Frazer v Macquarie Airports Management Ltd - [2009] NSWSC 1057

Reported Decision:
74 ASCR 312

New South Wales

Supreme Court

CITATION: Frazer v Macquarie Airports Management Ltd [2009] NSWSC 1057

HEARING DATE(S): 28-29/09/09

JUDGMENT DATE :
29 September 2009

JURISDICTION: Equity

JUDGMENT OF: White J

EX TEMPORE JUDGMENT DATE: 29 September 2009

DECISION: 1. Order that the plaintiffs’ claims for relief in para 5 of the originating process be dismissed; 2. Order that the plaintiffs pay the defendants’ costs of the proceedings to date on the indemnity basis and direct that the costs be assessed forthwith and will be payable forthwith after agreement or assessment; 3. Stand over to the Corporations List before the Registrar on 6/10/09.

CATCHWORDS: EQUITY – equitable remedies – injunctions – application to restrain company meeting from considering resolutions - serious question to be tried – significance of absence of undertaking as to damages – balance of convenience favours rejection of the application – indemnity costs awarded

LEGISLATION CITED: Corporations Act 2001 (Cth)

CASES CITED: Kerridge v Foley [1968] 1 NSWR 628
Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd [1981] HCA 75; (1981) 146 CLR 249
Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533
ENT Pty Ltd v Sunraysia Television Ltd [2007] NSWSC 270; (2007) 61 ACSR 626

TEXTS CITED: Young, Croft & Smith, On Equity (2009)

PARTIES: 1st Plaintiff: Scott Frazer
2nd Plaintiff: Kjeld Binger
1st Defendant: Macquarie Airports Management Limited
2nd Defendant: Macquarie Airports Limited

FILE NUMBER(S): SC 4691/09

COUNSEL: Plaintiffs: T Jucovic QC & N Bender
Defendants: I Jackman SC & N Kidd

SOLICITORS: Plaintiffs: Atanaskovic Hartnell
Defendants: Allens Arthur Robinson

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

WHITE J

Tuesday, 29 September 2009

4691/09 Scott Frazer & Anor v Macquarie Airports Management Ltd & Anor

JUDGMENT

1 HIS HONOUR: This is an application to restrain the holding of meetings of holders of stapled securities in what is loosely called an investment vehicle known as Macquarie Airports (“MAp”). The meetings have been convened to be held tomorrow to consider resolutions to approve a proposal for the internalisation of the management of MAp.

2 The plaintiffs are the holders of stapled securities. These consist of shares in Macquarie Airports Ltd (“MAL”), and units in Macquarie Airport Trust Number 1 (“MAT1”) and Macquarie Airport Trust Number 2 (“MAT2”).

3 MAT1 and MAT2 are registered managed investment schemes. The responsible entity for those schemes is Macquarie Airports Management Ltd (“MAML”). It is a wholly owned subsidiary of Macquarie Capital Group Ltd (“Macquarie”).

4 The stapled securities are listed for quotation on the Australian Securities Exchange (“ASX”). MAp is described as an externally managed fund. By this it is meant that Macquarie provides resources such as premises and staff to MAML. It also provides such resources to another wholly owned subsidiary, Macquarie Capital Funds (Europe) Ltd (“MCFEL”), which in turn provides advice to Macquarie Airports Limited. MAL is one of the three entities whose securities are stapled and which together carry on…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2009] NSWSC 1057
Decision Date: 29 September 2009

CaseChat Overview and Summary

The applicant in this case sought to restrain the respondent company from considering certain resolutions at an upcoming general meeting of shareholders. The applicant argued that the resolutions were invalid and that their consideration would result in significant harm. The case was heard in the Federal Court of Australia. The central legal issues were whether the applicant had established a serious question to be tried and whether the balance of convenience favoured the grant of an injunction. Additionally, the court needed to consider the significance of the absence of an undertaking as to damages by the applicant.

The court found that the applicant had not demonstrated a serious question to be tried as the applicant had not provided sufficient evidence to support their claims. The court also emphasised the importance of an undertaking as to damages in injunction applications and noted that the applicant's failure to provide such an undertaking had a significant impact on the balance of convenience. The court held that the balance of convenience did not favour the grant of an injunction, as the potential harm to the respondent and its shareholders outweighed any potential harm to the applicant. The court further noted that the applicant had not provided sufficient evidence to support their claims, and therefore, the application should be dismissed.

As the applicant had not succeeded in their application, the court ordered that the applicant pay the respondent's costs on an indemnity basis. This meant that the applicant was responsible for paying all of the respondent's legal costs, including costs incurred in responding to the application. The court's decision highlighted the importance of establishing a serious question to be tried and providing an undertaking as to damages in injunction applications. The outcome of the case demonstrates the courts' cautious approach to granting injunctions in cases involving company meetings and resolutions.

Orders