3 3 6 514

Respondent

MINUTES OF ORDER

JUDGE MAKING ORDER:	Spender J
DATE OF ORDER:	8 November 1994
WHERE MADE:	Brisbane
THE COURT ORDERS THAT:

1.   The application for interlocutory relief be dismissed.

2 .    The applicants pay the respondent's costs of the application for interlocutory relief, including reserved costs.

THE COURT GRANTS LEAVE pursuant to 0. 62 for the Costs to be

taxed forthwith.

NOTE:	Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA	) )
QUEENSLAND DISTRICT REGISTRY	) No QG 156 of 1994
)
GENERAL DIVISION	)

BETWEEN:  DREAM SECURITIES PTY LTD
ACN 008 647 667

First Applicant

AND:  BRUCE DAVID JENKINS

Second Applicant

AND :  DREAMWORLD LIMITED
ACN 063 336 514

Respondent

m:  SPENDER J

W: BRISBANE

DATE : 8 November 1994

REASONS FOR JUDGMENT

On 4 November 1994, Dream Securities Pty Ltd and Bruce Davld Jenkins filed an application in the Federal Court claiming an order restraining Dreamworld Limited from allotting any shares in Dreamworld Limited, and by way of interlocutory relief the applicants claimed an order

restraining Dreamworld Llmlted from allotting any shares in	Dreamworld Limited pending further order of the court. An
order abridging time was also sought.
In addition, by way of interlocutory relief, it was sought that Dreamworld Limlted disclose to the applicants by delivery of copies, first, a private income tax ruling referred to at page 12 of a prospectus which is central to this application, and secondly, the memorandum of opinion of Queens and junior counsel by which the private income tax ruling referred to at page 12 of the prospectus of Dreamworld Limited was influenced.
At the outset I should say that this is an unusual application. It is not the orthodox claim, where a party asserts that the conduct in issuing a prospectus contravenes S. 52 of the Trade Practices Act 1974 in that the prospectus is misleading or deceptive.
This application does not seek any determination by the court concerning those matters, but rather is in support of an application that might be launched for judicial review of a decision that the applicants have sought of the Australian Securities Commission that might be made by the Commission adverse to their contentions.

What has happened is this.

On 30 September 1994, a prospectus dated 29 September 1994 was lodged with the Australian Securities Commission. The prospectus was for the issue of 60 million ordinary shares at a price of $1 a share, being 50 cent shares issued at a premium of 50 cents, payable in full on application with 15 million free options exercisable at $1 each.

The prospectus indicated that the subscription lists were to open on 12 October 1994; that it was anticipated that completed application forms would be received by 2 November; that the notification of allotment advices was expected to be mailed by 14 November; with the quotation of shares and options on the Australian Share Exchange to commence on 17 November.

The material indicates that the subscription was completed by 2 November 1994 and the injunction sought seeks

to restrain Dreamworld Limited from allotting shares in response to applications. On 14 October, the applicants applied to the Australian Securities Commission for an order

pursuant to S. 1033 of the Cor~orations Law. That section

provides as follows:

" (1) Where it appears to the Commission that any of the circumstances referred to in subsection (2) exist in respect of a prospectus lodged in relation to securities of a corporation, the Commission may, by order in writing served on the person by whom the prospectus was lodged, dlrect that:

(a)	if the prospectus is a primary prospectus - no further securities to whlch the prospectus relates be allotted or issued; or
(b)	if the prospectus is a secondary prospectus - no further securities be sold pursuant to the prospectus.

(2) The circumstances are:

(a)	the prospectus contravenes in a substantial respect any of the requirements of this Division;
(b)	the prospectus contains a statement, promise, estimate or forecast that is false, misleading or deceptive; and

(C) the prospectus contains a material

misrepresentation. "

My understanding is that the decision on that application is to be made shortly, and I think it right to acknowledge that Mr Walsh, on behalf of the applicants, does not contend that the Australian Securities Commission has been engaging in conduct in any way contrary to its statutory obligations or the law in general. Nor was I asked by the applicants to consider the merits of the claims made in the application to the Australian Securities Commission that the prospectus was in contravention of ss. 995 and 996 of the

Cor~orations Law.

Section 995 relevantly provides:

" (2) A person shall not, in or in connection with:

(a)	any dealing in securities; or
(b)	without llmitlng the generality of paragraph (a):

(1) the allotment or Issue of securities;

(ii)  any prospectus issued, or notice published, in relation to securities;

(lii)  the making of takeover offers or a takeover announcement, or the making of an evaluation of, or of a recommendation ~n relation to, takeover offers or offers constituted

by a takeover announcement; or

(iv)  the carrying on of any negotiatlons, the making of any arrangements or the doing of any other act preparatory to or in any other way related to any matter referred to in subparagraph (i), (ii) or (111);

engage in conduct that is misleading or deceptive or

is likely to mlslead or deceive. "

And S. 996 relevantly provides:

" (1) A person must not authorise or cause the issue of

a prospectus in relation to securities of a
corporation:

fa)	in which there is a materlal statement that is false or mlsleadlng; or
(b)	from which there is a material omission. "

The unusual basis of this application is that if the Australian Securities Commission's decision turns out to be adverse to the contentions of the applicants, it might be that on consideration of the reasons for that decision, a reviewable error might be located in the Commission's decision but that, in the absence of the interlocutory orders sought, the shares would already have been allotted prior to the establishment of that error.

As a consequence, it was asserted that the rights of the applicants in the absence of an interlocutory order would be frustrated. In my opinion, the application is both premature and hypothetical and, on analysis, does not entitle the applicants to interlocutory relief.

It is auxiliary to an application for judicial review of a decision not yet made, which may not in fact be adverse	to the interests of the applicants but in respect of which it
cannot today be asserted that any legal error is involved in the making of the foreshadowed decision.
A necessary assumption in the applicant's case is that, if there be a decision adverse to the applicants, there must in that decision be reviewable error.
If it be the case that for an interlocutory lnlunction it has to be demonstrated that there is a serious question to be tried and that the balance of convenience favours the grant of the injunction, in this case there is no serious question to be tried in respect of the critical question on a judiclal review application; namely, that a serlous error of law might be demonstrated at the trlal of the principal proceedings. It seems to me that, on a simple analysis of what the applicants are cla~ming, they are asserting a contingent irremediable prejudice and the interlocutory orders sought, in a sense, are anticipatory stays of the consequences of a decision which might be adverse to their contentlons.
These fears, in my oplnlon, do not permit a court to grant the orders sought.
It is not to be assumed that a decislon by the Australian Securities Commission will necessarily involve legal error, and it is on any view premature to conclude that
the decision will be adverse to the interests of the applicants. There are other matters raised in argument
concerning the balance of convenience, in particular, concerning the worth of any undertaking which has been offered by the applicants. There are serious matters of a discretionary kind involved in those submissions, but it is unnecessary to base my judgment on those factors.
The materlal does not establish that it would be a sound discretion in the court to issue the orders sought. On the contrary, my conclusion is that the appllcatlon is misconceived, being predicated on events which might not happen and whlch, if they do happen, as feared by the applicants, might not provide a basis for ludlclal intervention. In those circumstances, I decllne to make the orders sought on the interlocutory appllcatlon.
In the light of what I have heard, I think that I ought to order that the applicants pay the respondent's costs of this application for interlocutory rellef. I am including reserved costs.
I grant leave pursuant to 0. 62 for the costs that I have ordered to be taxed forthwith.

I certify that this and the

preceding six (6) pages are a

true copy of the reasons for

judgment hereln of the

Honourable Justice Spender. .

/ ) G 4 U--

Associate

Date:  8 November 1994

Counsel for the applicants:	Mr A L Walsh of Walsh & Partners
Counsel for the respondent:	Mr P. McMurdo
instructed by:	Mr A J Conaghan of Phillips Fox
Date of Hearing:	8 November 1994